ADOPTED RULES 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 II. Texas Department of Banking Chapter 25. Prepaid Funeral Contracts Subchapter B. Regulation of Licenses 7 TAC sec.25.24 The Banking Department of Texas (the department) adopts an amendment to sec.25.24, concerning examination costs and assessment fees applicable to sellers of prepaid funeral benefits contracts, as defined in Texas Civil Statutes, Article 548b (the Act), sec.1(a)(10), without changes to the proposed text as published in the January 16, 1996, issue of the Texas Register (21 TexReg 417). Only subsections (a), (b), and (c) (2) and (3) of this section are amended. The Act, sec.2, authorizes the department "to prescribe reasonable rules and regulations concerning fees to defray the cost of administering (the Act)." Over the last three years, the department has refined its collection and analytical review of data relevant to the costs associated with prepaid funeral regulation and has determined that the assessments and examination fees collected under existing sec.25.24 are insufficient to support the department's expenses in administering the Act. The proposed fee increase and other fee-related amendments will enable the prepaid funeral benefits section of the special audits division to be self-funding as authorized by law and allow the department to conduct an annual examination of each regulated entity without resort to funding from other sources. Annual examinations enable the department to more effectively regulate the prepaid funeral industry and better safeguard the rights and interests of the consumer. As amended, sec.25.24(b) requires a seller to pay $500 a day and travel costs for each examiner that performs an examination of the seller's prepaid funeral operations. In addition, subsection (b) provides that the examination fee for the first annual examination of a seller in each year of a fiscal biennium may be offset against certain prior assessment fees. Finally subsection (b) provides that an additional fee of $500 a day and examiner travel costs will be assessed against a seller for any subsequent examination performed in a given fiscal year because of a seller's noncompliance with the Act or rules under the Act or because of failure to respond to departmental requests in furtherance of the department's enforcement responsibilities. Fees and costs associated with subsequent examinations in a given fiscal year may not be offset against prior assessment fees. Permit holders generally will not experience additional costs under the adopted provisions. Typically, the initial annual examination fee and associated examination travel expenses will be fully covered by the assessment fee for permit holders that meet the department's record keeping standards and do not require additional examinations. Although the proposed preamble disclosed an increase in cost to both small and large businesses, this increase applies to those businesses that require an extended annual examination or subsequent examinations in the same year because of poor record-keeping practices or violations of prepaid funeral laws that require additional examinations. Using the number of days spent on examinations last year, the department calculated the projected cost to each permit holder under the amended section. The department then compared that cost with the cost the permit holder would have paid last year had the department collected an assessment. This comparison shows that, for the overwhelming majority of permit holders, the cost of examination based on an assessment fee last year is more than the projected cost under the amendments. Small businesses that require more than one examination will pay approximately $300 more under amended sec.25.24 for an extra day of examination plus $100 in travel costs and one night's lodging; large businesses that require additional examinations will pay approximately $1,200 more in examination fees (i.e., $300 per day for four days) plus $200 in travel costs and lodging. At a public hearing held on February 16, 1996, six speakers commented on various provisions of the proposed amendments to sec.25.24. Although not expressly stating opposition to the section as a whole, Texas Funeral Directors Association (TFDA) appeared to oppose adoption of the proposal. No group or association expressly stated support for adoption of the amendments. No comment received resulted in change to the section as proposed. The department responds to the comments received as follows: TFDA and another commenter noted that an examiner's salary is less than the $500 a day examination fee and asked how the department justified the increase from $200, which included travel and expenses, to the $500 daily rate, which does not. The department's statutory authority is not limited to recouping the cost of examiner salaries. The Act, sec.2, permits the department to promulgate fee rules "to defray the cost of administering [the] Act." To determine the cost of administering the Act, the department analyzed existing fiscal data pertaining to salaries of staff and overhead costs (less associated travel expenses) related to the department's administration of the Act. To determine the hourly rate of an examination, the department added these amounts together and divided the total by the number of examiner hours spent conducting examinations. This figure multiplied by eight hours is the daily rate of the examination. Although existing data support an amount greater than the $500 established in this section, the department is confident that the section as adopted will adequately cover its actual expenses since it is continuing its efforts to lower administrative costs. In addition, the department had surplus funds regarding administration of the Act at the beginning of the prior fiscal biennium and established an artificially low, below cost examination rate to absorb the surplus for the benefit of the regulated industry. The industry was advised of this action and warned that the $200 rate may create a false impression regarding the true cost of regulation, see 18 TexReg 9885, 9887 (December 24, 1993). TFDA also questioned the department regarding the procedures in place to ensure examiner efficiency so that a permit holder will not be overcharged for the cost of an examination. Over the past three years, the department has actively sought and hired more highly qualified and knowledgeable examiners. In addition, the department has established rigorous standards for examiner