TITLE 1. ADMINISTRATION

PART 2. TEXAS ETHICS COMMISSION

CHAPTER 6. ORGANIZATION AND ADMINISTRATION

SUBCHAPTER B. OFFICERS AND EMPLOYEES OF THE COMMISSION

1 TAC §6.21

The Texas Ethics Commission (the commission) proposes an amendment to Texas Ethics Commission Rules §6.21, regarding the election and authority of the presiding officers.

Section 571.023 of the Government Code requires the members of the commission to elect annually the presiding officer of the commission. Commission Rules §6.21 currently requires the election of a presiding officer and a vice-presiding officer (chair and vice-chair) at the first meeting scheduled after November 19 of each year. The rule also specifies certain duties of the presiding officer, such as preserving order at meetings.

The rule amendment would make the following substantive changes:

The presiding officer and vice-presiding officer would be elected at the first meeting held after June 1.

The presiding officer and vice-presiding officer would be elected from different political party caucus lists.

A new presiding officer should be elected from a political party caucus list that is different from the list of the former presiding officer.

The presiding officer may perform certain actions, such as signing previously approved subpoenas and orders, scheduling hearings and meetings, and responding to litigation matters.

The presiding officer may appoint a commissioner as chair pro tem to preside over a hearing.

Seana Willing, Executive Director, has determined that for each odd numbered year of the first five years this rule is in effect there will be no fiscal implication for state or local government as a result of enforcing or administering this rule.

Ms. Willing has also determined that for each year of the first five years the amendment is in effect the public benefit expected as a result of adoption of the proposed rule is continuity in Commission leadership, clarification on the powers of the chair, and efficiency in Commission operations.

The commission invites comments on the proposed amendment from any member of the public. A written statement should be emailed to public_comment@ethics.state.tx.us, or mailed or delivered to Seana Willing, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070, or by facsimile (FAX) to (512) 463-5777. A person who wants to offer spoken comments to the commission concerning the proposed amendment may do so at any commission meeting during the agenda item relating to the proposed amendment. 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 to §6.21 is proposed under Texas Government Code §571.062, which authorizes the commission to adopt rules to administer Chapter 571 of the Government Code, and in conjunction with Texas Government Code §§571.023 and 571.075.

The amendment to §6.21 affects Tex. Gov't Code §§571.023 and 571.075.

§6.21.Officers of the Commission.

(a) The commission shall select a presiding officer and a vice-presiding officer.

(b) Commission officers are elected annually by majority vote of the commission. The election shall take place at the first commission meeting held [scheduled] after June 1 [November 19] of each year. Each officer shall serve until his or her successor is selected.

(c) The presiding officer and the vice-presiding officer shall be elected from different political party caucus lists.

(d) The presiding officer may be re-elected; however, if a new presiding officer is elected it should be from a different political party caucus list than the former presiding officer.

(e) [(c)]The presiding officer shall preside at all meetings of the commission. While presiding, the presiding officer shall direct the order of the meeting, appoint committees [subcommittees] and persons to chair committees, [subcommittees,] recognize persons to be heard at hearings, set reasonable and necessary time limits for speakers, and take other actions to clarify issues and preserve order. When the presiding officer is absent, the vice-presiding officer shall perform all duties of the presiding officer.

(f) The presiding officer may perform the following actions of the commission:

(1) Sign previously approved subpoenas and orders;

(2) Schedule hearings and meetings;

(3) Timely respond to litigation matters on behalf of the commission when action is required before the next scheduled meeting and is within the scope of the authorization granted by the commission; and

(4) Respond to matters on behalf of the commission when action is required and is within the scope of the authorization granted by the commission.

(g) The presiding officer may appoint a commissioner as chair pro tem to preside over a hearing held by the commission.

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 3, 2017.

TRD-201701369

Seana Willing

Executive Director

Texas Ethics Commission

Earliest possible date of adoption: May 14, 2017

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


CHAPTER 20. REPORTING POLITICAL CONTRIBUTIONS AND EXPENDITURES

SUBCHAPTER A. GENERAL RULES

1 TAC §20.1

The Texas Ethics Commission (the commission) proposes an amendment to Texas Ethics Commission Rules §20.1 by adding a definition for the term "vendor."

