TITLE 1. ADMINISTRATION

PART 2. TEXAS ETHICS COMMISSION

CHAPTER 10. ETHICS TRAINING PROGRAMS

The Texas Ethics Commission (the TEC) proposes an amendment and re-adoption of Texas Ethics Commission Rules in Chapter 10 regarding Ethics Training Programs. Specifically, the TEC proposes an amendment to rule §10.1 regarding Training Programs.

State law requires state agencies to "review and consider for readoption each of its rules … not later than the fourth anniversary of the date on which the rule takes effect and every four years after that date." Tex. Gov't Code §2001.039. The law further requires agencies to "readopt, readopt with amendments, or repeal a rule as the result of reviewing the rule under this section." Id . The TEC is authorized to adopt rules to administer Chapter 572 of the Government Code. Tex. Gov't Code §§ 571.061, .062.

The TEC is continuing its comprehensive review with a review of the TEC's rules regarding its ethics training programs, which are codified in Chapter 10.

The proposed amendments to Chapter 10 readopt the existing two rules, with one change to make clear a vote of the commissioners is not required to plan or host a training seminar. The current rules provide a framework for TEC create a plan to provide training on TEC laws and rules to the public. While the rules still serve a valid purpose, the TEC sees no need to codify into rule policies and plans related to training programs beyond the general framework in the current rule. Staff will work with the chair to make sure that the TEC provides the trainings that were recommended by Sunset Advisory Commission and authorized by law.

James Tinley, General Counsel, has determined that for the first five-year period the proposed amended and readopted rules are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the proposed amended and readopted rules.

The General Counsel has also determined that for each year of the first five years the proposed amended and readopted rules are in effect, the public benefit will be consistency and clarity in the Commission's rules regarding its training programs. There will not be an effect on small businesses, microbusinesses or rural communities. There is no anticipated economic cost to persons who are required to comply with the proposed amended and readopted rules.

The General Counsel has determined that during the first five years that the proposed amended and readopted rules are in effect, they will not: create or eliminate a government program; require the creation of new employee positions or the elimination of existing employee positions; require an increase in future legislative appropriations to the agency; require an increase or decrease in fees paid to the agency; expand, limit, or repeal an existing regulation; create a new regulation; increase or decrease the number of individuals subject to the rules' applicability; or positively or adversely affect this state's economy.

The Commission invites comments on the proposed amended and readopted rules from any member of the public. A written statement should be emailed to public_comment@ethics.state.tx.us, or mailed or delivered to J.R. Johnson, Executive Director, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. A person who wants to offer spoken comments to the Commission concerning the proposed amended and readopted rules may do so at any Commission meeting during the agenda item relating to the proposed amended and readopted rules. Information concerning the date, time, and location of Commission meetings is available by telephoning (512) 463-5800 or on the Commission's website at www.ethics.state.tx.us.

The amended and readopted rules are proposed under Texas Government Code §571.062, which authorizes the Commission to adopt rules to administer Chapter 572 of the Government Code.

The proposed amended and readopted rules affect Chapter 571 of the Government Code.

§ 10.1. Training Programs.

The [ Upon approval of the commission, the ] executive director shall establish a program to provide training relating to the laws administered and enforced by the commission and related laws for:

(1) members and members-elect of the legislature, to be held by January of each odd-numbered year;

(2) state employees, in cooperation with state agencies; and

(3) other persons and officials whose conduct is regulated by laws administered and enforced by the commission and related laws.

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 April 8, 2025.

TRD-202501110

Jim Tinley

General Counsel

Texas Ethics Commission

Earliest possible date of adoption: May 25, 2025

For further information, please call: (512) 463-5800

CHAPTER 12. SWORN COMPLAINTS

The Texas Ethics Commission (the Commission) proposes amendments to Texas Ethics Commission Rules in Chapter 12. Specifically, the Commission proposes amendments to §12.21 regarding Response to Notice of Complaint, §12.22 regarding Written Questions, §12.23 regarding Production of Documents During Preliminary Review, and §12.93 regarding Default Proceedings. The Commission also proposed new rules §12.27 regarding Discovery Control Plans, Application, §12.28 regarding Level 1 Discovery Control Plan, §12.29 regarding Level 2 Discovery Control Plan, and §12.30 regarding Requests for Disclosure.

