TITLE 1. ADMINISTRATION

PART 2. TEXAS ETHICS COMMISSION

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 affect 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 July 14, 2017.

TRD-201702652

Seana Willing

Executive Director

Texas Ethics Commission

Earliest possible date of adoption: August 27, 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, 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 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 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 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 §§253.035, 253.038, or 253.041, Election Code.

(c) A candidate, officeholder, or specific-purpose committee 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 §§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 July 14, 2017.

TRD-201702653

Seana Willing

Executive Director

Texas Ethics Commission

Earliest possible date of adoption: August 27, 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 to vendors.

Section 254.031 of the Election Code requires a candidate, officeholder, political committee, or other filer who files a campaign finance report to itemize 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 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 Section 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 (e)(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 section 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 July 14, 2017.

TRD-201702654

Seana Willing

Executive Director

Texas Ethics Commission

Earliest possible date of adoption: August 27, 2017

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


PART 4. OFFICE OF THE SECRETARY OF STATE

CHAPTER 81. ELECTIONS

SUBCHAPTER C. VOTING SYSTEMS

1 TAC §81.52

The Office of the Secretary State, Elections Division received a petition (as amended) for the adoption of rules under Section 2001.021 of the Texas Government Code and 1 TAC §71.16, requesting, among other things, modifications to 1 TAC §81.52. In accordance with Section 2001.021(c)(2) of the Texas Government Code and 1 TAC §71.16, the Secretary of State proposes amendments to 1 TAC §81.52. The proposed amendments to §81.52 relate to a requirement of a real-time audit log on a precinct ballot counter, and not a continuous audit log printer to be attached to the precinct ballot counter, during the early voting by personal appearance period. They also concern requirements relating to securing precinct ballot counters from tampering. The continuous audit log printer requirement is no longer necessary as federal voting system guidelines have been revised to provide additional content and security requirements for internal audit logs. Currently, all precinct ballot counters certified in Texas meet these federal standards.

Keith Ingram, Director of Elections, has determined that for the first five-year period the rule as amended is in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the rule as amended. The elimination of the outdated requirement for a continuous audit log printer is expected to reduce costs for local governments, and potentially open opportunities for more vendors to submit their precinct ballot counters for voting system certification in Texas. There will be no effect on small businesses or micro-businesses. There will be no anticipated economic cost to the state or local governments.

Mr. Ingram has also determined that for the first five-year period the public benefit anticipated as a result of the rule as amended will be the consistent and uniform guidance provided to entities conducting elections using precinct ballot counters.

Interested persons may submit written comments on the proposed rule to the Elections Division, Office of the Texas Secretary of State, P.O. Box 12060, Austin, Texas 78711-2060.

Comments may also be sent via E-mail to: elections@sos.texas.gov. For comments submitted electronically, please include "Proposed Amendment of Rule §81.52" in the subject line. Comments must be received no later than thirty (30) days from the date of publication of the rule in the Texas Register. Comments should be organized in a manner consistent with the organization of the proposed rule. Questions concerning the proposed amendments may be directed to Elections Division, Office of the Texas Secretary of State, at (512) 463-5650.

The amendments are proposed pursuant to §31.003 of the Texas Election Code, which provides the Office of the Secretary of State with the authority to obtain and maintain uniformity in the application, interpretation, and operation of provisions under the Texas Election Code and other election laws. The amendments are also proposed pursuant to §122.001 and §122.032 of the Texas Election Code, which provide the Office of the Secretary of State the authority to prescribe additional procedures related to certification and operation of voting systems. The amendments are also proposed pursuant to §81.002 of the Texas Election Code, which applies provisions related to electronic voting systems to early voting.

No other code or statute is affected by the amendments.

§81.52.Precinct Ballot Counters.

(a) Where an electronic voting system that does not entail the counting of ballots at central locations established under the Texas Election Code, Chapter 127, Subchapter A, is to be used at an election, the election results shall be processed in accordance with this section.

(b) If the tabulating equipment is capable of separating damaged ballots, irregularly marked ballots, and write-in ballots for manual processing, the equipment may be arranged so that voters deposit their marked ballots directly into the tabulator. The tabulator must be provided with a sealed container such that ballots deposited by voters are counted by the tabulator or separated for manual counting, as the case may be, and then placed by the device directly into the sealed container.

(c) In addition to the procedures provided herein and in §127.157 of the Texas Election Code (the "Code"), compliance with the following voting procedures is required for the proper processing of ballots to be tabulated by voting systems specifically designed as electronic precinct ballot counters ("precinct counters").

