TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 3. TAX ADMINISTRATION

SUBCHAPTER B. NATURAL GAS

34 TAC §3.30

The Comptroller of Public Accounts proposes new §3.30, concerning natural gas tax managed audits and determination of overpaid amounts. This section implements House Bill 2256, 86th Legislature, 2019.

In subsection (a), the comptroller defines the terms "managed audit" and "taxpayer." "Managed audit" is defined in the same manner as Tax Code, §201.3021(a) (Managed Audits). "Taxpayer" is any person required by Tax Code, Chapter 201 (Gas Production Tax) to file a producer's or first purchaser's report.

Subsection (b) implements Tax Code, §201.3021 as added by House Bill 2256. This subsection discusses the policies regarding managed audits for the natural gas tax and provides detailed procedures for managed audits.

Subsection (c) implements Tax Code, §201.207. This subsection discusses how taxpayers may use sampling of marketing cost transactions to establish that they have overpaid tax. In order to use sampling, the taxpayer must follow certain requirements, including use of a comptroller-approved sampling method, recording the method used, and making relevant records available for comptroller review. After establishing an overpayment, the taxpayer must amend all relevant reports and may then either use the overpayment as a credit on another natural gas tax return or request a refund. A taxpayer must amend all the relevant reports to allow the comptroller to track the application of refunds and credits to the taxpayer's account.

Tom Currah, Chief Revenue Estimator, has determined that during the first five years that the proposed new rule is in effect, the rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.

Mr. Currah also has determined that for each year of the first five years the proposed new rule is in effect, the proposed new rule would benefit the public by conforming the rule to current statute. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses or rural communities. The proposed new rule would have no fiscal impact on the state government, units of local government, or individuals. There would be no anticipated significant economic cost to the public.

Comments on the proposal may be submitted to Teresa G. Bostick, Director, Tax Policy Division, P.O. Box 13528, Austin, Texas 78711-3528. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register.

This new section is proposed under Tax Code, §111.002 (Comptroller's Rules; Compliance; Forfeiture), which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2 (State Taxation).

The new section implements Tax Code, §201.207 (Determination of Overpaid Amounts) and §201.3021 (Managed Audits).

§3.30.Natural Gas Tax Managed Audits and Determination of Overpaid Amounts.

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Managed audit--A review and analysis of invoices, checks, accounting records, or other documents or information conducted by a taxpayer to determine a taxpayer's liability for tax under Tax Code, Chapter 201 (Gas Production Tax).

(2) Taxpayer--Any person required to file a report with the comptroller under Tax Code, §201.203 (Producer's Report) or §201.2035 (First Purchaser's Report).

(b) Managed audits. The comptroller may authorize taxpayers that meet certain requirements to perform managed audits.

(1) A taxpayer who wishes to participate in a managed audit must request authorization from the comptroller's office to conduct a managed audit under this section. Authorization will only be granted as part of a written agreement between the taxpayer and the comptroller's office. The agreement must:

(A) be signed by an authorized representative of the comptroller and the taxpayer; and

(B) specify the period to be audited and the procedure to be followed.

(2) In determining whether to authorize a managed audit, the comptroller may consider:

(A) the taxpayer's history of tax compliance, including:

(i) timely filing of reports;

(ii) timely payment of all taxes and fees due to the state;

(iii) prior audit history;

(iv) delinquency in other taxes;

(v) correction of problems identified in prior audits; and

(vi) whether a penalty waiver had been denied on prior occasions and the reason for denial;

(B) whether the taxpayer has sufficient time and resources to conduct the audit;

(C) the sufficiency and availability of the taxpayer's tax records;

(D) the taxpayer's ability to pay any liability arising as a result of the audit; and

(E) any other factor the comptroller determines is relevant.

(3) The decision to authorize or not authorize a managed audit rests solely with the comptroller.

(4) A managed audit may be limited to one or more factors affecting a taxpayer's liability for tax under this chapter, including:

(A) gross value of gas produced;

(B) exempt interest;

(C) marketing costs of gas produced;

(D) gas used to power operations at a well or lease; or

(E) tax reimbursement paid by a purchaser to a producer.

(5) Before the audit is finalized, the comptroller may examine records that the comptroller determines are necessary to verify the results.

(6) Unless the audit or information reviewed by the comptroller under this subsection discloses fraud or willful evasion of the tax, the comptroller may not assess a penalty and may waive all or part of the interest that would otherwise accrue on any amount identified to be due in a managed audit. This does not apply to any amount collected by the taxpayer that was a tax or represented to be a tax but that was not remitted to this state.

(7) Except as provided by Tax Code, §111.104(f) (Refunds), a taxpayer is entitled to a refund of any tax overpayment disclosed by a managed audit under this section.

(8) This subsection applies to audits initiated on or after September 1, 2019.

