Notice of Review of Existing Regulations Pursuant to State Administrative Procedure Act Section 207 (Calendar Years 2012, 2007 and 2002)

Section 207 of the State Administrative Procedure Act (SAPA) requires that each State agency review, after five years and, thereafter, at five year intervals, each of its rules adopted on or after January 1, 1997 to determine whether such rules should be modified or continued without modification. In addition, pursuant to section 207(b) of SAPA, and L. 2012, c. 462, §§ 2, 3 eff. Jan. 1, 2013, an agency must also submit for publication a list of rules that must be reviewed in the third calendar year after the rule is adopted for which a regulatory flexibility analysis, rural area flexibility analysis or job impact statement was required. The Office of Children and Family Services (OCFS) did not adopt any rules during calendar years 1997 or 2014.

Therefore, pursuant to section 207 of SAPA, OCFS submits the following rules that were adopted during calendar years 2017, 2012, 2007, and 2002, and invites public comment on the continuation or modification of such rules. All section and part references are to Title 18 of the Official Compilation of the Codes, Rules and Regulations of the State of New York (NYCRR) unless otherwise indicated.

Comments regarding these rules should be sent to the attention of the following agency contact: Senior Attorney, Leslie Robinson, New York State Office of Children and Family Services, 52 Washington Street, Rensselaer, New York 12144. Email: [email protected]. Comments must be received within 45 days of the date of publication of this Notice. Please reference Rule Review in the subject line of the email.

The following information relates to regulations promulgated in 2012, 2007 and 2002, and that are scheduled for review during calendar year 2017:

2012

1. CFS-07-12-00002-A Educational Stability and Identity Theft Prevention

Action taken: Amendment of sections 428.3(b)(2)(v) and 430.11(c)(1)(i) and addition of sections 428.3(b)(2)(vi) and 430.12(k)

Analysis of need: This rule is necessary to implement the federal requirements relating to educations stability and identity theft prevention of foster children.

Legal basis: Social Services Law, sections 20(3)(d) and 34(3)(f)

2. CFS-45-11-00006-A Qualifications for Personnel in Juvenile Detention Facilities

Action taken: Amendment of section 180.8 of Title 9 NYCRR

Analysis of need: This rule is necessary to streamline juvenile detention personnel requirements and to align them with the requirements for authorized agencies.

Legal basis: Executive Law, section 501(3)

3. CFS-43-11-00005-A Multi-year Contracts

Action taken: Amendment of sections 405.3(e), 405.4(b)(2) and 405.4(c)

Analysis: This rule is necessary to provide the agency with greater flexibility in establish multi-year contracts.

Legal basis: Social Services Law, sections 20(2)(b), (3)(d), 34(3)(f) and 20-c

4. CFS-43-11-00015-A Designation of County Official to be Emergency Contact When a Youth is Remanded to an Out-of-County Detention Facility

Action taken: Amendment of section 180.7(c)(1) of Title 9 NYCRR

Analysis: This rule is necessary to allow each county to designate just one public official as the emergency contact for detention instead of two officials.

Legal basis: Executive Law, section 501(3)

2007

5. CFS-06-07-00010-A Public Assistance Employment Programs

Action taken: Amendment of sections 358-1.1, 415.2 and 415.4

Analysis: This rule is necessary to correct outdated cross references regarding public assistance employment programs.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(f) and 410-x(3)

6. CFS-13-07-00018-A Domestic Violence Shelter

Action taken: Amendment of section 452.10

Analysis: This rule is necessary to require that the location or address of a domestic violence shelter be kept confidential pursuant to Social Services Law, section 459-g.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(f), 383-c, 384, 409-e and 459-g

7. CFS-52-06-00012-A Mother and Baby Facility

Action taken: Amendment of section 442.25

Analysis: This rule is necessary to allow authorized agencies to request an exception to regulatory standards so that they may operate mother and baby facilities.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(f) and 462(1)

8. CFS-52-06-00011-A Medical Examinations for Prospective Adoptive and Foster Families

Action taken: Amendment of sections 421.16 and 443.2

Analysis: This rule is necessary to permit medical examinations to be conducted and medical reports required for certification or approval of a foster or adoptive parent.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(f) and 372-b(3)

9. CFS-51-06-00013-A Standards for Reimbursement for Foster Care Maintenance and/or Adoption Assistance

Action taken: Amendment of Parts 426, 427, 428 and 431

Analysis: This rule is necessary to maintain compliance with Federal regulations concerning the conditions for eligibility for receiving Federal reimbursement for certain foster care and adoption expenses, and clarify the definition of special needs child.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(f) and 407(4)

10. CFS-45-06-00002-A Caseworker Contacts with Foster Children, Their Relatives and Caregivers

Action taken: Amendment of sections 441.21 and 443.4

Analysis: This rule is necessary to revise the casework contact requirements for foster children, their relative and caretakers to better promote the health, safety and welfare of foster children.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(f) and 398(6)(a)

11. CFS-46-06-00002-A Child Protective Investigations

Action taken: Amendment of section 432.2

Analysis: This rule is necessary to clarify the procedures for cases where a child or home cannot be accessed by child protective service staff to conduct a safety assessment and to clarify the possible collateral contacts who may provide information relevant to a child protective investigation.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(f) and 421(3)

2002

12. CFS-34-02-0001-A Business Enterprise Program (BEP)

Action taken: Addition of Part 729

Analysis: This rule is necessary to establish a regulatory basis for the operation of the BEP by the Commission for the Blind.

Legal basis: Social Services Law, sections 20(3)(d) and 34(3)(f) and Unconsolidated Laws, section 8714-a

13. CFS-42-02-00021-A Foster Family Boarding Homes

Action taken: Amendment of sections 357.3, 421.1, 421.24, 427.2, 430.12, 430.13, 435.2 and 4446.3, and repeal of Parts 443 and 444, and addition of new Part 443

Analysis: This rule is necessary to establish the application, certification, approval and supervision of foster family boarding homes.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(d), (e) and (f) and 378(a)(2)

14. CFS-35-02-00002-A Adoption Subsidies for Foster Children

Action taken: Amendment of section 421.24

Analysis: This rule is necessary to establish adoption subsidies for foster children.

Legal basis: Social Services Law, sections 20(3)(d), 34(3)(f), 372-b(3), 383(3) and 451-454

INTRODUCTION

Pursuant to Section 207 of the State Administrative Procedure Act, Review of Existing Rules, the Department of Financial Services (“the Department”) must review, after five years and at five-year intervals thereafter, rulemakings adopted on or after January 1, 1998. In addition, effective January 1, 2013, for any rule that requires a regulatory flexibility analysis, rural area flexibility analysis or job impact statement, the Department must initially review that rule in the third calendar year after the year the rule first was adopted. The purpose of the review is to analyze the need for and legal basis of the adopted rulemakings. Please note that all references to “the Department” and the “Superintendent” prior to October 3, 2011 mean, respectively, the former Insurance Department or Banking Department and the former Superintendent of Insurance or Superintendent of Banking, as appropriate to the context, and that the references to laws cited are as of the date of the amendment to the regulations.

PART 1. FINANCIAL SERVICES REGULATIONS

Notice is hereby given of the following rules relating to financial services that the Department will review this year to determine whether they should be continued or modified. These rules were adopted in 2014. These rules as published in the New York State Register contain a regulatory flexibility analysis, a rural area flexibility analysis and/or a job impact statement. If no such analysis was filed, a statement setting forth why one or all of those analyses was unnecessary was published in the Register. Public comment on the continuation or modification of the above rules is invited. Comments must be received within 45 days of the date of publication of this notice. Comments should be submitted to:

Camielle A. Barclay

Senior Attorney

New York State Department of Financial Services

One State Street

New York, NY 10004

Telephone Number: (212) 480-5299

Email: [email protected]

Unless otherwise noted, the Department intends to continue the rules discussed herein without modification, while continually monitoring the regulations to ensure that the provisions remain consistent with related statutory and regulatory requirements.

The following rulemakings were adopted in 2014:

Addition of new Part 1 (Debt Collection by Third-Party Debt Collectors and Debt Buyers) to Title 23 NYCRR, effective December 2, 2014.

Statutory Authority: Financial Services Law Sections 202, 302, and 408.

This amendment established the oversight of debt collectors and set basic rules for debt collection in New York.

PART 2. INSURANCE REGULATIONS

Notice is hereby given of the following rules relating to insurance that the Department will review this year to determine whether they should be continued or modified. These rules were adopted in 2014, 2012, 2007 and 2002. These rules as published in the New York State Register contain a regulatory flexibility analysis, a rural area flexibility analysis and/or a job impact statement. If no such analysis was filed, a statement setting forth why one or all of those analyses was unnecessary was published in the Register. Public comment on the continuation or modification of the above rules is invited. Comments must be received within 45 days of the date of publication of this notice. Comments should be submitted to:

Camielle A. Barclay

Senior Attorney

New York State Department of Financial Services

One State Street

New York, NY 10004

Telephone Number: (212) 480-5299

Email: [email protected]

Unless otherwise noted, the Department intends to continue the rules discussed herein without modification, while continually monitoring the regulations to ensure that the provisions remain consistent with related statutory and regulatory requirements.

The following rulemakings were adopted in 2014:

Adoption of the Fourth Amendment to Part 39 (Insurance Regulation 144) (Minimum Standards for the New York State Partnership for Long-Term Care Program) of Title 11 NYCRR, effective January 1, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 1117, 3201, 3217, 3221, 3229, 4235, 4237, and Article 43; Social Services Law Section 367-f.

This rule amended the minimum daily benefit amounts for 2014 through 2023 for the New York State Partnership for Long-Term Care Program.

Adoption of the Fourth Amendment to Part 98 (Insurance Regulation 147) (Valuation of Life Insurance Reserves) of Title 11 NYCRR, effective January 1, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 1304, 1308, 4217, 4218, 4240 and 4517.

This amendment deleted the January 1, 2014 sunset provisions in Section 98.9(c)(viii), which permit insurers to use certain prescribed lapse assumptions that would make the section inoperable with respect to policies written on or after January 1, 2014.

Insurance Regulation 147 was amended effective April 1, 2015 to modernize the current regulatory scheme with respect to universal life insurance with secondary guarantee reserves.

Addition of new Part 226 (Insurance Regulation 200) (Unclaimed Life Insurance Benefits and Policy Identification) to Title 11 NYCRR, effective February 12, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 316, 1102, 1104, 2601, 3240 (unclaimed benefits), 4521, and 4525 and Article 24.

Part 226 was added to require insurers to implement reasonable procedures to identify unclaimed death benefits, locate beneficiaries, and make prompt payments. In addition, this Part required insurers to respond to requests from the Superintendent to search for policies insuring the life of, or owned by, decedents and to initiate the claims process for any death benefits that are identified as a result of those requests. It also established a filing requirement with the Office of the Comptroller regarding unpaid benefits.

Addition of new Part 244 (Insurance Regulation 168) (Confidentiality Protocols for Victims of Domestic Violence and Endangered Individuals) to Title 11 NYCRR, April 9, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301 and 2612.