(1) The voter may deposit a ballot directly into a precinct counter. If the machine returns the ballot to the voter because the ballot is blank, mismarked, damaged, or otherwise spoiled, the voter may either attempt to correct the ballot, request another ballot once the spoiled ballot is returned to the election officer, or request the election official to override the rejection so that the precinct counter accepts the ballot, and outstacks the write-in, if necessary.

(2) The voter is not entitled to receive more than three ballots. The procedures for handling a spoiled ballot provided by §64.007 of the Code must be followed.

(3) The precinct counter must be set up to reject and return the ballot to the voter rather than outstack the ballot if it is blank, mismarked, undervoted, or overvoted.

(4) If the precinct counter rejects the ballot for any reason and the voter has received the maximum number of ballots or does not wish to make further changes to the ballot, the election official must override the rejection so that the precinct counter accepts the ballot and outstacks the write-in, if necessary.

(5) While the polls are open or as soon as practicable after the polls close, the counted ballots shall be removed from the ballot box and examined for irregularly marked ballots for processing in accordance with §127.157(b) - (e) of the Code.

(d) If the tabulating equipment is not capable of separating damaged, irregularly marked, and write-in ballots for manual counting, a container meeting the specifications of the Code for ballots boxes number one and number two must be provided for the deposit of ballots by voters after the ballots have been marked. At the direction of the presiding judge, the election officials shall unlock the ballot container and process the ballots in accordance with the provisions of the Texas Election Code, §127.034(b) and (c), and then pass the ballots to be counted electronically through the tabulator for counting.

(e) In either case, the damaged and irregularly marked ballots shall be counted manually or duplicated for automatic tabulation pursuant to §127.126 of the Code. Write-in ballots shall be counted manually, and the results added to those for ballots counted by the tabulating equipment. The results entered on the returns shall reflect the totals obtained from the count of the ballots tabulated on the tabulating equipment and from the manual count of damaged, irregularly marked, and write-in ballots.

(f) In this section, "damaged ballot" means a ballot that is damaged such that it may not be accurately counted by the tabulating equipment.

(g) The returns, ballots, and other records of the election shall then be distributed in accordance with the provisions of Chapter 66 of the Code. Ballots must be returned to the appropriate authority in a container meeting the specifications of the Code for ballot box number three.

(h) If a precinct ballot counter is to be used during early voting by personal appearance, it must have a real-time [a continuous feed] audit log [printer must remain attached to the precinct counter throughout the early voting period]. In addition, the counter must be secured to prevent tampering by the following procedure.

(1) Immediately prior to the opening of the polls on the first day of early voting by personal appearance, a zero tape shall be run. If the tape properly reads "0" for all candidates and propositions, voting may begin.

(2) At the close of each day's voting, the precinct counter's doors must be locked and sealed with a numbered paper seal. The precinct counter must be unplugged and secured for the evening.

(3) Prior to voting on each day of the period, the precinct counter must be plugged back in and a tape run to indicate that the counter has not been disturbed since the previous day's voting and that voting may continue.

(4) At the conclusion of early voting by personal appearance, the precinct counter shall be locked, sealed, and secured by the Early Voting Clerk until Election Day.

(5) At the proper time designated for tabulation, the paper seal must be inspected to determine that it is intact. The audit log must also be inspected to determine that there has been no unauthorized access to the precinct counter.

(6) If the seal is intact and the log appears in order, the seal should be broken and the ballots removed to a separate container. The polls are closed on the counter and a "totals" printout is printed. The electronic media prom pack should be removed and transferred to the accumulator.

(7) If the seal is not intact, the early voting results may not be used and the early voting ballots must be re-counted using the standard election day procedure.

(8) If the audit log indicates unauthorized activity, the early voting results may not be used and the early voting ballots must be re-counted using the standard election day procedure.

[(9) After the final totals have been printed, the third test must be run on the precinct counter.]

(9) [(10)] The Early Voting Clerk shall place a notice on the bulletin board of the hour and location of the seal breaks and running of totals.

(10) [(11)] The audit log shall be preserved for 60 days after election day, or 22 months following election day in an election involving a federal office.

(11) [(12)] Any deviation from this procedure must be approved in writing by the Secretary of State.

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 July 17, 2017.