The Sunset Advisory Commission recommended several changes to the rules and procedures related to the sworn complaint process. The proposed amendments to Chapter 12 of the TEC rules implements those recommendations and makes other changes to streamline the sworn complaint process and better protect respondents' rights in the process.

The proposed rules would do the following:

Repeal provisions that allowed for sanctions for failing to respond to a sworn complaint;

Impose a discovery control plan that mirrors the Texas Rules of Civil Procedure to limit the scope and duration of discovery;

Provide a clear procedure for a respondent to set-aside a default order, mirroring the procedure of the State Office of Administrative Hearings;

Repeal rules that allowed for the tolling of sworn complaint deadlines when written questions were submitted to a respondent but for which a response had not been receive or when subpoenas were sought by TEC staff.

Although the Sunset review of the TEC sworn complaint files revealed no abuse of the discovery process, Sunset recommended that the TEC adopt discovery control plans to eliminate the potential for abuse and ensure speedy resolution of cases. The proposed rules track the discovery control plans established in the Texas Rules of Civil Procedure and limits the amount and duration of the discovery period.

Deciding to self-impose limits on discovery in the sworn complaint process effectuates the recommendations of Sunset, should speed the resolution of cases, but also result in more preliminary review hearings. The proposed repeal of rules allowing for the tolling of deadlines also conforms TEC practice to a recent opinion of the Office of the Attorney General. Tex. Att'y Gen. Op. KP-0484.

James Tinley, General Counsel, has determined that for the first five-year period the proposed amended and new rules are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the proposed amended and new rules.

The General Counsel has also determined that for each year of the first five years the proposed amended and new rules are in effect, the public benefit will be consistency and clarity in the Commission's rules regarding late fines for 8-day pre-election reports. There will not be an effect on small businesses, microbusinesses or rural communities. There is no anticipated economic cost to persons who are required to comply with the proposed amended and new rules.

The General Counsel has determined that during the first five years that the proposed amended and new rules are in effect, they will not: create or eliminate a government program; require the creation of new employee positions or the elimination of existing employee positions; require an increase in future legislative appropriations to the agency; require an increase or decrease in fees paid to the agency; expand, limit, or repeal an existing regulation; create a new regulation; increase or decrease the number of individuals subject to the rules' applicability; or positively or adversely affect this state's economy.

The Commission invites comments on the proposed amended and new rules from any member of the public. A written statement should be emailed to , or mailed or delivered to J.R. Johnson, Executive Director, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. A person who wants to offer spoken comments to the Commission concerning the proposed amended and new rules may do so at any Commission meeting during the agenda item relating to the proposed amended and new rules. Information concerning the date, time, and location of Commission meetings is available by telephoning (512) 463-5800 or on the Commission's website at www.ethics.state.tx.us.

SUBCHAPTER C. INVESTIGATION AND DISCOVERY

The amended rules are proposed under Texas Government Code §571.062, which authorizes the TEC to adopt rules to administer Chapter 571 of the Government Code. The TEC has additional authority to adopt rules regarding: (1) procedure in a formal hearing (§571.131), (2) technical and de minimis violations (§571.0631), and (3) procedures for preliminary review and preliminary review hearings (§571.1244).

The proposed rules affect Subchapter E of Chapter 571 of the Government Code.

§ 12.21. Response to Notice of Complaint.

[(a)] The response required by section 571.1242 of the Government Code must:

(1) be in writing;

(2) admit or deny the allegations set forth in the complaint; and

(3) be signed by the respondent.

§ 12.22. Written Questions.

[(a)] A complainant or respondent must respond to written questions not later than 15 business days after receiving the written questions.

§ 12.23. Production of Documents During Preliminary Review.

(a) - (c) (No change.)

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 April 8, 2025.

TRD-202501111

Jim Tinley

General Counsel

Texas Ethics Commission

Earliest possible date of adoption: May 25, 2025

For further information, please call: (512) 463-5800

The new rules are proposed under Texas Government Code §571.062, which authorizes the TEC to adopt rules to administer Chapter 571 of the Government Code. The TEC has additional authority to adopt rules regarding: (1) procedure in a formal hearing (§571.131), (2) technical and de minimis violations (§571.0631), and (3) procedures for preliminary review and preliminary review hearings (§571.1244).

