Honorable II.A. Benson
Savings & Loan Commissioner
1010 Lavaca-Street
Austin 1, Texas
                          Opinion No. C-130
                          Re:    Scope and extent of the
                                 rule making authority.of
                                 the Savings and LoanCorn-
                                 missioner under Articles
                                 342-205 and 852a, Vernon's
                                 Civtl Statutes, and relat-
Dear Mr. Benson:                 ed question.
       You have requested the opinion of this office as to
thenproper Interpretationof the scope and extent of the
rule-making power, if any, of the Savings  and Loan Commls-
sioner, under the applicable statutes, and particularly the
Texas Savin s and Loan Act(Acts 58th Legislature, Regular
Session, 198 3, Chapter 113, page 269) codified as Article
852a, Vernon's Civil Statutes. The Savings and Loan Act be-
comes effective on January 1, 1964.
        The office of Savings and Loan Commissioner is es-
tablished by Article 342-205, Vernon's Civil Statutes. Sub-
section  (d) thereof, the source of any rule-making power
that the Commissioner may have, is quoted, together with sub-
sections (e) and (g):
              "(d) Upon the appointment and quallfl-
       cation of a Savings and Loan Commissioner
       under this.Act such Savings and Loan Commis-
       sioner   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, supervise and
       regulate, in accordance with the rules and
       regulations promulgated by the Savings and
       Loan Commissioner together with the Building
       and Loan Sectlon of the Finance Commission,
       all savings and loan associations doing busi-
       ness In this State (except Federal Savings

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Hon. R. A. Benson, page 2 (C-130)


      and Loan Associationsorganized and existing
      under Federal Law), and he shall have and
      perform all of the duties and shall exercise
      all of the powers theretofore Imposed upon
      the Banking Commissioner and upon the Bulld-
      ing and Loan Supervisor under and by virtue
      of the laws of this State with reference to
      savings and loan associations, and the Bank-
      ing Commissioner shall be 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-making power of the Savings
       and Loan Commissioner and the Building and Loan
       Section of the Finance Commission shall not be
       exercised unless notice of the terms or substance
       of the proposed'rule or regulation or amendment
       to existing rules or regulations has been given
       to all associations subject to regulation here-
       under by certified mall, and, if withintwenty
       (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 interested party may present evidence or
       argument relating to such proposal. After con-
       sideration of any relevant matter available from
       the files and records of the Banking Department
       or presented at any such hearing, any rule, regu-
       lation or amendment approved and adopted pursuant
       to such hearing shall be promulgated in written
       form and the effective date thereof fixed by the
       order of adoption and promulgation."
            "(g) The Savings and Loan Commissioner may
       call special meetings 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 pre-
       side at all meetings of the entire Finance Com-
       mission except as otherwise provided by law."
       (Emphasis supplied).



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Hon. R. A. Benson, Page 3 (C-130)



A careful examination of the quoted provisions reveals that
the Savings and Loan Commissioner, acting alone, is granted
no rule-making authority. Rules for the conduct of the sav-
ings and loan Industry are to be promulgated by "the Savings
and Loan Commissioner together with the Bulldln and Loan Sec-
tion of the Finance Commission." Subsection (g7 delineates
the relationship between the Commissioner and the Building
and Loan Section In meetings of the Section; at which propos-
ed rules and.~othermatters muat be voted upon. The Commission-:
er is to preside but-hisgtven a vote only-.lnthe case:of a‘tle
"or when his vote~ls necessary for effective action," Inasmuch
as the Building and Loan Section consists of the three Bulld-
lng and-Loan members 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 'the phrase "when his vote'Is neces-
sary for effective action" refers to the ocbaslons-when the
Commlsslonerls presence 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 ex-
officio member of the Section, inasmuch as he 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-making power to the Commissioner, except ln-
sofar as he may at times participate In the voting held,by
the Building and Loan Section upon such matters.
       Article 342-114, Vernon's Civil Statutes, which remains
in force under the new Texas Savings and Loan Act, reads in
part as follows:
            "The Building and Loan Section, through
       resolution adopted by not less than two af-
       firmative votes, may promulgate general rules
       and regulations not inconsistent with the
       Constitution and Statutes of this State, and
       from.time to time emend the same, which rules
       and regulations shall be applicable alike to
       all State assoclatlorrs.. .'
In Southwestern Savings and Loan Association of Houston vs.
Falkner,    Tex.     331SW26917mO)
                            .               th T      Supreme
court mad?the foi6wing siatement, at pag& g&-E?
            "On January 29, 1958, the Building and
       Loan Section of the Finance Commission of
       Texas, acting pursuant to authority contain-
       ed in Art. 342-114, Vernon's Ann.Tex.St., and

