December 16, 1974

The Honorable Ben Bynum Chairman, Committee onInsurance House of Representatives Austin, Texas

Dear Representative Bynum: Opinion No. H- 475
Re: Extent ofthe Comptroller’s authority to regulate companies participating in the State’s deferred compensation plan. Your opinion request concerns the authority ofthe State Comptroller to issue a specific regulation pursuant tohis duty to administer the deferred compensation program for public employees provided by Article 6252-3b, V. T. C. S. The statute authorizes the use of deferred compensation plans whereby public employees may defer part oftheir salaries for purposes of investment in life insurance, fixed or variable annuities, or mutual funds. V. T. C.S. art. 6252-3b. 51. Insofar as state employees are concerned, the Comptroller ofPublic Accounts is authorized toventer into contracts with employees to defer aportion oftheir salaries and tomake the payment ofpremiums onthe investment item purchased. V. T. C.S. art. 6252-3b, §§2. 5. Section 1 ofthe statute authorizes the investment contract itself:

The state or any county, city, town, or other political subdivision may, by contract. agree with any employee to defer, inwhole or inpart, any portion ofthat employee’s compensation and may subsequently, with the consent ofthe employee, contract for, purchase, or otherwise procure a fixed or variable life insurance or annuity contract or mutual fund contracts for the purpose offunding a deferred compensation program for the employee, from any life underwriter duly licensed by this state who represents aninsurance company licensed to contract business inthis state,

p. 2164The Honorable Ben Bynum, page 2 (H-475)

However, the Comptroller has promulgated the following requirement which must be met by all life insurance companies and underwriters participating in the program:

The Company represents that it is a life insurance company, licensed for business in Texas and that the Company has in its possession all licenses or contracts at law required by law to offer for sale all of the contracts authorized for purchase under the Deferred Compensation Plan and that each representative ofthe Company contracting state employees for participation in the plan will be licensed to sell and will counsel the state employee as to the benefits of, each type ofinvestment contract authorized. The Comptroller’s regulation imposes additional material requirements for participation in the program beyond the requirements specified by the Legislature. In our opinion, section 1ofArticle 6252-3b clearly provides that any duly licensed life underwriter and any life insurance company licensed to transact business in Texas can participate in the program. The Comptroller however, has in effect ruled that many such duly licensed underwriters and companies cannot participate since they do not also hold licenses or contracts which would permit them to sell mutual funds. There is noauthority expressly granted to the Comptroller in Article 6252-3b toissue rules or regulations. However, section 3ofthe statute provides that “[t]he administration ofthe deferred compensation program shall be under the direction ofthe state ccanptroller or his designee

. - . .‘I Itis thus necessary to determine whether the grant ofauthority in section 3 to administer the program includes animplied power to issue the regulation in question, A general rule of statutory construction, stated in Terre11 v. Sparks, 135 S.W. 519, 521 (Tex. Sup. 1911)is that:

p. 2165The Honorable Ben Bynum, page 3 (H-475)

Whenever apower is given by statute, everything necessary to make it effectual or requisite to attain the end is implied. Itis awell-established principle that statutes containing grants of power are to be construed so as to include the authority to do all things necessary to accomplish the object ofthe grant. The grant ofan express power carries with it by necessary implication every other power necessary and proper to the execution ofthe power expressly granted. Where the law commands anything tobe done, it authorizes the performance ofwhatever may be necessary for executing its commands. (citing Sutherland on Statutory Construction, 5341)
See also Attorney General Opinion C-265 (1964). However, the implied powers ofan administrative body to effectuate the intent ofa statute are limited.

Although a statute conferring administrative authority will generally be liberally construed, the agency must not go beyond the clear intent ofthe legislature. Itmay not enlarge its powers by its owh orders, or exercise a power expressly conferred notupon it, butupon another agency or arm of government. 1Tex. Jur. Zd, Administrative Law, §6. In our opinion, the intent of the Legislature in passing Article 6252-3b. expressed inunambiguous language and reflected in the committee debates ofthe House ofRepresentatives, was to allow any licensed life underwriter who represents an insurance company licensed to contract business in Texas to participate in the deferred compensation plan program. The Comptroller’s regulation clearly runs contrary to this intent. In Ke1l.yv. Industrial Accident Board, 358 S.W. Zd 874, 876 (Tex. Civ. APP. --Austin 1962, writ ref’d. ) the court struck down an administrative rule, saying:

p. 2166The Honorable Ben Bynum, page 4 (H-475)

. . . the rules and regulations

. . . enacted by the administrative body may not impose additional burdens, conditions or restrictions in excess of or inconsistent with the statutory provisions. See also Johnson v. Firemen’s Insurance Co., 398 S.W. 2d 318 (Tew. Civ. APP. --Eastland 1965, nowrit); andAttorney General Opinion M-609A (1970). The Comptroller’s regulation imposes an additional burden in excess ofthe legislative intent since it requires that the life underwriter or insurance company be licensed to provide all four types ofdeferred compensation plans, and notjust any one ofthe plans as the statute permits. A rule ~ofan administrative agency is void if it conflicts with the statute. Teacher Retirement System v. Duck-worth, 264 S.W. 2d 98 (Tex. Sup. 1954) (adopting the opinionof the Court ofCivil Appeals in 260 S.W. 2d 632). Since the Comptroller’s regulation in this instance runs contrary to the intent of the statute in question and conflicts with the statutory requirements~for participation inthe deferred compensation program, it is our opinion that the regulation is void. SUMMA RY The regulation ofthe Comptroller requiring alife underwriter or insurance company to be licensed to provide life insurance, annuities and mutual fund contracts in order toparticipate in the deferred com-

‘pensation plan authorized by Article 6252-313, V. T. C.S., is void. Very truly yours,

Attorney General of Texas

irst Assistant

I C. ROBERT HEATH. Chairman Opinion Committee p. 2167