AGENDA

FINANCIAL SERVICES COMMISSION

FEBRUARY 25, 2003

MEMBERS

Governor Jeb Bush

Attorney General Charlie Crist

Treasurer Tom Gallagher

Commissioner Charlie Bronson

Contact: Andrew Price (OISR)                            

             (850) 410-9896                               

             Steve Parton (OIR)

             (850) 413-4185

             LL-03, The Capitol

             Tallahassee, Florida

ITEM              SUBJECT               RECOMMENDATION

Administration

1. Minutes from the January 28, 2003 meeting.

(ATTACHMENT 1)                   FOR ACTION

2. Proposed delegations of authority to the Office of Insurance Regulation and the Office of Financial Institutions and Securities Regulation. 

(ATTACHMENT 2)                    FOR  ACTION                         

3.      Authorization to initiate rulemaking on proposed rules related to the "additional organizational structure" of the Office of Insurance Regulation and the Office of Financial Institutions and Securities Regulation, as contemplated by s. 20.121(3)(b), F.S., with final proposed rules, including changes recommended by the Directors, to be brought before the Commission for final adoption. 

(ATTACHMENT 3)                                              FOR ACTION

4.      Request for authorization (a) to move forward with all steps necessary to transfer the existing rules of the former Department of Insurance and the former Department of Banking and Finance to the Office of Insurance Regulation or the Office of Financial Institutions and Securities Regulation, as appropriate, and (b) to make technical changes to the transferred rules.

(ATTACHMENT 4)                                              FOR ACTION

ITEM 1

Minutes of the Financial Services Commission

January 28, 2003

Members

Jeb Bush, Governor

Tom Gallagher, Chief Financial Officer

Charlie Crist, Attorney General

Charlie Bronson, Agriculture Commissioner

Presented by:  Paul Mitchell

Chief of Staff, Florida Department of Financial Services

Cabinet Meeting Room, Lower Level, the Capitol

Tallahassee, Florida  32399

For More Information Contact:  Robert Tornillo,

Chief Cabinet Aide  (850) 413-2825

Item 1:      Minutes from the January 9, 2003, meeting.    Upon motion by Treasurer Gallagher and seconded by Commissioner Bronson, the minutes were approved. 

Item 2:      Salaries for the Directors of Office of Financial Institutions & Securities and Insurance Regulation. Motion to approve by Treasurer Gallagher and seconded by General Crist.  Moved and seconded without objection, the item was approved.   

Item 3:      Report of the Committee of Transition Management for the Department of Financial Services.  Motion to accept the report by Treasurer Gallagher and seconded by Commissioner Bronson.  Moved and seconded without objection, the item was approved. 

Copies of all items are on file in the Financial Services Commission files, Office of the Chief Financial Officer, Office of Cabinet Affairs.

There being no further business to come before the Commission, the meeting was adjourned.

ITEM 2

Financial Services Commission Delegations of Authority

The Directors of the Office of Insurance Regulation and the Office of Financial Institutions and Securities Regulation, or their respective designees, are hereby delegated the authority to act on behalf of the Financial Services Commission in the following areas within their respective jurisdictions:

(1)   With regard to rulemaking activities carried out pursuant to ss. 120.536 - 120.565, F.S., and the rules promulgated thereunder, all aspects of the rulemaking process, with the exception of the following:

(a) Final adoption of rules pursuant to section 120.54, F.S.;

(b) Emergency rulemaking pursuant to section 120.54, F.S.;

(c) Denials of petitions to initiate rulemaking filed by a person regulated by the Offices or having a substantial interest in an agency rule, pursuant to s. 120.54(7), FS.;

(d) Denials of written proposals for lower cost regulatory alternatives submitted by substantially affected persons, pursuant to s. 120.541, FS.

(2)   The Directors shall keep each member of the Commission advised of controversial or major policy issues within their respective jurisdictions related to rulemaking activities carried out pursuant to ss. 120.536 - 120.565, F.S., and shall place such matters before the Commission when directed by any member or when, in the opinion of the Director, the issue requires policy direction from the Commission.

Rulemaking Activities Under the Proposed Delegation:

Section 20.121, F.S., provides that the Financial Services Commission:

Shall serve as the agency head for purposes of rulemaking under ss. 120.536 - 120.565 [for] the commission and all subunits of the commission.

For purposes of streamlining the rulemaking process, the authority to carry out a number of the preliminary steps and ministerial acts set out in Chapter 120 that are related to the rulemaking process can be delegated by the Financial Services Commission to the appropriate Office.  Under the proposed delegation scheme, the Commission would retain final rulemaking authority, while each Office would be given the ability to carry on the day-to-day activities necessary to develop rules for consideration by the Commission, resulting in a process that can be carried out in a seamless and timely manner.

Activities recommended for delegation

Section 120.536:

None necessary.

Section 120.54:

* (2)(a) Publish notice of rule development.

* (2)(c) Hold public workshops/respond to a request for a public workshop/determine that a public workshop is unnecessary/assign a facilitator or mediator for a workshop, or decide to employ other types of alternative dispute resolution for rule development.

* (2)(d) Initiate negotiated rulemaking/assign personnel to act on behalf of the agency in negotiated rulemaking/select representative groups to participate in negotiated rulemaking/employ or assign neutral facilitator or mediator for process.

* (2)(d) Grant or deny a request for negotiated rulemaking.