Insurance Law Section 2612 requires the Superintendent, in consultation with the Commissioner of Health, Office of Children and Family Services, and Office for the Prevention of Domestic Violence, to promulgate rules to protect domestic violence victims by guiding and enabling insurers to guard against the disclosure of the confidential information protected by Insurance Law Section 2612. Therefore, after consultation with the Commissioner of Health, the Office of Children and Family Services, and the Office for the Prevention of Domestic Violence, the Superintendent drafted this rule to guide and enable insurers to guard against disclosure.

Amendment of Part 97 (Insurance Regulation 128) (Market Value Separate Accounts Funding Guaranteed Benefits; Separate Account Operations and Reserve Requirements) of Title 11 NYCRR, effective June 25, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 1403, 1405, 1414, 4217 and 4240.

This amendment prescribed minimum and maximum rates for discounting guaranteed benefit cash flows, which are based on the Treasury discount rate, to ensure that prudent levels of reserves are maintained by life insurers. This amendment also changed the filing due date of the actuarial memorandum that life insurers are required to file with the Department, pursuant to Section 97.6 of this rule, from March 1 to March 15.

Addition of Part 82 (Insurance Regulation 203) (Enterprise Risk Management and Own Risk and Solvency Assessment) to Title 11 NYCRR, June 25, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 110, 301, 309, 1109, 1115, 1501, 1503, 1504(c), 1604, 1702, 1717 and Articles 15, 16 and 17.

Chapter 238 of the Laws of 2013 amended Insurance Law Articles 15, 16, and 17 to require an ultimate holding company and a domestic insurer with subsidiaries to adopt a formal enterprise risk management (“ERM”) function and file an enterprise risk report with the Superintendent of Financial Services by April 30 of each year starting in 2014. Insurance Regulation 203 implemented Chapter 238 by setting forth specific requirements for an ERM function and enterprise risk report, among other things, and required certain domestic insurers to conduct an ORSA and file an ORSA summary report to minimize the potential for specific harm to the insurer and its policyholders.

The Department is considering another amendment to Insurance Regulation 203 to require a holding company and certain domestic insurers to describe their enterprise risk management functions in their enterprise risk reports and to clarify certain language.

Amendment of Part 99 (Insurance Regulation 151) (Valuation of Annuity, Single Premium Life Insurance, Guaranteed Interest Contract and Other Deposit Reserves) of Title 11 NYCRR, effective August 27, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 1304, 4217 and 4517.

This amendment incorporated a new individual annuity mortality table, which was recently adopted by the National Association of Insurance Commissioners (“NAIC”) that must be used to calculate reserves on individual annuities and pure endowments issued or purchased on or after January 1, 2015.

Amendment of Part 27 (Insurance Regulation 41) (Excess Line Placements Governing Standards) of Title 11 NYCRR, effective October 8, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 316, 1213, 2101, 2104, 2105, 2110, 2116, 2117, 2118, 2121, 2122, 2130, 3103, 5907, 5909, 5911, 9102, and Articles 21 and 59; Laws of 1997, Chapter 225; Laws of 2002, Chapter 587; and Laws of 2011, Chapter 61.

Insurance Regulation 41 governs the placement of excess line insurance. The purpose of the excess line law is to enable consumers who are unable to obtain insurance from authorized insurers to obtain coverage from eligible excess line insurers. This regulation implemented the provisions and purposes of Chapter 61 of the Laws of 2011, which amended the Insurance Law to conform to the Nonadmitted and Reinsurance Reform Act of 2010 (“NRRA”). The NRRA prohibits any state, other than the home state of an insured, from requiring a premium tax payment for excess (or “surplus”) line insurance. The NRRA also subjects the placement of excess line insurance solely to the statutory and regulatory requirements of the insured’s home state, and declares that only an insured’s home state may require an excess line broker to be licensed to sell, solicit, or negotiate excess line insurance with respect to such insured. The NRRA and Chapter 61 took effect on July 21, 2011 and have been impacting excess line placements since that date.

Amendment of Subpart 80-1 (Insurance Regulation 52) (Holding Companies) of Title 11 NYCRR, November 12, 2014.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 1504 and 1506.

This amendment advised applicants that the Superintendent may require, among other things, that the applicant or any holding company within the insurer’s holding company system establish a trust account that substantially conforms to the requirements of 11 NYCRR 126 (Insurance Regulation 114), in an amount and for a duration to be determined by the Superintendent, if the Superintendent determines that, absent such action, the acquisition is likely to be hazardous or prejudicial to the insurer’s policyholders or shareholders.

Amendment of Parts 98 (Insurance Regulation 147) (Valuation of Life Insurance Reserves) and 100 (Insurance Regulation 179) (Recognition of the 2001 CSO Mortality Table for use in Determining Minimum Reserve Liabilities and Non-forfeiture Benefits and Recognition and Application of Preferred Mortality Tables for Use in Determining Minimum Reserve Liabilities) of Title 11 NYCRR, effective December 10, 2014.

Statutory authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 1304, 1308, 4217, 4218, 4221, 4224, 4240 and 4517.

This amendment was necessary to modernize the current regulatory scheme with respect to term life insurance reserves.

In addition, Insurance Regulations 147 and 179 were amended effective April 1, 2015, to modernize the current regulatory scheme with respect to universal life insurance with secondary guarantee reserves.

The following rulemakings were adopted in 2012:

Addition of Subpart 151-6 (Insurance Regulation 119) (Workers’ Compensation Insurance) to Title 11 NYCRR, effective March 7, 2012.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Section 301; and Workers’ Compensation Law Sections 15(8)(h)(4) and 151(2)(b).

This amendment was necessary, and mandated by the Workers’ Compensation Law, to standardize the basis upon which the workers’ compensation assessments were calculated to eliminate any discrepancy between the amount that an insurer collected from employers and the amount that an insurer remitted to the Workers’ Compensation Board.

Amendment of Part 54 (Insurance Regulation 77) (Variable Life Insurance) of Title 11 NYCRR, effective March 14, 2012.

Statutory Authority: Financial Services Law Sections 202, 301 and 302; Insurance Law Sections 301, 3201 and 4240.

This amendment to Insurance Regulation 77 added provisions necessary to accommodate the mechanics of private placement investments in variable life insurance policies, and allowed consumers who meet the federal definition of “accredited investor” or “qualified purchaser” as incorporated by reference in the regulation, to purchase private placement variable life insurance policies. The amendment also required insurers to inform consumers that, due to the illiquid nature of the investment options, the payment of the death benefit, the cash surrender value, policy loans, partial withdrawals or partial surrenders, as applicable, may be delayed. The statement must also advise the applicant to refer to the policy for further details on any delay of payments.

Addition of Part 381 (Insurance Regulation 198) (Life Settlements) to Title 11 NYCRR, effective March 21, 2012.

Statutory Authority: Financial Services Law Sections 202, 301 and 302; Insurance Law Sections 301 and Sections 2137, 7803, 7804 and 7817 as added by the Laws of 2009, Chapter 499, Section 21.

Sections 2137, 7803, and 7804 of the Insurance Law require that the Superintendent establish the application filing fees for licensing of life settlement providers and brokers; the registration of life settlement intermediaries; and financial accountability requirements for life settlement providers. Therefore, adoption of this rule establishing license and registration fees and financial accountability requirements was necessary for the implementation of the life settlement legislation.

Amendment of Part 16 (Insurance Regulation 86) (Special Risk Insurance) of Title 11 NYCRR, effective April 11, 2012.

Statutory Authority: Financial Services Law Sections 202, 301 and 302; Insurance Law Sections 301, 307 and 308 and Article 63.

Chapter 490 of the Laws of 2011 amended Article 63 of the Insurance Law by introducing Class 3 risks to be written in New York by insurers licensed to write special risk insurance for “large commercial insureds,” as defined in the amendment, provided that the insurers make certain informational filings with the Superintendent. The addition of the Class 3 risks was intended to enhance the ability of insurers to underwrite large and unusual risks in the New York market, increase speed to market for certain insurance products not currently exempted, and facilitate more streamlined economic development in New York, as existing and emerging businesses that need to insure large or unusual risks would have quick access to the insurance they need. The rule set forth the requirements for writing Class 3 risks and the procedures for insurers to make the required filings as stated in Chapter 490.

Amendment of Part 99 (Insurance Regulation 151) (Valuation of Annuity, Single Premium Life Insurance, Guaranteed Interest Contract and Other Deposit Reserves) of Title 11 NYCRR, effective April 11, 2012.

Statutory Authority: Financial Services Law Sections 202, 301, and 302; Insurance Law Sections 301, 1304, 4217 and 4517.

The Insurance Law prescribes the mortality tables and interest rates to be used for calculating reserve funds necessary in relation to the obligations made to policy or contract holders. This amendment was necessary to allow the use of substandard annuity mortality tables in valuing impaired lives under individual single premium immediate annuities. Use of a substandard annuity mortality table or the use of a constant addition to the standard mortality rate allowed the insurer to recognize the impaired health of the annuitant, which may benefit consumers with impaired health by enabling insurers to keep costs at a lower level because they would not need to hold standard reserves.

Insurance Regulation 151 was amended effective August 27, 2014, as previously discussed.

Amendment of Part 39 (Regulation 144) (Minimum Standards for the New York State Partnership for Long-Term Care Program) of Title 11 NYCRR, effective June 1, 2012.

Statutory Authority: Financial Services Law Sections 202, 301 and 302; Insurance Law Sections 301, 1117, 3201, 3217, 3221, 3229, 4235, 4237 and Article 43; and Social Services Law Section 367-f.

This rule amended minimum standards for inflation protection to add a new plan and add disclosure requirements relating to reciprocity.

Amendment of Part 16 (Insurance Regulation 86) (Special Risk Insurance) of Title 11 NYCRR, effective November 12, 2012.

Statutory Authority: Financial Services Law Sections 202, 301 and 302; Insurance Law Sections 301, 307 and 308 and Article 63.

The free trade zone enables insurers to make certain types of insurance available more quickly without prior approval or review by the Superintendent to facilitate more streamlined economic development in New York. To advance this objective, the Department reduced one of the premium thresholds for Class 1 risks and added more insurance risks that may be written as Class 2 risks in the free trade zone. The rule was also amended to define various risks and exposures that were previously added to the Class 2 risk list by public notice, pursuant to Section 16.8 of the regulation. Additionally, the parameters established for writing risks in the ‘‘free trade zone’’ had not been revised in several years. This amendment simplified certain of the calculations set forth in the current rule.

Amendment of Part 362 (Insurance Regulation 171) (The Healthy New York Program) of Title 11 NYCRR, effective November 28, 2012.

Statutory Authority: Financial Services Law Sections 202 and 302; Insurance Law Sections 301, 1109, 3201, 3216, 3217, 3221, 4235, 4303, 4304, 4305, 4326 and 4327.

This amendment permitted existing Healthy New York enrollees to keep their current coverage option. New applicants, for coverage effective January 1, 2012 or later, were limited to Healthy New York’s high deductible health plans only. This approach struck a balance in protecting existing enrollees from unaffordable rate increases while maintaining an affordable option for those purchasing coverage.

The following rulemakings were adopted in 2007:

Amendment of Part 83 (Insurance Regulation 172) (Financial Statement Filings and Accounting Practices and Procedures) of Title 11 NYCRR, effective January 10, 2007.