The proposed rules affect Subchapter E of Chapter 571 of the Government Code.

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 April 8, 2025.

TRD-202501112

Jim Tinley

General Counsel

Texas Ethics Commission

Earliest possible date of adoption: May 25, 2025

For further information, please call: (512) 463-5800

SUBCHAPTER F. RESOLUTIONS

The amended rule is proposed under Texas Government Code §571.062, which authorizes the TEC to adopt rules to administer Chapter 571 of the Government Code. The TEC has additional authority to adopt rules regarding: (1) procedure in a formal hearing (§571.131), (2) technical and de minimis violations (§571.0631), and (3) procedures for preliminary review and preliminary review hearings (§571.1244).

The proposed rule affects Subchapter E of Chapter 571 of the Government Code.

§ 12.93. Default Proceedings.

(a) If a respondent fails to respond to a complaint by the deadline set by Section 571.1242 or fails to appear for a formal hearing, the commission may, upon notice and hearing, proceed on a default basis.

(b) A default proceeding under this section requires adequate proof of the following:

(1) the notice of hearing to the respondent stated that the allegations listed in the notice could be deemed admitted and that the relief sought in the notice of hearing might be granted by default against the party that fails to appear at the hearing;

(2) the notice of hearing satisfies the requirements of sections 2001.051 and 2001.052 of the Government Code; and

(3) the notice of hearing was:

(A) received by the defaulting party; or

(B) sent by regular mail or by certified mail, restricted delivery, return receipt requested, to the party's last known address as shown by the commission's records.

(c) In the absence of adequate proof to support a default, the presiding officer shall continue the hearing and direct commission staff to provide adequate notice of hearing. If adequate notice is unable to be provided, the commission may dismiss the complaint.

(d) Upon receiving the required showing of proof to support a default, the commission may by vote deem admitted the allegations in the notice of hearing and issue a default decision.

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 April 8, 2025.

TRD-202501113

Jim Tinley

General Counsel

Texas Ethics Commission

Earliest possible date of adoption: May 25, 2025

For further information, please call: (512) 463-5800

CHAPTER 18. GENERAL RULES CONCERNING REPORTS

The Texas Ethics Commission (the Commission) proposes amendments to Texas Ethics Commission Rules in Chapter 18. Specifically, the Commission proposes amendments to §18.10 regarding Guidelines for Substantial Compliance for a Corrected/Amended 8-day Pre-election Report, §18.21 regarding Jurisdiction to Consider Waiver Request, and §18.24 regarding General Guidelines for Administrative Waiver or Reduction of Statutory Civil Penalties.

About one year ago, the TEC drastically simplified its rules regarding waivers or reductions of civil penalties for late reports. The simplified rules have allowed TEC staff to more efficiently process waiver and reduction requests and has allowed filers to better understand their rights and obligations related to the fine waiver process. However, the TEC can further refine the rules to foster swift and just outcomes for waiver requests.

Background

The TEC is required to determine from "any available evidence" whether a report that is required to be filed with the TEC was filed late and assess a civil penalty if the report is late. Tex. Elec. Code § 254.042. This is a mandatory duty that is separate from the sworn complaint process. The civil penalty is set by statute at $500 for most late reports, however the statutory civil penalty is $500 for the first day late and $100 each day thereafter until filed (up to $10,000) for an 8-day pre-election report or the first semiannual report following an 8-day pre-election report. A corrected 8-day pre-election report is considered filed as of the date of correction if the correction is substantial. The TEC is required to determine whether a substantial correction was made to every corrected 8-day report.

By law, a filer may request in writing that the TEC waive or reduce a civil penalty for a report. The TEC adopted rules to apply to waiver requests. The rules are a mechanical determination based on the number of prior late reports by the filer and the amount at issue. A filer may appeal the determination under the rules to the full commission at a public meeting.