Concurrently with publication of this rule amendment, the Commission is publishing new rule §20.56 and an amendment to §20.61 to clarify reporting requirements and certain prohibitions on the use of political contributions. The term "vendor" is included in each of those rules and would be defined in §20.1 as any person providing goods or services to a candidate, officeholder, political committee, or other filer of a campaign finance report. The term does not include an employee of the filer.

Seana Willing, Executive Director, has determined that for the first five-year period the proposed amendment is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the proposed amendment.

Ms. Willing has also determined that for each year of the first five years the proposed amendment is in effect the public benefit will be clarity in the commission's rules regarding the meaning of the term "vendor" as it appears in Chapter 20 of the commission's rules. There will not be an effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed amendment.

The Texas Ethics Commission invites comments on the proposed amendment from any member of the public. A written statement should be emailed to public_comment@ethics.state.tx.us, or mailed or delivered to Seana Willing, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070, or by facsimile (FAX) to (512) 463-5777. A person who wants to offer spoken comments to the commission concerning the proposed amendment may do so at any commission meeting during the agenda item relating to the proposed amendment. Information concerning the date, time, and location of commission meetings is available by telephoning (512) 463-5800 or on the Texas Ethics Commission's website at www.ethics.state.tx.us.

The amendment to §20.1 is proposed under Texas Government Code §571.062, which authorizes the commission to adopt rules concerning the laws administered and enforced by the commission.

The proposed amendment to §20.1 affects Title 15 of the Election Code, specifically in statutes requiring the disclosure of political expenditures, including §254.031, in addition to §§253.035, 253.038, and 253.041.

§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) - (23) (No change.)

(24) Vendor--Any person providing goods or services to a candidate, officeholder, political committee, or other filer under this chapter. The term does not include an employee of the candidate, officeholder, political committee, or other filer.

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 3, 2017.

TRD-201701370

Seana Willing

Executive Director

Texas Ethics Commission

Earliest possible date of adoption: May 14, 2017

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


SUBCHAPTER B. GENERAL REPORTING RULES

1 TAC §20.56

The Texas Ethics Commission (the commission) proposes new Texas Ethics Commission Rules §20.56, regarding expenditures to vendors providing goods or services to a candidate, officeholder, political committee, or other filer.

Section 254.031 of the Election Code requires a candidate, officeholder, political committee, or other filer who files a campaign finance report to include certain information regarding political expenditures and expenditures made from political contributions. When an expenditure is required to be itemized in a report, the report must include certain information regarding the expenditure, including the amount, date, and purpose of the expenditure and the name and address of the person to whom the expenditure is made. The rule addresses the proper disclosure of an expenditure made by a vendor for a filer with the intent to seek reimbursement from the filer, which must be reported by the filer as though the filer made the expenditure directly.

Additionally, §§253.035, 253.038, and 253.041 of the Election Code include prohibitions on candidates, officeholders, and specific-purpose committees converting political contributions to the personal use of a candidate or officeholder, making certain payments to purchase or rent real property, or paying certain family members of the candidate or officeholder for their personal services. The rule is intended to prevent a candidate, officeholder, or specific-purpose committee from using a vendor to circumvent these statutory prohibitions. Accordingly, the rule specifies that, in providing goods or services to a candidate, officeholder, or specific-purpose committee for supporting a candidate or assisting an officeholder, a vendor may not make an expenditure for the candidate, officeholder, or committee that would be prohibited by one of those statutes if it were made by the candidate, officeholder, or committee. The rule also specifies that a candidate, officeholder, or specific-purpose committee for supporting a candidate or assisting an officeholder may not use political contributions to pay or reimburse a vendor for an expenditure that would be prohibited by one of those statutes if it were made by the candidate, officeholder, or committee.

Seana Willing, Executive Director, 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.