(c) Determination of overpaid amounts by sampling marketing cost transactions.

(1) A taxpayer may sample marketing cost transactions provided that the sampling method is approved by the comptroller. The taxpayer must record the method and make available on request by the comptroller the records on which the computation is based.

(2) A taxpayer may obtain a reimbursement of an overpayment identified by sampling under this subsection by amending all relevant reports and:

(A) taking a credit on one or more reports filed under Tax Code, §201.203 or §201.2035; or

(B) filing a claim for refund with the comptroller within the statute of limitations specified by Tax Code, §111.107 (When a Refund or Credit is Permitted) and Chapter 111, Subchapter D (Limitations).

(3) This subsection applies to refund claims filed on or after September 1, 2019.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 20, 2019.

TRD-201904946

William Hamner

Special Counsel for Tax Administration

Comptroller of Public Accounts

Earliest possible date of adoption: February 9, 2020

For further information, please call: (512) 475-2220


CHAPTER 13. UNCLAIMED PROPERTY REPORTING AND COMPLIANCE

34 TAC §§13.4 - 13.8, 13.21

The Comptroller of Public Accounts proposes new §13.4 concerning report and delivery of certain personal tangible property, §13.5 concerning additional required information for reported mineral proceeds, §13.6 concerning minimum requirements for a claim, §13.7 concerning identification of claimed property; burden, and §13.8 concerning certain mineral proceeds; supporting documentation required. The comptroller also proposes amendments to §13.21 concerning property report format.

Section 13.4 provides that tangible personal property shall be reported in the manner prescribed by the Comptroller's Unclaimed Property Reporting Instructions. It also requires holders to provide a detailed description of the property to the comptroller and identify whether the property has been contaminated by biohazardous material. Finally, this section provides that the comptroller can determine that the property has insubstantial value and require a holder to destroy or otherwise dispose of the property before delivery to the comptroller.

Section 13.5 provides additional information reporting requirements for holders of mineral proceeds.

Section 13.6 describes the minimum requirements for a claim.

Section 13.7 describes that a person making a claim for unclaimed property has the burden of identifying the property in the possession of the comptroller that is being claimed.

Section 13.8 provides additional documentation requirements for claims involving mineral proceeds reported to the comptroller with an unknown or unidentified owner.

The amendment to §13.21 allows the comptroller to prescribe the electronic file format to be used to file a property report by publishing in the Comptroller's Unclaimed Property Reporting Instructions.

Tom Currah, Chief Revenue Estimator, has determined that during the first five years that the proposed new rules and amendment are in effect, the rules: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rules' applicability; and will not positively or adversely affect this state's economy.

Mr. Currah also has determined that the proposed new rules and amended rule would have no fiscal impact on small businesses or rural communities. The proposed new rules and amendment would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed new rules and amended rule would benefit the public by clearly defining existing policy. There would be no significant anticipated economic cost to the public.

Comments on the proposal may be submitted to Bryant Clayton, Assistant Director, Unclaimed Property Division, Comptroller of Public Accounts, at bryant.clayton@cpa.texas.gov or at P.O. Box 13528, Austin, Texas 78711-3528. Comments must be received no later than 30 days from the date of publication of the proposal in the Texas Register.

The new rules and amendment are proposed under Property Code, §74.701, which authorizes the comptroller to adopt rules necessary to carry out Property Code, Title 6, regarding unclaimed property.

The new rules and amendment implement Property Code, Chapter 74.

§13.4.Report and Delivery of Certain Tangible Personal Property.

(a) Tangible personal property shall be reported in the manner prescribed in the current Comptroller's Unclaimed Property Reporting Instructions. For tangible personal property other than the contents of a safety deposit box, a holder shall, at the time of making a property report, separately provide to the comptroller an inventory of the property that:

(1) clearly describes the property being reported; and

(2) identifies whether the property is contaminated by biohazardous or other medical waste.

(b) The comptroller may require a holder to provide additional information about the property that is reportable under this section.

(c) A holder shall not deliver property reported under this section to the comptroller until the earlier of January 1 or the date the comptroller requests a holder deliver the property.

(d) The comptroller may determine that property reported under this section has insubstantial commercial value and may require that a holder dispose of any such property.

§13.5.Additional Required Information for Reported Mineral Proceeds.

In addition to the information required by Property Code, §74.101(c) and (e), a holder who is required to report and deliver unclaimed mineral proceeds to the comptroller under Property Code, Title 6, shall include in the property report for the proceeds the American Petroleum Institute (API) number for each lease, property, or well from which the mineral proceeds arise. The API number shall be clearly identified as such in the property description field of the property report.

§13.6.Minimum Requirements for a Claim.