TRD-201702702

Lindsey Aston

General Counsel

Office of the Secretary of State

Earliest possible date of adoption: August 27, 2017

For further information, please call: (512) 463-5650


SUBCHAPTER D. VOTING SYSTEM CERTIFICATION

1 TAC §81.62

The Office of the Secretary State, Elections Division received a petition (as amended) for the adoption of rules under Section 2001.021 of the Texas Government Code and 1 TAC §71.16, requesting, among other things, modifications to 1 TAC §81.62. In accordance with Section 2001.021(c)(2) of the Texas Government Code and 1 TAC §71.16, the Secretary of State proposes amendments to 1 TAC §81.62. The proposed amendments to Rule 81.62 will eliminate the requirement for a continuous feed printer dedicated to a real-time audit log to be included with a central accumulator. The requirement is no longer necessary as federal voting system guidelines have been revised to provide additional content and security requirements for internal audit logs. Currently, all central accumulators certified in Texas meet these federal standards. Further, in 2009, §§129.051 - 129.057 were added to the Texas Election Code, which provide for pre-election security procedures, secure transportation of voting system equipment, secure access to voting equipment, and a prohibition on voting system equipment being connected to the internet. The improvements to the internal audit logs and the additional security provisions eliminate the requirement for the continuous feed printer.

Keith Ingram, Director of Elections, has determined that for the first five-year period the rule as amended is in effect, there will be no fiscal implications for state or local governments as a result of enforcing or administering the rule as amended. The elimination of the outdated requirement for a continuous audit log printer is expected to reduce costs for local governments, and potentially open opportunities for more vendors to submit their central accumulators for voting system certification in Texas.

Mr. Ingram has determined that for the first five-year period the public benefit anticipated as a result of the amendments will be to eliminate outdated requirements and references, and improve certification procedures. There will be no effect on small businesses or micro-businesses. There will be no anticipated economic cost to the state or local governments.

Interested persons may submit written comments on the proposed amendments to the Elections Division, Office of the Texas Secretary of State, P.O. Box 12060, Austin, Texas 78711-2060.

Comments may also be sent via E-mail to: elections@sos.texas.gov. For comments submitted electronically, please include "Proposed Amendment of Rule §81.62" in the subject line. Comments must be received no later than thirty (30) days from the date of publication of the proposed amendments in the Texas Register. Comments should be organized in a manner consistent with the organization of the proposed amendments. Questions concerning the proposed amendments may be directed to Elections Division, Office of the Texas Secretary of State, at (512) 463-5650.

The amendments are proposed pursuant to §31.003 of the Texas Election Code, which provides the Office of the Secretary of State with the authority to obtain and maintain uniformity in the application, interpretation, and operation of provisions under the Texas Election Code and other election laws. The amendments are also proposed pursuant to §122.001 and §122.032 of the Texas Election Code, which provide the Office of the Secretary of State the authority to prescribe additional procedures related to certification and operation of voting systems.

No other code or statute is affected by the amendments.

§81.62.Audit Logs for an Election Management System's Central Accumulator [Continuous Feed Printer Dedicated to the Central Accumulator Audit Log].

(a) For any Election Management System's central accumulator to be certified for use in Texas elections, the central accumulator shall include a [continuous feed printer dedicated to a] real-time audit log. All significant election events and their date and time stamps shall be maintained in [printed to] the audit log.

[(b) The definition of "significant election events" in subsection (a) of this rule includes but is not limited to:]

[(1) error and/or warning messages and operator response to those messages;]

[(2) number of ballots read for a given precinct;]

[(3) completion of reading ballots for a given precinct;]

[(4) identity of the input ports used for modem transfers from precincts;]

[(5) users logging in and out from election system;]

[(6) precincts being zeroed;]

[(7) reports being generated;]

[(8) diagnostics of any type being run; and]

[(9) change to printer status.]

(b) [(c)] The [continuous-feed printed] audit logs [log] for an election shall be retained by the custodian of election records for the appropriate preservation period.

(c) [(d)] The "Election Management System" as used in [subsection (a) of] this rule is defined as a system that consists of any or all of the following elements: functions and databases within a voting system that define, develop and maintain election databases, perform election definition and setup functions, format ballots, count votes, consolidate and report results, and maintain audit trails.

(d) [(e)] The "central accumulator" as used in [subsection (a) of] this rule is the part of an Election Management System that tabulates and/or consolidates the vote totals for multiple precincts/devices.

(e) An Election Management System that uses a central accumulator may not be used in an election unless the central accumulator creates in real time an audit log that includes a date and time stamp of each significant election event.

(f) An audit log produced by a central accumulator is considered part of the election records.

(g) A poll watcher may request a printed copy of an audit log produced by a central accumulator:

(1) before any votes are tabulated;

(2) after early voting results are tabulated; and

(3) immediately following the completion of the vote tabulation.

(h) After the automatic counting of ballots for each precinct is completed, the manager of a central counting station shall print a copy of the entire audit log to retain with other election records.

