Minn. R. (Commerce Department) | Minnesota Rules — Commerce Department

Chapter 2605 INSURANCE FILING FEES

Minn. R. 2605.0100 Scope of Authority

Parts 2605.0100 to 2605.0500 apply to all licensed insurers and rate service, data service, or other organizations that make insurance policy form or rate filings required by statute. They are adopted pursuant to authority granted under Minnesota Statutes, sections 45.023 and 60A.14, subdivision 1, paragraph (c).

History

Statutory Authority: MS s 60A.14
History: 10 SR 353

Minn. R. 2605.0200 Filing Fees for Casualty and Property Insurance

A $10 filing fee applies to the following filing of rates, rules, policies, or endorsements relating to casualty or property insurance:

A. Rates and rules pertaining to the same kind or line of insurance and submitted together are subject to a single filing fee.

B. Policy forms and endorsements pertaining to the same kind of insurance and submitted together are subject to a single filing fee.

C. Simultaneous identical filings by other insurers within a group or fleet of companies are subject to separate filing fees.

D. Deviations from, including effective date change, or nonadoption of, rate service or data service organization filings are subject to filing fees.

E. Policy forms, endorsements, and rate filings made by the Minnesota Automobile Insurance Plan or the FAIR Plan are subject to filing fees.

F. The following kinds of worker's compensation filings:

History

Statutory Authority: MS s 60A.14
History: 10 SR 353

Minn. R. 2605.0300 Life and Health Insurance

A $10 filing fee applies to each filing of policy forms, contracts, riders, endorsements, certificates, applications, or rates as further specified in items A to F.

A. If a single policy or contract filing includes riders, endorsements, applications, or other forms designed to be issued or used in direct connection with that policy or contract, a single fee applies to that filing.

B. Related endorsements, riders, applications, or other forms submitted as a single filing, when the policy or contract is not being filed, are subject to one filing fee.

C. Each rate filing or rate revision is subject to a filing fee.

D. Group insurance policy filings, including related certificates, applications, or other forms are subject to a single filing fee.

E. Filings made by the Minnesota Comprehensive Health Association are subject to filing fees.

F. When an insurer or the Minnesota Comprehensive Health Association fails to respond to an objection or inquiry within 90 days, a resubmission is required if action by the Department of Commerce is subsequently requested. An additional filing fee is required for the resubmission.

History

Statutory Authority: MS s 60A.14
History: 10 SR 353

Minn. R. 2605.0400 Provisions Applicable to All Policy Form and Rate Filings

The provisions in items A to G apply to all insurance policy form and rate filings required by statute.

A. A multipurpose form which can be used with more than one kind of policy, is subject to one filing fee.

B. Filings made to comply with law changes are subject to filing fees.

C. Filings made solely to change a company name or officer signature, correct printing errors, or make editorial changes are subject to filing fees.

D. Filings made for the sole purpose of withdrawing forms or rates are not subject to filing fees.

E. Exhibits and supporting data are not subject to filing fees.

F. Subsequent correspondence initiated by the Department of Commerce relating to a specific filing does not require a separate fee, nor does any amended rate or form resulting from the correspondence.

G. Filing fees are not refundable.

History

Statutory Authority: MS s 60A.14
History: 10 SR 353

Minn. R. 2605.0500 Specific Fees

The following is a list of specific filing fees applicable to certain filings:

A. A filing consisting of a policy form, an application, and four endorsements are subject to a filing fee of $10.

B. Rates and rules submitted together with the filing described in item A are subject to an additional $10 filing fee, for a total of $20.

C. A group of three companies submitting identical filings are subject to a $10 filing fee for each company for a total of $30.

D. A filing for nonadoption or only changing the effective date of a prior rate service organization filing are subject to a $10 filing fee. If the same filing also includes three endorsements replacing those filed on their behalf by the rate service organization, the filing fee remains the same.

History

Statutory Authority: MS s 60A.14
History: 10 SR 353

Chapter 2610 CONTESTED CASE PROCEDURES

Minn. R. 2630.0100 Definitions

Subpart 1. Scope.

As used in parts 2630.0100 to 2630.3300, the following terms have the meanings given them.

Subp. 2. Act.

"Act" means the Safe Toys Act, Minnesota Statutes, sections 325F.08 to 325F.17.

Subp. 3. Asphyxiation or suffocation.

"Asphyxiation or suffocation" means a toy presents a hazard of asphyxiation or suffocation if, in normal use and reasonably foreseeable damage or abuse, its design, manufacture, or storage presents a risk of personal injury or illness from interference with normal breathing.

Subp. 4. Child.

"Child" means any person or persons less than 14 years of age.

Subp. 5. Dealer.

"Dealer" means any person that sells or distributes any toy to the general public.

Subp. 6. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce.

Subp. 7. Distributor.

"Distributor" means any person that sells or distributes any toy at wholesale.

Subp. 8. Electrical hazard.

"Electrical hazard" means a toy presents an electrical hazard if, in normal use or when subjected to reasonably foreseeable damage or abuse, its design or manufacture may cause personal injury or illness by shock or electrocution.

Subp. 9. Flammable.

"Flammable" means having a flash point up to 80 degrees Fahrenheit as determined by the Tagliabue Open Cup Tester. The flammability of solids and of the contents of self-pressurized containers shall be determined by methods generally recognized as applicable to the materials or containers and established by this chapter.

Subp. 10. Importer.

"Importer" means any person that imports toys into the state for sale or distribution within the state.

Subp. 11. Manufacturer.

"Manufacturer" means any person that manufactures any toy for sale or distribution.

Subp. 12. Mechanical hazard.

"Mechanical hazard" means a toy presents a mechanical hazard if, in normal use or when subjected to reasonably foreseeable damage or abuse, its design or manufacture presents an unreasonable risk of personal injury or illness:

A. from fracture, fragmentation, or disassembly of the toy;

B. from propulsion of the toy or any part or accessory thereof;

C. from points or other protrusion, surfaces, edges, openings, or closures;

D. from moving parts;

E. from lack or insufficiency of controls to reduce or stop motion;

F. as a result of self-adhering characteristics of the toy;

G. because the toy or any part or accessory thereof may be aspirated or ingested;

H. because of instability;

I. from stuffing material which is not free of dangerous or harmful substances; or

J. because of any other aspect of the toy's design or manufacture.

Subp. 13. Mouth toy.

"Mouth toy" means any toy intended to be placed in or in contact with a child's mouth.

Subp. 14. Person.

"Person" means any individual, partnership, corporation, or association.

Subp. 15. Retail purchase price.

"Retail purchase price" means the amount of money paid to acquire a toy offered for sale at retail, excluding transportation and shipping charges, interest, finance or service charges, and Minnesota sales and use taxes.

Subp. 16. Thermal hazard.

"Thermal hazard" means that a toy presents a thermal hazard if, in normal use and reasonably foreseeable damage or abuse, its design or manufacture presents an unreasonable risk of personal injury or illness because of heat or from heated parts, substances, or surfaces.

Subp. 17. Toxic.

"Toxic" means able to produce personal injury or illness to a person through ingestion, inhalation, or absorption through any body surface, and can apply to any substance other than a radioactive substance.

Subp. 18. Toy.

"Toy" means any toy, game, or other article designed, labeled, advertised, or otherwise intended for use by children.

History

Statutory Authority: MS s 325F.11
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2630.0200 Scope and Purpose

Parts 2630.0100 to 2630.3300 are adopted pursuant to the Safe Toys Act, Minnesota Statutes, sections 325F.08 to 325F.17, and are promulgated to assist consumers and business people in the interpretation of the statute.

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279

Minn. R. 2630.0300 Adoption of Federal Hazardous Substances Act by Reference

The following regulations promulgated pursuant to the Federal Hazardous Substances Act, and published as Code of Federal Regulations, title 16, chapter II, subchapter C, parts 1500 and 1505 (formerly title 21, part 191), and in the Federal Register, volume 38, number 187 on Thursday, September 27, 1973, and in effect on October 30, 1973, are incorporated herein by reference and hereby made a part of this part:

A. part 1500.18 (formerly part 191.9a): banned toys and other banned articles intended for use by children;

B. part 1500.47 (formerly part 191.17): method for determining the sound pressure level produced by toy caps;

C. part 1500.86 (formerly part 191.65a): exemptions from classification as a banned toy or other banned article for use by children; and

D. part 1505 (formerly part 191b): requirements for electrically operated toys or other electrically operated articles intended for use by children.

History

Statutory Authority: MS s 325F.11

Minn. R. 2630.0400 Banned Toys List

The commissioner may, from time to time, publish a list of those toys that fail to meet the standards required by the act and the rules adopted pursuant thereto. Such a list shall be for general informational purposes only and shall not constitute an exclusive listing of all toys distributed which are in violation of the act.

History

Statutory Authority: MS s 325F.11
History: L 1983 c 289 s 114

Minn. R. 2630.0500 Banning and Seizure of Hazardous Toys

Subpart 1. Order banning hazardous toys.

If the commissioner determines that a specific toy is subject to a part and fails to meet any standards incorporated therein, the commissioner may issue and cause to be served upon the manufacturer and importer a temporary order banning the manufacture, importation, distribution, sale, or offering for sale of such toys. The order shall be served by registered or certified mail and shall be calculated to give reasonable notice of the time and place for a hearing thereon, and shall state the reasons for the entry of the temporary order. The hearing shall be held no later than ten days after the temporary order has been served upon all parties, after which and within ten days of the date of the hearing the commissioner shall issue a further order either vacating, modifying, or continuing the order. The order may be modified to include:

A. directing the manufacturer or importer to repurchase the banned toys in accordance with parts 2630.1100 to 2630.1900;

B. directing the manufacturer or importer to bring such toys into conformity with this chapter and federal regulations, and standards incorporated therein; and

C. directing such other action as the commissioner deems necessary to ensure compliance with this chapter and federal regulations.

Subp. 2. Immediate danger.

If the commissioner determines that an immediate danger exists to the public health and safety, which is caused by a toy that presents an electrical, mechanical, or thermal hazard or a toy that presents a hazard due to toxic or flammable properties or properties able to produce asphyxiation or suffocation, the commissioner may issue and cause to be served upon the manufacturer, importer, or dealer a temporary order banning the manufacture, importation, sale, or distribution of such toy. The order shall be served by registered or certified mail and shall be calculated to give reasonable notice of the time and place for a hearing thereon and shall state the reasons for the entry of the temporary order. The hearing shall be held no later than ten days after the issuance of the temporary order, after which and within ten days of the date of the hearing the commissioner shall issue a further order either vacating, modifying, or continuing the order.