A claim under Property Code, Chapter 74, Subchapter F, must identify:

(1) the name of each claimant;

(2) the mailing address for each claimant;

(3) the social security number or employer identification number of each claimant, or a statement that a claimant does not have such a number; and

(4) each specific property in the possession of the comptroller that is being claimed by reference to the unique property identification number assigned to each claimed property by the comptroller.

§13.7.Identification of Claimed Property; Burden.

A person making a claim for property under Property Code, Title 6, has the burden to identify each specific property or properties in the possession of the comptroller to which the person is making a claim.

§13.8.Certain Mineral Proceeds; Supporting Documentation Required.

(a) For mineral proceeds reported to the comptroller as having an unknown or unidentified owner, a person making a claim for the mineral proceeds must, in addition to the requirements of §13.6 of this title (relating to Minimum Requirements for a Claim), include documentation demonstrating that the claimant either:

(1) was the owner of the underlying mineral interest or had an interest, whether possessory or non-possessory, in the mineral proceeds at the time the minerals were produced; or

(2) is the legal heir or successor in title of the person who was the owner of the underlying mineral interest, whether possessory or non-possessory, or who had an interest in the mineral proceeds at the time the minerals were produced.

(b) The comptroller may require a person claiming mineral proceeds under this section to provide a final judgment in an action to quiet title, as to all potential owners or claimants of the underlying mineral interest, issued by a court of competent jurisdiction in the county in which each mineral interest is located.

(c) For a claim made under this section, the comptroller may require additional documentation as may be appropriate under the circumstances, including information about heirship and transfer of property by probate proceedings, deed, or other method of conveyance.

§13.21Property Report Format.

(a) Property report(s) filed by a holder pursuant to Property Code, Chapters 72-75and 77, shall be submitted to the comptroller in the NAUPA Standard Electronic File format prescribed in the Comptroller's Unclaimed Property Reporting Instructions. A property report filed under this title must be filed electronically [NAUPA2 format] via one of the online submission methods specified in the Comptroller's Unclaimed Property Reporting Instructions.

(b) Information contained in property report(s) shall comply with the data entry standards for property type, securities delivery and country codes, owner name and property description fields, and abbreviations of owner title and common terms as specified in the Unclaimed Property Reporting Instructions.

(c) Incomplete reports and reports not meeting the format specifications described above will be rejected by the comptroller and returned to the holder for correction. The comptroller will keep a copy of any report that is returned for correction.

(d) Information shall be submitted in a format that is accessible by the comptroller's office. Reports that are encrypted, corrupted, or otherwise inaccessible will be rejected by the comptroller and returned to the holder for correction. The comptroller will keep a copy of any report that is returned for correction.

(e) When a report is rejected, the responsible holder shall submit a revised, complete, accessible and properly formatted report to the comptroller no later than 30 calendar days after notification of the rejection.

(f) If a complete, accessible, and properly formatted report is not resubmitted within 30 calendar days after notification of the rejection, the holder will be considered delinquent and subject to interest and civil penalties and criminal charges in Property Code, Chapter 74, Subchapter H, until a complete and properly formatted report is submitted to the comptroller.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 20, 2019.

TRD-201904944

Victoria North

Chief Counsel Fiscal and Agency Affairs Legal Services Division

Comptroller of Public Accounts

Earliest possible date of adoption: February 9, 2020

For further information, please call: (512) 475-2220


PART 3. TEACHER RETIREMENT SYSTEM OF TEXAS

CHAPTER 41. HEALTH CARE AND INSURANCE PROGRAMS

SUBCHAPTER C. TEXAS SCHOOL EMPLOYEES GROUP HEALTH (TRS-ACTIVECARE)

34 TAC §41.51

The Teacher Retirement System of Texas (TRS) proposes amendments to rule §41.51, concerning appeals relating to eligibility to enroll in the Texas School Employees Uniform Group Health Coverage Program ("TRS-ActiveCare").

BACKGROUND AND PURPOSE

TRS proposes amendments to TRS Rule §41.51, concerning appeals relating to eligibility to enroll in TRS-ActiveCare. House Bill 2629 requires that in adopting rules governing the appeal of a final administrative decision, TRS ensures that rules establishing deadlines for the filing of an appeal afford a member or retiree at least the same amount of time to file an appeal as TRS has to issue a decision. While TRS does not believe that the appeal process under TRS Rule §41.51 results in a final administrative decision by TRS, the proposed changes to this rule are in the spirit of House Bill 2629.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed amended rule will be in effect, there will be no foreseeable fiscal implications for state or local governments as a result of administering the proposed amended rule.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed amended rule will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of the adopting the amended rule will be to allow a greater amount of time for individuals to timely file an appeal concerning eligibility to enroll in TRS-ActiveCare. Mr. Green has also determined that there is no economic cost to entities or persons required to comply with the proposed amended rule.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed amendments. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed amended rule. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed amended rule is in effect, the proposed amendments will not create or eliminate any TRS programs; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not eliminate any fees currently paid to TRS; will not create a new regulation; will not expand, limit or repeal an existing regulation; will not increase or decrease the number of individuals subject to the rule's applicability; and will not affect the state's economy.