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 July 17, 2017.

TRD-201702703

Lindsey Aston

General Counsel

Office of the Secretary of State

Earliest possible date of adoption: August 27, 2017

For further information, please call: (512) 463-5650


PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

CHAPTER 353. MEDICAID MANAGED CARE

SUBCHAPTER J. OUTPATIENT PHARMACY SERVICES

1 TAC §353.905

The Texas Health and Human Services Commission (HHSC) proposes to amend Title 1, Part 15, Chapter 353, Subchapter J, §353.905, concerning Managed Care Organization Requirements.

BACKGROUND AND PURPOSE

42 Code of Federal Regulations (CFR) §455.410 requires that all ordering and referring physicians or other professionals providing services under the Medicaid state plan or under a waiver of the plan be enrolled as participating providers.

Section 353.905 is no longer aligned with federal law, as it requires a managed care organization (MCO) to allow pharmacy providers to fill prescriptions for covered outpatient drugs ordered by any licensed prescriber, regardless of the prescriber's network participation, without additionally requiring Medicaid enrollment. In accordance with 42 CFR §455.410, the proposed amended rule will require that an MCO allow pharmacy providers to fill prescriptions for covered outpatient drugs ordered only when the prescribing provider is enrolled in Texas Medicaid.

SECTION-BY-SECTION SUMMARY

The proposed amendment of §353.905(f) clarifies that an MCO can only allow a pharmacy provider to fill prescriptions that are written by (1) a licensed prescriber who is enrolled as a Texas Medicaid provider or (2) a physician resident participating in a postgraduate training program and under the supervision of a teaching physician who is enrolled as a Texas Medicaid provider.

The proposed amendment of §353.905(k) clarifies that a teaching physician as described in subsection (f) is not required to co-sign orders written by a resident, as long as the Medicaid recipient's medical record clearly documents the teaching physician's identifiable supervision of the resident.

FISCAL NOTE

Greta Rymal, HHSC Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years that the section will be in effect, there will be no fiscal implications to costs and revenues of state or local governments as a result of enforcing and administering the section as proposed.

SMALL BUSINESS AND MICRO-BUSINESS IMPACT ANALYSIS

Ms. Rymal has also determined that there will be no adverse impact on small businesses or micro-businesses required to comply with the section as proposed. There is no cost to providers to enroll in Medicaid for the single purpose of ordering, referring, or prescribing for Medicaid clients.

ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT

There are no anticipated economic costs to persons who are required to comply with the section as proposed.

There is no anticipated negative impact on local employment.

PUBLIC BENEFIT

Jami Snyder, State Medicaid Director, has determined that for each year of the first five years the section is in effect, the public will benefit from adoption of the proposed amendment. The public benefit anticipated as a result of enforcing or administering the section will be the implementation of fraud, waste, and abuse screening of providers who are not currently enrolled in Texas Medicaid and who order drugs for Medicaid clients.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code, §2007.043.

PUBLIC COMMENT

Written comments on the proposal may be submitted to Rules Coordination Office, P.O. Box 149030, Mail Code H600, Austin, Texas 78714-9030, or street address 4900 North Lamar Boulevard, Austin, Texas 78751; or e-mailed to HHSRulesCoordinationOffice@hhsc.state.tx.us.

To be considered, comments must be submitted no later than 30 days after the date of this issue of the Texas Register. The last day to submit comments falls on a Sunday; therefore, comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) faxed or e-mailed by midnight on the last day of the comment period. When faxing or e-mailing comments, please indicate "Comments on Proposed Rule 1R023" in the subject line.

STATUTORY AUTHORITY

The amendment is authorized by Texas Government Code §531.033, which provides the Executive Commissioner of HHS with broad rulemaking authority; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a) which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas.

The proposed amendment affects Texas Human Resources Code Chapter 32 and Government Code, Chapter 531.

§353.905.Managed Care Organization Requirements.

(a) - (e) (No change.)

(f) A health care MCO must allow pharmacy providers to fill prescriptions for covered outpatient drugs ordered by any licensed prescriber, regardless of the prescriber's network participation, who is:

(1) enrolled as a Texas Medicaid provider; or

(2) a physician resident participating in a postgraduate training program and under the supervision of a teaching physician who is enrolled as a Texas Medicaid provider.

(g) - (j) (No change.)

(k) A teaching physician as described in subsection (f) of this section is not required to co-sign orders written by a resident, provided the Medicaid recipient's medical record clearly documents the teaching physician's identifiable supervision of the resident.

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 July 11, 2017.