* (3)(a) Publish notice of intent to adopt, amend or repeal a rule, other than an emergency rule (unless the rule is controversial or the Office Director determines that policy guidance from the Financial Services Commission is needed).

* (3)(a) Decide whether to prepare a statement of the estimated regulatory costs (unless a request is filed under s. 120.541, FS).

* (3)(b) Make determination whether a rule will affect small businesses/provide notification to OTTED/decide whether to adopt OTTED alternatives pursuant to stated criteria.

* (3)(c)1. Schedule a public hearing on a rule.

* (3)(c)2. Decide whether, at the request of a person whose "substantial interests" will be affected, a rulemaking proceeding "does not provide adequate opportunity to protect those interests" (also make threshold determination of whether the person's substantial interests will be affected and that proceeding does not provide adequate opportunity to protect those interests).  If so, forward proceeding to DOAH.

* (3)(d) Decide whether to modify or withdraw rule during rulemaking process, prior to consideration by the Financial Services Commission.

* (3)(e) After approval by Governor and Cabinet, filing final rule package for final adoption, including preparation of filing documents and certification of facts necessary to file rule.

* (7) Decision to grant a petition for rulemaking (decision to deny would be taken to the Financial Services Commission), or to deny a petition based on threshold determination that the person is not regulated by the agency or has no substantial interest in the agency rule.

* (8) Take all actions necessary to ensure retention of a complete rulemaking record.

Section 120.541:

* Decision to revise a proposed rule as a result of a lower cost regulatory alternative submitted by a substantially affected person, subject to ultimate approval of the proposed rule by the Financial Services Commission (decision not to revise would be taken before the Commission as part of the adoption process).

Section 120.542:

None necessary.

Section 120.545:

* (2) Respond to requests for information from JAPC.

* (3)&(4) Respond to objections from JAPC for proposed rules and amendments (including repeals).

Sections 120.55 - .551:

None necessary.

Section 120.56:

* Defend challenges to existing and proposed rules.

* Withdraw proposed rules declared invalid by an administrative law judge pursuant to an order that has become final.

Section 120.565:

None necessary.

Activities not recommended for delegation

Section 120.54:

* (3) Final adoption of rules.

* (4) Emergency rulemaking.

* (7) Decision to deny a petition for rulemaking filed by a person who is regulated by the agency or has a substantial interest in the agency rule.

Section 120.541:

* Decision not to revise a proposed rule in response to a result of a lower cost regulatory alternative submitted by a substantially affected person - this would be submitted to the Cabinet as part of the final rule package.

ITEM 3

Rules of the Financial Services Commission, Office of Financial Institutions and Securities Regulation

xx-x.xxx  Organizational Structure

(1)   The following Bureaus within the Office of Financial Institutions and Securities Regulation are hereby established:

(a)   Bureau of Financial Investigations.

(b)   Bureau of Bank Regulation - District I.

(c)   Bureau of Bank Regulation - District II.

(d)   Bureau of Credit Union Regulation.

(e)   Bureau of Securities Regulation.

(f)   Bureau of Finance Regulation.

(g) Bureau of Regulatory Review.

(2)   The Office of Financial Institutions and Securities Regulation shall have an Assistant Director, two Deputy Directors, and an Office of Legal Services.

Rules of the Financial Services Commission, Office of Insurance Regulation

xx-x.xxx  Organizational Structure

(1)   The following Bureaus within the Office of Insurance Regulation are hereby established:

(a)   Bureau of Property and Casualty Insurer Solvency.

(b)   Bureau of Life and Health Insurer Solvency.

(c)   Bureau of Specialty Insurers.

(d)   Bureau of Property and Casualty Forms & Rates.

(e) Bureau of Life and Health Forms & Rates.

(f) Bureau of Market Conduct.

(2)   The Office of Insurance Regulation shall have an Assistant Director, two Deputy Directors, and an Office of Legal Services.

ITEM 4

Pursuant to Section 3 of House Bill 3-E, adopted by the 2002 Legislature, certain programs of the former Department of Insurance and the Department of Banking and Finance were transferred to the Office of Insurance Regulation and the Office of Financial Institutions and Securities Regulation within the Financial Services Commission by a "type two transfer, as defined in s. 20.06(2), Florida Statutes."  That section provides:

the administrative rules of any agency or department involved in the transfer which are in effect immediately before the transfer remain in effect until specifically changed in the manner provided by law.

s. 20.06(2)(c), F.S.  While the rules administered by these Offices are still in force and effect, the rules are structurally located within rule chapters of the Florida Administrative Code that were assigned to the now-defunct Department of Insurance and Department of Banking and Finance.  In order to structurally realign the existing rules into the appropriate substantive areas, new rule chapters within the Florida Administrative Code will need to be assigned by the Bureau of Administrative Code, and new rule numbers assigned to these rules.

Staff is seeking authorization to move forward with the steps necessary to assign new rule numbers to these existing rules, thereby organizing the rules under the appropriate Office.  The steps include requesting the Bureau of Administrative Code to assign new rule chapters to the Office of Insurance Regulation and the Office of Financial Institutions and Securities Regulation, assigning the appropriate new rule numbers to these existing rules, and filing a transfer request covering the new numbers with the Bureau of Administrative Code to officially change the rule numbers.  Staff is also seeking authorization to file technical change letters with respect to these rules with the Bureau of Administrative Code, as necessary, to correct agency name and address references, as well as form numbers and other ministerial issues.  This agenda item contemplates no substantive changes to the rules.