TITLE 1. ADMINISTRATION

PART 2. TEXAS ETHICS COMMISSION

CHAPTER 10. ETHICS TRAINING PROGRAMS

The Texas Ethics Commission (the Commission) adopts an amendment in chapter 10 of the Ethics Commission Rules. Specifically, the TEC adopts an amendment to rule §10.1 regarding Training Programs. The amended rule is adopted without changes to the proposed text as published in the April 25, 2025, issue of the Texas Register (50 TexReg 2539). The amended rule 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 its ethics training programs, which are codified in Chapter 10.

The adopted 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.

No public comments were received on this amended rule.

The amendment and re-adoption 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 readopted rules affect Chapter 571 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 June 13, 2025.

TRD-202502007

Natalie McDermon

Interim General Counsel

Texas Ethics Commission

Effective date: July 3, 2025

Proposal publication date: April 25, 2025

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

CHAPTER 12. SWORN COMPLAINTS

The Texas Ethics Commission (the Commission) adopts amendments to Texas Ethics Commission Rules in Chapter 12. Specifically, the Commission adopts 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 adopts 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 amended and new rules are adopted with one change to the proposed text as published in the April 25, 2025, issue of the Texas Register (50 TexReg 2540). Section 12.28 will be republished. All other sections will not be republished. The only change is the deletion of an extra period at the end of a sentence in §12.28(5).

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

The adopted rules will 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 adopted 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 adopted 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.

No public comments were received on these amended rules.

SUBCHAPTER C. INVESTIGATION AND DISCOVERY

The amended rules are adopted 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 adopted rules affect Subchapter E of Chapter 571 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 June 13, 2025.

TRD-202502014

Natalie McDermon

Interim General Counsel

Texas Ethics Commission

Effective date: July 3, 2025

Proposal publication date: April 25, 2025

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

The new rules are adopted 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 adopted rules affect Subchapter E of Chapter 571 of the Government Code.

§ 12.28. Level 1 Discovery Control Plan.

Discovery in a preliminary review under a Level 1 Discovery Control Plan is subject to the limitation provided elsewhere in this Chapter and to the following additional limitations:

(1) All discovery during a preliminary review must be conducted during the discovery period which begins when the initial response to the complaint is due and continues for 90 days.

(2) The discovery period reopens on the date the commission sets the matter for a formal hearing and continues for an additional 90 days.

(3) During a preliminary review, the respondent and commission staff may serve on any other party no more than 5 written interrogatories, excluding interrogatories asking a party only to identify or authenticate specific documents. If set for a formal hearing, each party may serve 10 more interrogatories. Each discrete subpart of an interrogatory is considered a separate interrogatory.

(4) During a preliminary review, the respondent and commission staff may serve on any other party no more than 5 written requests for production. If set for a formal hearing, each party may serve 10 more written requests for production. Each discrete subpart of a request for production is considered a separate request for production.

(5) During a preliminary review, the respondent and commission staff may serve on any other party no more than 5 written requests for admissions. If set for a formal hearing, each party may serve 10 more requests for admissions. Each discrete subpart of a request for admission is considered a separate request for admission.

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 June 13, 2025.

TRD-202502015

Natalie McDermon

Interim General Counsel

Texas Ethics Commission

Effective date: July 3, 2025

Proposal publication date: April 25, 2025

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

SUBCHAPTER F. RESOLUTIONS

The amended rule is adopted 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 adopted rule affects Subchapter E of Chapter 571 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 June 13, 2025.

TRD-202502016

Natalie McDermon

Interim General Counsel

Texas Ethics Commission

Effective date: July 3, 2025

Proposal publication date: April 25, 2025

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

CHAPTER 18. GENERAL RULES CONCERNING REPORTS

The Texas Ethics Commission (the Commission) adopts amendments to Texas Ethics Commission Rules in Chapter 18. Specifically, the Commission adopts 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. The amended and new rules are adopted without changes to the proposed text as published in the April 25, 2025, issue of the Texas Register (50 TexReg 2543). The amended rules will not be republished.

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.

Adopted 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 adopted 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 adopted 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.

Figure: 1 TAC Chapter 18 - Preamble (.pdf)

The adopted 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.

No public comments were received on these proposed amended rules.

The amended rules are adopted 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 adopted amended rules affect Title 15 of the Election Code and Chapter 571 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 June 13, 2025.

TRD-202502017

Natalie McDermon

Interim General Counsel

Texas Ethics Commission

Effective date: July 3, 2025

Proposal publication date: April 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 (the Commission) adopts an amendment in Chapter 20 of the Ethics Commission Rules. Specifically, the TEC adopts an amendment to rule §20.1 regarding the definition of principal purpose. The amended rule is adopted without changes to the proposed text as published in the April 25, 2025, issue of the Texas Register (50 TexReg 2545). The amended rule will not be republished.

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. The setting of 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 amended 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 use 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).

The Commission received one public comment on its initial proposal, from attorney Andrew Cates. Mr. Cates suggested adding language that a politically active corporation that is suspected of being a political committee would have an affirmative defense of proving that the group's political expenditures did not exceed 50 percent of the group's overall spending. The Commission incorporated that language into the adopted rule.

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

The adopted amended rule affects Title 15 of the Election 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 June 13, 2025.

TRD-202502018

Natalie McDermon

Interim General Counsel

Texas Ethics Commission

Effective date: July 3, 2025

Proposal publication date: April 25, 2025

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