Ms. Willing 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 commission's rules regarding the disclosure of political expenditures to vendors in campaign finance reports made available to the public and in the application of certain statutory prohibitions to limit the misuse of political contributions. There will not be an effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed new rule.

The Texas Ethics 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 Seana Willing, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070, or by facsimile (FAX) to (512) 463-5777. 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 Texas Ethics Commission's website at www.ethics.state.tx.us.

The new rule §20.56 is proposed under Texas Government Code §571.062, which authorizes the commission to adopt rules concerning the laws administered and enforced by the commission.

The proposed new rule, §20.56, affects Chapter 254 of the Election Code as it relates to the requirement to report a political expenditure, including §254.031, and to §§253.035, 253.038, and 253.041.

§20.56.Expenditures to Vendors.

(a) A political expenditure made by a vendor for a candidate, officeholder, political committee, or other filer, with the intent to seek reimbursement from the filer, shall be reported by the filer in accordance with this chapter as though the filer made the expenditure directly.

(b) A vendor of a candidate, officeholder, or specific-purpose committee for supporting a candidate or assisting an officeholder may not, in providing goods or services for the candidate, officeholder, or committee, make an expenditure that, if made by the candidate, officeholder, or committee, would be prohibited by Sections 253.035, 253.038, or 253.041, Election Code.

(c) A candidate, officeholder, or specific-purpose committee for supporting a candidate or assisting an officeholder may not use political contributions to pay or reimburse a vendor for an expenditure that, if made by the candidate, officeholder, or committee, would be prohibited by Sections 253.035, 253.038, or 253.041, Election 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 3, 2017.

TRD-201701371

Seana Willing

Executive Director

Texas Ethics Commission

Earliest possible date of adoption: May 14, 2017

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


1 TAC §20.61

The Texas Ethics Commission (the commission) proposes an amendment to Texas Ethics Commission Rules §20.61, regarding the disclosure of expenditures, including expenditures for political consulting.

Section 254.031 of the Election Code requires a candidate, officeholder, political committee, or other filer who files a campaign finance report to include the itemization of certain political expenditures and expenditures made from political contributions, including the purposes of the expenditures. Current Texas Ethics Commission Rules §20.61 requires the purpose of an expenditure to include a description of the category of goods, services, or other thing of value for which the expenditure is made and a brief statement or description of the candidate, officeholder, or political committee activity that is conducted by making the expenditure. The rule provides examples of acceptable categories for the description of an expenditure.

The proposed amendment provides a definition for the term "consulting," which would thereby require the category "consulting expense" to be used for an expenditure made for advice and strategy, and not for goods or services. The amendment also provides that an expenditure, other than a reimbursement, that is made for more than one type of good or service must be itemized in a report separately for each type of good or service that is provided.

Seana Willing, Executive Director, has determined that for the first five-year period the proposed amendment is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the proposed amendment.

Ms. Willing has also determined that for each year of the first five years the proposed amendment is in effect the public benefit will be clarity in the commission’s rules regarding the disclosure of expenditures, including expenditures for political consulting services, and requiring providing greater disclosure to the public when expenditures are made to vendors and other persons for more than one type of good or service. There will not be an effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed amendment.

The Texas Ethics Commission invites comments on the proposed amendment from any member of the public. A written statement should be emailed to public_comment@ethics.state.tx.us, or mailed or delivered to Seana Willing, Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070, or by facsimile (FAX) to (512) 463-5777. A person who wants to offer spoken comments to the commission concerning the proposed amendment may do so at any commission meeting during the agenda item relating to the proposed amendment. Information concerning the date, time, and location of commission meetings is available by telephoning (512) 463-5800 or on the Texas Ethics Commission’s website at www.ethics.state.tx.us.

The amendment to §20.61 is proposed under Texas Government Code §571.062, which authorizes the commission to adopt rules concerning the laws administered and enforced by the commission.

The proposed amendment to §20.61 affects Chapter 254 of the Election Code as it relates to the requirement to report an expenditure, including §254.031.