Statutory Authority: Insurance Law Sections 107(a)(2), 201, 301, 307, 308, 1109, 1301, 1302, 1308, 1404, 1405, 1407, 1411, 1414, 1501, 1505, 3233, 4117, 4233, 4239, 4301, 4310, 4321-a, 4322-a, 4327 and 6404; Public Health Law Sections 4403, 4403-a, 4403-(c)(12) and 4408-a; Chapter 599 of the Laws of 2002.

This rule incorporated the National Association of Insurance Commissioners (“NAIC”) Accounting Practices and Procedures Manual As Of March 2005 by reference so as to enhance the consistency of the accounting treatment of assets, liabilities, reserves, income and expenses, and to set forth the accounting practices and procedures to be followed in completing annual and quarterly financial statements required by law. The amendment of another portion of the regulation was necessitated by the issuance of a revised edition of Estimated Useful Lives of Depreciable Hospital Assets, another publication that is incorporated by reference in the regulation.

Insurance Regulation 172 was amended effective March 16, 2011, to update the regulation to conform to NAIC guidelines and statutory amendments, and to clarify existing provisions.

The Department is considering another amendment to Insurance Regulation 172 to add an exception for proposed amendments expected to be adopted by the NAIC regarding policy reserves for life contracts, to revise lapse rates and economic volatility used in calculating the standard scenario reserve, to update the economic volatility assumption used in the stochastic modeling for variable annuities with guaranteed living benefits, and to make other revisions.

Amendment of Part 98 (Insurance Regulation 147) (Valuation of Life Insurance Reserves) of Title 11 NYCRR, effective January 10, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 1304, 1308, 4217, 4218, 4240, and 4517.

Maintaining solvency of insurers doing business in New York is a principal focus of the Insurance Law. One way the Insurance Law seeks to ensure solvency is by requiring all insurers and fraternal benefit societies authorized to do business in New York to hold reserve funds in an amount proportional to the obligations made to policyholders. At the same time, insurers and policyholders benefit when insurers have adequate capital for company purposes such as expansion and product or other forms of business development.

Some companies have sold life insurance products that result in lower reserves than would be required for products with similar death benefit and premium guarantees. This rule addressed that problem by establishing new reserve methodologies consistent with Insurance Law Section 4217.

Insurance Regulation 147 was amended effective March 16, 2011, to remove restrictions on the mortality adjustment factors (known as X factors) in deficiency reserves calculation. This amendment to Insurance Regulation 147 incorporated both the NAIC revisions to the model regulation and the interpretation of the Actuarial Guideline, thus resulting in consistency between the NAIC and New York and promoting regulatory uniformity across the U.S. Companies domiciled in states that did not adopt these changes by December 31, 2009 year-end were forced to hold higher reserves relative to companies domiciled in states that had adopted these changes.

Insurance Regulation 147 also was amended in 2014 and 2015 as discussed above.

Amendment to Part 262 (Insurance Regulation 162) (Legal Services Insurance) of Title 11 NYCRR, effective January 10, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 1113(a)(29), 1116 and Articles 23 and 63; Chapter 65 of the Laws of 1998.

Prior to this amendment, legal services insurance that was written as part of a policy of liability insurance was subject to the filing and approval requirements of Insurance Law Article 23, and did not qualify as a special risk coverage pursuant to 11 NYCRR Part 16 (Insurance Regulation 86). Thus, a liability policy that might otherwise be exempt from Article 23 filing requirements, except for the fact that it includes legal services insurance coverage, was required to be submitted to the Department for approval before it could be used. This amendment permitted legal services insurance to qualify as a special risk only if the coverage of the policy of liability insurance of which it is a part also qualified as a special risk coverage pursuant to Insurance Regulation 86 and Insurance Law Article 63, and the policy was written on such basis.

Addition of new Part 75 (Insurance Regulation 181) (Standards for Insurance that Qualifies for the Environmental Remediation Insurance Tax Credit) to Title 11 NYCRR, effect January 10, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 2105, 2118, and 3447.

Insurance Law Section 3447 provides that the Superintendent is authorized to promulgate regulations relating to the certification of policies of insurance that qualify for the environmental remediation insurance tax credit provided for under Tax Law Section 23. Part 75 was added to provide guidance for insurers as to the minimum standards for environmental remediation insurance coverages that will enable an insurer to certify that the coverages qualify for the environmental remediation insurance tax credit provided for under the Tax Law. This Part also provided the requirements for disclosure of the premiums paid for the coverages under Insurance Law Section 3447(b) to enable the insured to obtain the appropriate tax credit.

Addition of Part 46 (Insurance Regulation 174) (Unemployment Lapse Protection Benefit for Life Insurance) to Title 11 NYCRR, effective January 7, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 1113, 3201, and 4525.

This rule established minimum standards for benefit levels, benefit eligibility and exclusion, and premium levels relating to additional benefits authorized under Insurance Law Section 1113(a)(1) for unemployment lapse protection benefits for life insurance. The unemployment lapse protection benefit includes waiver of premium benefits and waiver of charge benefits. This rule also prescribed advertising and disclosure requirements for unemployment lapse protection benefits for life insurance.

Amendment of Part 152 (Insurance Regulation 124) (Physicians and Surgeons Professional Insurance Merit Rating Plan) of Title 11 NYCRR, effective January 24, 2007.

Insurance Law Section 2343(d) provides that the Superintendent shall, by regulation, establish a merit rating plan for physicians’ professional liability insurance. Section 2343(e) provides that the Superintendent may approve malpractice insurance premium reductions for insured physicians who successfully complete an approved risk management course, subject to standards prescribed by the Superintendent by regulation. This rule was amended to allow, but not to require, an insurer to offer an internet-based risk management course to its insureds as soon as the Department determines that the course is in proper compliance with applicable law.

Amendment of Part 362 (Insurance Regulation 171) (The Health New York Program & the Direct Payment Stop Loss Relief Program) of Title 11 NYCRR, effective January 31, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 1109, 3201, 3216, 3217, 3221, 4235, 4303, 4304, 4305, 4318, 4326, and 4327.

Chapter 1 of the Laws of 1999 enacted the Healthy New York Program as an initiative designed to encourage small employers to offer health insurance to their employees and to encourage uninsured individuals to purchase health insurance coverage. This rule introduced a second Healthy New York benefit package at a reduced premium rate. The second benefit package provided for a lower-cost alternative and permitted individuals and small businesses to choose a benefit package that met their needs. The rule eliminated the well-child copayment applicable to the Healthy New York Program in order to enhance access to preventive and primary care for children, and permitted the Healthy New York Program to be considered qualifying health insurance under the federal Trade Act of 2002 allowed those qualifying for a federal tax credit to benefit from that credit. The rule also revised the eligibility requirements relating to employment in order to lessen complexity and enhance access.

Insurance Regulation 171 was amended effective November 7, 2007, to require HMOs and participating insurers to offer high deductible health plans using the Healthy New York small employer and individual programs. This option provided New Yorkers with access to a tax-advantaged method of purchasing health insurance. The rule also provided for prostate cancer screening and a limited home health care and physical therapy benefit. The addition of the prostate cancer screening benefit facilitated prompt and early detection of prostate cancer, which in turn should decrease mortality and reduce treatment costs.

Insurance Regulation 171 also was amended effective November 28, 2012 as discussed above.

Amendment of Subpart 65-3 (Insurance Regulation 68-C) (Claims for Personal Injury Protection Benefits) and Subpart 65-4 (Insurance Regulation 68-D) (Arbitration) of Title 11 NYCRR, effective March 14, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 2601, 5106 and 5221; Vehicle and Traffic Law Section 2407.

Regulation 68 contains provisions implementing Article 51 of the Insurance Law, which is commonly referred to as the No-fault law. No-fault insurance is intended to provide for prompt payment of health care and loss of earnings benefits. In accordance with Chapter 452 of the Laws of 2005, these two rules required an insurer to issue a denial of a no-fault claim with specific language that advised the applicant of the availability of special expedited arbitration to resolve the issue of which insurer must process the claim for first party benefits.

Repeal of Part 94 and addition of new Part 94 (Insurance Regulation 56) (Valuation of Individual and Group Accident and Health Insurance Reserves) to Title 11 NYCRR, effective July 11, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 1303, 1304, 1305, 1308, 4117, 4217, 4310, and 4517.

The Insurance Law does not specify mortality, morbidity, and interest standards used to value individual and group accident and health insurance policies, but relies on the Superintendent to specify methodology. This regulation was amended to prescribe rules for valuing minimum individual and group accident and health insurance reserves, including standards for valuing certain accident and health benefits in life insurance policies and annuity contracts. The amendment also lowered reserves for individual policies, which was expected to result in a lower cost of doing business in New York.

The Department is considering an amendment to Insurance Regulation 56 to adopt a new individual disability income table for valuing active life and disabled life reserves in consideration of a proposed NAIC adoption of such table.

Amendment of Part 74 (Insurance Regulation 159) (Homeowners Insurance Disclosure Information and other Notices) of Title 11 NYCRR, effective August 8, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 3425, 3445, and 5403.

In enacting Chapter 162 of the Laws of 2006, the Legislature intended to improve public awareness of market assistance programs, such as the Coastal Market Assistance Program, that may be available to homeowners in New York. Chapter 162 required that when a policyholder received a notice of cancellation, nonrenewal or conditional renewal for a homeowners insurance policy as specified in Insurance Law Section 3425(e) with respect to property located in an area served by a market assistance program established by the Superintendent for the purpose of facilitating placement of homeowners insurance, the policyholder must also have received notice from the insurer of possible eligibility for coverage through the market assistance program or through the New York Property Insurance Underwriting Association (“NYPIUA”). In order to implement Chapter 162, the Legislature required the Superintendent to promulgate regulations governing the notices required by law. This rule set forth certain minimum notification requirements to ensure that policyholders that may have been eligible for a market assistance program or NYPIUA received proper notice of their options.

Addition of Part 12 (Insurance Regulation 50) (Agent Training Allowance Subsidies for Certain Life Insurance and Annuity Business) to Title 11 NYCRR, effective October 17, 2007.

Statutory Authority: Insurance Law Sections 201, 301, and 4228.

Insurance Regulation 50 was added to update the limits in Insurance Law Sections 4228(e)(3)(C) through 4228(e)(3)(E) to reflect inflation from the January 1, 1998 effective date of Section 4228 to the present.

On October 25, 2016, the Department filed with the Department of State a proposed amendment to Insurance Regulation 50 to increase the training allowance limits to reflect inflationary increases that have arisen since the regulation was first promulgated on September 28, 2007.

Amendment of Part 350 (Insurance Regulation 140) (Continuing Care Retirement Communities) of Title 11 NYCRR effective October 17, 2007.

Statutory Authority: Insurance Law Sections 201, 301, and 1119; Public Health Law Sections 4604(4)(a), 4607, and 4611.

Chapter 689 of the Laws of 1989 was enacted for the stated purpose of facilitating the creation of the necessary components for the development of a broader and more integrated continuum of long term care, financed by a range of private, public and public/private options. One option was the Continuing Care Retirement Community (“CCRC”), a residential facility for seniors that provides stated housekeeping, social, and health care services in return for some combination of advance fees, periodic fees, and additional fees. A CCRC is often designed to provide a full continuum of care as the health status of a resident deteriorates with age. A CCRC is expected to maintain at all times at least the required minimum level of liquid funds to cover unexpected expenses or unexpected revenue shortfalls. These funds are not to cover budgeted expenses. This amendment reduced the minimum liquid amount requirement to a level more in line with the investment community’s “days cash on hand” benchmark for an entrance fee community. The “days cash on hand” benchmark was designed to provide sufficient funds to cover unexpected expenditures, to provide refunds for unanticipated living unit turnover without an attendant new entrance fee, or to meet other unbudgeted expenses.