TAKINGS IMPACT ASSESSMENT

TRS has determined that there are no private real property interests affected by the proposed amended rule; therefore, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed amended rule because it does not impose a cost on regulated persons.

COMMENTS

Comments may be submitted in writing to Brian Guthrie, TRS Executive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The amendments are proposed under the authority of Texas Insurance Code §1579.051 and §1579.052 (a), (b) and (e) relating to the adoption of rules for TRS-ActiveCare.

CROSS-REFERENCE TO STATUTE

The proposed amended rule implements the Texas School Employees Uniform Group Health Coverage Act (Chapter 1579 of the Texas Insurance Code).

§41.51.Appeals Relating to Eligibility.

(a) A full-time or part-time employee ("Petitioner") whose application to enroll themselves and/or their dependents in TRS-ActiveCare is denied by either TRS, the administering firm, or a participating entity may appeal the denial to TRS.

(b) An appeal made pursuant to subsection (a) of this section shall be made in writing and must be received by TRS no later than 45 days after the date of denial. The appeal shall be directed to the TRS-ActiveCare Grievance Administrator. TRS may, at its sole discretion, provide a copy of the appeal to the administering firm or the participating entity that denied enrollment.

(c) An appeal made pursuant to subsection (a) of this section shall state the basis for appeal and shall include all relevant documents and correspondence that were considered by TRS, the administering firm, or a participating entity when the enrollment was denied. The administering firm or participating entity is required, upon request by TRS, to participate in the process.

(d) The TRS Appeal Committee ("Committee") is responsible for the review and determination of appeals made pursuant to subsection (a) of this section. The Committee shall be appointed by the TRS Deputy Director or, if the position of the Deputy Director is vacant, the TRS Chief Financial Officer and shall serve at the discretion of the Deputy Director or, if the position of the Deputy Director is vacant, the Chief Financial Officer.

(e) In determining eligibility for enrollment, the Committee shall apply the TRS-ActiveCare plan design and rules in effect for the plan year in which the Petitioner is seeking enrollment. If TRS finds that extraordinary circumstances constituting "good cause" prevented the Petitioner from complying fully with a deadline established by TRS under the TRS-ActiveCare plan design or rules, the appeal may be granted. For purposes of this subsection, "good cause" means that a person's failure to act was not because of a lack of due diligence the exercise of which would have caused a reasonable person to take prompt and timely action. A failure to act based on ignorance of the law or facts reasonably discoverable through the exercise of due diligence does not constitute good cause. If a person was reasonably prevented from complying with a deadline as a result of an unexpected natural disaster or sudden catastrophic event, that event may constitute "good cause" even though the event occurs on or near a deadline and arguably Petitioner could have met the deadline if Petitioner had acted sooner. Misinformation concerning a deadline provided to Petitioner by either TRS, the health plan administrator of TRS-ActiveCare, or a participating entity, and relied upon by Petitioner, may be grounds for "good cause" if the act of providing misinformation to Petitioner is documented or substantiated and a reasonable person would have relied on the information provided to Petitioner and reasonably would not have known the information provided to Petitioner was inaccurate.

(f) The Committee shall notify the Petitioner, the administering firm, and the participating entity of its decision in writing.

(g) If the Committee determines that the enrollment should be allowed, it shall inform the Petitioner, the administering firm, and the participating entity of the manner and effective date of enrollment by the Petitioner.

(h) The Petitioner may appeal the written decision of the [TRS Appeal] Committee relating to eligibility to the executive director.

(1) A request for an appeal to the executive director must be submitted by the Petitioner in writing and must be received by TRS by the later of: [no later than]

(A) 30 days after the date [of] the initial written decision by the [TRS Appeal] Committee is mailed; or [.]

(B) a number of days after the decision of the Committee is mailed equal to the number of days it took the Committee to issue its decision.

(2) The number of days it took the Committee to issue its decision is calculated from the date TRS received the Petitioner's appeal made pursuant to subsection (a) of this section to the date TRS mailed the Committee's decision.

(3) The request for an appeal to the executive director shall be directed to the attention of the TRS-ActiveCare Grievance Administrator.

(4) Subject to subsection (i) of this section and pursuant to the delegation of authority through this section, the decision of the executive director is the final decision of TRS.

(i) The Committee shall review an appeal made pursuant to subsection (a) or (h) of this section for timeliness and may deny an appeal that is not timely received by TRS. An appeal made pursuant to subsection (a) or (h) of this section that is denied because TRS did not timely receive the appeal is a final decision by TRS.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 30, 2019.

