Honorable II. A. Benson Savings & Loan Commissioner 1010 Lavaca-Street Austin 1, Texas Opinion No. C-130

Re: Scope and extent of the rulemaking authority.of the Savingsand LoanCornmissioner under Articles 342-205 and 852a, Vernon's Civtl Statutes, and relatDear Mr. Benson: ed question.

You have requested the opinion of this office as to then proper Interpretationof the scope and extent of the rule-making power, if any, of the Savings and Loan Commlssioner,under the applicable statutes, and particularly the Texas Savin s and Loan Act(Acts 58th Legislature,Regular Session, 1983, Chapter 113, page 269) codified as Article 852a, Vernon's Civil Statutes. The Savings and Loan Act becomes effective on January 1, 1964.

The office of Savings and Loan Commissioner is establishedby Article 342-205,Vernon's Civil Statutes. Subsection (d) thereof, the source of any rule-makingpower that the Commissionermay have, is quoted, together with subsections (e)and (g):

"(d) Upon the appointment and quallflcation of a Savings and Loan Commissioner under this.

Act such Savings and Loan Commissioner shall in person or by and through the Deputy Savings and Loan Commissioner, Savings and Loan Examiners, or other officers of the Savings and Loan Department, superviseand regulate, in accordance with the rules and regulationspromulgated by the Savings and Loan Commissioner togetherwith the Building and Loan Sectlon of the Finance Commission, all savings and loan associations doing business In this State (exceptFederal Savings

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and Loan Associationsorganizedand existing under Federal Law), and he shallhave and perform all of the duties and shall exercise all of the powers theretofore Imposed upon the Banking Commissioner and upon the Bullding and Loan Supervisor under and by virtue of the laws of this Statewith reference to savings and loan associations,and the Banking Commissioner shallbe relieved of all responsibility and authority relating to the granting of charters and the regulation and supervision of such associations." (Emphasis supplied).
"(e) The rule-makingpower of the Savings and Loan Commissionerand the Building and Loan Section of the Finance Commission shallnot be exercised unless notice of the terms or substance of the proposed'

rule or regulation or amendment to existing rules or regulationshas been given to all associations subject to regulationhereunder by certifiedmall, and, ifwithintwenty (20)days after issuance if such notice, as many as five (5)associations request a hearing on such proposal, a public hearing shall be called by the Savings and Loan Commissioner at which any interestedparty may present evidence or argument relating to suchproposal. After consideration of any relevantmatter available from the files and records of the Banking Department
or presented at any suchhearing, any rule, regulation or amendment approved and adoptedpursuant to suchhearing shallbe promulgated inwritten form and the effective date thereof fixed by the order of adoption and promulgation."
"(g) The Savings and Loan Commissionermay call specialmeetings of the Building and Loan Section of the Finance Commission, and he shall preside at all meetings of the Building and Loan Section of the Finance Commission,but he shall not vote except In the case of a tie or when his vote is necessary for effective action; provided, however, that the Banking Commissioner shall preside at all meetings of the entire Finance Commission except as otherwise providedby law." (Emphasissupplied).

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A careful examination of the quoted provisionsreveals that the Savingsand Loan Commissioner,acting alone, is granted
no rule-making authority. Rules for the conduct of the savings and loan Industry are to be promulgatedby "the Savings and Loan Commissioner togetherwith the Bulldln and Loan Section of the Finance Commission." Subsection (g 7 delineates the relationshipbetween the Commissionerand the Building and Loan Section In meetings of the Section;at which proposed rules and.~other matters muat be voted upon. The Commission-:
er is to preside but-his gtven a vote only-.ln the case:of a‘tle "orwhen his vote~ls necessary for effectiveaction," Inasmuch
as the Building and Loan Section consists of the three Bulldlng and-Loanmembers of the Finance Commission (Art. 342-103, V.C.S.);there-should rarely be a tie vote. Further, It is the opinion of this office that 'thephrase "whenhis vote'Is necessary for effective action" refers to the ocbaslons-when the Commlsslonerlspresence and vote Is necessary to constitute
a quorum of the Building?iiidzn Section,for the statute makes clear that the Commissioner is to be considered an exofficiomember of the Section, inasmuch ashe Is given a ~vote in certain circumstances,and his presence Is necessary at all meetings of the Section.

From the foregoing, it can be seen that Article 342- 205 gives no rule-makingpower to the Commissioner, except lnsofar as he may at times participate In the voting held,by the Building and Loan Sectionupon suchmatters.