The Department is considering another amendment to Insurance Regulation 140 to clarify and modify the actuarial reserve calculation, distribution allowances, allowable investments, and necessary filing requirements, in view of marketplace expansion in both the number and types of CCRCs. The amendment would also add a new section specifying parameters for transactions between a CCRC and its parent corporation, affiliate or subsidiary.

Amendment of Part 52 (Insurance Regulation 62) (Minimum Standards for the Form, Content, and Sale of Health Insurance, Including Standards of Full and Fair Disclosure) and Addition of a new Part 56 (Insurance Regulation 183) (Processing of Claims) to 11 NYCRR, effective November 7, 2007.

The Insurance Law authorizes the Superintendent to establish standard provisions for accident and health insurance coverage, and to promulgate regulations governing minimum standards for the form, content and sale of such coverage. Insurance Regulation 183 and the amendment of 11 NYCRR 52.16(c)(5) served that purpose. The cosmetic surgery exclusion presently set forth in Regulation 62 predated Insurance Law Article 49, which provides for internal and external appeal of medical necessity denials. This rule clarified the requirements relating to the cosmetic surgery exclusion in light of the subsequently enacted statutes.

Amendment of Part 42 (Insurance Regulation 149) (Term Life Issuance and Renewal Restrictions; Non-forfeiture Values for Certain Life Insurance Policies) of Title 11 NYCRR, effective December 5, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 3201, 4221, and 4511.

The Insurance Law sets forth non-forfeiture requirements for the anniversaries of life insurance policies. Those requirements assume that premiums are annually paid at the beginning of each policy year, and that any surrenders or lapses occur at the end of the year. In practice, premiums may actually be paid throughout a policy year (i.e. monthly), and surrenders may occur at times other than on a policy anniversary. This amendment addressed the issues that can arise when those types of variations occur. Providing insurers with guidance as to what is considered acceptable, should enhance their ability to get policy forms approved more quickly. This amendment also sought to clarify the requirements of Insurance Law Section 4221 because of the number of areas where the Department found problems with policy form submissions.

Amendment of Part 27 (Insurance Regulation 41) (Excess Line Placements Governing Standards) of Title 11 NYCRR, effective December 19, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 2105, 2118, and Article 21.

Article 21 of the Insurance Law establishes minimum standards for the placement of New York risks with eligible excess line insurers. Insurance Regulation 41 further governs the placement of excess line insurance. Insurance Regulation 41 requires alien excess line insurers to maintain trust funds in the United States to support their United States excess line business. These trust requirements were not updated for several years. The NAIC’s International Insurers Department, which reviews alien insurer applications for inclusion on the NAIC Quarterly Listing of Alien Insurers, updated its trust funding standards for alien excess line insurers and for associations of insurance underwriters (“Associations”). This rule changed the amount of funds required to be held in trust by alien excess line insurers and Associations, and resolved the existing inequity in the trust fund obligations imposed upon alien excess line insurers, as compared to the obligations imposed upon an Association. The amount of funds to be held in trust by alien excess line insurers increased, and the amount of funds to be held in trust by an Association decreased.

Insurance Regulation 41 was amended effective October 8, 2014, to implement Chapter 61 of the Laws of 2011, conforming to the Federal Non-admitted and Reinsurance Reform Act of 2010.

Amendment of Part 100 (Insurance Regulation 179) (Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Non-forfeiture Benefits and Recognition and Application of Preferred Mortality Table for Use in Determining Minimum Reserve Liabilities) of Title 11 NYCRR, effective December 26, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 1304, 4217, 4218, 4221, 4224, 4240, and 4517, and Articles 24 and 26.

Insurance Regulation 179 was amended to recognize and permit the use of the 2001 CSO preferred class structure mortality table for preferred lives for individual life insurance and group life insurance products sold to individuals by certificate with premium rates guaranteed from issue for at least two years in accordance with Insurance Law Sections 4217 and 4517.

Insurance Regulation 179 was amended effective March 16, 2011, to extend the use of the 2001 CSO Preferred Structure Mortality Table to policies issued on or after January 1, 2004, and also amended in 2014 and 2015 as discussed above.

The Department is considering another amendment to Insurance Regulation 179 to revise the title and adopt the 2017 CSO mortality table for valuing life insurance reserves in consideration of a proposed NAIC adoption of such table.

Amendment of Part 98 (Insurance Regulation 147) (Valuation of Life Insurance Reserves) of Title 11 NYCRR, effective December 26, 2007.

Statutory Authority: Insurance Law Sections 201, 301, 1304, 1308, 4217, 4218, 4240, and 4517.

Insurance Regulation 147 was amended to include the provisions of the adopted new version of the NAIC’s Actuarial Guideline 38 to be in effect for policies issued on or after January 1, 2007 and prior to January 1, 2011.

The Department is considering another amendment to Insurance Regulation 147 to adopt the existing NAIC standards for waiver of premium reserves, to adopt the 2017 CSO mortality table for valuing life insurance reserves, and to revise the standards for varying premium term life insurance policies and universal life products with secondary guarantees for those policies where the 2017 CSO table will be the minimum standard.

The following rulemakings were adopted in 2002:

Amendment of Part 34 (Insurance Regulation 125) (Requirements Pertaining to the Location of an Insurance Agent or Broker at Each Place of Insurance Business in New York) of Title 11 NYCRR, effective February 13, 2002.

Statutory Authority: Insurance Law Sections 201, 301, and 2129; Chapter 556 of the Laws of 1996; Chapter 505 of the Laws of 2000.

This amendment to Insurance Regulation 125 implemented Chapter 556 of the Laws of 1996, which modified the requirements as to whom may supervise the office of an insurance agent or broker, and Chapter 505 of the Laws of 2000, which created a new type of license, the life insurance broker license.

Addition of new Part 421 (Insurance Regulation 173) (Standards for Safeguarding Consumer Information) to Title 11 NYCRR, effective February 27, 2002.

Statutory Authority: Insurance Law Sections 201 and 301 and Article 24; 15 U.S.C. Sections 6801, 6805(a)(6), 6805(b), 6805(c), and 6807; 15 U.S.C. Chapter 94.

Insurance Regulation 173 was added to establish standards for developing and implementing administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of customer information, pursuant to Sections 501, 505(b) and 507 of the Gramm-Leach-Bliley Act.

Amendment of Part 71 (Insurance Regulation 107) (Legal Defense Costs in Liability Policies) of Title 11 NYCRR, effective April 17, 2002.

Statutory Authority: Insurance Law Sections 201, 301, 1113(a)(13)-(14), 3436, and 5504; and Articles 23, 31, 34, and 55.

This amendment to Insurance Regulation 107 established lines of insurance that may be written to provide for defense of a claim to be provided within policy limits (defense within limits). Information provided to the Department indicated that for certain of the lines of insurance for which defense within limits was allowed, the minimum limit requirements were greater than the needs of some policyholders. The premium for the minimum permissible limits was often such that, as a business decision, the employer declined to purchase the coverage. As a consequence, the financial position of the employer, if faced with a claim, could be placed at undue risk and injured parties may have no means of recovery for damages suffered. In addition, some small and regional insurers with relatively limited financial capacity had indicated reluctance to participate in this market at the previously required minimum limits. This regulation also reduced the minimum required limit of liability for employee benefit liability, fiduciary liability and employment practices liability. As a result, small insurance agents and brokers, as well as regional insurers, had an additional product line to offer and small businesses were offered more affordable coverage.

Amendment to Part 86 (Insurance Regulation 95) (Report of Suspected Insurance Fraud to the Insurance Frauds Bureau; Required Warning Statements) of Title 11 NYCRR, effective May 1, 2002.

Statutory Authority: Insurance Law Sections 201, 301, 403(c), (d), and (e), 409, and 4322; and Chapter 2 of the Laws of 1998.

Chapter 2 of the Laws of 1998 amended Insurance Law Section 409 relating to fraud prevention plans, to make it applicable to most entities licensed pursuant to Article 44 of the Public Health Law. Section 409 required the Superintendent to implement the provisions of Chapter 2 by promulgating a regulation, including those provisions requiring insurers to adopt and implement fraud prevention plans utilizing a special investigation unit (“SIU”). Therefore, Insurance Regulation 95 was amended to require HMOs to adopt and implement fraud prevention plans, and to liberalize the requirements for SIU investigators so that insurers would be better able to recruit qualified investigators.

The Department is considering another amendment to Insurance Regulation 95 to establish a requirement that a licensee required to submit a fraud prevention plan must revise its fraud prevention plan to reflect changes to the holding company, the lines of business that affect the SIU, and changes to SIU personnel or the provider of SIU services. Also revising Section 86.6(d) to correct the due date of the filing of the annual report from January 15 to March 15, in compliance with Insurance Law Section 409(g).

Amendment to Part 361 (Insurance Regulation 146) (Establishment and Operation of Market Stabilization Mechanisms for Individual and Small Group Health Insurance and Medicare Supplement Insurance) of Title 11 NYCRR, effective May 22, 2002.

Statutory Authority: Insurance Law Sections 201, 301, 1109, 3201, 3216, 3217, 3221, 3231, 3232, 3233, 4235, 4304, 4305, 4317, 4318, 4321, 4322, and Article 45; Chapter 501 of the Laws of 1992 and Chapter 504 of the Laws of 1995.

Chapter 501 of the Laws of 1992 established requirements for open enrollment, community rating and portability of individual and small group health coverage, and provided for a pooling mechanism for individual and small group insurance to ensure the stabilization of health insurance markets and premium rates. Chapter 504 of the Laws of 1995 provided for modification of pooling processes designed to share the risk of insurers and HMOs providing individual and small group health insurance coverage.

This amendment to Insurance Regulation 146 exercised the statutory authority and responsibility placed upon the Superintendent to implement and assure the ongoing operation of open enrollment and community rating, including mechanisms designed to ensure the stability of the individual and small group health insurance markets. Chapter 504 permitted the Superintendent, after January 1, 2000, to establish more than one type of mechanism for insurers and HMOs to share risks or prevent undue variation in claims costs. This amendment also phased out (as of January 1, 2000) pooling based on demographics for individual and small group coverage, other than Medicare supplement insurance, and replaced them with modified specified medical condition pools. It continued a demographic pooling mechanism for Medicare supplement insurance.

Insurance Regulation 146 was amended effective June 25, 2008 to create a new market stabilization process in the individual and small group market in order to share among plans substantive cost variations attributable to high cost medical claims.

On December 7, 2016, the Department adopted an amendment to Insurance Regulation 146 on an emergency basis to implement a market stabilization pool for the small group health insurance market for the 2017 plan year.

Amendment of Part 52 (Insurance Regulation 62) (Minimum Standards for the Form, Content, and Sale of Health Insurance, Including Standards for Full and Fair Disclosure) of Title 11 NYCRR, effective June 19, 2002.

