PART 2. TEXAS ETHICS COMMISSION
CHAPTER 40. FINANCIAL DISCLOSURE FOR PUBLIC OFFICERS
1 TAC §§40.2, 40.3, 40.9, 40.11, 40.13, 40.15
The Texas Ethics Commission (the TEC) adopts amendments to Texas Ethics Commission Rules in Chapter 40 regarding Financial Disclosure for Public Officers. Sections §§40.2, 40.3, 40.9, 40.11, 40.13, and 40.15 are adopted without changes to the proposed text as published in the November 1, 2024, issue of the Texas Register (49 TexReg 8629). Proposed new rule §40.5 regarding Assets and Liabilities of Business Associations was not adopted. The adopted rules will not be republished.
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 financial disclosures, which are codified in Title 1, Chapter 40 of the Administrative Code. The TEC adopts new rules and amends existing rules to clarify state officers' obligations related to submitting personal financial statements.
The rules and amendments are designed to more closely track statutory language and to provide more clarity and notice of the TEC's interpretations of the statutory requirements of Chapter 572 of the Government Code.
Specifically, the TEC adopts amendments to rules §40.2 regarding Disclosure of Financial Activity and §40.11 regarding Publicly Traded Corporation as Source of Income. The TEC also adopts new rules §40.3 regarding PFS Required for Each Year of Service, §40.9 regarding Exchange Traded Funds and Real Estate Investment Trusts, §40.13 regarding Beneficial Interest in Real Property Includes Real Property Held in a Trust, and §40.15 regarding Identification of the Source of Rents Derived From Rental Property. The following is a description of each rule amendment or new rule.
§40.2. Disclosure of Financial Activity [of Spouse and Dependent Children].
The existing rule (§40.2) implies that a filer must report the activity of a spouse or dependent child over which the filer "held the right to exercise" control. The statute requires a filer to report the financial activity of a spouse or dependent child if the filer has "actual control" over the activity. The proposed amendment strikes the reference to right to control to conform the rule to the statute.
§40.3. PFS Required for Each Year of Service
The next rule clarifies that a state officer must file a PFS covering each year the filer served the state.
The law relevant law states: "Not later than April 30 each year, a state officer or a state party chair shall file the financial statement as required by this subchapter." Tex. Gov't Code § 572.026(a). A PFS includes "an account of the financial activity of the individual's spouse and dependent children if the individual had actual control over that activity for the preceding calendar year." Id. § 572.023.
A PFS is owed each year by a state officer that covers the state office's financial activity from the previous calendar year. The statute is ambiguous as to whether a state officer that ceases service in, for example, 2024 would be required to file a PFS in 2025 that covers financial activity that took place in 2024.
The most natural construction is that a state officer needs to file a PFS accounting for the financial activity for each year the state officer served, and that PFS is due April 30. So, in the example of a state officer who ceases service in 2024, the state officer is required by law to file a PFS in 2025 covering the financial activity in the filer's last year of service.
The proposed rule attempts to make that clear with two exceptions: 1) if a state officer ceases state service before the end of a calendar year, the PFS the state officer files need only cover through the end of their state service and 2) a retiring member of the legislature does not need to file a PFS covering the few days they serve in January before their successor is sworn into office.
§40.13. Beneficial Interest in Real Property Includes Real Property Held in a Trust
The law requires a filer to disclose "all beneficial interests in real property." Id.
§ 572.023(b)(6). The dictionary definition of a beneficial interest in real property is a property held in a trust for the benefit of an individual. The proposed rule amendment would clarify that a filer is required to disclosure properties held in a trust for the filer's benefit.
Subsection (b) of the proposed rule harmonizes two statutory provisions regarding the disclosure of assets held in a blind trust. Income producing assets held in a trust generally need to be disclosed on a PFS. However, there is an express provisions that exempts an income producing assets from disclosure if is held in a blind trust. Id. § 572.023(b)(6). There is no similar exclusion for disclosing beneficial interests in real property held in a blind trust.
Based on the definition of a blind trust in Chapter 572, a filer may know what assets are in a blind trust. Id. § 572.023(c). However, the trustee of a blind trust is required to file a sworn statement that includes a statement that the "the trustee has not revealed any information to the individual, except information that may be disclosed under [a provision related to trust income]. Id. § 572.023(b)(14)(D).
Reading the law as a cohesive whole, a filer may or may not know the assets of a blind trust. But trustee cannot tell the filer what is in the trust. So, if the filer is unaware of the contents of the trust the filer should have no way of knowing. In the case whether a filer is not actually aware of a beneficial interest in real property held in a blind trust, the filer is excused of his duty to disclose it. However, if a filer actually knows of a beneficial interest in real property the filer must disclose it even if it is in a blind trust.
