The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), proposes to amend §26.1, concerning fees required to operate a perpetual care cemetery, §26.2, concerning what records are required to be maintained, and §26.4, concerning when a burial marker or monument must be ordered and set. The amended rules are proposed to implement statutory changes and to update the fees charged for examinations.

House Bill 2495, 82nd Texas Legislature, 2011 (House Bill 2495), amended Chapters 711 and 712 of the Health and Safety Code. The proposed amendments to §§26.1, 26.2 and 26.4 would conform the regulations to these statutory changes. Additional proposed amendments to §26.1 change the method of calculating examination fees.

Section 26.1 sets out the fees that must be paid to operate a perpetual care cemetery. Proposed amendments to §26.1(b)(1) and (2) are made to reflect changed terminology and changed citations to Chapter 712 of the Health and Safety Code. Proposed §26.1(b)(3) is a new provision that establishes a late fee, which was authorized by Health and Safety Code §712.0039(b)(2).

Proposed §26.1(b)(5) and §26.1(d)(1) change the formula for calculating the fee for examinations of new perpetual care cemetery certificate holders and the fee for extra examinations of perpetual care cemeteries. Until May 5, 2011, these examination fees had been set by §26.1 at $600 per day per examiner. The rule was amended to tie these perpetual care cemetery examination fees to the fee charged for specialty examinations of other entities under §3.36(h) of this title (currently also set at $600 per day per examiner). This change was based on the premise that the resources necessary for all examinations performed by department examiners are similar and when one changed the other should change also. However, as the department continued to evaluate the examination fee for other entities under §3.36(h), it determined that although similar, the cost to examine these other entities is greater than the cost to examine perpetual care cemeteries. Therefore, the department has determined that the rates should be set separately.

Currently, the fee for new and additional perpetual care cemetery examinations is $600 per day for each examiner. It has been the department's practice to prorate the fee when less than a full day is spent on a perpetual care cemetery examination. These types of examinations typically take 8 hours or less to complete. The proposed amendments would change the fee for these perpetual care cemetery examinations from $600 per day for each examiner to $75 per hour for each examiner. Related travel expenses would continue to be charged in addition to this hourly rate. This reimbursement method more closely describes the current practice. The proposed examination fee of $75 per hour for each examiner is equivalent to the current fee of $600 per day for each examiner.

The proposed amendment to §26.1(c)(1) would clarify the department's current practice of decreasing the annual assessment if the commissioner determines a lesser amount is needed to administer Health and Safety Code Chapter 712.

Similar changes are being proposed to the rules that set examination fees for money services businesses and prepaid funeral contract sellers. This will allow for consistent examination fees for all industries examined by the department's Special Audits Division.

The proposed amendment to §26.2(b)(1)(A) clarifies what financial information a certificate holder must maintain. House Bill 2495 included new Health and Safety Code §712.0037, which requires a certificate holder to renew its certificate of authority annually. Previously there was no renewal requirement. Section 712.0037(a)(2) requires the certificate holder to demonstrate that it meets the qualifications for holding a certificate. Those qualifications are set out in §712.0034(b). One of those qualifications is that the certificate holder has a financial condition that warrants the public's confidence. The department has determined that it must review a current balance sheet and income statement to ensure that the certificate holder's financial condition is sound.

The proposed amendment to §26.2(b)(1)(K) reflects the addition of new requirements regarding lawn crypts to Chapter 711 of the Health and Safety Code. The proposed amendment to §26.2(c)(2) adds citations to new statutory sections of Chapter 712 of the Health and Safety Code that broaden the department's enforcement powers.

The proposed amendment to §26.4 changes the statutory citations in subsection (a)(2) to reflect changes made to Health and Safety Code §711.002.

Stephanie Newberg, Deputy Commissioner, has determined that for the first five-year period the proposed rules are in effect, there will be no fiscal implications for state government or for local government as a result of enforcing or administering the rules.

Ms. Newberg also has determined that, for each year of the first five years the rules as proposed are in effect, the public benefit anticipated as a result of enforcing the rules as proposed will be consistency with the new provisions of Chapters 711 and 712 of the Health and Safety Code. Additionally, Ms. Newberg has determined that the new fee formula in §26.1 will result in a more accurate description of how new and additional examination fees for perpetual care cemeteries are calculated.

For each year of the first five years that the rule will be in effect, there will be no economic costs to persons required to comply with the rule as proposed. Fees for new and additional perpetual care cemetery examinations are currently calculated at the rate of $75 per hour, even though the rate is currently expressed as a per day amount. Therefore, there will be no difference in the resulting fee if the amendment is adopted.

There will be no adverse economic effect on small businesses or micro-businesses. There will be no difference in the cost of compliance for small businesses as compared to large businesses.

To be considered, comments on the proposed amendments must be submitted no later than 5:00 p.m. on October 3, 2011. Comments should be addressed to General Counsel, Texas Department of Banking, Legal Division, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Comments may also be submitted by email to legal@dob.texas.gov.

The amendments are proposed under Health and Safety Code, §711.012(a), which authorizes the Finance Commission to adopt rules to enforce and administer §711.061 of the Health and Safety Code; Health and Safety Code, §712.0037(a)(1), which authorizes the Finance Commission to adopt a rule establishing an annual renewal fee; Health and Safety Code §712.0037(b)(2), which authorizes the Finance Commission to adopt a late fee for renewing certificate holders; Health and Safety Code §712.008(a), which authorizes the Finance Commission to adopt rules to enforce and administer Chapter 712, including rules establishing fees to defray the costs of enforcing and administering Chapter 712; Health and Safety Code §712.042, which authorizes the Finance Commission to adopt a rule setting an annual assessment fee to defray the cost of administering Chapter 712; and Health and Safety Code §712.044(b), which authorizes the Finance Commission to adopt a rule setting a fee for examinations under Chapter 712.

Health and Safety Code §§711.002, 711.061, 711.063, 711.064, 712.0033, 712.0037, 712.042, 712.044, 712.0442, 712.0443, and 712.0444 are affected by the proposed amended sections.