Statutory Authority: Insurance Law Sections 201, 301, 3201, 3216, 3217, 3218, 3221, 3231, 3232, 4235, 4237, and Article 43; Social Security Act (42 U.S.C. Section 1395ss).

The enactment of the Omnibus Budget Reconciliation Act of 1990 required the mandatory standardization and federal certification of policies of Medicare supplement insurance. As a result of this Act, states were required to amend their laws and regulations to conform to the federal standards for Medicare supplement insurance. The revisions contained in this amendment made technical corrections to New York’s Medicare supplement regulation to ensure continued compliance with federal standards.

Amendment of Part 16 (Insurance Regulation 86) (Special Risk Insurance) of Title 11 NYCRR, effective September 11, 2002.

Statutory Authority: Insurance Law Sections 201, 301, 1403(c), 1404(a)(1), and 1405(a)(1).

This amendment updated Insurance Regulation 86 to include the definitions of various risks and exposures that were previously added to the Class Two Risk List of the Free Trade Zone by public notice. These risks and exposures had been added to the list since the last amendment to this regulation in 1998.

Insurance Regulation 86 was amended in 2012 and 2014 as discussed above.

Amendment of Subpart 64-2 (Insurance Regulation 35-C) (Liability Insurance Covering All-Terrain Vehicles) of Title 11 NYCRR, effective September 11, 2002.

Insurance Regulation 35-C was amended to update the regulation and provisions contained therein to be consistent with approved name changes of statutorily prescribed endorsements, to delete obsolete provisions and to make editorial changes.

Amendment of Parts 105-109 (Insurance Regulation 30) (Operating and Allocation of Expenses for Annual Statement Purposes) of Title 11 NYCRR, effective October 23, 2002.

Statutory Authority: Insurance Law Sections 201, 301, 2325, and Article 23.

This amendment deleted obsolete provisions and updated other provisions to be consistent with the NAIC’s current Annual Statement instructions.

Amendment of Parts 1 and 2 (Insurance Regulation 1) (Definitions; Promulgation of Regulation; Opinions) of Title 11 NYCRR, effective December 4, 2002.

Statutory Authority: Insurance Law Sections 201 and 301.

This amendment deleted obsolete provisions to reflect current law and the existing internal practices of the Insurance Department and made editorial changes for clarification purposes.

PART 3. BANKING REGULATIONS

Pursuant to Section 207 of the State Administrative Procedure Act, Review of Existing Rules, notice is hereby given of the following rules relating to banking which the Department of Financial Services will be reviewing this year to determine whether they should be continued or modified. These rules were adopted in 2002, 2007, 2012, and 2014. Public comment on the continuation or modification of the above rules is invited. Comments must be received within 45 days of the date of publication of this notice.

Comments should be submitted to:

Christine M. Tomczak

Assistant Counsel

State of New York Department of Financial Services

One State Street

New York, NY 10004

Telephone: (212) 709-1642

Email: [email protected]

2002 Rules

Amendments to Part 41.3 of the General Regulations of the Superintendent (Prohibited Acts and Practices)

a. Description of rule: The rule sets forth the guidelines for the making of high cost mortgage loans by regulated lenders.

b. Legal basis for the rule: Banking Law §§ 6-I, 6-l, 13 and 14.

c. Need for rule: Part 41 establishes various consumer protections with regard to the making of high cost mortgage loans. This rule is necessary to prohibit a lender from requiring a borrower to finance single premium credit insurance for a high cost home loan covered by Part 41.

Adoption of New Part 41.11 of the General Regulations of the Superintendent (Single premium insurance; debt cancellation and suspension agreement payments)

d. Description of rule: The rule sets forth the guidelines for the making of high cost mortgage loans by regulated lenders.

e. Legal basis for the rule: Banking Law §§ 6-I, 6-l, 13 and 14.

f. Need for rule: Part 41 establishes various consumer protections regarding the making of high cost mortgage loans. This rule is necessary to ban the financing of single premium credit insurance, in high cost home loans covered by Part 41.

Amendments to Part 80 of the General Regulations of the Superintendent (Investment in Junior Lien Mortgage Loans by Commercial Banks, Savings Banks, Credit Unions, Mortgage Bankers and Savings and Loan Associations)

a. Description of rule: The rule sets forth the guidelines for investment in junior lien mortgages by various entities.

b. Legal basis for the rule: Banking Law §§ 14, 103, 235, 380, 454, and 590-a.

c. Need for rule: This rule is necessary to conform Part 80 to Part 38 of the General Regulations of the Superintendent so that entities may comply with applicable disclosure and notification requirements and to allow collection of processing fees.

Amendments to Part 82 of the General Regulations of the Superintendent (Alternative Mortgage Instruments)

a. Description of rule: The rule gives licensed entities the authority to enter into alternative mortgage instruments.

b. Legal basis for the rule: Banking Law §§ 6-f and 14[1].

c. Need for rule: This rule is necessary to conform Part 82 to Part 38 of the General Regulations of the Superintendent so that entities may comply with applicable disclosure and notification requirements and to allow collection of processing fees.

Amendments to Part 322 of the General Regulations of the Superintendent (Pledge of Assets and Maintenance of Assets by Licensed Foreign Banking Corporations in New York)

a. Description of rule: The rule describes the requirement of the pledge of assets and maintenance of assets by branches or agencies of foreign banking corporations in New York.

b. Legal basis for the rule: Banking Law §§ 12, 202-b and 204.

c. Need for rule: This rule is necessary to provide all foreign banking institutions some relief from the current requirements in the form of a reduction for most institutions in the amount of assets required to be pledged, as well as additional flexibility in the types of assets that may be pledged, and an easing of certain administrative aspects of compliance with the requirements.

Amendments to Part 333.1 of the General Regulations of the Superintendent (Indices Which may be used in Connection with Variable Rate Closed-End Personal Loans made by Lending Institutions Pursuant to Part 33 or in Connection with Variable Rate Open-Ended Accounts Established by Banking Institutions Pursuant to Part 90)

a. Description of rule: The rule sets forth the list of indices used by banking institutions which are making variable rate closed-end personal loans pursuant to the provisions of Part 33 of the General Regulations of the Superintendent or for use by banking institutions which establish variable rate open-end accounts pursuant to Part 90 of the General Regulations of the Secretary.

b. Legal basis for the rule: Banking Law §§ 12, 202-b, and 204.

c. Need for rule: This rule is necessary to add LIBOR to the list of indices used by banking institutions which are making variable rate closed-end personal loans pursuant to the provisions of Part 33 of the General Regulations of the Superintendent or for use by banking institutions which establish variable rate open-end accounts pursuant to Part 90 of the General Regulations of the Secretary.

Amendment to Supervisory Procedure G 106.3 (Public Access to Department of Financial Services Records: Records Access Officer)

a. Description of rule: The rule describes the process by which the public may access Department of Financial Services records.

b. Legal basis for the rule: Banking Law §§ 12, 36.10; Public Officers Law §§ 87, 89.

c. Need for rule: This rule has since been amended to state that the records access officer shall be designated by the general counsel from the attorneys in the office of the general counsel.

Amendment to Supervisory Procedure G 114 (Access to Personal Information: Designation of Privacy Compliance Officer)

a. Description of rule: The rule sets describes the process by which the public may access Department of Financial Services records.

b. Legal basis for the rule: Banking Law §§ 12, 36.10; Public Officers Law §§ 87, 89.

c. Need for rule: This rule has since been amended to state that the privacy compliance officer shall be designated by the general counsel from the attorneys in the office of the general counsel.

2007 Rules

Amendments to Part 6.8 of the General Regulations of the Superintendent (Superintendent’s Regulations: Additional Authority of Banks, Trust Companies, Savings Banks and Savings and Loan Associations pursuant to Banking Law, Sections 14-g and 14-h: Overdraft Protection Charges)

a. Description of rule: This rule allows New York state-chartered banks, trust companies, savings banks and savings and loan associations to impose charges regarding insufficient funds to the same extent as national banks and federal savings associations.

b. Legal Basis for the rule: Banking Law §§ 13.4, 14, 14-g and 14-h.

c. Need for rule: This rule is necessary to make it clear that the notice to account holders regarding overdraft protection programs must be separately given and must be “clear and conspicuous” in cases in which bounce protection will be applied to a new or existing account.

Amendments to Part 73 of the General Regulations of the Superintendent (Electronic Facilities)

a. Description of rule: This rule allows for a banking organization to conduct banking business at electronic facilities that are either established or shared, on a transaction fee or similar basis, by such banking facility.

b. Legal Basis for the rule: Banking Law §§ 14.1, 105-a, 240-a and 396-a.

c. Need for rule: This rule is necessary to streamline the application process for banking institutions when establishing electronic facilities.

Amendments to Part 76 of the General Regulations of the Superintendent (Compliance with Community Reinvestment Act)

a. Description of rule: This rule pertains to the framework and criteria by which the Department of Financial Services assesses a banking institution’s record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods.

b. Legal Basis for the rule: Banking Law §§ 10, 14, 28-b and Art. XII.

c. Need for rule: This rule is necessary to conform the rule to changes in the Federal Community Reinvestment Act regulations.

Amendments to Part 322 of the General Regulations of the Superintendent (Pledge of Assets and Maintenance of Assets by Licensed Foreign Banking Corporations in New York)

a. Description of rule: This rule describes the requirement of the pledge of assets and maintenance of assets by branches or agencies of foreign banking corporations in New York.

b. Legal Basis for the rule: Banking Law §§ 12, 202-b and 204.

c. Need for rule: This rule is necessary to reduce the asset pledge requirement for foreign banks with “well-rated” foreign branches and agencies and allow all foreign banks to pledge a wider variety of assets.

Amendment to Part 400.5 of the General Regulations of the Superintendent (Licensed Check Cashers: Conduct of Business)

a. Description of rule: This rule describes the process of licensing for check cashers in New York State and the requirements of doing business as a check casher.

b. Legal Basis for the rule: Banking Law §§ 12, 37(3), 367, 369, 371, 372.

c. Need for rule: This rule is necessary to permit licensed check cashers to maintain bank accounts with banking institutions or their branches located inside New York State.

2012 Rules

Amendments to Part 23 of the General Regulations of the Superintendent (Call Reports)

a. Description of rule: This rule requires banks, trust companies and private bankers to file periodical reports of condition with the Superintendent.

b. Legal basis for the rule: Banking Law §§ 14.1(l) and 37(1).

c. Need for rule: This rule is necessary to require banks, trust companies and private bankers to file periodical reports of condition using the Federal Financial Institutions Examination Council (FFIEC) forms.

Amendments to Part 39 of the General Regulations of the Superintendent (Exempt Organizations; Subsidiaries of Exempt Organizations)

a. Description of rule: This rule defined the entities engaged in the business of soliciting, negotiating, placing, processing or making mortgage loans secured by a first or junior lien that will be exempt from the registration or licensing requirements of article 12-D of the Banking Law, and to define mortgage loan products, the brokering or funding of which do not require registration or licensing as mortgage banker or broker under article 12-D.

b. Legal basis for the rule: Banking Law §§ 12, 14, Art. 12-D, L. 2011, ch. 62, part A. § 91.

c. Need for rule: This rule is necessary to eliminate the former exemptions from licensing as a mortgage banker or registration as a mortgage broker for consolidated subsidiaries of financial services organizations and for entities which deal solely in certain loan products.