Subp. 3. Warrant to seize toys.

The commissioner shall apply to the district court to seize toys presenting hazards to the public when no other method to control the hazard exists.

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279; L 1983 c 289 s 114

Minn. R. 2630.0800 Testing of Toys

Testing of toys:

A. Each manufacturer of toys shall test all toys of that manufacturer that are subject to this chapter and which are currently being manufactured for sale or distribution within the state. The tests shall be conducted to ensure compliance with this chapter. Each manufacturer shall provide the results of these tests to any person who imports the manufacturer's toy into this state.

B. Each manufacturer of toys shall test all of that manufacturer's toys that are subject to this chapter prior to introduction for sale or distribution in the state. The tests shall be conducted to ensure compliance with this chapter. Each manufacturer shall provide the results of these tests to any person who imports the manufacturer's toy into the state.

C. A copy of all test results for each toy introduced for sale or distribution in the state shall be kept by each manufacturer and importer who manufactures or imports that toy. Such test results shall be presented to the commissioner upon 72 hours notice from the commissioner or an employee of the commissioner.

D. Pursuant to an order issued to a manufacturer or importer the commissioner may require that all test results be filed with the commissioner's office prior to the introduction of any new toys into the state for distribution or sale by that manufacturer or importer.

E. When a manufacturer or importer fails to comply with items A to D, the commissioner may issue and serve upon that manufacturer or importer an order banning the sale, offering for sale, importation, distribution, or manufacture of any toy for which test results are not available. The order shall be served by mail and shall be calculated to give reasonable notice of the time and place for a hearing thereon and shall state the reasons for the entry of the order.

F. The provisions of this part shall be applied to all toys sold in Minnesota 120 days after the effective date of the part.

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279; L 1983 c 289 s 114

Minn. R. 2630.1100 Retroactive Scope

The procedures prescribed in this chapter shall apply to any toy banned pursuant to the act, regardless of whether such toy was banned at the time of its sale.

History

Statutory Authority: MS s 325F.11

Minn. R. 2630.1200 Return to Dealer

Return to dealer:

A. In the case of a person who returns a banned toy that was sold at retail by a dealer, if the person who purchased it from the dealer returns it to the dealer and provides proof of retail purchase price, that dealer shall refund the retail purchase price and shall reimburse the buyer for any reasonable and necessary transportation charges incurred in its return.

B. In the case of a person who returns a banned toy that was sold at retail by a dealer, if the person who purchased it from the dealer returns it to the dealer and does not provide proof of retail purchase price, the dealer shall refund the person the average retail purchase price charged for such toy during the 12-month period preceding the posting of public notice as required in this chapter. If the dealer is unable to establish the average retail purchase price charged for such a toy, the dealer shall refund the price last paid for the toy.

C. Any dealer who makes reimbursement pursuant to item B shall, upon request from the commissioner or an employee of the commissioner, furnish the commissioner with any information and records used to determine the average retail price described in item B. Such information and records shall be available for a period of 12 months.

D. Refunds of sales and use taxes shall be governed by Minnesota Statutes and the rules of the Minnesota Department of Revenue relating to the sales and use tax.

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279; L 1983 c 289 s 114

Minn. R. 2630.1300 Distributors

A distributor who has sold a banned toy shall repurchase it from the person to whom it was sold and shall refund that person the price paid the distributor for that toy.

If the distributor is repurchasing the banned toy from a dealer who has reimbursed the purchaser for reasonable and necessary transportation charges pursuant to the requirements of part 2630.1200, the distributor shall reimburse that dealer for such charges.

If the distributor requires the return of the toy in connection with the repurchase of it in accordance with this paragraph, the distributor shall reimburse any persons for any reasonable and necessary expenses incurred in returning the toy to the distributor.

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279

Minn. R. 2630.1400 Manufacturer or Importer

Subpart 1. Repurchase.

A manufacturer or importer who has sold a banned toy shall repurchase it from the person to whom it was sold and shall refund that person the price paid the manufacturer for that toy.

The manufacturer or importer shall reimburse a person to whom a banned toy was sold for any reasonable and necessary transportation charges and expenses paid by said persons pursuant to the requirements of parts 2630.1200 and 2630.1300.

If the manufacturer or importer requires the return of the toy in connection with repurchase of it in accordance with this part, the manufacturer or importer shall reimburse any persons to whom he or she sold it for any reasonable and necessary expenses incurred in returning the toy to the manufacturer or importer.

Subp. 2. Notice.

The manufacturer or importer of a toy subject to repurchase shall immediately notify, in a manner prescribed by the commissioner, each distributor and other person to whom the toy was sold that the toy is a banned toy and is subject to repurchase under the act. Such notice shall identify the toy involved, including model number or other distinguishing characteristics, set forth the nature of hazards associated with the use of the product, provide instructions for return or other disposition of the toy, and advise that any distributor or dealer who receives the notice is required to provide further notice as specified in parts 2630.1500 to 2630.1900. A distributor, upon receiving such notice, shall, in the same manner, immediately notify, in a manner prescribed by the commissioner, each distributor, dealer, and other person to whom the distributor sold such a toy.

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279; L 1983 c 289 s 114

Minn. R. 2630.1500 Banned Toy List; Display

Banned toy list:

A. A dealer who sells or has sold a banned toy at a retail establishment shall, upon notification that such a product is a banned toy, immediately prepare and prominently display a list containing identification of the banned product including the model number or other distinguishing characteristics, the name and address of the manufacturer and the nature of the hazards associated with the use of the product, along with the procedure by which a refund, repair, or replacement may be obtained by the retail purchaser. Each such banned toy shall be maintained on the list for a period of not less than 120 days from the date the dealer received such notification.

B. The commissioner may, at any time, require the manufacturer or importer to notify distributors and dealers that a product shall be maintained on said list for a longer period. In this case, the distributor shall so notify persons to whom the distributor sold the banned toy and dealers shall so maintain said list.

C. The list required by item A shall be considered prominently displayed if it is available for inspection at a convenient location in the retail establishment, to which the public has access without having to obtain the permission or assistance of a store employee, and if a sign posted in accordance with the provisions of part 2630.1600 clearly indicates the location of the list.

D. A dealer who displays a list of banned toys pursuant to the Federal Hazardous Substances Act or the Consumer Product Safety Act, which list includes each article and all information required to be displayed pursuant to the Safe Toys Act, shall have complied with this part.

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279; L 1983 c 289 s 114

Minn. R. 2630.1600 Retail Dealers Displaying Notice of Refund

A dealer who sells or has sold a banned toy at a retail establishment, upon receiving notification that such product is a banned toy, shall immediately prepare and prominently display a "NOTICE OF REFUND PROCEDURES FOR BANNED TOYS OR ARTICLES FOR CHILDREN" as follows. This notice shall be posted on each floor of each such establishment where items similar to the banned toy are displayed or sold. Each such notice, which shall be not less than 22 by 28 inches in size, shall be printed in a color contrasting with the background and shall be so displayed for a period of not less than 120 days from the date the dealer received the latest such notification, or a longer period if so ordered by the commissioner.

NOTICE OF REFUND PROCEDURES FOR BANNED TOYS OR ARTICLES FOR CHILDREN.

IN ACCORDANCE WITH THE MINNESOTA SAFE TOYS ACT, THIS STORE HAS AVAILABLE A LIST OF TOYS AND OTHER CHILDREN'S ARTICLES THAT HAVE BEEN SOLD IN THIS STORE AND THAT HAVE RECENTLY BEEN BANNED BY THE MINNESOTA DEPARTMENT OF COMMERCE.

THESE ARTICLES ARE HAZARDOUS AND SHOULD NOT BE USED. THIS LIST IS AVAILABLE FOR INSPECTION AT: (describe location where available).

THE LIST CONTAINS IDENTIFICATION OF THE BANNED ARTICLE, THE NATURE OF THE HAZARD ASSOCIATED WITH THE ARTICLE, AND HOW A REFUND, REPAIR OR REPLACEMENT MAY BE OBTAINED.

History

Statutory Authority: MS s 325F.11
History: L 1983 c 289 s 114

Minn. R. 2630.1700 Nonretail Dealers Displaying Notice of Refund

A dealer who sells or has sold a banned toy in other than a retail establishment, shall, upon notification that the product is a banned toy, publicize a clear and conspicuous "NOTICE OF BANNED TOY OR CHILDREN'S ARTICLE" as follows, in a manner reasonably calculated to reach as many purchasers of the banned product as possible.

NOTICE OF BANNED TOY OR CHILDREN'S ARTICLE

(Insert identification of banned product, including model number or other distinguishing characteristics and name and address of manufacturers).

THE MINNESOTA DEPARTMENT OF COMMERCE HAS BANNED THIS PRODUCT AS HAZARDOUS BECAUSE (insert nature of the hazards associated with the use of the product).

THIS PRODUCT SHOULD NOT BE USED. IF YOU HAVE PROOF OF HOW MUCH YOU PAID FOR THE TOY, RETURN THE BANNED PRODUCT TO THE RETAILER WHO SOLD IT TO YOU AND RECEIVE A FULL REFUND OF THE RETAIL PURCHASE PRICE, REPAIR OR REPLACEMENT, AND ANY REASONABLE AND NECESSARY COSTS INCURRED IN RETURNING THE PRODUCT.

IF YOU DO NOT HAVE PROOF OF HOW MUCH YOU PAID FOR THE TOY, YOU MAY RETURN THE TOY TO THE RETAILER WHO SOLD IT TO YOU AND RECEIVE A PARTIAL REFUND, REPAIR OR REPLACEMENT, AND ANY REASONABLE AND NECESSARY COSTS INCURRED IN RETURNING THE ARTICLE.

History

Statutory Authority: MS s 325F.11
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2630.1800 Alternative Display Compliance

Subpart 1. Retail dealers.

Any notice posted by a dealer in compliance with the Federal Hazardous Substances Act or the Consumer Product Safety Act, which includes the same information required by the notice in part 2630.1600 shall meet the requirements of part 2630.1600.