                            -648-
Hon. R. A. Benson, page 4 (C-130)


      respondent Commissioner promulgated certain
      Rules and Regulations governing the granting
      of charters to building and loan associations
      and the establishment of branch offices." (Em-
      phasis supplied).
Article 88la, Vernon's Civil Statutes, which was the center
of controversy In the above case,; has been repealed by Artl-
cle 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 342-205 makes any addition
to the rule-making power of the Commissioner. From the'quoted
portion of the Southwestern Savings case, su ra It Is clear
that the Supreme Court viewed the rule-mak?-=
                                           ng power as stem-
mlng from Article 342-114: The only effect of the'two subse-
quent statutes (Articles 342-205 and 852a) is.to add the Sav-
ings and Loan Commissioner as an ex-officio member of the
Building and Loan Section of the Finance Commission. Any rules
promulgated would thus be the joint action of the Section and
the Commissioner, which accounts for the phraseology contained
in many sections of the new Texas Savings and Loan Act.
       Article 342-205, in subsections (d) and (e) thereof,
does not grant a rule-making power to either the Savings and
Loan Commissioner or the Building and Loan Section, or the two
acting together. References to rule-making power contained in
those subsections are references only and not grants of power.
Therefore any rule-making authority that may be exercised under
Article 342-205 in relation to the Texas Savings and Loan Act
would be invalid. The only statute that 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 regulations not inconslst-
ent wlih the Constitution and Statutes of this State, . . .'I
       In addition to the above general review of the scope and
extent of the Commissioner's role 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 regulations concerning
       additional offices, agencies and change of
       office location as has been done prior to Jan-
       uary 1, 1964, even though there is no specific
       authorization for the implementation by rule
       and regulation of the establishment of addl-
       tlonal offices, agencies, or change of loca-
       tions authorized under Section 2.13 ~of the New
       Act. ,&t. 852a, V.C.SJ."
                              -64%
,
    .,   -




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


             By Section 2.13 of the Texas Savings and Loan Act, the Com-
             missioner Is vested with the responsiblllty for decision In
             the above matters, but the Act is silent as to the respohsl-
             bllitg for the promulgation of specific rules and regula-
             tions. Since these rules and regulations are necessary to
             establish further criteria for the guidance of the Commis-
             sioner and the Industry, and we have already established
             that the Commissioner has no rule-making power in himself,
             we must turn to Article 342-114. That Act, with Its general
             grant of rule-making power to the Building and Loan Section,
             must control here, by the;slmple process of elimination.
             The Savings and Loan Commissioner participates In the rule-
             making process, of course, In the manner previously outlined,
             but the promulgation of rules and regulations for the conduct
             of the savings and loan industry Is a function which the Legls-
             lature has delegated to the Bulildlngand 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 rule-
                      making authority to the Savings and Loan Com-
                      missioner. His participation In the rule-
                      making process for the savings and loan fndus-
                      try 1s only by virtue of his ef-officio member-
                      ship in the Building and Loan Section of the
                      Finance Commission, and by Art. 342-114, V.C.S.,
                      the said section has sole rule-making authority
                      in this area.
                           Art. 342-205, V.C.S., contains no grant of
                      rule-making power to either the Savings and Loan
                      Commissioner or the Building and Loan Section.
                      Such general power stems from Art. X42-114,
                      V.C.S., and can only be exercised In a manner
                      consonant with the Constitution and existing
                      statutes.
                                         Yours very   truly,
                                        WAGGONER CARR
                                        Attorney General


                                         BY
             MLQ:ms                           Assistant

                                              -650-
Hon. R. A. Benson, Page 6 (C-130)


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




                            -651-