TRD-201905017

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: February 9, 2020

For further information, please call: (512) 542-6524


CHAPTER 43. CONTESTED CASES

34 TAC §§43.1, 43.3, 43.5, 43.6, 43.8 - 43.10, 43.12

The Teacher Retirement System of Texas (TRS) proposes amendments to 34 TAC §§43.1, relating to administrative review of individual requests, 43.3, relating to definitions, 43.5, relating to request for adjudicative hearing, 43.6, relating to filing of documents, 43.8, relating to extensions, 43.9, relating to docketing of appeal for adjudicative hearing and dismissal for failure to obtain setting, 43.10, relating to authority to grant relief, and 43.12, relating to forms of petitions and other pleadings.

BACKGROUND AND PURPOSE

Chapter 43 addresses procedures for appeals of administrative decisions and contested cases relating to the TRS pension plan. TRS proposes amendments to §43.1 and §43.9 to streamline and simplify the benefit administrative appeals process. Proposed amended §43.1 authorizes the Chief Benefit Officer to make the final administrative decision of TRS and clarifies the administrative appeal process for members applying for disability retirement. Proposed amended §43.9 authorizes the Chief Operations and Administration Officer to review petitions for adjudicative hearing for docketing. In addition, the proposed amended §43.5 implements House Bill 2629, enacted by the 86th Texas Legislature, which requires TRS to modify the deadline for members or retirees to appeal a final administrative decision of TRS by affording a members or retirees at least the same amount of time to file such an appeal as TRS had to issue the final administrative decision. Lastly, TRS makes non-substantive conforming and modernizing changes to the rule text in §§43.3, 43.6, 43.8, 43.10, and 43.12.

FISCAL NOTE

Don Green, TRS Chief Financial Officer, has determined that for each year of the first five years the proposed amended rules will be in effect, there will be no foreseeable fiscal implications to state or local governments as a result of administering the proposed amended rules.

PUBLIC COST/BENEFIT

For each year of the first five years the proposed amended rules will be in effect, Mr. Green also has determined that the public benefit anticipated as a result of adopting the amended rules will be to streamline and simplify the benefit administrative appeals process and to conform the administrative appeals process with new statutory requirements. Mr. Green has also determined that there is no economic cost to entities or persons required to comply with the proposed amended rules.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

TRS has determined that there will be no adverse economic effect on small businesses, micro-businesses, or rural communities as a result of the proposed amendments. Therefore, neither an economic impact statement nor a regulatory flexibility analysis is required under Government Code §2006.002.

LOCAL EMPLOYMENT IMPACT STATEMENT

TRS has determined that there will be no effect on local employment because of the proposed amended rules. Therefore, no local employment impact statement is required under Government Code §2001.022.

GOVERNMENT GROWTH IMPACT STATEMENT

TRS has determined that for the first five years the proposed amended rule will be in effect, the proposed amendments will not create or eliminate any TRS programs; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to TRS; will not eliminate any fees currently paid to TRS; will not create a new regulation; will not expand, limit or repeal an existing regulation; will not increase or decrease the number of individuals subject to the rule's applicability; and will not affect the state's economy.

TAKINGS IMPACT ASSESSMENT

TRS has determined that there are no private real property interests affected by the proposed amended rules, therefore, a takings impact assessment is not required under Government Code §2007.043.

COSTS TO REGULATED PERSONS

TRS has determined that Government Code §2001.0045 does not apply to the proposed amended rules because they do not impose a cost on regulated persons.

COMMENTS

Comments may be submitted in writing to Brian Guthrie, TRS Executive Director, 1000 Red River Street, Austin, Texas 78701-2698. Written comments must be received by TRS no later than 30 days after publication of this notice in the Texas Register.

STATUTORY AUTHORITY

The proposed amended rules are proposed under the authority of Government Code §825.102, which authorizes the Board to adopt rules for eligibility for membership, the administration of the funds of the retirement system, and the transaction of business of the Board; Government Code §825.115(b), which authorizes the Board to adopt rules relating to the authority of the Board to make a final decision in a contested case or delegate its authority; and under Government Code §825.521, which provides that in adopting rules relating to appeals, the board of trustees shall ensure that rules establishing deadlines for the filing of an appeal afford a member or retiree at least the same amount of time to file an appeal as the retirement system has to issue the retirement system's decision.

CROSS-REFERENCE TO STATUTE

The proposed amended rules implement the following sections or chapters of the Government Code: §825.101, concerning the general administration of the retirement system; §825.115, concerning the applicability of certain laws; and §825.204, concerning the TRS Medical Board.

§43.1.Administrative Review of Individual Requests.

(a) Organization. TRS [The Teacher Retirement System of Texas (TRS)] is divided into administrative divisions, which are further divided into departments, for the efficient implementation of its duties. Any person who desires any action from TRS must consult with the proper department within TRS and comply with all proper requirements for completing forms and providing information to that department.