Subp. 2. Nonretailed dealers.

Any notice published by a dealer in compliance with the Federal Hazardous Substances Act or the Consumer Product Safety Act, which includes the same information required by the notice in part 2630.1700 shall meet the requirements of part 2630.1700.

History

Statutory Authority: MS s 325F.11

Minn. R. 2630.1900 Scope of Notice Provision

The notice provisions of parts 2630.1600 and 2630.1700 are not mutually exclusive.

History

Statutory Authority: MS s 325F.11

Minn. R. 2630.2000 Manufacturers Initiative

Where a manufacturer or importer discovers that a toy he or she is selling or has sold is in violation of this chapter, the manufacturer or importer shall initiate the same listing, notification, and repurchase procedures as set out in parts 2630.1100 to 2630.1900 and shall notify the commissioner of that action within 72 hours of discovering the violation.

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279; L 1983 c 289 s 114

Minn. R. 2630.3100 Toys Containing Glass

Subpart 1. Particles and edges.

No person, firm, corporation, association or agent or employee thereof shall import, manufacture, sell, hold for sale, or distribute a toy or other article intended for use by children that contains glass, unless the glass is protected in such a way that no glass particle or edges will be accessible when a toy is subjected to normal use or reasonably foreseeable damage or abuse.

Subp. 2. Exemption.

The provisions of subpart 1 shall not apply to nontoy glass articles used during the consumption of food or beverages, glass containers for prescriptions, health and beauty aid products, chemistry sets and other science education sets intended primarily for use by children, children's prescription eyewear, children's vacuum bottles, or light bulbs and similar illuminating devices that are components of toys.

History

Statutory Authority: MS s 325F.11

Minn. R. 2630.3200 Toy Chests and Similar Articles

Subpart 1. Compliance.

No person, firm, corporation, association or agent or employee thereof shall import, manufacture, sell, hold for sale, or distribute any toy chest or similar article intended for use by children that does not comply with the provisions of subparts 2 and 3.

Subp. 2. Instructions included with nonassembled toy chests.

Toy chests and similar articles intended for use by children, unless they are sold completely assembled to the consumer, shall be accompanied by detailed instructions that include an assembly drawing, a list and description of all parts and tools required for assembly, and a full-size diagram of the required bolts and other fasteners.

The instructions shall be written so that unskilled lay persons following the instructions can correctly assembly the article without making errors that would result in improper or unsafe assembly. The instructions shall include cautionary statements concerning tightening of bolts and other fasteners.

Subp. 3. Requirements for design and construction.

Requirements for design and construction:

A. The article shall have no components that have the potential for causing injury by shearing, scissoring, or pinching actions; have the potential for causing laceration or puncture wound injury; have sharp or rough edges; or are threaded hardware that protrudes more than one diameter beyond the internally threaded fastener or structural member.

B. All wood parts and surfaces shall be smooth and free from splinters, splits, cracks, and similar defects.

C. No attachments, including, but not limited to, built-in toys, decorations, and design components, and no part thereof that will become accessible when subjected to normal use or reasonably foreseeable damage or abuse, shall have laceration or puncture injury potential.

D. If the article or a component thereof has a continuous enclosed volume greater than 1.1 cubic feet and a smaller internal dimension of six inches or more, it must comply with the following:

History

Statutory Authority: MS s 325F.11
History: 17 SR 1279

Minn. R. 2630.3300 Children's Vacuum Bottles

Subpart 1. Test.

No person, firm, corporation, association, or agent thereof shall import, manufacture, sell, hold for sale, or distribute any vacuum bottle with a capacity of 16 ounces or less that is intended for use by children, unless it is designed and constructed to pass the tests described in subparts 2 and 3.

Subp. 2. Impact medium.

The impact medium shall consist of a 0.125 inch nominal thickness of type IV vinyl-asbestos tile, as specified in Federal Specification SST-312A, over at least a 2.5 inch thickness of concrete. The impact area shall be at least three square feet.

Subp. 3. Test procedure.

The test shall consist of dropping a fully assembled vacuum bottle, filled to the neck with water at 36 degrees to 40 degrees Fahrenheit, a minimum of four times from a height of three feet. The vacuum bottle shall be dropped in random orientation. After each drop, the test sample shall be allowed to come to rest and examined and evaluated before continuing. If the glass filler breaks on any of the first three drops, the test can be terminated on the particular drop on which the filler breaks. Accessibility of glass in the liquid shall be determined by opening the cap and emptying the contents.

History

Statutory Authority: MS s 325F.11

Chapter 2640 BOARD OF COSMETOLOGY

Minn. R. 2640.0100 Repealed by subpart

Subpart 1.

[Renumbered 2642.0010, subpart 1 and 2644.0010, subpart 1]

Subp. 2.

[Renumbered 2642.0010, subp. 2 and 2644.0010, subp. 2]

Subp. 3.

[Renumbered 2642.0010, subp. 3 and 2644.0010, subp. 3]

Subp. 4.

[Renumbered 2642.0010, subp. 4 and 2644.0010, subp. 4]

Subp. 5.

[Renumbered 2642.0010, subp. 5 and 2644.0010, subp. 5]

Subp. 6.

[Renumbered, 2642.0010, subp. 6 and 2644.0010, subp. 6]

Subp. 7.

[Repealed, 13 SR 1056]

Subp. 8.

[Renumbered 2642.0010, subp. 7 and 2644.0010, subp. 7]

Subp. 9.

[Renumbered 2642.0010, subp. 8 and 2644.0010, subp. 8]

Subp. 10.

[Renumbered 2642.0010, subp. 9 and 2644.0010, subp. 9]

Subp. 11.

[Renumbered 2642.0010, subp. 10 and 2644.0010, subp. 10]

Subp. 12.

[Renumbered 2642.0010, subp. 11 and 2644.0010, subp. 11]

Subp. 13.

[Renumbered 2642.0010, subp. 12 and 2644.0010, subp. 12]

Subp. 14.

[Renumbered 2642.0010, subp. 13 and 2644.0010, subp. 13]

Subp. 15.

[Renumbered 2642.0010, subp. 14 and 2644.0010, subp. 14]

Subp. 16.

[Renumbered 2642.0010, subp. 15 and 2644.0010, subp. 15]

Subp. 17.

[Renumbered 2642.0010, subp. 16 and 2644.0010, subp. 16]

Subp. 18.

[Renumbered 2642.0010, subp. 17 and 2644.0010, subp. 17]

Subp. 19.

[Renumbered 2642.0010, subp. 18 and 2644.0010, subp. 18]

Subp. 20.

[Renumbered 2642.0010, subp. 19 and 2644.0010, subp. 19]

Subp. 21.

[Renumbered 2642.0010, subp. 20 and 2644.0010, subp. 20]

Subp. 22.

[Renumbered 2642.0010, subp. 21 and 2644.0010, subp. 21]

Minn. R. 2640.0500 [Renumbered 2642.0100 and 2644.0100]

[Renumbered 2642.0100 and 2644.0100]

Minn. R. 2640.0600 [Renumbered 2642.0110 and 2644.0110]

[Renumbered 2642.0110 and 2644.0110]

Minn. R. 2640.0700 [Renumbered 2642.0120 and 2644.0120]

[Renumbered 2642.0120 and 2644.0120]

Minn. R. 2640.1100 [Renumbered 2642.0130 and 2644.0130]

[Renumbered 2642.0130 and 2644.0130]

Minn. R. 2640.1200 [Renumbered 2642.0140]

[Renumbered 2642.0140]

Minn. R. 2640.1300 [Renumbered 2642.0150]

[Renumbered 2642.0150]

Minn. R. 2640.1400 [Renumbered 2642.0160]

[Renumbered 2642.0160]

Minn. R. 2640.1500 [Renumbered 2644.0140]

[Renumbered 2644.0140]

Minn. R. 2640.1600 [Renumbered 2642.0170]

[Renumbered 2642.0170]

Minn. R. 2640.1700 [Renumbered 2642.0180 and 2644.0150]

[Renumbered 2642.0180 and 2644.0150]

Minn. R. 2640.1800 [Renumbered 2642.0190 and 2644.0160]

[Renumbered 2642.0190 and 2644.0160]

Minn. R. 2640.1900 [Renumbered 2642.0200 and 2644.0170]

[Renumbered 2642.0200 and 2644.0170]

Minn. R. 2640.2000 [Renumbered 2642.0210 and 2644.0180]

[Renumbered 2642.0210 and 2644.0180]

Minn. R. 2640.2100 [Renumbered 2642.0220 and 2644.0190]

[Renumbered 2642.0220 and 2644.0190]

Minn. R. 2640.2200 [Renumbered 2642.0230 and 2644.0200]

[Renumbered 2642.0230 and 2644.0200]

Minn. R. 2640.3100 [Renumbered 2642.0300]

[Renumbered 2642.0300]

Minn. R. 2640.3200 [Renumbered 2642.0310]

[Renumbered 2642.0310]

Minn. R. 2640.3300 [Renumbered 2642.0320]

[Renumbered 2642.0320]

Minn. R. 2640.3400 [Renumbered 2642.0330]

[Renumbered 2642.0330]

Minn. R. 2640.3500 [Renumbered 2642.0340]

[Renumbered 2642.0340]

Minn. R. 2640.3600 [Renumbered 2642.0350]

[Renumbered 2642.0350]

Minn. R. 2640.3700 [Renumbered 2642.0360]

[Renumbered 2642.0360]

Minn. R. 2640.3800 [Renumbered 2642.0370]

[Renumbered 2642.0370]

Minn. R. 2640.3900 [Renumbered 2642.0380]

[Renumbered 2642.0380]

Minn. R. 2640.4000 [Renumbered 2642.0390]

[Renumbered 2642.0390]

Minn. R. 2640.4100 [Renumbered 2642.0400]

[Renumbered 2642.0400]

Minn. R. 2640.5100 [Renumbered 2644.0300]

[Renumbered 2644.0300]

Minn. R. 2640.5200 [Renumbered 2644.0310]

[Renumbered 2644.0310]

Minn. R. 2640.5300 [Renumbered 2644.0320]

[Renumbered 2644.0320]

Minn. R. 2640.5400 [Renumbered 2644.0330]

[Renumbered 2644.0330]