However, to be eligible to receive a waiver or reduction under the current rules, a filer must 1) make the request within 60 days of the deadline for the late report (unless good cause is shown for missing the deadline); 2) file all missing reports; and 3) pay any outstanding civil penalty that is not subject to a waiver or reduction request.

A reduced civil penalty not paid within 30 days reverts back to the original amounts.

Proposed Amendments

Extend the time to file a request for a waiver or reduction to 210 days.

It is common for candidates who lose their elections to close their P.O. boxes, stop checking campaign email, and cancel service to their campaign phone in a good-faith belief that their obligations as a candidate have ceased. However, an unsuccessful candidate needs to file at least one report after their election. In these cases, the filer may not receive notice of the late report because they have not updated their contact information with the TEC. Six months after the first missed semiannual report, the subsequent semiannual report will come due and the filer will once again be sent notice of a second late report. In several cases, for whatever reason, the filer became aware of the second late report and swiftly filed the missing reports. Under the current rules, that person was not be eligible for a waiver or reduction of the civil penalty for a $10,000 fine for the first missed semiannual after the election. Extending the deadline to file for a waiver or reduction to 210 days will provide the person 30 days after the second late semi-annual to request a waiver or reduction. Extending the deadline will maintain some level of finality while also providing ample time to submit a waiver request.

Make 8-day correction "substantial compliance" determinations more generous.

By statute, if a person files a correction to an 8-day pre-election report even if the person swears the report was originally filed in good-faith, and that the report was corrected within 14 days of learning of the error and omission, the report is nevertheless considered filed late if the correction is substantial.

The law punishing corrections to 8-day reports is designed to prevent people from filing an incomplete report close to an election, only to correct it after the election and thereby avoid meaningful disclosure. However, in practice, many people who voluntarily correct reports originally filed in good faith receive substantial fines for having made the correction. In nearly all cases those fines are waived on appeal to the commission. The proposed amendments raise the monetary threshold before a correction will be considered substantial. If the dollar amounts of the corrections indicate that the correction is substantial under the proposed rule, then the Executive Director will determine whether there is reason to believe the report was originally filed in bad-faith, with the purpose of evading disclosure, or otherwise substantially defeated the purpose of disclosure and therefore was filed as of the date of correction. A review of the past approximately 50 corrections to late reports with substantial corrections under existing rules, raising the monetary threshold from $3,000 to $7,500 would reduce the number of reports considered filed late by 33 percent. The table below shows the effect of a raising the threshold dollar amount of a correction that would trigger a report being considered late to $5,000, $7,500, $10,000, or $15,000.

The proposed rule change will allow for a swift determination and save filers the time, expense, and worry that they have a $10,000 fine that can only be waived by the TEC commissioners.

James Tinley, General Counsel, has determined that for the first five-year period the proposed amended rules are in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the proposed amended rules.

The General Counsel has also determined that for each year of the first five years the proposed amended rules are in effect, the public benefit will be consistency and clarity in the Commission's rules regarding late fines for 8-day pre-election reports. There will not be an effect on small businesses, microbusinesses or rural communities. There is no anticipated economic cost to persons who are required to comply with the proposed amended rules.

The General Counsel has determined that during the first five years that the proposed amended rules are in effect, they will not: create or eliminate a government program; require the creation of new employee positions or the elimination of existing employee positions; require an increase in future legislative appropriations to the agency; require an increase or decrease in fees paid to the agency; expand, limit, or repeal an existing regulation; create a new regulation; increase or decrease the number of individuals subject to the rules' applicability; or positively or adversely affect this state's economy.

The Commission invites comments on the proposed amended rules from any member of the public. A written statement should be emailed to public_comment@ethics.state.tx.us, or mailed or delivered to J.R. Johnson, Executive Director, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. A person who wants to offer spoken comments to the Commission concerning the proposed amended rules may do so at any Commission meeting during the agenda item relating to the proposed amended rules. Information concerning the date, time, and location of Commission meetings is available by telephoning (512) 463-5800 or on the Commission's website at www.ethics.state.tx.us.

The amended rules are proposed under Texas Government Code §571.062, which authorizes the Commission to adopt rules to administer Title 15 of the Election Code and Chapter 571 of the Government Code.