review, testing, and evaluation based on the rating of the permit holder and the number of contracts examined. These two measures operate in conjunction to promote efficiency in the examination function. One commenter asked the department to address the concern that these amendments change the frequency of the examination from biennial to annual and, therefore, double the cost to the permit holder. The Act, sec.8, makes a permit holder subject to an "annual examination ... and to such additional examinations as [the department] deems necessary." Annual examinations enable the department to more effectively regulate the prepaid funeral industry and better safeguard the rights and interests of the consumer. Furthermore, amendments to this section provide for the offset of the cost of one annual examination each fiscal year against the assessment fee. In preparatory work prior to submission of the proposed amendments for comment, the department calculated the amount each permit holder would pay under this section as amended, based on examination data for the last fiscal year. From these calculations, the department determined that the majority of permit holders (specifically those who practice good and business-like record keeping techniques and those who are not in violation of prepaid funeral laws) will not experience additional costs as a result of amendments to this section. This same commenter asked for an explanation of how the department arrived at the conclusion, stated in the proposed preamble to this section, that the cost to persons required to comply will be $.08 for each $100 of prepaid funeral merchandise purchased under a contract. The department's calculations assume an average contract price of $4,000. With an assessment of $3.00 per contract, the assessment is $.08 for each $100 of contract price (i.e., $3.00 divided by 4,000 times 100). TFDA asked the department for the number of permit holders for whom the assessment fee would cover the cost of the examination. Based on an analysis of the department's examination data for last year, 43 permit holders will incur additional charges associated with the initial examination as a consequence of this fee structure, assuming all factors relevant to permit holder operations remain unchanged. Cost to these 43 licensees will exceed the assessment fee because, under the stated assumptions, their examinations will take longer to perform than the department's standard time allotment for permit holders of their respective sizes. As of February 29, 1996, there were 493 prepaid funeral benefits permit holders in the state of Texas. TFDA requested the department to leave the cost of the initial examination at $200 per day and establish the cost of re-examinations in any one year at $500 per day. The department rejects this proposal. In those cases where the initial examination takes several days, the department would not recover its costs under this proposal; furthermore, every permittee would not be paying the actual cost of its examination, as previously discussed, which would have to be subsidized by other means. A commenter indicated support for the proposed amendment to the extent that the smaller permittees should not be subsidizing examination costs for other permittees. However, this commenter, as well as TFDA and another commenter, also requested the department to justify the proposed amendments by making its calculations available for inspection. The department respectfully declines to do so. The department has concluded that its disclosure of the methodology and rationale in formulating the contents of such amendments presented at the hearing and in this preamble, as well as the department's offer to compute the projected cost of examination for any permittee at its request, reasonably addresses this issue while protecting the confidentiality of individual permittees. TFDA and another commenter indicated that the preamble should fully explain the amendments and their bases. The department believes that this preamble satisfies this request. The amendment is adopted pursuant to the department's rule-making authority under Texas Civil Statutes, Article 548b, sec.2. Section 2 permits the department to "prescribe reasonable rules and regulations concerning fees to defray the cost of administering this Act." This authority is limited by the mandate that the department "may not maintain unnecessary fund balances." Furthermore, the department is statutorily directed to set fee amounts in accordance with such limitation. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on April 15, 1996. TRD-9605218 Everette D. Jobe General Counsel Texas Department of Banking Effective date: May 6, 1996 Proposal publication date: January 16, 1996 For further information, please call: (512) 475-1300 TITLE 16. ECONOMIC REGULATION Part I. Railroad Commission of Texas Chapter 9. Liquefied Petroleum Gas Division The Railroad Commission of Texas adopts amendments to sec.9.3, relating to LP- gas report forms, and sec.9.160, relating to manufacturer's nameplate and markings on ASME containers, and new sec.9.161, relating to commission identification nameplates, without changes to the versions published in the February 27, 1996, Texas Register (21 TexReg 1431). Section 9.3 lists the numbers and titles of various forms required to be filed with the commission; adopted changes include the addition of new LPG Form 502, request for commission identification nameplate, the addition of LPG Form 506, concerning the polyethylene pipe/tubing heat-fusion certification (which is discussed in sec.9.956, relating to joining methods, but was mistakenly omitted from sec.9.3), and correction of the reference to the former LP-Gas Division. Section 9.160 describes the nameplate that identifies ASME containers and lists the information to be included on the nameplate. Adopted changes include some nameplate definitions added to subsection (a), and new subsections (f), (g), (h), and (j); adopted subsection (f) requires the working pressure for a container to be painted on the container if the original ASME nameplate begins to become unreadable. Adopted subsection (g) describes procedures for replacement nameplates. Adopted subsection (h) allows nameplates on motor or mobile fuel containers to be attached with a method other than continuous fusion welding and to be raised of the surface of the container; while this is not directly a safety issue, it will allow persons in Texas to have a wider selection of ASME containers approved for use in