Adoption of a New Part 342 of the General Regulations of the Superintendent (Call Reports)

a. Description of rule: This rule requires branches and agencies of foreign banks, savings banks and savings and loan associations to file periodical reports of condition with the Superintendent.

b. Legal basis for the rule: Banking Law §§ 37, 204, 255, and 404.

c. Need for rule: This rule is necessary to require branches and agencies of foreign banks savings banks and savings and loan associations to file periodical reports of condition using the Federal Financial Institutions Examination Council (FFIEC) forms.

2014 Rules

Adoption of New Part 43 of the General Regulations of the Superintendent (Subprime Home Loans – Meaning of Terms)

a. Description of rule: The rule provides interpretations of the Banking Law, particularly Banking Law § 6-m and as applicable.

b. Legal basis for the rule: Banking Law §§ 6-m and 14; Financial Services Law § 302.

c. Need for rule: The rule is necessary to interpret terms appearing in Banking Law § 6-m.

Adoption of New Part 83 of the General Regulations of the Superintendent (Shared Appreciation Mortgage Modification)

a. Description of rule: The rule permits banks, trust companies, foreign banking corporations licensed to maintain a branch or agency in New York State, savings banks, savings and loan associations, credit unions and persons and entities engaging in the business described in section Banking Law § 590 to make shared appreciation mortgage modifications.

b. Legal basis for the rule: Banking Law § 6-f.

c. Need for rule: This rule is necessary to explain the requirements and procedure of making shared appreciation mortgage modifications.

Adoption of New Part 117 of the General Regulations of the Superintendent (Lending Limits: Inclusion of Credit Exposures Arising from Derivative Transactions)

a. Description of rule: The rule sets forth the manner and extent to which derivative transactions will be taken into account for purposes of the lending limit provisions of the Banking Law.

b. Legal basis for the rule: Banking Law §§ 14, 103, 235, as amd. by L. 2011, ch. 62, part A., Part § 104[e], [g], 202 and 302; arts. 12 D, E; Financial Services Law §§ 202 and 302.

c. Need for rule: The rule is necessary to ensure that New York banks continue to be able to engage in derivative transactions and manage their risk exposure using derivatives.

Adoption of Revised Part 420 of the General Regulations of the Superintendent (Mortgage Loan Originators: Licensing; Education Requirements)

a. Description of rule: The rule sets forth the exempts from licensing as a mortgage loan originator, the procedure and requirements of mortgage loan originator licensing and the requirements of mortgage loan originator education.

b. Legal basis for the rule: Banking Law §§ 39, 44; arts. 12-D and 12-E.

c. Need for rule: This rule is necessary to implement the July 11, 2009 revised Article 12-E of the Banking Law which was modeled on Title V of the federal Housing and Economic Recovery Act of 2008, also known as the “SAFE Act”. The SAFE Act was intended to impose a nationwide standard for mortgage loan originator regulation.

Amendments to MB 107 of the General Regulations of the Superintendent (Application for Initial License as a Mortgage Loan Originator; Request for Renewal of License)

a. Description of rule: The rule outlines the application process for mortgage loan originator licensing.

b. Legal basis for the rule: Banking Law §§ 599-c and art. 12-E.

c. Need for rule: This rule is necessary to update the rule according to the July 11, 2009 revised Article 12-E of the Banking Law which was modeled on Title V of the federal Housing and Economic Recovery Act of 2008, also known as the “SAFE Act”. The SAFE Act was intended to impose a nationwide standard for mortgage loan originator regulation.

Amendments to MB 108 of the General Regulations of the Superintendent (Application as Provider of Education Courses for Mortgage Loan Originators: Approval of Education Courses; Other Education Requirements)

a. Description of rule: The rule describes the application process, the approval process and the requirements of providers of education courses related to mortgage loan originators.

b. Legal basis for the rule: Banking Law §§ 599 et al; arts. 12-D and 12-E.

c. Need for rule: The rule was repealed.

Please be advised that, following a review of actions taken by the Power Authority of the State of New York (the “Authority”) under State Administrative Procedures Act (“SAPA”) in the year 2012, it has been determined that no rules were enacted during 2012 that are subject to the “five-year review” requirements of SAPA § 207. Therefore, the Authority will not be submitting a list of rules subject to the five-year review for publication in the New York State Register.

REVIEW OF RULES ADOPTED BY THE DEPARTMENT OF STATE IN CALENDAR YEARS 2014 AND 2012 REQUIRED TO BE REVIEWED IN CALENDAR YEAR 2017; AND FURTHER REVIEW OF RULES ADOPTED BY THE DEPARTMENT OF STATE IN CALENDAR YEARS 2007, 2002 AND 1997 REQUIRED TO BE RE-REVIEWED IN CALENDAR YEAR 2017

As required by section 207 of the State Administrative Procedure Act, the following is a list of rules adopted by the Department of State in calendar years 2014, 2012, 2007, 2002 and 1997, which must be reviewed in calendar year 2017. This list does not include rules that were adopted as consensus or emergency rules, or rules that subsequently have been amended or repealed. Public comment on the continuation or modification of these rules is invited and will be accepted until March 13, 2017. Comments may be submitted to the contact person indicated at the end of this list.

RULES ADOPTED IN 2014

(1) DOS 36-13-00004 Pet Cemeteries Seeking to Inter the Cremated Remains of Pet Owners with the Remains of Their Pets

Added section 201.19 to Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to permit pet cemeteries to inter the cremated remains of pet owners with the remains of their pets.

Legal basis for the rule: Executive Law, section 91; General Business Law, section 750-d; and Not-for-Profit Corporation Law, section 1504(c)

(2) DOS-10-14-00004 Real Estate Broker Record Retention

Amended section 175.23 of Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to update regulations requiring real estate brokers to retain certain business records.

Legal basis for the rule: Real Property Law, section 442-k(1)

(3) DOS-25-14-00016 Supervisory Appraiser/Trainee Appraiser Course Outline Requirements

Added section 1103.2; and amended sections 1103.3(e)(4) and (5) of Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to establish the required course curriculum for the Supervisory Appraiser/Trainee Appraiser Course.

Legal basis for the rule: Executive Law, section 160-d and Article 6-E

(4) DOS-40-14-00020 Minimum Standards for Code Enforcement Training

Repealed Parts 434, 435 and 1208; and added new Part 1208 to Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to establish minimum training standards so as to increase the level of competency and reliability of code enforcement personnel.

Legal basis for the rule: Executive Law, sections 376-a and 381

(5) DOS-41-14-00020 Appraiser Certification and License Update Requirements

Amended sections 1103.2(a), (b)(2), (c)(2), (d)(2), 1103.6(b), (e), (g), 1103.10(b) and 1107.12; and added sections 1103.2(c)(3), (d)(3) and 1107.4(a)(1) to Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to conform appraiser qualifications to federal standards.

Legal basis for the rule: Executive Law, section160-d and Article 6-E

(6) DOS-41-14-00021 Appraiser Certification and License Update Requirements

Amended sections 1102.2(a), (b), (c), 1102.3(a), 1103.4(b)(1), (c) and 1104.1(b)(1); repealed section 1102.4; and added new section 1102.4 to Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to conform appraiser qualifications to federal standards while simultaneously removing unnecessary requirements.

Legal basis for the rule: Executive Law, section 160-d and Article 6-E

RULES ADOPTED IN 2012

(1) DOS-44-11-00004 Do-Not-Call

Amended section 400.8 of Title 19 NYCRR; and amended sections 4602.1, 4602.2, and 4603.1 – 4603.4 of Title 21 NYCRR

Analysis of the need for the rule: The rule was needed to carry out the intent of the December 2010 amendments to the Do-Not-Call Law.

Legal basis for the rule: Executive Law, section 94; and General Business Law, section 399-z

(2) DOS-02-12-00001 Children’s Product Safety and Recall Effectiveness Act

Added Part 4607 to Title 21 NYCRR

Analysis of the need for the rule: The rule was needed to implement the Children’s Product Safety and Recall Effectiveness Act.

Legal basis for the rule: General Business Law, section 490-h, as added by Chapter 62 of the Laws of 2011

(3) DOS-27-12-00016 Foreign Language Advertising by Notaries Public

Added Part 182 to Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to protect consumers against false and misleading advertising.

Legal basis for the rule: Executive Law, section 135-b

RULES ADOPTED IN 2007

(1) DOS-19-07-00012 Shared Municipal Services Incentive Awards Grant Program

Amended Part 814 of Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to establish eligibility requirements and criteria for the Shared Municipal Services Incentive Awards Grant Program.

Legal basis for the rule: State Finance Law, sections 54(10)

(2) DOS-37-07-00001 Cremation Certification Course

Added Part 204 to Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to establish training and cremation certification course requirements for the maintenance and operation of crematories.

Legal basis for the rule: Not-for-Profit Corporation Law, section 1517-j

(3) DOS-39-07-00010 New York State Uniform Fire Prevention and Building Code

Amended sections 1201.2(d) and 1204.1; Added 1204.3(f)(4) and 1204.3(h)(3); Renumbered 1204.3(i) to (l); and Added 1204.3(i),(j) and (k)

Analysis of the need for the rule: The rule was needed to clarify that the State would be responsible for administration and enforcement of the Uniform Fire Prevention and Building Code with respect to facilities included in the Statewide Wireless Network.

Legal basis for the rule: Executive Law, section 381

RULES ADOPTED IN 2002

As indicated above, this list does not include rules that were adopted as consensus or emergency rules, or rules that subsequently have been amended or repealed. Since all of the rules adopted by the Department of State in calendar year 2002 were adopted as consensus or emergency rules, or subsequently have been amended, no rules adopted by the Department in 2002 are listed for re-review in 2017.

RULES ADOPTED IN 1997

(1) DOS-01-97-00012 Community Services Block Grant Advisory Council

Added Part 701 to Title 19 NYCRR

Analysis of the need for the rule: The rule was needed because Chapter 884 of the Laws of 1982 directed the Governor to require each executive agency administering a Community Services Block Grant Program to establish a Community Services Block Grant Advisory Council. Article 6-D of the Executive Law places the responsibility for administering the Community Services Block Grant Advisory Council in the Department of State. This rule recognized the existing Community Services Block Grant Advisory Council, and provided membership in the Council to be a number certain of 20.

Legal basis for the rule: Executive Law, sections 91 and 159-g; and Chapter 884 of the Laws of 1982

(2) DOS-30-97-00056 Maintaining Abandoned Cemeteries

Added a new section 202.1 to Title 19 NYCRR

Analysis of the need for the rule: The rule was needed to satisfy the requirement in General Municipal Law, section 165 that the Division of Cemeteries of the Department of State promulgate regulations describing how the Department would provide technical assistance to a municipal corporation wishing to establish voluntary maintenance and cleanup programs at abandoned cemeteries for which the municipality has primary responsibility to provide care.

Legal basis for the rule: General Municipal Law, section 165

Comments on any item appearing above may be submitted to: David Treacy, Esq., Office of General Counsel, New York State Department of State, One Commerce Plaza, 99 Washington Avenue, Suite 1120, Albany, New York 12231-0001, (518) 474-6740; [email protected]. This Review of Rules is posted on the Department’s website at: http://www.dos.ny.gov/info/regulatory_activity/index.html.