The proposed amended rules affect Title 15 of the Election Code and Chapter 571 of the Government Code.

§ 18.10. Guidelines for Substantial Compliance for a Corrected/Amended 8-day Pre-election Report.

(a) A corrected/amended 8-day pre-election report substantially complies with the applicable law and will not be assessed a late fine under §18.9 of this title (relating to Corrected/Amended Reports) if:

(1) The original report was filed in good faith and the corrected/amended report was filed not later than the 14th business day after the date the filer learned of the errors or omissions; and

(2) The only corrections/amendments needed were to correct the following types of errors or omissions:

(A) a technical, clerical, or de minimis error, including a typographical error, that is not misleading and does not substantially affect disclosure;

(B) an error in or omission of information that is solely required for the commission's administrative purposes, including a report type or filer identification number;

(C) an error that is minor in context and that, upon correction/amendment, does not result in changed monetary amounts or activity disclosed, including a descriptive change or a change to the period covered by the report;

(D) one or more errors in disclosing contributions that, in total:

(i) do not exceed $7,500 [ $3,000 ]; or

(ii) do not exceed the lesser of 10% of the total contributions on the corrected/amended report or $20,000 [ $10,000 ];

(E) one or more errors in disclosing expenditures that, in total:

(i) do not exceed $7,500 [ $3,000 ]; or

(ii) do not exceed the lesser of 10% of the total expenditures on the corrected/amended report or $20,000 [ $10,000 ];

(F) one or more errors in disclosing loans that, in total:

(i) do not exceed $7,500 [ $3,000 ]; or

(ii) do not exceed the lesser of 10% of the amount originally disclosed or $20,000 [ $10,000 ]; or

(G) an error in the amount of total contributions maintained that:

(i) does not exceed $7,500 [ $3,000 ]; or

(ii) does not exceed the lesser of 10% of the amount originally disclosed or $20,000 [ $10,000 ].

(H) The only correction/amendment by a candidate or officeholder was to add to or delete from the outstanding loans total an amount of loans made from personal funds;

(I) The only correction/amendment by a political committee was to add the name of each candidate supported or opposed by the committee, when each name was originally disclosed on the appropriate schedule for disclosing political expenditures;

(J) The only correction/amendment was to disclose the actual amount of a contribution or expenditure, when:

(i) the amount originally disclosed was an overestimation;

(ii) the difference between the originally disclosed amount and the actual amount did not vary by more than the greater of $7,500 or 10%; and

(iii) the original report clearly included an explanation of the estimated amount disclosed and the filer's intention to file a correction/amendment as soon as the actual amount was known; or

(K) The only correction/amendment was to delete a duplicate entry.

(b) If a corrected/amended 8-day pre-election report does not meet the substantial complies criteria under subsection (a) of this section the executive director shall determine whether there is reason to believe the report was originally filed in bad-faith, with the purpose of evading disclosure, or otherwise substantially defeated the purpose of disclosure and therefore was filed as of the date of correction [ The executive director shall determine whether an 8-day pre-election report as originally filed substantially complies with applicable law by applying the criteria provided in this section ].

(d) [ (c) ] In this section, "8-day pre-election report" means a report due eight days before an election filed in accordance with the requirements of §20.213(d), 20.325(e), or 20.425(d) of this title (relating to a candidate, a specific-purpose committee, or a general-purpose committee, respectively) and §254.064(c), 254.124(c), or 254.154(c) of the Election Code (relating to a candidate, a specific-purpose committee, or a general-purpose committee, respectively).

§ 18.21. Jurisdiction to Consider Waiver Request.

(a) A filer may ask the commission to waive or reduce a civil penalty determined by §§ 305.033(b) or 572.033(b) of the Government Code, or §254.042(b) of the Election Code by submitting a written request to the Commission.

(b) The commission will not consider a request under subsection (a) of this section unless the filer, not later than 210 [ 60 ] days after the report or statement was due:

(1) submits the request in the manner prescribed by subsection (a) of this section;

(2) files all reports owed to the commission; and

(3) pays all outstanding civil penalties owed to the commission that are not subject to a pending request for waiver or appeal.

(c) Upon a showing of good cause, the executive director may extend the deadline in subsection (b) of this section.

