December 16, 1974
The Honorable Ben Bynum Opinion No. H- 475
Chairman, Committee on Insurance
House of Representatives Re: Extent of the Comptroller’s
Austin, Texas authority to regulate com-
panies participating in the
State’s deferred compensation
Dear Representative Bynum: plan.
Your opinion request concerns the authority of the State Comptroller to
issue a specific regulation pursuant to his 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 of their salaries for purposes of
investment in life insurance, fixed or variable annuities, or mutual funds.
V. T. C. S. art. 6252-3b. 5 1. Insofar as state employees are concerned,
the Comptroller of Public Accounts is authorized to venter into contracts
with employees to defer a portion of their salaries and to make the payment
of premiums on the investment item purchased. V. T. C. S. art. 6252-3b,
§ §2. 5.
Section 1 of the 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, in whole or in part, any
portion of that employee’s compensation and may
subsequently, with the consent of the employee,
contract for, purchase, or otherwise procure a
fixed or variable life insurance or annuity contract
or mutual fund contracts for the purpose of funding
a deferred compensation program for the employee,
from any life underwriter duly licensed by this
state who represents an insurance company licensed
to contract business in this state,
p. 2164
The 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 con-
tracts at law required by law to offer for sale all of
the contracts authorized for purchase under the
Deferred Compensation Plan and that each representa-
tive of the 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 of investment 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 1 of Article 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 no authority expressly granted to the Comptroller in Article
6252-3b to issue rules or regulations. However, section 3 of the statute
provides that “[t]he administration of the deferred compensation program
shall be under the direction of the state ccanptroller or his designee . - . .‘I
It is thus necessary to determine whether the grant of authority in section 3
to administer the program includes an implied 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. 2165
The Honorable Ben Bynum, page 3 (H-475)
Whenever a power is given by statute, everything
necessary to make it effectual or requisite to
attain the end is implied. It is a well-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
of the grant. The grant of an express power carries
with it by necessary implication every other power
necessary and proper to the execution of the power
expressly granted. Where the law commands
anything to be done, it authorizes the performance
of whatever may be necessary for executing its
commands. (citing Sutherland on Statutory Construc-
tion, 5 341)
See also Attorney General Opinion C-265 (1964).
However, the implied powers of an administrative body to effectuate
the intent of a statute are limited.
Although a statute conferring administrative
authority will generally be liberally construed,
the agency must not go beyond the clear intent
of the legislature. It may not enlarge its powers
by its owh orders, or exercise a power expressly
conferred not upon it, but upon another agency or
arm of government. 1 Tex. Jur. Zd, Administrative
Law, § 6.
In our opinion, the intent of the Legislature in passing Article 6252-3b.
expressed in unambiguous language and reflected in the committee debates
of the House of Representatives, was to allow any licensed life under-
writer 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.y v. 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. 2166
The 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, no writ); and Attorney General Opinion M-609A (1970).
The Comptroller’s regulation imposes an additional burden in excess of the
legislative intent since it requires that the life underwriter or insurance
company be licensed to provide all four types of deferred compensation plans,
and not just any one of the plans as the statute permits.
A rule ~of an 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 of Civil 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 require-
ments~ for participation in the deferred compensation program, it is our
opinion that the regulation is void.
SUMMA RY
The regulation of the Comptroller requiring a life
underwriter or insurance company to be licensed to
provide life insurance, annuities and mutual fund
contracts in order to participate 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