§20.61.Purpose of Expenditure.

(a) For reporting required under §254.031 of the Election Code, the purpose of an expenditure means:

(1) A description of the category of goods, services, or other thing of value for which an expenditure is made. Examples of acceptable categories include:

(A) advertising expense;

(B) accounting/banking;

(C) consulting expense;

(D) contributions/donations made by candidate/officeholder/political committee;

(E) event expense;

(F) fees;

(G) food/beverage expense;

(H) gifts/awards/memorials expense;

(I) legal services;

(J) loan repayment/reimbursement;

(K) office overhead/rental expense;

(L) polling expense;

(M) printing expense;

(N) salaries/wages/contract labor;

(O) solicitation/fundraising expense;

(P) transportation equipment and related expense;

(Q) travel in district;

(R) travel out of district;

(S) other political expenditures; and

(2) A brief statement or description of the candidate, officeholder, or political committee activity that is conducted by making the expenditure and an additional indication if the expenditure is an officeholder expenditure for living in Austin, Texas. The brief statement or description must include the item or service purchased and must be sufficiently specific, when considered within the context of the description of the category, to make the reason for the expenditure clear. Merely disclosing the category of goods, services, or other thing of value for which the expenditure is made does not adequately describe the purpose of an expenditure.

(3) For purposes of this section, "consulting" means advice and strategy. "Consulting" does not include providing other goods or services, including without limitation media production, voter contact, or political advertising.

(b) An expenditure other than a reimbursement to a person, including a vendor, for more than one type of good or service must be reported by the filer as separate expenditures for each type of good or service provided by the person in accordance with this rule.

(c) [(b)] The description of a political expenditure for travel outside of the state of Texas must provide the following:

(1) The name of the person or persons traveling on whose behalf the expenditure was made;

(2) The means of transportation;

(3) The name of the departure city or the name of each departure location;

(4) The name of the destination city or the name of each destination location;

(5) The dates on which the travel occurred; and

(6) The campaign or officeholder purpose of the travel, including the name of a conference, seminar, or other event.

(d) [(c)] Except as provided by subsection (d) of this section, this rule applies to expenditures made on or after July 1, 2010.

(e) [(d)] The requirement to include an additional indication if an expenditure is an officeholder expenditure for living in Austin, Texas, applies to an expenditure made on or after July 1, 2014.

(f) [(e)] Comments: The purpose of an expenditure must include both a description of the category of goods or services received in exchange for the expenditure and a brief statement or description of the candidate, officeholder, or political committee activity that is conducted by making the expenditure. A description of an expenditure that merely states the item or service purchased is not adequate because doing so does not allow a person reading the report to know the allowable activity for which an expenditure was made. The following is a list of examples that describe how the purpose of an expenditure may be reported under §20.61. This list is for illustrative purposes only. It is intended to provide helpful information and to assist filers in reporting the purpose of an expenditure under this rule. However, it is not, and is not intended to be, an exhaustive or an exclusive list of how a filer may permissibly report the purpose of an expenditure under this rule. The rule does not require the candidate or officeholder to identify by name or affiliation an individual or group with whom the candidate or officeholder meets.

(1) Example: Candidate X is seeking the office of State Representative, District 2000. She purchases an airline ticket from ABC Airlines to attend a campaign rally within District 2000. The acceptable category for this expenditure is "travel in district." The candidate activity that is accomplished by making the expenditure is to attend a campaign rally. An acceptable brief statement is "airline ticket to attend campaign event."

(2) Example: Candidate X purchases an airline ticket to attend a campaign event outside of District 2000 but within Texas, the acceptable category is "travel out of district." The candidate activity that is accomplished by making the expenditure is to attend a campaign event. An acceptable brief statement is "airline ticket to attend campaign or officeholder event."

(3) Example: Candidate X purchases an airline ticket to attend an officeholder related seminar outside of Texas. The acceptable method for the purpose of this expenditure is by selecting the "travel out of district" category and completing the "Schedule T" (used to report travel outside of Texas).