(b) Final administrative decision by chief benefit officer [deputy director]. In the event that a person is adversely affected by a determination, decision, or action of department personnel, the person may appeal the determination, decision, or action [make a request] to the appropriate manager within the department, and then to the chief benefit officer of TRS [of the division, and then to the deputy director]. The chief benefit officer [deputy director] shall mail a final written administrative decision, which shall include:

(1) The chief benefit officer's determination regarding the person's appeal and reasons for denying the appeal, if applicable; and

(2) a statement that if the person is adversely affected by the decision, the person may request an adjudicative hearing to appeal the decision [to the executive director] and the deadline for doing so.

(c) A person adversely affected by a decision of the chief benefit officer [deputy director] may request an adjudicative hearing to appeal the decision of the chief benefit officer [to the executive director of TRS] as provided in §43.5 of this chapter (relating to Request for Adjudicative Hearing). The deputy [executive ] director shall determine whether the appeal should be docketed and set for a contested case hearing pursuant to §43.9 of this chapter (relating to Docketing of Appeal for Adjudicative Hearing and Dismissal for Failure to Obtain Setting).

(d) [(c)] Final administrative decision by Medical Board. In the event that the Medical Board does not certify disability of a member under Government Code, §824.303(b), or the Medical Board certifies that a disability retiree is no longer mentally or physically incapacitated for the performance of duty under Government Code, §824.307(a), the member or retiree may request reconsideration and submit additional information to the Medical Board. The Medical Board shall consider a request for reconsideration and additional information and make a determination on the disability of the member or retiree. If a request for reconsideration has been denied, a member or retiree may appeal the decision [an adverse final administrative decision of the Medical Board to the TRS Board of Trustees] by requesting an adjudicative hearing as provided in §43.5 of this chapter. [A final administrative decision of the Medical Board shall include a statement of whether the member or retiree may request additional reconsideration or may appeal the decision to the board, as well as the deadline for doing so.] The deputy [executive] director shall [is authorized to] determine whether the [an] appeal [of a Medical Board decision] should be docketed and set for a contested case hearing pursuant to §43.9 of this chapter [and to make other procedural decisions relating to such an appeal].

(e) [(d)] Applicability. The procedures of this chapter apply only to administrative decisions, appeals, and adjudicative hearings relating to the TRS pension plan, unless rules relating to other programs specifically adopt by reference the provisions of this chapter.

§43.3.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise:

[(1) Adjudicative hearing--An evidentiary hearing in a contested case, as provided by Government Code, §2001.051 and paragraph (5) of this section.]

(1) [(2)] Administrative law judge--An individual appointed to conduct the adjudicative hearing in a contested case. The deputy director [Executive Director] may refer an appeal to be heard by an administrative law judge employed by the State Office of Administrative Hearings or may employ, select, or contract for the services of another administrative law judge or hearing examiner to conduct a hearing.

(2) [(3)] Appeal--A formal request to the executive director or board, as applicable under this chapter, to reverse or modify a final administrative decision by the chief benefit officer [deputy director] or the Medical Board on a matter over which TRS has jurisdiction and authority to grant relief and the relief sought does not conflict with the terms of the pension plan.

(3) [(4)] Board--The Board of Trustees of TRS [the Teacher Retirement System of Texas (TRS)].

(4) Chief Benefit Officer--the Chief Benefit Officer of TRS or person acting in that position.

(5) Contested case--A proceeding in which the legal rights, duties, or privileges of a party are to be determined by TRS after an opportunity for adjudicative hearing on a matter over which TRS has jurisdiction and authority to grant relief and the relief sought does not conflict with the terms of the pension plan.

(6) Deputy Director--the Deputy Director of TRS or person acting in that position.

(7) [(6)] Executive director--The executive director of TRS or person acting in that position; when the executive director determines that a need exists, the executive director at his or her discretion may designate a person to accomplish the duties assigned in this chapter to the executive director.

(8) [(7)] Final administrative decision--An action, determination, or decision by the chief benefit officer [deputy director] or the Medical Board, as applicable, based on review of a person's request on an administrative basis (i.e., without an adjudicative hearing).

(9) [(8)] Final decision of TRS--A decision that may not be appealed further within TRS, either because of exhaustion of all opportunities for appeal within TRS or because of a failure to appeal the decision further within TRS in the manner provided for in this chapter.

[(9) Hearing--The trial-like portion of the contested case proceeding that is handled by an administrative law judge after the Executive Director of TRS dockets an appeal.]

(10) Medical board--The medical board appointed by the TRS board of trustees under Government Code, §825.204.

(11) Member--A person who is a member, retiree, or beneficiary of TRS.

(12) Order--The whole or a part of the final disposition of an appeal, whether affirmative, negative, injunctive, or declaratory in form, of the executive director, deputy director, or the board in a contested case.