Texas. Adopted subsection (j) states that the commission may remove any container from service if the nameplate, in any form defined in subsection (a), appears to be tampered with or defective in some manner. Other adopted nonsubstantive amendments in sec.9.160 include some changes in organization, wording, or punctuation to provide clearer language or sequence. Adopted new sec.9.161 describes requirements for issuance of commission identification nameplates which will be available only for stationary containers with water capacities of 4,001 gallons or more. Subsections (a) through (e) specify the requirements for owners or operators of stationary containers to request a commission identification nameplate if the original ASME nameplate is becoming loose, unreadable, or detached, and a replacement nameplate cannot be issued because the original tank manufacturer is no longer in existence, or in another similar situation. The commission's identification nameplate shall serve only to identify the container as an ASME container and will in no way indicate the condition of the container. The commission will issue identification nameplates only for containers with water capacities of 4, 001 gallons or more installed in Texas before September 1, 1984, the effective date of the nameplate requirement in sec.9.160. The minimum size of 4,001 gallons will enable the LP- Gas Section to issue identification nameplates for larger, more expensive containers, while maintaining its primary responsibilities of safety and inspections. In addition, the commission must be able to verify the continuous LP-gas service of the container in Texas prior to September 1, 1984. The reason for providing this service only for containers continuously used in Texas is to prevent an excessive influx of older containers into Texas. In order to further ensure that the section's ability to perform its primary responsibilities will not be jeopardized, certain fees associated with the identification nameplates will have to be paid in advance to cover the commission's preparatory work, with all fees being due before the nameplate will be attached; in other words, to prevent the section from doing nothing but issuing identification nameplates, the entire financial burden for the commission identification nameplate will rest on the owner or operator of the container. No comments were received on the proposed amendments and new section. Subchapter A. General Applicability and Requirements 16 TAC sec.9.3 The new section is adopted under the Texas Natural Resources Code, sec.113. 051, which authorizes the commission to adopt rules relating to any and all aspects or phases of the LP-gas industry that will protect or tend to protect the health, welfare, and safety of the general public. The following is the statute, article, or code affected by the adopted new section: sec.9.3, Texas Natural Resources Code, sec.113.051. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on April 16, 1996. TRD-9605260 Mary Ross McDonald Assistant Director, Gas Services Section, Office of General Counsel Railroad Commission of Texas Effective date: May 7 1996 Proposal publication date: February 27, 1996 For further information, please call: (512) 463-7008 Subchapter B. Basic Rules 16 TAC sec.9.160, sec.9.161 The new section and amendment are adopted under the Texas Natural Resources Code, sec.113.051, which authorizes the commission to adopt rules relating to any and all aspects or phases of the LP-gas industry that will protect or tend to protect the health, welfare, and safety of the general public. The following is the statute, article, or code affected by the adopted amendment and new section: sec.9.160, and sec.9.161, Texas Natural Resources Code, sec.113.051. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on April 16, 1996. TRD-9605261 Mary Ross McDonald Assistant Director, Gas Services Section, Office of General Counsel Railroad Commission of Texas Effective date: May 7, 1996 Proposal publication date: February 27, 1996 For further information, please call: (512) 463-7008 Part IV. Texas Department of Licensing and Regulation Chapter 67. Auctioneers 16 TAC sec.67.22, sec.67.81 The Texas Department of Licensing and Regulation adopts amendments to sec.67.22 and sec.67.81, concerning auctioneers. Section 67.81 is adopted with changes to the proposed text as published in the February 9, 1996 issue of the Texas Register (21 TexReg 921). Section 67.22 is adopted without changes and will not be republished. The amendment to sec.67.22 changes the amount of time a person who has passed the auctioneer examination has in which to get a license without being required to retake the examination from two years to 90 days. The amendment to sec.67.81 increases the late renewal fee from $25 to $50. In response to staff concerns and comment received the agency decided to leave the period allowed for late renewal at 30 days rather than change it to 90 days as was proposed. The justification for raising the late fee is to make it the same as all other Department late fees. The justification for changing the period of time during which an applicant may secure an auctioneer license after passing the examination from two years to 90 days is that auctioneers are required to know and comply with many laws dealing with taxes, deceptive trade, and other state and federal law concerning licenses to buy or sell various items. These laws and regulations can be changed at various times by the state legislature, the Congress, rulemaking by the Comptroller or various other agencies, and attorney general opinions. The public will be protected more effectively if the time when a license may be secured and the time knowledge is demonstrated are not widely separated. The two comments received were favorable to the proposed amendments but suggested leaving the time frame for late renewal at 30 days. The amendments are adopted under Texas Civil Statutes, Article 8700, which authorize the department to license and regulate auctioneers. sec.67.81. Fees-Renewal. (a)-(b) (No change.) (c) A late fee of $50 will be charged for renewal applications postmarked between midnight of the day a current license expires and midnight of the 30th day after the expiration. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on April 16, 1996. TRD-9605249 Tommy V. Smith Executive Director Texas Department of Licensing and Regulation Effective date: May 7, 1996 Proposal publication date: February 9, 1996 For further information, please call: (512) 463-7348