(4) Example: Candidate X contracts with an individual to do various campaign related tasks such as work on a campaign phone bank, sign distribution, and staffing the office. The acceptable category is "salaries/wages/contract labor." The candidate activity that is accomplished by making the expenditure is to compensate an individual working on the campaign. An acceptable brief statement is "contract labor for campaign services."

(5) Example: Officeholder X is seeking re-election and makes an expenditure to purchase a vehicle to use for campaign purposes and permissible officeholder purposes. The acceptable category is "transportation equipment and related expenses" and an acceptable brief description is "purchase of campaign/officeholder vehicle."

(6) Example: Candidate X makes an expenditure to repair a flat tire on a campaign vehicle purchased with political funds. The acceptable category is "transportation equipment and related expenses" and an acceptable brief description is "campaign vehicle repairs."

(7) Example: Officeholder X purchases flowers for a constituent. The acceptable category is "gifts/awards/memorials expense" and an acceptable brief description is "flowers for constituent."

(8) Example: Political Committee XYZ makes a political contribution to Candidate X. The acceptable category is "contributions/donations made by candidate/officeholder/political committee" and an acceptable brief description is "campaign contribution."

(9) Example: Candidate X makes an expenditure for a filing fee to get his name on the ballot. The acceptable category is "fees" and an acceptable brief description is "candidate filing fee."

(10) Example: Officeholder X makes an expenditure to attend a seminar related to performing a duty or engaging in an activity in connection with the office. The acceptable category is "fees" and an acceptable brief description is "attend officeholder seminar."

(11) Example: Candidate X makes an expenditure for political advertising to be broadcast by radio. The acceptable category is "advertising expense" and an acceptable brief description is "political advertising." Similarly, Candidate X makes an expenditure for political advertising to appear in a newspaper. The acceptable category is "advertising expense" and an acceptable brief description is "political advertising."

(12) Example: Officeholder X makes expenditures for printing and postage to mail a letter to all of her constituents, thanking them for their participation during the legislative session. Acceptable categories are "advertising expense" OR "printing expense" and an acceptable brief description is "letter to constituents."

(13) Example: Officeholder X makes an expenditure to pay the campaign office electric bill. The acceptable category is "office overhead/rental expense" and an acceptable brief description is "campaign office electric bill."

(14) Example: Officeholder X makes an expenditure to purchase paper, postage, and other supplies for the campaign office. The acceptable category is "office overhead/rental expense" and an acceptable brief description is "campaign office supplies."

(15) Example: Officeholder X makes an expenditure to pay the campaign office monthly rent. The acceptable category is "office overhead/rental expense" and an acceptable brief description is "campaign office rent."

(16) Example: Candidate X hires a consultant for fundraising services. The acceptable category is "consulting expense" and an acceptable brief description is "campaign services."

(17) Example: Candidate/Officeholder X pays his attorney for legal fees related to either campaign matters or officeholder matters. The acceptable category is "legal services" and an acceptable brief description is "legal fees for campaign" or "for officeholder matters."

(18) Example: Candidate/Officeholder X makes food and beverage expenditures for a meeting with her constituents. The acceptable category is "food/beverage expense" and an acceptable brief statement is "meeting with constituents."

(19) Example: Candidate X makes food and beverage expenditures for a meeting to discuss candidate issues. The acceptable category is "food/beverage expense" and an acceptable brief statement is "meeting to discuss campaign issues."

(20) Example: Officeholder X makes food and beverage expenditures for a meeting to discuss officeholder issues. The acceptable category is "food/beverage expense" and an acceptable brief statement is "meeting to discuss officeholder issues."

(21) Example: Candidate/Officeholder X makes food and beverage expenditures for a meeting to discuss campaign and officeholder issues. The acceptable category is "food/beverage expense" and an acceptable brief statement is "meeting to discuss campaign/officeholder issues."

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 3, 2017.

TRD-201701372

Seana Willing

Executive Director

Texas Ethics Commission

Earliest possible date of adoption: May 14, 2017

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