(13) Party--Each person named or admitted in a contested case.

(14) Person--Any natural person or other legal entity.

(15) Pleading--A written document that is submitted by a party, by TRS staff, or by a person seeking to participate in a case as a party and that requests procedural or substantive relief, makes claims or allegations, presents legal arguments, or otherwise addresses matters involved in a contested case.

(16) SOAH--The State Office of Administrative Hearings.

(17) State Office of Administrative Hearings--The state agency established by Chapter 2003, Government Code, which may serve as the forum for the conduct of an adjudicative hearing upon referral of an appeal by TRS.

(18) Third party respondent or petitioner--A person joined as an additional party to a proceeding; a party shall be designated as either a third party respondent or third party petitioner based on whether the person opposes the action requested in the petition or supports it or whether the person's interests are aligned with petitioner or respondent.

(19) TRS--The Teacher Retirement System of Texas.

(20) Trustee--One of the members of the board.

(21) With prejudice--Barring a subsequent contested case on the same claim, allegation, or cause of action.

§43.5.Request for Adjudicative Hearing.

(a) On a matter over which TRS has jurisdiction and authority to grant relief that does not conflict with the terms of the pension plan, a person [party] may appeal a final administrative decision by filing a petition for adjudicative hearing with the deputy [executive] director [no later than 45 days after the date the final administrative decision is mailed]. The petition shall conform to the requirements of §43.12 of this chapter (relating to Form of Petitions and Other Pleadings).

(b) A petition for adjudicative hearing must be filed by the later of:

(1) 45 days after the date the final administrative decision is mailed; or

(2) a number of days after the final administrative decision is mailed equal to the number of days it took TRS to issue the final administrative decision.

(c) The number of days it took TRS to issue the final administrative decision is calculated from the date TRS received the person's appeal of the department manager's decision to the date TRS mailed the final administrative decision.

§43.6.Filing of Documents.

All documents relating to any appeal of a final administrative decision [pending or to be instituted before the executive director or the board] shall be filed with the deputy [executive] director at TRS, 1000 Red River Street, Austin, Texas 78701-2698. A document may be filed with TRS by hand-delivery, courier-receipted delivery, facsimile transmission, or regular, certified, or registered mail. A document is deemed filed when mailed if it is received by TRS within a timely manner under Texas Rule of Civil Procedure 5 and the sender provides adequate proof of the mailing date. If the deputy [executive] director has docketed an appeal and referred it for an adjudicative hearing, documents shall be filed with the administrative law judge and a copy provided to the TRS docket clerk during the time the matter is pending before the administrative law judge.

§43.8.Extensions.

Unless otherwise provided by statute, the time for filing pleadings or other documents may be extended, upon the filing of a motion, prior to the expiration of the applicable period of time, showing that there is good cause for such extension of time and that the need for the extension is not caused by the neglect, indifference, or lack of diligence of the party making the motion. A copy of any such motion shall be served upon all other parties of record to the proceeding contemporaneously with its filing. In the case of filings that initiate a proceeding or that are made before an appeal has been referred for an adjudicative hearing, the deputy [executive] director will determine whether good cause exists and whether an extension should be granted. In the case of filings made in a proceeding after TRS has referred the appeal for an adjudicative hearing, rules governing hearings before SOAH will control so long as the matter is before SOAH. If a matter is referred for an adjudicative hearing to a hearing official not affiliated with SOAH, then the rules of this chapter shall apply to the conduct of the hearing while pending before the hearing official. For matters returned by an administrative law judge or hearing examiner to TRS, either through dismissal from the adjudicative hearing docket or through issuance of a proposal for decision, the executive director may determine whether good cause exists and whether an extension should be granted. The executive director is authorized to rule on motions for extensions on matters directed to the Board if no Board meeting is scheduled before the expiration of the applicable period of time.

§43.9.Docketing of Appeal for Adjudicative Hearing and Dismissal for Failure to Obtain Setting.

(a) On an appeal over which TRS has jurisdiction, authority to grant relief, in which the relief requested is consistent with the terms of the plan, and that otherwise complies with this chapter, the deputy [executive] director shall assign the petition a TRS docket number, provide all parties notice of the docket number, and refer the matter for an adjudicative hearing before the State Office of Administrative Hearings or otherwise as authorized by law.

(b) The deputy [executive] director may decline to docket an appeal over which TRS has no jurisdiction or no authority to grant relief, that seeks relief that is inconsistent with the terms of the pension plan, that is not timely filed, or that otherwise fails to comply with this chapter. [The executive director may also decline to docket a matter for which a contested case hearing is not required by law or for which other available procedures are more appropriate.] The deputy [executive] director's decision declining to docket an appeal is the final decision of TRS when the circumstances described in §2001.144, Government Code, are met. A person may not appeal such decision to the executive director or the board.