Minn. R. 2640.5500 [Renumbered 2644.0340]

[Renumbered 2644.0340]

Minn. R. 2640.5600 [Renumbered 2644.0350]

[Renumbered 2644.0350]

Minn. R. 2640.5700 [Renumbered 2644.0360]

[Renumbered 2644.0360]

Minn. R. 2640.5800 [Renumbered 2644.0370]

[Renumbered 2644.0370]

Minn. R. 2640.5900 [Renumbered 2644.0380]

[Renumbered 2644.0380]

Minn. R. 2640.6000 [Renumbered 2644.0390]

[Renumbered 2644.0390]

Minn. R. 2640.6100 [Renumbered 2644.0400]

[Renumbered 2644.0400]

Minn. R. 2640.6200 [Renumbered 2644.0410]

[Renumbered 2644.0410]

Minn. R. 2640.6300 [Renumbered 2644.0420]

[Renumbered 2644.0420]

Minn. R. 2640.6400 [Renumbered 2642.0510 and 2644.0430]

[Renumbered 2642.0510 and 2644.0430]

Minn. R. 2640.6600 [Renumbered 2644.0500]

[Renumbered 2644.0500]

Minn. R. 2640.6700 [Renumbered 2644.0510]

[Renumbered 2644.0510]

Minn. R. 2640.6800 [Renumbered 2644.0520]

[Renumbered 2644.0520]

Minn. R. 2640.6900 [Renumbered 2644.0530]

[Renumbered 2644.0530]

Minn. R. 2640.7000 [Renumbered 2642.0600 and 2644.0540]

[Renumbered 2642.0600 and 2644.0540]

Minn. R. 2640.7100 [Renumbered 2642.0610 and 2644.0550]

[Renumbered 2642.0610 and 2644.0550]

Minn. R. 2640.7200 [Renumbered 2642.0620 and 2644.0560]

[Renumbered 2642.0620 and 2644.0560]

Minn. R. 2640.7500 [Renumbered 2644.0600]

[Renumbered 2644.0600]

Minn. R. 2640.7600 [Renumbered 2644.0610]

[Renumbered 2644.0610]

Minn. R. 2640.7700 [Renumbered 2644.0620]

[Renumbered 2644.0620]

Minn. R. 2640.7800 [Renumbered 2644.0630]

[Renumbered 2644.0630]

Minn. R. 2640.7900 [Renumbered 2644.0640]

[Renumbered 2644.0640]

Minn. R. 2640.8000 [Renumbered 2644.0650]

[Renumbered 2644.0650]

Minn. R. 2640.8100 [Renumbered 2644.0660]

[Renumbered 2644.0660]

Minn. R. 2640.8200 [Renumbered 2644.0670]

[Renumbered 2644.0670]

Minn. R. 2640.8300 [Renumbered 2644.0680]

[Renumbered 2644.0680]

Minn. R. 2640.8400 [Renumbered 2644.0690]

[Renumbered 2644.0690]

Minn. R. 2640.8500 [Renumbered 2644.0700]

[Renumbered 2644.0700]

Minn. R. 2640.8600 [Renumbered 2644.0710]

[Renumbered 2644.0710]

Minn. R. 2640.8700 [Renumbered 2644.0720]

[Renumbered 2644.0720]

Minn. R. 2640.8800 [Renumbered 2644.0730]

[Renumbered 2644.0730]

Minn. R. 2640.8900 [Renumbered 2644.0740]

[Renumbered 2644.0740]

Minn. R. 2640.9100 [Renumbered 2642.0800 and 2644.0800]

[Renumbered 2642.0800 and 2644.0800]

Minn. R. 2640.9200 [Renumbered 2642.0810 and 2644.0810]

[Renumbered 2642.0810 and 2644.0810]

Minn. R. 2640.9400 [Renumbered 2642.0820 and 2644.0820]

[Renumbered 2642.0820 and 2644.0820]

Chapter 2642 COSMETOLOGY; SALONS

Minn. R. 2642.0010 Repealed by subpart

Subpart 1.

[Renumbered 2105.0010, subpart 1]

Subp. 2.

[Repealed, 22 SR 594]

Subp. 3.

[Repealed, 22 SR 594]

Subp. 4.

[Renumbered 2105.0010, subp. 2]

Subp. 5.

[Repealed, 22 SR 594]

Subp. 6.

[Repealed, 22 SR 594]

Subp. 7.

[Renumbered 2105.0010, subp. 4]

Subp. 8.

[Repealed, 22 SR 594]

Subp. 9.

[Renumbered 2105.0010, subp. 5]

Subp. 10.

[Repealed, 22 SR 594]

Subp. 11.

[Renumbered 2105.0010, subp. 6]

Subp. 12.

[Repealed, 22 SR 594]

Subp. 12a.

[Renumbered 2105.0010, subp. 7]

Subp. 13.

[Renumbered 2105.0010, subp. 8]

Subp. 14.

[Renumbered 2105.0010, subp. 9]

Subp. 15.

[Renumbered 2105.0010, subp. 10]

Subp. 16.

[Renumbered 2105.0010, subp. 11]

Subp. 17.

[Renumbered 2105.0010, subp. 3]

Subp. 18.

[Repealed, 22 SR 594]

Subp. 19.

[Renumbered 2105.0010, subp. 12]

Subp. 20.

[Renumbered 2105.0010, subp. 13]

Subp. 21.

[Repealed, 22 SR 594]

Minn. R. 2642.0100 [Renumbered 2105.0100]

[Renumbered 2105.0100]

Minn. R. 2642.0110 [Renumbered 2105.0110]

[Renumbered 2105.0110]

Minn. R. 2642.0120 Repealed by subpart

Subpart 1.

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Subp. 2.

[Renumbered 2105.0120, subpart 1]

Subp. 3.

[Renumbered 2105.0120, subp. 2]

Subp. 4.

[Renumbered 2105.0120, subp. 3]

Subp. 5.

[Renumbered 2105.0120, subp. 4]

Subp. 6.

[Renumbered 2105.0120, subp. 5]

Minn. R. 2642.0130 [Renumbered 2105.0130]

[Renumbered 2105.0130]

Minn. R. 2642.0140 [Renumbered 2105.0140]

[Renumbered 2105.0140]

Minn. R. 2642.0150 [Renumbered 2105.0150]

[Renumbered 2105.0150]

Minn. R. 2642.0160 [Renumbered 2105.0160]

[Renumbered 2105.0160]

Minn. R. 2642.0170 [Repealed, 22 SR 594]

[Repealed, 22 SR 594]

Minn. R. 2642.0180 Repealed by subpart

Subpart 1.

[Renumbered 2105.0180, subpart 1]

Subp. 2.

[Renumbered 2105.0180, subp. 2]

Subp. 3.

[Repealed, 22 SR 594]

Minn. R. 2642.0190 [Renumbered 2105.0190]

[Renumbered 2105.0190]

Minn. R. 2642.0200 [Renumbered 2105.0200]

[Renumbered 2105.0200]

Minn. R. 2642.0210 [Renumbered 2105.0210]

[Renumbered 2105.0210]

Minn. R. 2642.0220 [Renumbered 2105.0220]

[Renumbered 2105.0220]

Minn. R. 2642.0230 [Renumbered 2105.0230]

[Renumbered 2105.0230]

Minn. R. 2642.0300 [Renumbered 2105.0300]

[Renumbered 2105.0300]

Minn. R. 2642.0310 Repealed by subpart

Subpart 1.

[Renumbered 2105.0310, subpart 1]

Subp. 2.

[Renumbered 2105.0310, subp. 2]

Subp. 3.

[Repealed, L 1993 c 204 s 28]

Subp. 4.

[Repealed, L 1993 c 204 s 28]

Subp. 5.

[Repealed, L 1993 c 204 s 28]

Minn. R. 2642.0320 [Renumbered 2105.0320]

[Renumbered 2105.0320]

Minn. R. 2642.0330 Repealed by subpart

Subpart 1.

[Renumbered 2105.0330, subpart 1]

Subp. 2.

[Renumbered 2105.0330, subp. 2]

Subp. 3.

[Repealed, L 1993 c 204 s 28]

Subp. 4.

[Repealed, L 1993 c 204 s 28]

Subp. 5.

[Renumbered 2105.0330, subp. 3]

Subp. 6.

[Renumbered 2105.0330, subp. 4]

Minn. R. 2642.0340 [Renumbered 2105.0340]

[Renumbered 2105.0340]

Minn. R. 2642.0350 [Renumbered 2105.0350]

[Renumbered 2105.0350]

Minn. R. 2642.0360 [Renumbered 2105.0360]

[Renumbered 2105.0360]

Minn. R. 2642.0370 [Renumbered 2105.0370]

[Renumbered 2105.0370]

Minn. R. 2642.0380 [Renumbered 2105.0380]

[Renumbered 2105.0380]

Minn. R. 2642.0390 [Renumbered 2105.0390]

[Renumbered 2105.0390]

Minn. R. 2642.0400 [Renumbered 2105.0400]

[Renumbered 2105.0400]

Minn. R. 2642.0450 [Renumbered 2105.0450]

[Renumbered 2105.0450]

Minn. R. 2642.0510 [Renumbered 2105.0510]

[Renumbered 2105.0510]

Minn. R. 2642.0600 [Renumbered 2105.0600]

[Renumbered 2105.0600]

Minn. R. 2642.0610 [Renumbered 2105.0610]

[Renumbered 2105.0610]

Minn. R. 2642.0620 [Repealed, 22 SR 594]

[Repealed, 22 SR 594]

Minn. R. 2642.0650 [Renumbered 2105.0650]

[Renumbered 2105.0650]

Minn. R. 2642.0800 [Repealed, L 1993 c 204 s 28]

[Repealed, L 1993 c 204 s 28]

Minn. R. 2642.0810 [Repealed, L 1993 c 204 s 28]

[Repealed, L 1993 c 204 s 28]

Minn. R. 2642.0820 [Renumbered 2105.0820]

[Renumbered 2105.0820]

Chapter 2644 COSMETOLOGY; SCHOOLS

Minn. R. 2644.0010 Repealed by subpart

Subpart 1.

[Renumbered 2110.0010, subpart 1]

Subp. 2.

[Renumbered 2110.0010, subp. 2]

Subp. 3.