Article 342-114,Vernon's Civil Statutes,which remains in force under the new Texas Savings and Loan Act, reads in part as follows:

"TheBuilding and Loan Section, through resolution adoptedby not less than two affirmativevotes,may promulgate general rules and regulationsnot inconsistentwith the Constitutionand Statutes of this State, and from.time to time emend the same,which rules and regulations shall be applicablealike to all State assoclatlorrs.

. .'

In Southwestern Savings and Loan Associationof Houston vs. Falkner, Tex. 331SW26917mO) th T

. courtmad?the foi6wing siatement,at pag& g&-E? Supreme

"On January 29, 1958, the Building and Loan Section of the Finance Commission of Texas, acting pursuant to authority contained in Art. 342-114,Vernon's Ann.Tex.St.,and

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respondent Commissionerpromulgatedcertain Rules and Regulationsgoverningthe granting of charters to building and loan associations and the establishment of branch offices." (Emphasis supplied).

Article 88la, Vernon's Civil Statutes,which was the center of controversy In the above case,;has been repealed by Artlcle 852a,-Vernon's Civil Statutes,the Texas Savings and Ioan Act. However, for our purposes the case is valid, inasmuch
as neither the new Act nor Article 342-205makes any addition to the rule-makingpower of the Commissioner. From the'quoted portion of the Southwestern Savingscase, su ra It Is clear ?-= that the Supreme Court viewed the rule-makng power as stemmlng from Article 342-114: The only effect of the'two subsequent statutes (Articles 342-205and 852a) is.to add the Savings and Loan Commissioneras an ex-officiomember of the Building and Loan Section of the Finance Commission. Any rules promulgatedwould thus be the jointaction of the Section and the Commissioner,which accounts for the phraseology contained in many sections of the new Texas Savingsand Loan Act.
Article 342-205, in subsections (d)and (e) thereof, does not grant a rule-makingpower to either the Savingsand Loan Commissioneror the Building and Loan Section, or the two acting together. References to rule-makingpower contained in those subsections are referencesonly and not grants of power. Therefore any rule-making authoritythatmay be exercisedunder Article 342-205 in relation to the Texas Savings and LoanAct would be invalid. The only statutethat grants the rule-making power with regard to the savings and loan Industry Is Article 342-114. The rule-making power vested therein is general in aature and it is required that the Building and Loan Section

promulgate general rules and regulationsnot inconslstent wlih the Constitution and Statutesof this State,

. . .'I

In addition to the above general review of the scopeand extent of the Commissioner'srole In rule-making for the savings and loan industry, you also ask the following specific question:

11

. . . Can the Building and Loan Section promulgate rules and regulationsconcerning additional offices, agenciesand change of office location as has been doneprior to January 1, 1964, even though there is no specific authorization for the implementationby rule and regulation of the establishmentof addltlonal offices, agencies, or change of locations authorized under Section 2.13~ofthe New Act. ,&t. 852a, V.C.SJ." -64%,

., -

Hon. R. A. Benson, page 5 .(C-3.3> :

By Section 2.13 of the Texas Savingsand Loan Act, the Commissioner Is vested with the responsibllltyfor decision In the above matters, but the Act is silent as to the respohslbllitg for the promulgation of specificrules and regulations. Since these rules and regulationsare necessary to establish further criteria for the guidance of the Commissioner and the Industry, and we have already established that the Commissionerhas no rule-makingpower in himself,
we must turn to Article 342-114. That Act,with Its general grant of rule-makingpower to the Building and Loan Section, must control here, by the;slmpleprocess of elimination. The Savings and Loan Commissioner participates In the rulemaking process, of course, In themanner previously outlined, but the promulgation of rules and regulations for the conduct of the savings and loan industry Is a function which the Leglslature has delegated to the Bulildlng and Loan Section of the Finance Commission.

SUMMARY

The Texas Savings and Loan Act (Art. 852a, V.C.S.), which goes into effect on January 1, 1964, does not by Its terms grant any rulemaking authority to the Savingsand Loan Commissioner. His participation In the rulemaking process for the savingsand loan fndustry 1s onlyby virtue of his ef-officiomembership in the Building and Loan Section of the Finance Commission, and by Art. 342-114,V.C.S., the said sectionhas sole rule-makingauthority in this area.

Art. 342-205,V.C.S., containsno grant of rule-making power to either the Savings and Loan Commissioneror the Building and Loan Section. Such general power stems from Art. X42-114, V.C.S., and can only be exercised In a manner consonantwith the Constitutionand existing statutes.

Yours very truly,

WAGGONER CARR Attorney General

MLQ:ms BY
Assistant

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APPROVED:

OPINION COMMITTEE

W. V. Geppe?t, Chairman Milton Richardson John Reeves Dudley McCalla J. C. Davis

APPROVED FOR THE ATTORNEY'GENERAL By: Stanton Stone

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