Emergency Sections An agency may adopt a new or amended section or repeal an existing section on an emergency basis if it determines that such action is necessary for the public health, safety, or welfare of this state. The section may become effective immediately upon filing with the Texas Register, or on a stated date less than 20 days after filing, for no more than 120 days. The emergency action is renewable once for no more than 60 days. Symbology in amended emergency sections. New language added to an existing section is indicated by the use of bold text. [Brackets] indicate deletion of existing material within a section. TITLE 1. ADMINISTRATION Part V. General Services Commission Chapter 113. Central Purchasing Division Purchasing 1 TAC sec.113.19 The General Services Commission is renewing the effectiveness of the emergency adoption of amended sec.113.19, for a 60-day period effective December 17, 1993. The text of amended sec.113.19 was originally published in the November 2, 1993, issue of the Texas Register (18 TexReg 7895). Issued in Austin, Texas, on December 17, 1993. TRD-9333762 Judith Monaco Porras General Counsel General Services Commission Effective date: December 17, 1993 Expiration date: February 16, 1994 For further information, please call: (512) 463-3583 TITLE 7. BANKING AND SECURITIES Part II. Banking Department of Texas Chapter 25. Prepaid Funeral Contracts Subchapter B. Regulation of Licenses 7 TAC sec.25.23, sec.25.24 The Texas Department of Banking (the Department) adopts on an emergency basis new sec.25.23 and sec.25.24, based in large part sec.25.23 proposed on an emergency basis and as published in the September 7, 1993, issue of the Texas Register (18 TexReg 5931), which is being withdrawn in this issue of the Texas Register . The new sec.25.23 and sec.25.24 proposed on an emergency basis will expire on March 28, 1994, the 180th day after original emergency sec.25.23 was promulgated. The new emergency sections establish fees applicable to the regulated prepaid funeral services and merchandise industry, sometimes referred to as the prepaid funeral benefits industry, pursuant to Texas Civil Statutes, Article 548b, as amended effective September 1, 1993 (the Act). A proposed version of sec.25.23 was published in the July 20, 1993, issue of the Texas Register (18 TexReg 4723), and written comments have been received as well as a public hearing held. Based on comments received, the new emergency sec.25.23 and sec.25 24 have been revised from both the original proposal and the emergency sec.25.23. The original proposed sec.25.23 is being withdrawn in this issue of the Texas Register, and proposed new sec.25. 23 and sec.25.24 are being published for comment in this issue of the Texas Register . The emergency sections hereby adopted are substantially similar to the new proposed sections, with such changes as are necessary to provide a transition from the former emergency section to the new emergency sections. An explanation of the comments received and the reasons for the changes made can be found in the preamble to new proposed sec.25.23 and sec.25.24. The Department adopts sec.25.23 and sec.25.24 on an emergency basis to define terms, set application fees, establish examination fees, and impose assessment fees to be assessed against and collected from each prepaid funeral benefits permittee based on the number of each licensee's total outstanding unmatured contracts, for the purpose of recovering the cost of examination, the equitable or proportionate cost of maintenance and operation of the Department and the enforcement of the Act. The new sections are adopted on an emergency basis to ensure that all necessary rules are in place to fund regulation of the industry and implement the provisions of House Bill 2499, 73rd Legislature, 1993, effective September 1, 1993. The Department finds that a requirement of state law requires adoption of these sections on fewer than 30 days' notice because sec.2 and s8 of the Act require that the prepaid funeral benefits industry bear its equitable or proportionate share of the cost of maintenance and operation of the Department and pay the cost of enforcement of the Act. Failure to have appropriate regulations in place during the interim period between the effective date of amendments to the Act and final adoption of the sections would cripple the ability of the Department to fund regulation of this industry. The new section is adopted under Texas Civil Statutes, Article 548b, sec.sec.1(A)(d), 2, 3, 5(a)(4)(D)(ix), and 8, which empower the Department to set fees. sec.25.23. Application Fees. (a) Definitions. The following words and terms, when used in this section, have the following meanings, unless the context clearly indicates otherwise. (1) Act-Texas Civil Statutes, Article 548b. (2) Commissioner-The Banking Commissioner of Texas. (3) Department-The Texas Department of Banking. (4) Outstanding contracts-Unmatured, prepaid funeral benefit contracts. For purposes of determining fees that vary with the number of outstanding contracts, the number of outstanding contracts shall be the number reported by a seller in the most recent annual report on file with the Department, subject to adjustments for errors or mistakes in such annual report. If a seller has not filed an annual report for the fiscal year immediately preceding the relevant determination date, the Department shall determine, in its sole discretion based on reasonably obtainable and reliable information, the number of outstanding contracts. (5) Permit holder-A person having a valid permit to sell prepaid funeral benefits. (6) Prepaid funeral benefits-Prearranged or prepaid funeral or cemetery services or funeral merchandise, including caskets, grave vaults, and all other articles of merchandise incidental to a funeral service. The term does not include a grave lot, grave space, grave marker, monument, tombstone, crypt, niche, or mausoleum unless it is sold in contemplation of trade or barter for services and merchandise to which the Act applies. (7) Seller-A person selling, accepting funds or premiums for, or soliciting contracts for prepaid funeral benefits or contracts or policies of insurance to fund prepaid funeral benefits in this state, including a seller who has discontinued selling prepaid funeral benefits but still has outstanding contracts. (b) Application Fees. The application fees set forth in this subsection have been set in accordance with the Act for the purpose of defraying the cost of administering this Act. Except as otherwise provided in this subsection, all fees are due at. the time the