TRD-201702617

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: August 27, 2017

For further information, please call: (512) 487-3434


CHAPTER 354. MEDICAID HEALTH SERVICES

SUBCHAPTER F. PHARMACY SERVICES

DIVISION 4. LIMITATIONS

1 TAC §354.1863

The Texas Health and Human Services Commission (HHSC) proposes to amend Title 1, Part 15, Chapter 354, Subchapter F, §354.1863, concerning Prescription Requirements.

BACKGROUND AND PURPOSE

42 Code of Federal Regulations (CFR) 455.410 requires that all ordering and referring physicians or other professionals providing services under the Medicaid state plan or under a waiver of the plan be enrolled as participating providers.

Section 354.1863 is no longer aligned with federal law, as it only requires a prescribing provider to be licensed in order for HHSC to reimburse the pharmacy. In accordance with 42 CFR 455.410, the proposed amended rule will require that the prescriber also be enrolled in Texas Medicaid.

SECTION-BY-SECTION SUMMARY

The proposed amendment of §354.1863(a) adds that HHSC can only pay for pharmaceuticals if the prescribing practitioner is (1) enrolled as a Texas Medicaid provider or (2) is a physician resident participating in a postgraduate training program and under the supervision of a teaching physician who is enrolled as a Texas Medicaid provider.

The proposed amendment of §354.1863(f) clarifies that a teaching physician as described in subsection (a) is not required to co-sign orders written by a resident as long as the Medicaid recipient's medical record clearly documents the teaching physician's identifiable supervision of the resident.

FISCAL NOTE

Greta Rymal, Deputy Executive Commissioner for Financial Services, has determined that for each year of the first five years that the section will be in effect, there will be no fiscal implications to costs and revenues of state or local governments as a result of enforcing and administering the section as proposed.

SMALL BUSINESS AND MICRO-BUSINESS IMPACT ANALYSIS

Ms. Rymal has also determined that there will be no adverse impact on small businesses or micro-businesses required to comply with the section as proposed. There is no cost to providers to enroll in Medicaid for the single purpose of ordering, referring, or prescribing for Medicaid clients.

ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT

There are no anticipated economic costs to persons who are required to comply with the section as proposed.

There is no anticipated negative impact on local employment.

PUBLIC BENEFIT

Jami Snyder, State Medicaid Director, has determined that for each year of the first five years the section is in effect, the public will benefit from adoption of the section. The public benefit anticipated as a result of enforcing or administering the section will be the implementation of fraud, waste, and abuse screening of providers who are not currently enrolled in Texas Medicaid and who treat and prescribe drugs to Medicaid clients.

TAKINGS IMPACT ASSESSMENT

HHSC has determined that the proposal does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Texas Government Code, §2007.043.

PUBLIC COMMENT

Written comments on the proposal may be submitted to Rules Coordination Office, P.O. Box 149030, Mail Code H600, Austin, Texas 78714-9030, or street address 4900 North Lamar Boulevard, Austin, Texas 78751; or emailed to HHSRulesCoordinationOffice@hhsc.state.tx.us.

To be considered, comments must be submitted no later than 30 days after the date of this issue of the Texas Register. The last day to submit comments falls on a Sunday; therefore, comments must be: (1) postmarked or shipped before the last day of the comment period; (2) hand-delivered before 5:00 p.m. on the last working day of the comment period; or (3) faxed or emailed by midnight on the last day of the comment period. When faxing or emailing comments, please indicate "Comments on Proposed Rule 1R023" in the subject line.

STATUTORY AUTHORITY

The amendment is authorized by Texas Government Code §531.033, which provides the Executive Commissioner of HHS with broad rulemaking authority; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a) which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas.

The amendment affects Human Resources Code Chapter 32 and Government Code, Chapter 531.

§354.1863.Prescription Requirements.

(a) Payment for pharmaceuticals can be made only when these pharmaceuticals are prescribed by a practitioner:

(1) licensed to prescribe legend drugs and enrolled as a Texas Medicaid provider; or

(2) a physician resident participating in a postgraduate training program and under the supervision of a teaching physician who is enrolled as a Texas Medicaid provider.

(b) - (e) (No change.)

(f) A teaching physician as described in subsection (a) of this section is not required to co-sign orders written by a resident, provided the Medicaid recipient's medical record clearly documents the teaching physician's identifiable supervision of the resident.

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 July 11, 2017.

TRD-201702618

Karen Ray

Chief Counsel

Texas Health and Human Services Commission

Earliest possible date of adoption: August 27, 2017

For further information, please call: (512) 487-3434