[Renumbered 2110.0010, subp. 3]

Subp. 4.

[Renumbered 2110.0010, subp. 4]

Subp. 5.

[Renumbered 2110.0010, subp. 5]

Subp. 6.

[Renumbered 2110.0010, subp. 6]

Subp. 7.

[Renumbered 2110.0010, subp. 8]

Subp. 8.

[Renumbered 2110.0010, subp. 9]

Subp. 9.

[Renumbered 2110.0010, subp. 10]

Subp. 10.

[Renumbered 2110.0010, subp. 11]

Subp. 11.

[Renumbered 2110.0010, subp. 12]

Subp. 12.

[Renumbered 2110.0010, subp. 13]

Subp. 12a.

[Renumbered 2110.0010, subp. 14]

Subp. 13.

[Renumbered 2110.0010, subp. 15]

Subp. 14.

[Renumbered 2110.0010, subp. 16]

Subp. 15.

[Renumbered 2110.0010, subp. 17]

Subp. 16.

[Renumbered 2110.0010, subp. 18]

Subp. 17.

[Renumbered 2110.0010, subp. 7]

Subp. 18.

[Repealed, 22 SR 594]

Subp. 19.

[Renumbered 2110.0010, subp. 19]

Subp. 20.

[Renumbered 2110.0010, subp. 20]

Subp. 21.

[Repealed, 22 SR 594]

Minn. R. 2644.0100 [Renumbered 2110.0100]

[Renumbered 2110.0100]

Minn. R. 2644.0110 [Renumbered 2110.0110]

[Renumbered 2110.0110]

Minn. R. 2644.0120 Repealed by subpart

Subpart 1.

[Repealed, 22 SR 594]

Subp. 2.

[Renumbered 2110.0120, subpart 1]

Subp. 3.

[Renumbered 2110.0120, subp. 2]

Subp. 4.

[Renumbered 2110.0120, subp. 3]

Subp. 5.

[Renumbered 2110.0120, subp. 4]

Subp. 6.

[Renumbered 2110.0120, subp. 5]

Minn. R. 2644.0130 [Renumbered 2110.0130]

[Renumbered 2110.0130]

Minn. R. 2644.0140 [Renumbered 2110.0140]

[Renumbered 2110.0140]

Minn. R. 2644.0150 Repealed by subpart

Subpart 1.

[Repealed, 22 SR 594]

Subp. 2.

[Repealed, 22 SR 594]

Subp. 3.

[Repealed, 22 SR 594]

Subp. 4.

[Renumbered 2110.0150]

Minn. R. 2644.0160 [Repealed, 22 SR 594]

[Repealed, 22 SR 594]

Minn. R. 2644.0170 [Repealed, 22 SR 594]

[Repealed, 22 SR 594]

Minn. R. 2644.0180 [Repealed, 22 SR 594]

[Repealed, 22 SR 594]

Minn. R. 2644.0190 [Renumbered 2110.0190]

[Renumbered 2110.0190]

Minn. R. 2644.0200 [Renumbered 2110.0200]

[Renumbered 2110.0200]

Minn. R. 2644.0300 [Renumbered 2110.0300]

[Renumbered 2110.0300]

Minn. R. 2644.0310 Repealed by subpart

Subpart 1.

[Renumbered 2110.0310, subpart 1]

Subp. 2.

[Repealed, L 1993 c 204 s 28]

Subp. 3.

[Repealed, L 1993 c 204 s 28]

Subp. 4.

[Repealed, L 1993 c 204 s 28]

Subp. 5.

[Renumbered 2110.0310, subp. 2]

Minn. R. 2644.0320 [Renumbered 2110.0320]

[Renumbered 2110.0320]

Minn. R. 2644.0330 [Renumbered 2110.0330]

[Renumbered 2110.0330]

Minn. R. 2644.0340 [Renumbered 2110.0340]

[Renumbered 2110.0340]

Minn. R. 2644.0350 [Repealed, 22 SR 594]

[Repealed, 22 SR 594]

Minn. R. 2644.0360 [Renumbered 2110.0360]

[Renumbered 2110.0360]

Minn. R. 2644.0370 [Renumbered 2110.0370]

[Renumbered 2110.0370]

Minn. R. 2644.0380 [Renumbered 2110.0380]

[Renumbered 2110.0380]

Minn. R. 2644.0390 [Renumbered 2110.0390]

[Renumbered 2110.0390]

Minn. R. 2644.0400 [Renumbered 2110.0400]

[Renumbered 2110.0400]

Minn. R. 2644.0410 [Renumbered 2110.0410]

[Renumbered 2110.0410]

Minn. R. 2644.0420 [Renumbered 2110.0420]

[Renumbered 2110.0420]

Minn. R. 2644.0430 [Renumbered 2110.0430]

[Renumbered 2110.0430]

Minn. R. 2644.0500 [Renumbered 2110.0500]

[Renumbered 2110.0500]

Minn. R. 2644.0510 [Renumbered 2110.0510]

[Renumbered 2110.0510]

Minn. R. 2644.0520 [Renumbered 2110.0520]

[Renumbered 2110.0520]

Minn. R. 2644.0530 [Renumbered 2110.0530]

[Renumbered 2110.0530]

Minn. R. 2644.0540 [Renumbered 2110.0540]

[Renumbered 2110.0540]

Minn. R. 2644.0550 [Renumbered 2110.0550]

[Renumbered 2110.0550]

Minn. R. 2644.0560 [Renumbered 2110.0560]

[Renumbered 2110.0560]

Minn. R. 2644.0600 [Renumbered 2110.0600]

[Renumbered 2110.0600]

Minn. R. 2644.0610 [Renumbered 2110.0610]

[Renumbered 2110.0610]

Minn. R. 2644.0620 [Renumbered 2110.0620]

[Renumbered 2110.0620]

Minn. R. 2644.0630 [Renumbered 2110.0630]

[Renumbered 2110.0630]

Minn. R. 2644.0640 [Renumbered 2110.0640]

[Renumbered 2110.0640]

Minn. R. 2644.0650 [Renumbered 2110.0650]

[Renumbered 2110.0650]

Minn. R. 2644.0660 [Renumbered 2110.0660]

[Renumbered 2110.0660]

Minn. R. 2644.0670 [Renumbered 2110.0670]

[Renumbered 2110.0670]

Minn. R. 2644.0680 [Renumbered 2110.0680]

[Renumbered 2110.0680]

Minn. R. 2644.0690 [Renumbered 2110.0690]

[Renumbered 2110.0690]

Minn. R. 2644.0700 [Renumbered 2110.0700]

[Renumbered 2110.0700]

Minn. R. 2644.0710 [Renumbered 2110.0710]

[Renumbered 2110.0710]

Minn. R. 2644.0720 [Renumbered 2110.0720]

[Renumbered 2110.0720]

Minn. R. 2644.0730 [Renumbered 2110.0730]

[Renumbered 2110.0730]

Minn. R. 2644.0740 [Renumbered 2110.0740]

[Renumbered 2110.0740]

Minn. R. 2644.0750 [Renumbered 2110.0750]

[Renumbered 2110.0750]

Minn. R. 2644.0800 [Repealed, L 1993 c 204 s 28]

[Repealed, L 1993 c 204 s 28]

Minn. R. 2644.0810 [Repealed, L 1993 c 204 s 28]

[Repealed, L 1993 c 204 s 28]

Minn. R. 2644.0820 [Renumbered 2110.0820]

[Renumbered 2110.0820]

Chapter 2650 ESTABLISHING FINANCIAL INSTITUTIONS

Minn. R. 2650.0100 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.0200 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.0300 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.0400 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.0500 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.0600 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1100 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1200 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1300 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1400 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1500 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1600 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1700 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1800 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.1900 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.2000 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.2100 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3100 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3200 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3300 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3400 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3500 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3600 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3700 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3800 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.3900 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.4000 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2650.4100 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Chapter 2655 INTERSTATE BANKING

Minn. R. 2655.0100 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.0200 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.0300 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.0400 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.0500 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.0600 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.0700 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.0800 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.0900 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.1000 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2; L 1996 c 414 art 1 s 44]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2; L 1996 c 414 art 1 s 44]

Minn. R. 2655.1100 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.1200 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Minn. R. 2655.1300 [Repealed, L 1996 c 414 art 1 s 44]

[Repealed, L 1996 c 414 art 1 s 44]

Chapter 2660 RECIPROCAL INTERSTATE BRANCHING

Minn. R. 2660.0010 Applicability and Scope

Parts 2660.0010 to 2660.0110 govern application and approval procedures by a savings association with its principal place of business located in another state applying to acquire or operate a branch office in this state, or by a savings and loan holding company with its principal place of business in another state to acquire the voting shares of a savings and loan holding company, a savings association, or a savings bank in this state under Minnesota Statutes, section 51A.58.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893; L 1995 c 202 art 1 s 25

Minn. R. 2660.0020 Definitions

Subpart 1. Scope.

As used in parts 2660.0010 to 2660.0110, the following terms have the meanings given them.

Subp. 2. Acquiree.

"Acquiree" means the Minnesota savings and loan holding company, savings association, savings bank, or branch office being acquired by the applicant.

Subp. 3. Acquisition.

"Acquisition" means obtaining ownership by one association, either directly or indirectly, of one or more branch offices of another association. Acquisition shall include obtaining ownership of all offices of another association through a merger, consolidation, purchase, or assumption of some or all of the assets and liabilities.

Subp. 4. Affiliate.

"Affiliate" means a person who directly or indirectly has beneficial ownership of ten percent or more of any class of voting securities.

Subp. 5. Alternate energy loans and alternate conservation loans.

"Alternate energy loans" and "alternate conservation loans" means all loans for any purpose under Minnesota Statutes, section 116M.03, subdivision 26.

Subp. 6. Applicant.

"Applicant" means a savings association or a savings and loan holding company that has filed an application to directly or indirectly acquire a Minnesota savings association or branch office under the Minnesota Reciprocal Interstate Banking Act.

Subp. 7. Association.

"Association" means a mutual or capital stock savings association, a savings association, or a savings bank organized under Minnesota Statutes, chapter 50 or 51A, or a similar statute of a reciprocating state.

Subp. 8. Control.