application is filed and are nonrefundable. Failure to timely pay fees or costs shall be grounds for denial of the application. (1) New Permit Application Fee. An applicant for a new prepaid funeral benefits permit, other than an applicant seeking a permit for the sole purpose of administering previously sold and outstanding contracts, shall pay a $500 fee. An applicant that administers previously sold and outstanding contracts and wishes to again sell prepaid funeral benefits shall pay the greater of a $500 fee or the fee calculated pursuant to paragraph (2) of this subsection. In addition to the application fee, an applicant shall pay any extraordinary costs incurred by the Department pursuant to any out of state investigation of the applicant as required by the Act, sec.3. Extraordinary costs shall be paid by the applicant within 20 days after written request by the Department. (2) Renewal Application Fee. To renew an existing permit, or to acquire a new permit for the sole purpose of administering outstanding contracts, the applicant shall pay a fee of $100 plus $1.00 for every outstanding contract administered or held by the applicant in excess of 25 contracts, provided that the maximum fee shall not exceed $1,500. (3) Conversion Application Fee. An applicant for the conversion of a trust- funded prepaid funeral benefits operation to an insurance-funded prepaid funeral benefits operation shall pay a $1,000 fee per application. (c) Prior and Pending Applications. All applications received from September 1, 1993, to the date of adoption of this section shall be subject to the application fees set forth in this section. An applicant after September 1, 1993, that paid a different fee shall receive a rebate within a reasonable period of time to allow for processing if the paid fee exceeds the fee specified in this section, and shall be billed for the difference if the paid fee is less than the fee specified in this section. Any additional remittance shall be made within 15 days after receipt of the statement for additional fees or the application may be denied. (d) Severability. If any fee in this section or the manner of its calculation, or other provision of this section, is determined to be unlawful or in excess of the authority of the Department to adopt and impose, the remainder of this section shall be unaffected, and other fees specified herein shall continue to be due and collected. sec.25.24. Examination Costs and Assessment Fees. (a) Definitions. The following words and terms, when used in this section, shall be defined according to Texas Civil Statutes (the Act), Article 548b, sec.1(b) and sec.25.23(a) of this title (relating to Application Fees), unless otherwise defined herein or unless the context clearly indicates otherwise. (1) Examination-The process of evaluating the legal compliance and financial condition of a seller or permit holder's prepaid funeral benefit operation. (2) Fiscal biennium-The 24-month period from September 1st of each odd- numbered calendar year to August 31st of the next succeeding odd-numbered calendar year. (b) Examination Costs. Each seller shall be subject to annual examination by the Department, shall be examined at least once in each fiscal biennium, shall be subject to such additional examinations as the Department deems necessary, and shall pay for the cost of each examination, including the salary and travel expenses for Department employees and all other expenses necessarily incurred in the examination. Examination costs including expenses shall be calculated at the rate of $200 per examiner per day, and shall be due at the time of billing; provided, however, that the seller may offset any examination fee due against and to the extent of prior assessment fees actually paid to the Department in the current fiscal biennium pursuant to subsection (c) of this section. (c) Assessment Fees. (1) In connection with the examination, during each fiscal biennium, each seller shall pay nonrefundable assessment fees in such periodically adjusted amounts as reasonably appear necessary to defray the total unrecovered costs of administering this Act and to avoid the accumulation of unnecessary fund balances, as provided in this subsection. (2) No more often than once each quarter of each fiscal biennium, the Department shall calculate, based on the number of each seller's total outstanding contracts, a proportionate charge covering the cost of examination, the seller's equitable or proportionate cost of maintenance and operation of the Department and the enforcement of the provisions of the Act, taking into account current fund balances and anticipated revenues from fees collected under sec.25.23 of this title. The aggregate sum of assessments during a fiscal biennium shall not exceed $6.00 per outstanding contract, or $14,700 per seller, whichever is less. (3) A seller shall remit payment for any assessment fee due within 15 days from the date of billing by the Department; provided, however, that the seller may offset any assessment fee due against and to the extent of examination costs actually paid to the Department in the current fiscal biennium pursuant to subsection (b) of this section. If examination costs actually paid and not previously offset against assessments in the current fiscal biennium exceed the current assessment fee due, the seller shall be permitted to carry forward such excess amounts as a credit against future assessments within the current fiscal biennium, but not into the next succeeding fiscal biennium. The offset provisions of this paragraph and subsection (b) of this section shall be construed together to require that a seller pay the greater of the sum of all assessments during the fiscal biennium or the sum of all examination costs incurred during the fiscal biennium. (4) If the assessment for any seller as computed under paragraph (2) of this subsection is less than $100 for the fiscal biennium, a minimum assessment fee of $100 shall be levied and collected for the fiscal biennium, subject to offset as provided in paragraph (3) of this subsection. (d) Severability. If any fee in this section or the manner of its calculation is determined to be unlawful or in excess of the authority of the Department to adopt and impose, the remainder of this section shall be unaffected, and other fees specified herein shall continue to be due and collected. Issued in Austin, Texas, on December 15, 1993. TRD-9333722 Everette D. Jobe General Counsel Texas Department of Banking Effective date: December 16, 1993 Expiration date: March 28, 1994 For further information, please call: (512) 475-1300