§ 18.24. General Guidelines for Administrative Waiver or Reduction of Statutory Civil Penalties.

(a) For purposes of determining whether a filer is eligible for a waiver or reduction of a civil penalty under §18.25 or §18.26 of this title (relating to Administrative Waiver or Reduction of Certain Statutory Civil Penalties and Administrative Waiver or Reduction of Statutory Civil Penalties in Excess of $500 respectively), a "prior late offense" is any report for which a civil penalty for late filing was assessed, regardless of whether the civil penalty was waived or reduced. The term does not include:

(1) reports for which no late notices were sent and the filer did not file a request that the civil penalty be waived or reduced for the prior late report; and

(2) reports determined by the executive director to be not required.

(b) [ (c) ] A filer may appeal a determination made under §18.25 or §18.26 of this title by submitting a request for appeal in writing to the commission within thirty (30) calendar days from the date of the letter informing the filer of the decision.

(1) The request for appeal should state the filer's reasons for requesting an appeal, provide any additional information needed to support the request, and state whether the filer would like the opportunity to appear before the commission and offer testimony regarding the appeal.

(2) The Executive Director may review the appeal and reconsider the determination made under §18.25 or §18.26 of this title or set the appeal for a hearing before the commission.

(3) After hearing a request for appeal, the commission may affirm the determination made under §18.25 or §18.26 of this title or make a new determination based on facts presented in the appeal.

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 April 8, 2025.

TRD-202501115

Jim Tinley

General Counsel

Texas Ethics Commission

Earliest possible date of adoption: May 25, 2025

For further information, please call: (512) 463-5800

CHAPTER 20. REPORTING POLITICAL CONTRIBUTIONS AND EXPENDITURES

SUBCHAPTER A. GENERAL RULES

The Texas Ethics Commission (TEC) proposes amendments to Texas Ethics Commission rules in Subchapter A of Chapter 20. Specifically, the TEC proposes new rule §20.1(17), regarding the definition of "principal purpose".

A political committee is defined by state law as "two or more persons acting in concert with a principal purpose of accepting political contributions or making political expenditures." Tex. Elec. Code § 251.001(12) (emphasis added). The TEC defined the term "principal purpose" for the purpose of defining whether a group is a political committee. Tex. Elec. Code § 251.001(12). The existing rule states that a group has a principal purpose of accepting political contributions or making political expenditures if 25 percent of its incoming funds are political contributions or 25 percent of its expenditures are political expenditures. Setting a bright-line activity threshold at 25 percent of a group's activity has proved unworkable and is contrary to how a similar federal law is interpreted for defining political committee status.

The new rule avoids a bright-line approach based on a percentage of spending. Instead, it embraces the Federal Election Code (FEC) method of determining whether a group is a political committee by taking a holistic view of the group's activity to be adjudicated on a case-by-case basis. This approach has been upheld as constitutional by the Fourth Circuit. Real Truth About Abortion, Inc. v. FEC , 681 F.3d 544, 557-58 (4th Cir. 2012); see also Citizens for Responsibility & Ethics in Washington v. FEC , 209 F. Supp. 3d 77, 82 (D.D.C. 2016). Embracing the FEC approach will also allow the TEC and regulated community to more easily apply the precedent set by FEC adjudications and federal court decisions to determine whether a group is a political committee. See Tex. Ethics Comm'n Op. No. 614 (2024).

This proposed amendment incorporates comments from Attorney Andrew Cates on a previously published proposed rule amendment. Mr. Cates suggested that the "principal purpose rule" should state that a group is not a political committee if it can demonstrate that not more than 49 percent of its overall expenditures are political expenditures.

This proposed rule amendment incorporates Mr. Cates' comments.

James Tinley, General Counsel, has determined that for the first five-year period the proposed new rule is in effect, there will be no fiscal implications for state or local government as a result of enforcing or administering the proposed new rule.

The General Counsel has also determined that for each year of the first five years the proposed new rule is in effect, the public benefit will be clarity in the definition of "principal purpose" for use by political committees. There will not be an effect on small businesses, microbusinesses or rural communities. There is no anticipated economic cost to persons who are required to comply with the proposed new rule.