"Control," with respect to a savings and loan holding company, association, or savings bank to be organized under Minnesota Statutes, chapter 50 or 51A, and parts 2660.0010 to 2660.0110 has the following meaning:

A. the ownership, directly or indirectly, or acting through one or more other persons, control of or the power to vote 25 percent or more of any class of voting securities;

B. control in any manner over the election of a majority of the directors; or

C. the power to exercise, directly or indirectly, a controlling influence over management and policies.

Subp. 9. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce.

Subp. 10. Community.

"Community" means the area the savings association has designated for purposes of compliance with the Community Reinvestment Act of 1977, United States Code, title 12, sections 2901 to 2905, as being the area that it serves.

Subp. 11. Community development corporation.

"Community development corporation" is as defined in Minnesota Statutes, section 116M.04.

Subp. 12. Developmental loans.

"Developmental loans" includes the following categories:

A. low and moderate income housing;

B. operating loans for family farmers;

C. loans made in distressed areas;

D. minority- and woman-owned businesses;

E. alternative energy and energy conservation practices;

F. community development corporations;

G. Indian reservations and student education loans; and

H. any other specifically defined class of people, businesses, or projects that meet the standards under Minnesota Statutes, section 645.445, for socially or economically disadvantaged persons, projects, or businesses.

Subp. 13. Developmental investments.

"Developmental investments" includes investments for the following purposes:

A. low and moderate income housing;

B. operating loans for family farmers;

C. loans made in distressed areas;

D. minority- and woman-owned businesses;

E. alternative energy and energy conservation practices;

F. community development corporations;

G. Indian reservations and student education loans; and

H. other specifically defined class of people, businesses, or projects that meet the standards under Minnesota Statutes, section 645.445, for socially or economically disadvantaged persons, projects, or businesses.

Subp. 14. Distressed area.

"Distressed area" is defined to include any area designated as a distressed area under Code of Federal Regulations, title 24, section 570.452, by the United States Department of Housing and Urban Development.

Subp. 15. Equity capital.

"Equity capital" means the sum of common stock, preferred stock, surplus, and undivided profits.

Subp. 16. Family farmers.

"Family farmers" means family farms and family farm corporations as defined in Minnesota Statutes, section 500.24.

Subp. 17. Investments.

"Investments" means funds or capital extended, contributed, or otherwise invested, but not loaned.

Subp. 18. Low and moderate income housing.

"Low and moderate income housing" means housing as defined by any of the following:

A. regulations adopted by the Farmers' Home Administration; and

B. section 8 of the United States Housing Act of 1937, and the regulations adopted under the act.

Subp. 19. Minnesota association.

"Minnesota association" means a savings association or a savings bank:

A. organized under Minnesota law; or

B. whose organizational certificate identifies an address in this state as the principal place of conducting its business.

Subp. 20. Minnesota loan.

"Minnesota loan" means loans made to Minnesota residents to be used in Minnesota or loans where the association has been advised by the borrower that the loan proceeds will be used in Minnesota.

Subp. 21. Minnesota residents.

"Minnesota residents" are:

A. individuals located within a Minnesota zip code;

B. private profit or nonprofit corporations, or their subsidiaries or divisions, located and doing business within Minnesota;

C. profit or nonprofit partnerships, trusts, or any form of other business enterprise located and doing business within Minnesota; and

D. any municipality, agency, or other public authority established and operating under the laws of Minnesota.

Subp. 22. Minority-owned business and woman-owned business.

"Minority-owned business" and "woman-owned business" means any socially or economically disadvantaged person under Minnesota Statutes, section 645.445. A minority-owned business or woman-owned business must have at least 50 percent of the ownership interest controlled by that disadvantaged class of persons.

Subp. 23. Net new funds.

"Net new funds" means a net increase in lending, investment, and credit involvement brought to Minnesota on behalf of the acquiree as described in the application filed with the commissioner.

Subp. 24. Reciprocating state.

"Reciprocating state" is (1) a state that authorizes the establishment of branch offices in that state by a Minnesota association, and the acquisition of savings associations and savings banks located in that state by a savings and loan holding company with its headquarters in this state, under conditions no more restrictive than those imposed by the laws of Minnesota as determined by the commissioner of commerce; and (2) comprised of the states provided for in Minnesota Statutes, section 48.92, subdivision 7.

Subp. 25. Relevant market area.

"Relevant market area" includes the standards established by the Federal Reserve Board for evaluation of concentration of financial institution deposits.

Subp. 26. Savings and loan holding company.

"Savings and loan holding company" means any person, corporation, partnership, trust, joint stock company, association, or other legal entity that owns, holds, or in any manner controls, directly or indirectly, the stock in an association.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893; L 1995 c 202 art 1 s 25

Minn. R. 2660.0030 Acquisition Procedure

Subpart 1. Application.

After filing an application in writing with the commissioner on the forms provided by the Department of Commerce:

A. An association in any reciprocating state may establish or operate branch offices in this state by acquisition, merger, purchase, and assumption of some or all of the assets or liabilities or consolidation, and may acquire by direct or indirect ownership or control the voting shares of a savings and loan holding company, a savings association, or a savings bank located in this state, and may acquire and merge with a savings and loan holding company with its headquarters in this state.

B. A savings and loan holding company with its headquarters in a reciprocating state may acquire by direct or indirect ownership or control the voting shares of a savings and loan holding company, a savings association, or a savings bank located in this state, and may acquire and merge with a savings and loan holding company with its headquarters in this state.

C. The headquarters of a savings and loan holding company for purposes of this part is that state in which the operations of its deposit taking subsidiaries are the largest in terms of total deposits.

D. The commissioner, upon receipt of the application, shall act upon it within 30 days of the end of the public comment period provided by part 2660.0110 and, unless the proposed acquisition is disapproved within that period of time, it becomes effective without approval, except that the commissioner may extend the 30-day period an additional 30 days if in the commissioner's judgment any material submitted is substantially inaccurate or the acquiring party has not furnished all the information required by subparts 3 and 4, or the commissioner. No application for approval required by this part is complete unless accompanied by an application fee of $5,000 payable to the commissioner of management and budget. Within three days after making the decision to disapprove any proposed acquisition, the commissioner shall notify the acquiring party in writing of the disapproval. The notice must provide a statement of the basis for the disapproval.

Subp. 2. Hearings.

Within ten days of receipt of notice of disapproval under subpart 1, the applicant may request an agency hearing on the proposed acquisition. At the hearing, all issues must be determined on the record under Minnesota Statutes, chapter 14, and the rules issued by the department. At the conclusion of the hearing, the commissioner shall by order approve or disapprove the proposed acquisition on the basis of the record made at the hearing.

Subp. 3. Application documentation.

An application filed under subpart 1 must contain the following attachments:

A. A certified copy of the applicant board's resolution authorizing submission of the application and designating the officers authorized to sign it.

B. A copy of the most recent Federal Home Loan Bank Examination Report for the applicant or the applicable state regulatory authority. If the applicant is prohibited from releasing this report, it shall file a copy of a written request to the appropriate federal or state authority requesting delivery of the report to the commissioner.

C. A copy of all invitations, tenders, or advertisements making a tender offer to stockholders for purchase of their stock to be used in connection with the proposed acquisition.

D. A copy of all acquisition agreements detailing the terms and conditions of any proposed acquisition.

E. An organizational chart of the applicant and its subsidiaries.

F. A copy of the most recent consolidated report of condition and statement of earnings of the applicant.

G. A pro forma balance sheet of the applicant on a consolidated basis both before and after the acquisition.

H. A statement of the assets and liabilities of the applicant, as of the end of the calendar year for each of the five years immediately preceding the date of the application, together with related statements of income, sources, and application of funds for each of the calendar years then concluded, prepared in accordance with generally accepted accounting principles, consistently applied.

I. An interim statement of assets and liabilities of the applicant, together with related statements of income, source, and application of funds as of a date not more than 90 days before the date of the filing of the application.

J. Any other information the commissioner considers necessary to determine whether the application should be approved.

Subp. 4. Information.

The application form shall include, but not be limited to, the following:

A. The name and address of the applicant.

B. The name and address of the acquiree.

C. The full name of each shareholder who owns or controls ten percent or more of the stock of the acquiree who is tendering its stock.

D. The total number of shares presently held by each shareholder who owns or controls ten percent or more of the stock of the acquiree who is tendering its stock.

E. The total number of shares to be sold or transferred by each shareholder who owns or controls ten percent or more of the stock of the acquiree.

F. The total number of shares to be held by each shareholder of the acquiree who will hold or control ten percent or more of the stock following completion of the proposed transaction.

G. The total number of voting shares authorized by either the acquiree association or the acquiree savings and loan holding company.

H. The total number of outstanding voting shares of the acquiree.

I. The number of shares involved in this transaction.

J. The total number of shares of the acquiree currently held by the applicant.

K. The total consideration for the proposed transaction.

L. The identity, personal history, business background, and experience of the applicant. If known to the applicant, or any officer or director of the applicant, the identity, personal history, business background, and experience of its affiliates, including any material business activities and affiliations during the past five years.

M. A description of any material pending legal or administrative proceeding in which the applicant is a party, and any criminal indictment or conviction of that person by a state or federal court; and, if known by the applicant or an officer or director of the applicant, similar proceedings involving an affiliate of the applicant must be disclosed.

N. The names and addresses of the anticipated board of directors of the Minnesota association being acquired by the applicant. If a savings and loan holding company located in Minnesota is being acquired, the attachment must contain the names and addresses of the anticipated board of directors of the subsidiary located in Minnesota of the savings and loan holding company. If the anticipated board is not known, include an explanation of how the directors will be determined.

O. If a savings and loan holding company located in Minnesota is being acquired, the attachment must list the names and addresses of its subsidiaries.

P. The source and amount of funds or other consideration, except those funds borrowed, to be used in making the acquisition. The applicant should particularly describe any of its assets that are to be liquidated to finance the acquisition.

Q. If any part of the funds or other consideration are to be borrowed to make the acquisition, the applicant must describe the collateral to be pledged and the terms of the transaction, including the name of the lender, interest rates, requirements, guarantors, endorsers, and any other arrangements, agreements, and understandings between and among the parties. The application must include copies of any loan commitments obtained from lenders in connection with the proposed acquisition.

R. If borrowed funds are to be obtained, the applicant must indicate the sources of funds for debt service. Additionally, the applicant shall detail the extent to which the applicant intends to rely on dividends and fees or other funds from the association being acquired for debt servicing requirements.