Pursuant to section 207 of the State Administrative Procedure Act (SAPA) the Department of Taxation and Finance intends to review the following rules during 2017, and invites written comments on the continuation or modification of these rules in order to assist the Department in the required review. We will consider comments that are received by March 13, 2017. Any questions concerning the items listed in this rule review or comments regarding the continuation of the rules being reviewed should be referred to: Office of Counsel, Department of Taxation and Finance, W.A. Harriman Campus, Building 9, Room 200, Albany, New York 12227. Telephone: (518) 530-4153, Email address: [email protected].

RULES ADOPTED IN 2012

1. TAF-50-11-00014-A Sales Tax Collection Charts

This rule amended section 530.1 regarding sales tax collection charts.

Analysis of the need for the rule: This rule updates regulatory language to more accurately reflect existing statutes and Department practice.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 1111(d); 1142(1) and (8); and 1250 (not subdivided).

2. TAF-07-12-00007-A Continuing Education Training for Assessors and County Directors

This rule amended sections 188-2.8, 188-2.9, 188-4.8 and 188-4.9 regarding continuing education training for assessors and county directors.

Analysis of the need for the rule: This rule reduces the continuing education requirement for assessors and county directors of real property tax service agencies.

Legal basis for the rule: Real Property Tax Law sections 202(1)(k), 310(5)(b), 318 and 1530.

3. TAF-18-12-00008-A Real Property Tax Administration

This rule renumbered Parts 185 through 202 of Title 9 to Parts 8185 through 8202 of Title 20 and amended Parts 8185 through 8202 of Title 20 regarding real property tax administration.

Analysis of the need for the rule: This rule move rules for real property tax administration from Title 9 to Title 20.

Legal basis for the rule: Real Property Tax Law, sections 201(1) and 202(1)(k).

4. TAF-37-12-00004-A Elimination of the One-Week Stay to Determine Nontaxable Occupancy of Bungalows and Similar Living Units

This rule amended section 527.9 regarding the elimination of the one-week stay test to determine nontaxable occupancy of bungalows and similar living units.

Analysis of the need for the rule: This rule conform the regulations to current statutory interpretation concerning sales tax on hotel occupancy.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 1142(1) and (8); and 1250 (not subdivided).

RULES ADOPTED IN 2007

1. TAF-52-06-00008-A Security Training Tax Credit

This rule adds Subparts 5-4 and 20-7 and section 106.3 to Title 20 NYCRR regarding security training tax credit.

Analysis of the need for the rule: This rule provides a credit proration rule where a qualified security officer is not employed for a full year. The rule was included in the Department’s 2012 Rule Review published in the State Register on January 4, 2012.

Legal basis for the rule: Tax Law, sections 26(a); 171, subdivision First; 697(a); and 1096(a).

2. TAF-43-07-00015-A Repurchase Agreements and Securities Lending Agreements held by Registered Securities Brokers and Dealers

This rule amended sections 3-3.2, 4-4.3, and 6-2.7, renumbering of section 4-4.7 to section 4-4.8 and addition of new section 4-4.7 regarding Repurchase agreements and securities lending agreements held by registered securities brokers and dealers.

Analysis of the need for the rule: This rule provided that repurchase agreements and securities lending agreements held by registered securities brokers or dealers may not be considered investment capital so that the income and expenses from these agreements must be included in the computation of business income for such taxpayers. The rule was included in the Department’s 2012 Rule Review published in the State Register on January 4, 2012.

Legal basis for the rule: Tax Law, sections 171, subdivision First; and 1096(a).

3. TAF-43-07-00003-A Tobacco Products Wholesale Dealers’ Informational Returns

This rule amended sections 89.1 and 89.3 regarding increased rate of tobacco products tax imposed by Article 20 of the Tax Law.

Analysis of the need for the rule: This rule required licensed wholesale dealers that are not also distributors of tobacco products to file new monthly informational returns with the Department detailing their purchases, sales, and prices of such products. The rule was included in the Department’s 2012 Rule Review published in the State Register on January 4, 2012.

Legal basis for the rule: Tax Law sections 171, subdivision First; 474, subdivision (4); and 475, (not subdivided).

4. RPS-40-06-00007-A Annual Reports of Railroad Companies

This rule amended Subpart 200-2, sections 200-6.1, 200-6.5 and 200-6.6, and repeal of Subparts 200-7 and 200-8 of Title 9 NYCRR.

Analysis of the need for the rule: This rule revised the schedule for filing annual reports with the State Board of Real Property Services (whose rule-making functions were transferred to the Department by l.2010, c.56, Pt. W). The rule was included in the Department’s 2012 Rule Review published in the State Register on January 4, 2012.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 489-q, 489-nn.

5. RPS-40-06-00008-A Annual Reports of Special Franchise Owners

This rule amended sections 202(1)(1) and 604 regarding annual reports of special franchise owners.

Analysis of the need for the rule: This rule revised the schedule for filing annual reports with the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). The rule was included in the Department’s 2012 Rule Review published in the State Register on January 4, 2012.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1) and 604.

6. RPS-21-07-00002-A License Fees

This rule amended section 202(1)(1) regarding license fees.

Analysis of the need for the rule: This rule lowered the annual license fee charged to school districts which subscribe to the Real Property System developed by the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). The rule was included in the Department’s 2012 Rule Review published in the State Register on January 4, 2012.

Legal basis for the rule: State Finance Law, section 97-kk and Real Property Tax Law, section 202(1)(1).

7. RPS-21-07-00003-A Training for Assessors and County Directors

This rule amended sections 202(1)(1), 310(5), 318 and1532 regarding training for assessors and county directors.

Analysis of the need for the rule: This rule revised the basic course of training prescribed for assessors and directors of county real property tax service agencies by the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). The rule was included in the Department’s 2012 Rule Review published in the State Register on January 4, 2012.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 310(5), 318 and 1532.

RULES ADOPTED IN 2002

1. TAF-49-01-00002-A Empire Zone Wage Tax Credit

This rule repeals Subparts 5-9, 20-4, 32-2 and section 106.8 and adding new Subparts 5-9, 20-4, 32-2 and section 106.8 regarding business corporation franchise tax, franchise tax on banking corporations, franchise taxes on insurance corporations and New York State personal income tax.

Analysis of the need for the rule: This rule eliminated obsolete and redundant material and areas of Franchise Tax on Banking Corporations, Franchise Taxes on Insurance Corporations and New York State Personal Income Tax regulations, relating to Empire Zone (EZ) Wage Tax Credit, that parallel provisions in the Business Corporation Franchise Tax regulations. In addition, the rule contained amendments to reflect existing Department policy with respect to the EZ Wage Tax Credit. The rule was included in the Department’s 2007 Rule Review published in the State Register on January 3, 2007.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 697(a); and 1096(a).

2. TAF-13-02-00008-A Clothing Alterations

This rule amended sections 527.4(b), (c) and 527.5(b)(3) regarding clothing alterations.

Analysis of the need for the rule: This rule provided that reasonable charges for alterations to all items of clothing are treated as tailoring, a service that is specifically excluded from New York State and local sales and compensating use taxes. Prior to these amendments, the exclusion from tax depended upon who altered the clothing (e.g., an independent tailor or the clothing retailer) and whether the clothing itself was new, used, taxable, or exempt from tax. The rule also made technical corrections to the subject sections of the regulations. The rule was previously reviewed as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. As a result of that review of the 2002 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on April 25, 2007.

Legal basis for the rule: Tax Law sections 171, subdivision First; 1142(1) and (8); and 1250 (not subdivided).

3. TAF-27-02-00006-A Tobacco Products Tax

This rule amended sections 89.1 and 89.3 regarding increased rate of tobacco products tax imposed by Article 20 of the Tax Law.

Analysis of the need for the rule: This rule reflected the statutory increase in the rate of tobacco products excise tax that was effective July 2, 2002, and effectuated the floor tax on tobacco products in inventory as of the close of business on July 1, 2002. This rule was previously reviewed as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. As a result of that review of the 2002 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on October 24, 2007. (It is noted that a portion of this rule was subsequently amended, deleting an outdated rate of tax for tobacco products [TAF-49-10-00002-A].)

Legal basis for the rule: Tax Law sections 171, subdivision First; 471-b; 471-c; 472; 473-a; and 475 (not subdivided); and L. 2002 ch. 85.

4. TAF-37-02-00005-A Increased Rate of New York City Excise Tax on Cigarettes

This rule amended Parts 74, 80, and 82 regarding increased rate of New York City excise tax on cigarettes.

Analysis of the need for the rule: This rule reflected the statutory increase in the rate of New York City excise tax on cigarettes that was effective on June 30, 2002, ensured that the commissions paid by New York State to licensed cigarette agents were preserved notwithstanding the New York City tax rate increase and more realistically reflected the basic cost of cigarettes in the cigarette marketing standards illustrations. (It is noted that portions of this rule have been amended to delete obsolete references to the 75 cent cigarette tax stamp and packages of 10 cigarettes to conform to section 1399-gg of the Public Health Law [TAF-48-07-00006-A]. In addition, portions of this rule have been subsequently amended based on Chapter 57, Part RR-1 of the Laws of 2008 [TAF-24-08-00006-A] and Chapter 134 of the Laws of 2010, Part D [TAF-35-10-00003-A], both affecting the New York State rate of tax.) This rule was previously reviewed as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. As a result of that review of the 2002 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on September 12, 2007.

Legal basis for the rule: Tax Law sections 171, subdivision First; and 475 (not subdivided); and L. 2002, ch. 93 and New York City Local Law 10, enacted June 30, 2002.

5. RPS-08-02-00009-A State Equalization Program

This rule amended sections 202(1)(1), 1202, 1204, 1206, 1208 and 1210 regarding state equalization program.

Analysis of the need for the rule: This rule enhanced the procedures relating to complaints against tentative State equalization rates filed by municipalities. This rule was previously reviewed as part of the 2007 Rule Review of the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). As a result of that review, a notice indicating that the rule would be continued without modification was published in the State Register on July 11, 2007.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 1202, 1204, 1206, 1208 and 1210.

6. RPS-08-02-00008-A Payment of Maintenance Aid

This rule amended sections 202(1) and 1573 regarding payment of maintenance aid.

Analysis of the need for the rule: This rule enhanced the procedures relating to complaints against tentative State equalization rates filed by municipalities. This rule was previously reviewed as part of the 2007 Rule Review of the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). As a result of that review, a notice indicating that the rule would be continued without modification was published in the State Register on July 11, 2007.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 1202, 1204, 1206, 1208 and 1210.

7. RPS-26-02-00013-A Tax Maps

This rule amended sections 202(1)(1) and 503(1)(b) regarding tax maps.

Analysis of the need for the rule: This rule relaxed submission and approval requirements for converting traditional tax maps into a digital data format. This rule was previously reviewed as part of the 2007 Rule Review of the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). As a result of that review, a notice indicating that the rule would be continued without modification was published in the State Register on July 11, 2007.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1) and 503(1)(b).

RULES ADOPTED IN 1997

1. TAF-45-96-00002-A Group Nonresident Income Tax Returns

This rule amended Part 151 and sections 161.3(c) and 185.3(k) regarding group New York State nonresident personal income tax returns.