The General Counsel has determined that during the first five years that the proposed new rule is in effect, it will not: create or eliminate a government program; require the creation of new employee positions or the elimination of existing employee positions; require an increase in future legislative appropriations to the agency; require an increase or decrease in fees paid to the agency; expand, limit, or repeal an existing regulation; or increase or decrease the number of individuals subject to the rule's applicability.

The Commission invites comments on the proposed new rule from any member of the public. A written statement should be emailed to public_comment@ethics.state.tx.us, or mailed or delivered to J.R. Johnson, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. A person who wants to offer spoken comments to the Commission concerning the proposed new rule may do so at any Commission meeting during the agenda item relating to the proposed new rule. Information concerning the date, time, and location of Commission meetings is available by telephoning (512) 463-5800 or on the Commission's website at www.ethics.state.tx.us

The amendment is proposed under Texas Government Code §571.062, which authorizes the Commission to adopt rules to administer Title 15 of the Election Code.

The proposed new rule affects Chapter 255 of the Election Code.

§ 20.1. Definitions.

The following words and terms, when used in Title 15 of the Election Code, in this chapter, Chapter 22 of this title (relating to Restrictions on Contributions and Expenditures), and Chapter 24 of this title (relating to Restrictions on Contributions and Expenditures Applicable to Corporations and Labor Organizations), shall have the following meanings, unless the context clearly indicates otherwise.

(1) - (16) (No change.)

(17) Principal purpose--A group has as a principal purpose of accepting political contributions or making political expenditures, including direct campaign expenditures, when that activity is an important or a main function of the group.

(A) A group may have more than one principal purpose. When determining whether a group has a principal purpose of accepting political contributions or making political expenditures, the Commission may consider any available evidence regarding the activities by the group and its members, including, but not limited to:

(B) A group does not have a principal purpose of making political expenditures if it can demonstrate that not more than 49% of its overall expenditures are political expenditures. [ A group has as a principal purpose accepting political contributions if the proportion of the political contributions to the total contributions to the group is more than 25 percent within a calendar year. A contributor intends to make a political contribution if the solicitations that prompted the contribution or the statements made by the contributor about the contribution would lead to no other reasonable conclusion than that the contribution was intended to be a political contribution. ]

(C) The following shall be included for purposes of calculating the proportion of the group's political expenditures to all other spending: [ The group may maintain specific evidence of contributions related only to political contributions or only to nonpolitical contributions. For example, the group may ask the contributor to make an indication when the contribution is made that the contribution is only a nonpolitical contribution. ]

[(D)] [ A group has as a principal purpose making political expenditures, including direct expenditures, if the group expends more than 25 percent of its annual expenses to make political expenditures within a calendar year. ]

(i) the amount of money paid in compensation and benefits to the group's employees for work related to making political expenditures;

(ii) the amount of money spent on political expenditures; and

(iii) the amount of money attributable to the proportional share of administrative expenses related to political expenditures. The proportional share of administrative expenses is calculated by comparing the political expenditures in clause (ii) of this subparagraph with nonpolitical expenditures. (For example, if the group sends three mailings a year and each costs $10,000, if the first two are issue-based newsletters and the third is a direct advocacy sample ballot, and there were no other [ outside ] expenditures, then the proportion of the administrative expenses attributable to political expenditures would be 33%.) Administrative expenses include:

(I) fees for services to non-employees;

(II) advertising and promotion;

(III) office expenses;

(IV) information technology;

(V) occupancy;

(VI) travel expenses;

(VII) interest; and

(VIII) insurance .

(D) [ (E) ] The group may maintain specific evidence of administrative expenses related only to political expenditures or only to nonpolitical expenditures. Specifically identified administrative expenses shall not be included in the proportion established by subparagraph (C)(iii) [ (D)(iii) ] but allocated by the actual amount of the expense.

(E) [ (F) ] In this section, the term "political expenditures" includes direct campaign expenditures.

(18) - (23) (No change.)

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 April 8, 2025.

TRD-202501128

Jim Tinley

General Counsel

Texas Ethics Commission

Earliest possible date of adoption: May 25, 2025

For further information, please call: (512) 463-5800