§40.15. Identification of the Source of Rents Derived from Rental Property
The proposed rule clarifies that the "identification of each source" of rents includes the name of the lessee and the address of the rental property.
The agency did not receive any public comments on these new and amended rules.
The amended and new rules are adopted under Texas Government Code §571.062, which authorizes the Commission to adopt rules to administer Chapter 572 of the Government Code.
The adopted amended and new rules affect Chapter 572 of the Government Code.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on December 23, 2024.
TRD-202406310
Jim Tinley
General Counsel
Texas Ethics Commission
Effective date: January 12, 2025
Proposal publication date: November 1, 2024
For further information, please call: (512) 463-5800
CHAPTER 174. INDIGENT DEFENSE POLICIES AND STANDARDS
SUBCHAPTER C. POLICY MONITORING REQUIREMENTS
DIVISION 2. POLICY MONITORING PROCESS AND BENCHMARKS
The Texas Indigent Defense Commission (TIDC) is a permanent Standing Committee of the Texas Judicial Council. TIDC adopts amendments to Texas Administrative Code, Title 1, Part 8, Chapter 174, Subchapter C, Division 2, §174.28, concerning On-Site Monitoring Process. The amended sections are adopted without changes to the proposed text as published in the October 4, 2024, issue of the Texas Register (49 TexReg 8007) and will not be republished. No comments were received.
EXPLANATION OF AMENDMENTS
The amendment to §174.28(c)(4) requires the policy monitor to make a finding if the monitor finds the court did not explain the procedures for requesting counsel or identifies cases in which a defendant entered an uncounseled plea while having a pending counsel request.
The amendment to §174.28(c)(5) provides that in counties with a public defender's office, the monitor will determine if appointments to the office are made in accordance with Article 26.04(f), Code of Criminal Procedure, the priority appointment of public defender's statute.
The amendments to §174.28(c)(5) add requirements related to attorney appointments in capital felony cases. In a county with a public defender's office that accepts capital appointments, the monitor will verify that the office is appointed in each capital case. If the office was not appointed in each case, the policy monitor shall determine whether the court or its designee made a finding of good cause on the record for appointing other counsel in accordance with Article 26.04(f)(1).
The amendments to §174.28(c)(5) also require that in capital felony cases where a public defender's office was not appointed, the policy monitor shall determine if two attorneys were appointed and whether at least one attorney was qualified to serve as lead counsel under Article 26.052(e), Code of Criminal Procedure. If one attorney was appointed, the policy monitor shall determine whether the State filed written notice that it is not seeking the death penalty and the date the notice was filed.
The amendments to §174.28(d)(1) provide that staff shall submit draft policy monitoring reports to the Policies and Standards Committee, rather than to the county, for review within 60 days after the date staff receives all required data for the review, rather than within 60 days of a site visit. The first part of the amendment is proposed since the Committee review process can sometimes take a few weeks to complete, especially when changes to a report are needed. The second part of the amendment is proposed because some monitoring reviews are now fully remote and because delays in receiving needed data from counties often leads to staff not meeting the timeline in the current version of the rule.
The amendments to §174.28(d)(3) provide that in the case of a follow-up review report, a county may receive an extension beyond the two 30-day periods provided for in the current rule if the county demonstrates it has extenuating circumstances that are approved by the Executive Director.
The amendments to §174.28(d)(4) require only formula grant payments, rather than all grant payments, be withheld if a county does not respond to a policy monitoring report within 10 days of receipt of a certified letter notifying the local officials. This would assure that improvement grant-funded programs such as public defender offices are not immediately jeopardized.
The amendments to §174.28(d)(5) specify TIDC may require regular reporting of data to determine if process changes are being implemented and their impact on compliance when counties fail to come into compliance after multiple reviews. Currently, the only processes specified are to impose a remedy for noncompliance under §173.307, Texas Administrative Code, such as withholding grant funds.
STATUTORY AUTHORITY
The amendments are adopted under the Texas Government Code §79.037(a) and (b), which requires TIDC to monitor the effectiveness of the county's indigent defense policies, standards, and procedures and to ensure compliance by the county with the requirements of state law relating to indigent defense.
No other statutes, articles, or codes are affected by the amendments.
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on December 20, 2024.
TRD-202406221
Wesley Shackleford
Deputy Director
Texas Judicial Council
Effective date: January 9, 2025
Proposal publication date: October 4, 2024
For further information, please call: (737) 279-9208