(c) Prior to docketing an appeal, the deputy [executive] director [or his designee] may review the request [petition] filed with TRS to determine the sufficiency. If the petition does not materially comply with this chapter, the deputy [executive] director shall return the petition to the person who filed it, along with reasons for the return. The person shall be given a reasonable time (not to exceed 90 days) to file a corrected petition. If the petition is not corrected to substantially comply with this chapter within the time given, the deputy [executive] director may decline to docket the appeal.

(d) If a contested case is referred to the SOAH [State Office of Administrative Hearings (SOAH)] for adjudicative hearing, then during the period of time the case is before SOAH, the adjudicative hearing rules for SOAH (1 TAC Chapter 155) shall apply unless inconsistent with applicable statutes or constitutional provisions. If a matter is referred for an adjudicative hearing to a hearing official not affiliated with SOAH, then the rules of this chapter shall apply to the conduct of the hearing while pending before the hearing official.

(e) A party that files an appeal and causes a matter to be docketed and referred to for adjudicative hearing shall have the responsibility of prosecuting the appeal within a reasonable time period. TRS may seek dismissal with prejudice of an appeal if a responsible party fails to obtain a setting for a hearing on the merits within two years of referral of the matter for an adjudicative hearing.

§43.10.Authority to Grant Relief.

At any time before an appeal is referred for adjudicative hearing, the deputy [executive] director or, in the matter of certification for disability retirement, the Medical Board may grant the relief sought by the petitioner and dismiss the appeal, provided that the interest of other individual parties are not adversely affected and the relief does not conflict with the terms of the pension plan. If a matter has been referred to SOAH, the SOAH administrative law judge may dismiss the case from the SOAH docket in accordance with SOAH rules. If a matter is referred for an adjudicative hearing to a hearing official not affiliated with SOAH, then the rules of this chapter shall apply to the dismissal of the case.

§43.12.Form of Petitions and Other Pleadings.

(a) Petitions, briefs, and other pleadings shall be typed [typewritten] or printed on paper not to exceed 8 1/2 inches by 11 inches with an inside margin of at least one inch width. Annexed exhibits shall be folded to the same size. Only one side of the paper shall be used. Copies [Reproductions] may be used, provided they [all copies] are clear and permanently legible.

(b) The pleadings shall state their object and shall contain a concise statement of the supporting facts. The petition appealing a final administrative decision and requesting an adjudicative hearing shall specify the action desired from TRS and shall be filed with TRS, directed to the attention of the deputy [executive ] director.

(c) The original of any pleading filed with TRS shall be signed [in permanent ink] by the party filing it or by his authorized representative. Pleadings shall contain the address, [and] telephone number, and email address of the party filing the documents or the name, business address, telephone number, email address, and fax [facsimile] number [, and business address] of counsel.

(d) The original petition for an adjudicative hearing should also include the name, address, [and] telephone number, and email address of petitioner and the name, address, telephone number, email address, and, if known, the tax number of any member whose interest or whose beneficiary's interest may be involved in the case. In lieu of the tax number, the petition may include other information sufficient to identify the member or beneficiary whose interest may be involved in the case. The petition should further identify all persons who may have a material interest in the outcome of the case, the basis for that interest, and such person's last known address, [and] telephone number, and email address. If such information is not provided on the original petition, the executive director, board of trustees, or administrative law judge may require submission of such information before proceeding with the hearing.

(e) Pleadings should be styled: "Petition of (Name of Petitioner)." If a TRS, SOAH, or other adjudicative hearing docket number has been assigned, pleadings shall contain the docket number.

(f) All pleadings shall contain the following:

(1) the name of the party filing the pleading;

(2) a concise statement of the facts relied upon by the party;

(3) a request stating the type of relief, action, or order desired by the party;

(4) a certificate of service conforming to subsection (g) of this section; and

(5) any other matter required by statute.

(g) Written pleadings [other than the original petition] may be served by hand-delivery, courier-receipted delivery, fax [facsimile transmission], or regular, certified, or registered mail upon all other known parties of record, and a certification of such service should be submitted with the original copy of the pleading filed with TRS. If a party is represented by an attorney, service may be made upon a party by serving the attorney of record. The following form of certification will be sufficient: "I hereby certify that I have this _____ day of ____________________, 20__, served copies of the foregoing pleading upon all other parties to this proceeding, by (state the manner of service). Signature."

(h) A party may object to the form or sufficiency of a pleading by filing the objections in writing at least 15 days before the hearing date. If the objections are sustained, the administrative law judge shall allow a reasonable time for amendment.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 30, 2019.

TRD-201905015

Don Green

Chief Financial Officer

Teacher Retirement System of Texas

Earliest possible date of adoption: February 9, 2020

For further information, please call: (512) 542-6560