Analysis of the need for the rule: This rule expanded the privilege of filing group nonresident income tax returns to more partnerships; clarified the Department’s policy allowing certain limited liability partnerships and limited liability companies to file group returns; and allowed nonresident athletes the election to be included on a group individual nonresident income tax return. These provisions were again amended in 1998 to further expand the privilege of filing group returns to other groups. This rule was previously reviewed as part of the Department’s 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on November 6, 2002. The rule was again reviewed as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. As a result of that review of the 1997 rule, a Rule Review notice that it would be continued without modification was published in the State Register on May 14, 2008.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 697(a); 651; 658(a); 658(c).

2. TAF-02-97-00001-A CT-4 Filing Rules

This rule amended section 6-3.1 regarding Form CT-4 filing requirements.

Analysis of the need for the rule: This rule eliminated certain restrictions on who may file Form CT-4, General Business Corporation Franchise Tax Return (short form), thereby increasing the number of taxpayers eligible to file the short form. This rule was previously reviewed as part of the Department’s 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on July 24, 2002. The rule was again reviewed as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on April 4, 2007.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 211.1; and 1096(a).

3. TAF-12-97-00014-A Farming and Commercial Horse Boarding

This rule amended section 528.7 regarding exemption from sales and use taxes of farmers’ personal protective equipment and materials used in farm silo foundations.

Analysis of the need for the rule: This rule originally provided that personal protective equipment purchased by farmers for use directly and predominantly in farm production and construction materials that become integral component parts of the foundations of farm silos were exempt from sales and compensating use taxes. The rule also made clarifying amendments to section 528.7. The rule was previously reviewed as part of the Department’s 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review, substantial changes to section 528.7 of the regulations were adopted based on statutory changes in 1999 and 2000, which significantly broadened the subject exemptions from tax. (See TAF 10 04 00025 A; filed April 29, 2004; published May19, 2004; effective May 19, 2004.) However, two of the amendments that were made in 1997 were continued without modification, specifically the cross reference added to section 528.7(c) and the clarifying amendment made to section 528.7(c)(1)(iii). Therefore, only these two amendments from the 1997 rule were subject to review in 2007, and every five years thereafter. They were previously reviewed as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. As a result of that review, a Rule Review notice indicating that these two amendments would be continued without modification was published in the State Register on August 1, 2007.

Legal basis for the rule: Tax Law sections 171, subdivision First; 1115(a)(6); 1142(1); and 1250 (not subdivided).

4. TAF-18-97-00008-A Filing of Sales and Use Tax Returns

This rule amended sections 533.3(d) and (g) and 561.13(b) regarding annual sales tax filing threshold and due date of annual sales tax return.

Analysis of the need for the rule: This rule allowed vendors with ranges of annual sales and use tax liabilities of $250 to $3,000 to file annual, rather than quarterly, sales and use tax returns. The rule also made technical corrections to sections 533.3 and 561.13 of the Sales and Use Taxes Regulations. The rule was previously reviewed as part of the Department’s 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on August 21, 2002. The rule was again reviewed as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. As a result of that review of the 1997 rule, amendments to sections 533.3(d) and (g) of the regulations were adopted to delete obsolete information and to better reflect the current policies of the Department concerning the administration of its annual-filing program. (See TAF-40-07-00004-A; filed December 11, 2007; published December 26, 2007; effective December 26, 2007.) However, other amendments that were made in 1997 were continued without modification, specifically those concerning the filing benefits and the filing period codified in the regulations. (See TAF 40-07-00004-P, Statement of Reasoned Justification for Modification of the Rule; published October 3, 2007.) Therefore, the 1997 amendments related to the filing benefits and the filing period remain valid and are again subject to five-year review in 2012 and forward.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 1136(a), (b), and (c); 1142(1); 1250 (not subdivided); and 1251(c).

5. TAF-22-97-00001-A Power of Attorney

This rule amended Part 2390 and Appendix 6; addition of new Part 2390 and amendment of section 4000.2(b) regarding powers of attorney and representation in the Bureau of Conciliation and Mediation Services.

Analysis of the need for the rule: Part 2390 provides practical requirements as to when a power of attorney is required by the Division of Taxation, and as to the form and content of a power of attorney. Section 4000.2(b) was amended to reflect that an agent who is enrolled to practice before the Internal Revenue Service may act as a representative in a conciliation conference proceeding. This rule was previously reviewed as part of the Department’s 2002 and 2007 Rule Reviews. The 2002 Rule Review was published in the State Register on January 2, 2002. As a result of the 2002 review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on June 19, 2002. The 2007 Rule Review was published in the State Register on January 3, 2007. As a result of the 2007 review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on September 5, 2007.

Legal basis for the rule: Tax Law sections 171, subdivision First; and 170.3-a(d).

6. TAF-34-97-00003-A Service of Process

This rule added a new Part 2391 to Chapter IX regarding New York State Department of Taxation and Finance Procedural Regulations.

Analysis of the need for the rule: This rule added new provisions to provide information to any person commencing an action or proceeding involving the Commissioner or Department (except the Division of Tax Appeals or the Tax Appeals Tribunal) by setting forth the procedure for service of process on the Commissioner or Department. The rule was previously reviewed as part of the Department’s 2002 Rule Review published in the State Register on January 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on June 19, 2002. The rule was reviewed again as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. Following the 2007 review, a Rule Review notice indicating that the rule would again be continued without modification was published in the State Register on April 18, 2007.

Legal basis for the rule: Tax Law, section 171, subdivision First; Civil Practice Law and Rules, section 307.

7. TAF-34-97-00004-A Elimination of Unnecessary Provisions of Art. 1 of the Personal Income Tax Regulations (entitled “General”)

This rule amended sections 171, subdivision First; 697(a); 601(e); and 606(b) and (e) regarding elimination of unnecessary provisions of Art. 1 of the Personal Income Tax Regulations (entitled “General”).

Analysis of the need for the rule: This rule repealed certain provisions that were unnecessary because the provisions repeated statutory material which did not require additional interpretation by regulation. Approximately 30 pages of unnecessary regulations were eliminated while retaining and recodifying necessary provisions. This rule was previously reviewed as part of the Department’s 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on October 16, 2002. The rule was reviewed again as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. Following the 2007 review, a Rule Review notice indicating that the rule would again be continued without modification was published in the State Register on May 2, 2007.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 697(a); 601(e); and 606(b) and (e).

8. TAF-38-97-00004-A Repeal of Parallel Credit Provisions

This rule amended Subparts 5-7, 5-8 & 5-10; repeal of sections 106.5, 106.7, 106.9, Subparts 20-2 & 32-1; and adding new Sections 106.5, 106.7 & 106.9 and new Subparts 20-2 & 32-1 regarding Business Corporation Franchise Tax, Franchise Tax on Banking Corporations, Franchise Taxes on Insurance Companies and New York State Personal Income Tax.

Analysis of the need for the rule: This rule eliminated certain unnecessary corporation tax, bank tax, insurance tax and personal income tax regulations relating to credits, which was considered redundant. Additionally, there were amendments which updated the rule to reflect legislative changes in the Empire Zone Investment Tax Credit, the Empire Zone Capital Credit, and the Special Mortgage Recording Tax Credit. This rule was previously reviewed as part of the Department’s 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on February 26, 2003. The rule was included in the Department’s 2007 Rule Review published in the State Register on January 3, 2007.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 191; 210(20);(a), (b), (c) and (d); 210(12-B)(d); 606(j); 683(c)(9); 697(a); 1096(a); 1456(d); and 1511(h).

9. TAF-44-97-00001-A Repeal of the 30 day Rule

This rule amended sections 6-2.4, 8-1.3, 21-2.2, 21-2.3, and 21-2.5 regarding combined reports.

Analysis of the need for the rule: This rule eliminated the requirement that business and banking corporations request permission to file combined reports, or to change the composition of a combined group, within 30 days of the close of the taxable year. This rule was previously reviewed as part of the Department’s 2002 Rule Review published in the State Register on January 2, 2002. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on July 24, 2002. The rule was again reviewed as part of the Department’s 2007 Rule Review published in the State Register on January 3, 2007. As a result of that review of the 1997 rule, a Rule Review notice indicating that it would be continued without modification was published in the State Register on April 18, 2007.

Legal basis for the rule: Tax Law, sections 171, subdivision First; 211.4; and 1096(a).

10. RPS-48-96-00024-A Procedures for Conducting Market Value Surveys

This rule amended sections 202(1)(1), 1200 regarding procedures for conducting market value surveys.

Analysis of the need for the rule: This rule provided for increased reliance upon sales and local valuation data in the computation of State equalization rates by the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). This rule was previously reviewed as part of the 2002 Rule Review of the State Board of Real Property Services. As a result of that review, a notice indicating that the rule would be continued without modification was published in the State Register on January 23, 2002.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 1200.

11. RPS-10-97-00020-A Minimum Qualifications of Appointed Assessors and County Directors

This rule amended sections 202(1)(1), 312, 1530 regarding minimum qualifications of Appointed Assessors and County Directors.

Analysis of the need for the rule: This rule modified the procedures by which Appointed Assessors and County Directors of Real Property Tax Services obtain approval of their qualifications from the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). This rule was previously reviewed as part of the 2002 Rule Review of the State Board of Real Property Services. As a result of that review, a notice indicating that the rule would be continued without modification was published in the State Register on January 23, 2002.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 312, 1530.

12. RPS-12-97-00004-A Assessing Special Franchises and Establishing Railroad Ceilings

This rule amended sections 202(1)(1), 489-q, 489-nn and 606; State Finance Law section 97-jj regarding assessing special franchises and establishing railroad ceilings.

Analysis of the need for the rule: This rule revised the procedures relating to the determination of annual charges for special franchise assessments and railroad ceilings established by the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W). This rule was previously reviewed as part of the 2002 Rule Review of the State Board of Real Property Services. As a result of that review, a notice indicating that the rule would be continued without modification was published in the State Register on January 23, 2002.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 489-q, 489-nn and 606; State Finance Law section 97-jj.

13. RPS-11-97-00030-A Training for Assessors

This rule amended sections 202(1)(1), 318 regarding training for assessors.

Analysis of the need for the rule: This rule revised the basic course of training for Assessors, as prescribed by the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W), and expanded reimbursement provisions. This rule was previously reviewed as part of the 2002 Rule Review of the State Board of Real Property Services. As a result of that review, a notice indicating that the rule would be continued without modification was published in the State Register on January 23, 2002.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 318.

14. RPS-39-97-00003-A State Equalization Program

This rule amended sections 202(1)(1), 1200 regarding state equalization program.

Analysis of the need for the rule: This rule related to the use of local valuation data in the computation of State equalization rates by the State Board of Real Property Services (whose rule-making functions were transferred to the Department by L.2010, c.56, Pt. W), and generally clarified the framework for the establishment of equalization rates and the review of complaints. This rule was previously reviewed as part of the 2002 Rule Review of the State Board of Real Property Services. As a result of that review, a notice indicating that the rule would be continued without modification was published in the State Register on January 23, 2002.

Legal basis for the rule: Real Property Tax Law, sections 202(1)(1), 1200.

Dated: January 9, 2017

Kathleen D. O’Connell

Tax Regulations Specialist 2