S. The applicant must identify any person retained or compensated by the applicant, or by any person on the applicant's behalf, to make solicitations of recommendations to stockholders for the purpose of assisting in the acquisition, and a brief description of the terms of any retainer or arrangement for compensation.

T. The applicant must disclose any plans or proposals regarding any partial or full liquidation of the acquiree, of any plans or proposals to sell the acquiree's assets or merge it, or any other major change in the acquiree's business or corporate structure or management.

U. The applicant must describe how the acquisition will bring net new funds, under part 2660.0100 to Minnesota.

V. The application must also disclose how the acquisition will not result in undue concentration of resources or a substantial lessening of competition in Minnesota. The application shall delineate the relevant market area of the association or associations to be acquired and located in Minnesota. This delineation is to be described by map or drawing showing the other associations and commercial banks accompanied by a schedule of correspondent, current total deposits of each.

W. The applicant shall describe its plan of compliance in providing the developmental loans and investments.

X. The applicant must describe developmental loans or developmental investments as set forth in part 2660.0040.

Y. The commissioner may additionally require other information as may be necessary to determine whether the application should be approved.

Subp. 5. Disapproval.

The commissioner shall disapprove any proposed acquisition if:

A. the financial condition of any acquiring person is such as might jeopardize the financial stability of the Minnesota association or prejudice the interests of the depositors of the Minnesota association;

B. the competence, experience, and integrity of any acquiring person or of any of the proposed management personnel indicates that it would not be in the interest of the depositors of the Minnesota association or in the interest of the public to permit the person to control the Minnesota association;

C. the acquisition will result in undue concentration of resources or substantial lessening of competition in this state;

D. the application fails to adequately demonstrate that the acquisition proposal would bring net new funds into Minnesota; or

E. the application is incomplete or any acquiring party neglects, fails, or refuses to furnish all the information required by the commissioner.

Subp. 6. Appeals.

The Court of Appeals of Minnesota will have exclusive original jurisdiction of any judicial review of an order issued under this part. The applicant that is the subject of the order may see judicial review at any time within 90 days of the date of an order lawfully issued under this part.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893; L 1995 c 202 art 1 s 25; L 2003 c 112 art 2 s 50; L 2009 c 101 art 2 s 109

Minn. R. 2660.0040 New Association Application

Any application to organize an association under Minnesota Statutes, chapter 51A, may include control by a reciprocating state holding company if, in addition to the conditions in Minnesota Statutes, chapter 51A, the application does not present any facts that would be grounds for disapproval in part 2660.0030, subpart 5, and if the application would result in the acquisition and operation of no more than one association in this state by the same reciprocating state holding company.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893

Minn. R. 2660.0060 Supervision

The commissioner may enter into cooperative and reciprocal agreements with federal or state regulatory authorities of reciprocating states for exchange or acceptance of reports of examination and other records from the authorities in lieu of conducting its own examinations. The commissioner may enter into joint actions with federal or state regulatory authorities of reciprocating states to carry out its responsibilities under Minnesota Statutes, section 51A.58, and parts 2660.0010 to 2660.0110, and assure compliance with the laws and rules of this state.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893

Minn. R. 2660.0070 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2660.0080 Public Participation

Subpart 1. Public information.

Consistent with federal law, the commissioner shall make available to the public at reasonable cost copies of all applications, including supporting documents and any other information required to be submitted to the commissioner.

Subp. 2. Notice.

Upon the filing of an application:

A. an applicant shall publish in a newspaper of general circulation notice of the proposed acquisition as prescribed by the commissioner by rule;

B. the commissioner shall accept public comment on an application for a period of not less than 30 days from the date of the final publication required by item A, or 30 days after the date of the availability of the first periodic bulletin required by this item, whichever is later; and

C. the commissioner shall prepare and update with each new application a bulletin listing all pending applications. The bulletin must be published and mailed without charge to any person upon request.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893

Minn. R. 2660.0090 Developmental Loans

Subpart 1. Requirements.

An association located in this state owned by an interstate holding company shall provide a level of developmental loans as defined by the commissioner. A developmental loan includes, but is not limited to: (1) loans for low and moderate income housing, loans to community development corporations, loans to woman- and minority-owned businesses, student education loans, and alternative energy or energy conservation loans; and (2) loans within distressed areas and on any Indian reservation for any commercial nonreal estate purpose, home loans, home improvement loans, and operating loans to family farmers. The commissioner shall annually designate distressed areas. A distressed area may be made for a geographic region smaller than a county within the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. The determination of a distressed area should be made on the area's unemployment rate, economic conditions, and credit needs.

Subp. 2. Mandatory factors to consider.

The commissioner shall consider the following factors in determining an acceptable level of developmental loans in the community by an applicant through its acquiree:

A. the level of developmental loans, in terms of number and amount, held by the acquiree at the end of:

B. the projected level of developmental loans, in terms of number and amount, held at the end of each of the next three calendar years from the date of application;

C. any developmental investments for the classifications listed under developmental loans held at the time periods described in items A and B;

D. any developmental loans or developmental investments originated by the acquiree that have been or will be participated in or sold to other institutions during the time periods described in items A and B;

E. the acquiree's financial condition at the close of the time periods described in items A and B;

F. the association's asset quality at the close of the time periods described in items A and B;

G. the economic condition of the community during the time periods described in items A and B;

H. the asset mix of the association and the socioeconomic makeup of the community in terms of socially and economically disadvantaged persons;

I. the extent of loans made by the acquiree in its Community Reinvestment Act territories during the time periods described in items A and B; and

J. the volume of developmental loans made in the community during the time periods described in items A and B.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893

Minn. R. 2660.0100 Net New Funds

Subpart 1. Requirements.

The description of net new funds must be filed with the application and annually thereafter stating the amount of capital funds, including the increase in equity capital that will result from the acquisition or establishment of an association. The level of total equity capital must exceed $3,000,000 for a new chartered association and $1,000,000 for an acquired association. The description must state the net increase in loanable funds expressed as an increase in the total loan-to-asset ratio of Minnesota loans and assets. The statement must also include a discussion of initial capital investments, loan policy, investment policy, dividend policy, and the general plan of business, including the full range of consumer and business services that will be offered.

Subp. 2. Lending, investment, and capital involvement.

In determining whether additional lending, investment, and capital involvement by the acquiree will occur as a result of the application being approved, the commissioner shall consider the following data at the close of each of its last two calendar years, and the close of its most recent calendar quarter before the filing of the application, together with projections of the same data for the close of its next three calendar years:

A. the total deposits of the acquiree;

B. the total loans of the acquiree;

C. the total equity capital of the acquiree;

D. the total Minnesota loans;

E. the total loan-to-asset ratio;

F. the total loan-to-deposit ratio;

G. the total loan-to-equity capital ratio;

H. the total Minnesota loan-to-asset ratio;

I. the total Minnesota loan-to-deposit ratio;

J. the total Minnesota loan-to-equity capital ratio;

K. the total Minnesota loan-to-total loan ratio;

L. the total loan-to-deposit ratio considering only loans made in the acquiree's community; and

M. the total loan-to-deposit ratio considering only loans made outside the acquiree's community.

Subp. 3. Acquiree; community economic factors.

The commissioner shall also consider:

A. the acquiree's financial condition on the dates described in subpart 1;

B. the acquiree's asset quality on the dates described in subpart 1;

C. the economic characteristics of the community served by the acquiree including, but not limited to, population trends, area use for residential, commercial, industrial, and agricultural purposes, the level of socially and economically disadvantaged persons, families of low and moderate income and low and moderate income housing, and location in the community of enterprise zones and distressed areas;

D. the extent of loans and investments made by the acquiree in the community served by it on the dates described in subpart 1; and

E. the initial capital investment of the applicant, and with respect to the acquiree, its loan policy, investment policy, dividend policy, and general plan of business, including the full range of consumer and business services that will be offered.

Subp. 4. Affiliated associations.

To determine whether the applicant will actively participate in the community and in Minnesota, the commissioner shall also consider the following data for each association affiliated with the applicant at the close of its last two calendar years and at the end of its most recent calendar quarter before the filing of the application:

A. the total deposits of each association;

B. the total loans of each association;

C. the total equity capital of each association;

D. the total loan-to-deposit ratio considering only loans made in the association's community; and

E. the total loan-to-deposit ratio considering only loans made outside of the association's community.

Subp. 5. Additional factors.

The commissioner shall also consider:

A. any peer group averages of other Minnesota associations for market share, loan-to-deposit ratio, net interest spread, return on average assets, return on average equity, net charge-offs, capital, and loans for real estate consumers, financial institutions, farmers, and commercial property;

B. any other material fact or information brought to the commissioner's attention concerning the appropriate level of net new funds; and

C. a business plan as to any lending, investment, bank service, or grant program administered by the applicant, or any affiliate of the applicant, that serves the needs and communities of people defined by the development loan categories of these regulations, accompanied by a statement of how the programs will be applied to the applicant's or applicant affiliate's programs and activities in Minnesota.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893

Minn. R. 2660.0110 Notice

Subpart 1. Publication.

Within 30 days of the filing of an application, the applicant shall publish a notice of the filing of the application in a newspaper of general circulation within the county in which the association or branch office to be acquired or the proposed association or bank is located. In addition, the applicant shall mail by certified mail, return receipt requested, notice of the filing of the application to the commercial lending institutions within a three-mile radius of the association or branch office to be acquired or located.

Subp. 2. Proof of publication.

The applicant shall submit to the commissioner a certified publisher's affidavit, including a tear sheet of the publication, setting forth the fact that the publication has been made.

Subp. 3. Proof of mailing.

The applicant shall file with the commissioner the receipts certifying that the notices were sent by first class mail to the commercial lending institutions located within the three-mile radius of the association or branch office to be acquired or located.

Subp. 4. Content of notice.

The application shall disclose the following:

A. the name and address of the applicant or the applicant's attorney;

B. the name and address of the association or branch office to be acquired or chartered;

C. the date that the application was filed with the department;

D. the notice that public comment addressed to the name and address of the commissioner will be accepted for a period of at least 30 days from the date of publication;

E. that the application to acquire or charter a savings association or branch office by an interstate bank holding company must establish certain statutory criteria for approval under Minnesota statutes;

F. that the application, before being approved, must demonstrate that the acquisition of the savings association or branch office:

G. that the application, subject to any limitations imposed by federal or state statutes, is available to members of the public by contacting the commissioner of the Department of Commerce at 500 Metro Square Building, Saint Paul, MN, 55101; and

H. any other information that the commissioner considers relevant to a proper disclosure surrounding the facts and circumstances of the acquisition.

Subp. 5. Format.

The publication required in this part shall be typeset in a format acceptable for the publication of a savings association charter application.

History

Statutory Authority: MS s 45.023; 51A.58
History: 14 SR 2893; L 1995 c 202 art 1 s 25

Chapter 2675 FINANCIAL INSTITUTIONS

Minn. R. 2675.0200 Financial Statements

Signed, current financial statements of the borrowers, endorsers, or guarantors are required on loans which the commissioner or an examiner determines to be inadequately secured. Financial statements are considered current when renewed at least annually.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.0300 [Repealed, L 2003 c 51 s 20]

[Repealed, L 2003 c 51 s 20]

Minn. R. 2675.0400 Participation Loans

Where a participation in a loan is sold to another bank the agreement may provide that repayment may first be applied to the share sold. Since one of the purposes of such a sale may be to reduce the bank's retention of loans which may exceed its lending limit, the agreement should, as a matter of prudent banking practice, also provide that in the event of default or a comparable event defined in the agreement, the participants shall share in all subsequent repayments and collections in proportion to the percentage of participation at the time of the happening of the event.

When a bank or trust company purchases a participation in a loan originated elsewhere, it must obtain copies of all essential papers necessary to determine the credit quality thereof.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.0500 Special Feeder Loans

Special feeder loans as referred to in Minnesota Statutes, section 48.24, subdivision 7, must be made for the exclusive purpose of purchasing feeder livestock and each note shall bear the notation "special feeder loan" on its face.

Each such note on file shall be supplied with a paid invoice, bill of sale, or other evidence to show the date of purchase, weight of each feeder animal or the total weight if they are all of the same class, and the total cost or value. Such loans need not be made at the time of actual purchase providing that these documents are held and made available for inspection.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.0600 Loans to Corporations and Partnerships

Subpart 1. Corporations.

All loans to corporations shall be supported by a certified copy of a resolution of the board of directors, board of trustees, or other governing bodies of such corporations authorizing the borrowing by the officer or officers signing on behalf of the corporation and such resolution shall indicate the authority of such officer.

Subp. 2. Partnerships.

Loans made directly to partnerships, unless all partners sign the note, must be supported by a declaration by the partners showing the composition of the partnership and the proportionate part owned by each partner, and authority of the partner executing the note to bind the partnership therefore.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.0700 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.0800 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.0900 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.0901 Real Estate Loans-Documentation

A bank must maintain a written policy approved annually by its board of directors that at a minimum addresses:

A. Written appraisal or valuation reports made in conjunction with federal, state, and board requirements. Valuation reports must contain detail sufficient to state current market value based on actual conditions and must not be based on projected or speculative events. Updated evaluation reports based on changing conditions of an individual loan transaction or economic conditions must also be included as a requirement.

B. Description of fee title, validity of the bank's lien, position of the lien, and documentation of methods used to make these determinations.

C. Evidence of adequate insurance which names the bank as the loss payee.

D. Exemption of documentation requirements, for a single loan or class of loans, if the loan documents reflect that the lien is not needed to support the loan and where the terms of the transaction as a consequence have not been made more favorable than they would have been in the absence of a lien. For regulatory purposes, no real estate collateral value will be assigned to exempted loans.

History

Statutory Authority: MS s 45.023; 46.01
History: 9 SR 1689; 14 SR 517; 20 SR 168

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.1110 Eligible Securities

An obligation of indebtedness which may be purchased for its own account by a state bank, in order to come within the classification of eligible securities within the meaning of this part, must be a marketable obligation. It must be salable under ordinary circumstances with reasonable promptness at a fair value; and with respect to the particular security, there must be present one or more of the following characteristics:

A. a public distribution of the securities must have been provided for or made in a manner to protect or insure the marketability of the issue; or

B. other existing securities of the obligor must have such a public distribution as to protect or insure the marketability of the issue under consideration; or

C. in the case of eligible securities for which a public distribution as set forth in item A or B cannot be so provided, or so made, and which are issued by established commercial or industrial businesses or enterprises, that can demonstrate the ability to service such securities, the debt evidenced thereby must mature not later than 20 years after the date of issuance of the security and must be of such sound value or so secured as reasonably to assure its payments.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.1120 Securities Under Trust Agreement

Where the security is issued under a trust agreement, the agreement must provide for a trustee independent of the obligor, and such trustee must be a bank or trust company.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.1130 Investment Qualities

Securities, in order to be eligible for purchase by state banks, must be in the form of bonds, notes, and/or debentures, and must be of recognized investment quality. Eligible securities are those which are included among the four highest ratings of the rating services, and nonrated securities of equivalent value. With regard to the ratings, the following items shall apply:

A. A security rated by only one service will be designated as an eligible security if it is rated within the first four grades by that service.

B. A security rated by two services will be designated as an eligible security if it is rated within the first four grades by both services.

C. A security rated by three services will be designated as an eligible security if it is rated within the first four grades by two of those services.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.1140 Holding Bonds on Par or Face Value

The statutory limitation on the amount of the eligible securities of any one obligor or maker which may be held by the bank, not otherwise exempted by Minnesota Statutes, section 48.24, subdivision 6, is to be determined on the basis of the par or face value of the securities, and not on their book value.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.1150 Purchase of Asset at a Premium or Discount

When assets are purchased at a premium or discount, a bank:

A. shall charge off the premium when the asset is placed on the books; or, provide for the regular amortization of the premium pursuant to generally accepted accounting principles; and

B. may provide for the regular accretion of the discount pursuant to generally accepted accounting principles.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.1160 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.1170 Securities Having Holder Options

Purchase of securities convertible into stock at the option of the holder or with stock purchase warrants attached is prohibited if the price paid for such security is in excess of the investment value of the security itself, considered independently of the stock purchase warrants or conversion feature. If it is apparent that the price paid for an otherwise eligible security fairly reflects the investment value of the security itself and does not include any speculative value based upon the presence of a stock purchase warrant or conversion option, the purchase of such a security is not prohibited.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.1180 Foreign Borrowers Securities

Purchase of securities of foreign borrowers, whether private, corporate, or governmental, is prohibited with the exception of:

A. securities of borrowers, whether private, corporate, or governmental, residing in or which are part of the Dominion of Canada, provided, however, that such securities are payable in dollars of the United States;

B. bonds of the International Bank for Reconstruction and Development, which are payable in dollars of the United States; provided, however, that the total par value of such bonds held by any bank or trust company shall never exceed 20 percent of its capital and of its actual surplus fund; provided further, that this part is intended to permit limited purchase of the bonds of the International Bank for Reconstruction and Development only by banks, trust companies, and savings banks;

C. bonds of the Inter-American Development Bank, which are payable in dollars of the United States; provided, however, that the total par value of such bonds held by any bank or trust company shall never exceed 20 percent of its capital and of its actual surplus fund; provided further, that this part is intended to permit limited purchase of the bonds of the Inter-American Development Bank only by banks, trust companies, and savings banks;

D. bonds of the Asian Development Bank, which are payable in dollars of the United States; provided, however, that the total par value of such bonds held by any bank or trust company shall never exceed 20 percent of its capital and of its actual surplus fund; provided further, that this part is intended to permit limited purchase of the bonds of the Asian Development Bank only by banks, trust companies, and savings banks; and

E. bonds of the African Development Bank, which are payable in dollars of the United States; provided however, that the total par value of such bonds held by any bank or trust company shall never exceed 20 percent of its capital and of its actual surplus fund; provided further, that this part is intended to permit limited purchase of the bonds of the African Development Bank only by banks, trust companies, and savings banks.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.1190 Repurchase Agreement Securities

As to purchase of securities under repurchase agreement subject to the limitations and restrictions set forth in the law and this part:

A. It is permissible for the bank to purchase eligible securities from another under an agreement whereby the bank has an option or a right to require the seller of the securities to repurchase them from the bank at a price stated or at a price subject to determination under the terms of the agreement, but in no case less than the value at the time of repurchase.

B. It is permissible for the bank to purchase eligible securities from another under an agreement whereby the seller or a third party guarantees the bank against loss on resale of the securities.

C. It is not permissible for the bank to purchase eligible securities from another under an agreement whereby the seller reserves the right or the option to repurchase said securities itself or through its nominee at a price stated or at a price subject to determination under the terms of the agreement, notwithstanding the fact that the bank may also, under such agreement, have the right or option to compel the seller to repurchase the securities at a price stated or at a price subject to determination under the terms of the agreement.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.2000 Banks Selling with Repurchase Agreement

As to repurchase agreements accompanying sales of securities, it is permissible for the bank selling securities to another to agree that the bank shall have an option or right to repurchase the securities from the buyer at a price stated or at a price subject to determination under the terms of the agreement, but in no case in excess of the market value at the time of repurchase.

Except for securities which are the direct obligation of, or obligations that are fully guaranteed as to principal and interest by, the United States government or an agency thereof, it is not permissible for the bank selling securities to another to agree that the purchaser shall have the right or the option to require the bank to repurchase said securities at a price stated or at a price subject to determination under the terms of the agreement, notwithstanding the fact that the bank may also, under such agreement have the right or option to repurchase the securities from the buyer at a price stated or at a price subject to determination under the terms of the agreement.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2010 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2020 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2030 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2040 Purchase of Issuer Option Securities Prohibited

Purchase of securities convertible into stock at the option of the issuer is prohibited.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.2050 Purchase of Noneligible Securities Prohibited; Disposition; Exceptions

The purchase of securities other than eligible securities as defined in part 2675.1110 is prohibited. Any such purchase will be considered a violation of this part and the commissioner will require that any noneligible security so purchased be disposed of within a reasonable length of time. No bank shall be permitted to purchase securities of business or municipal corporations that shall have undergone debt readjustment until 12 months shall have elapsed since the effective date of the readjustment. Such securities, if purchased, must also be disposed of. However, the purchase of railroad equipment trust obligations which are not in default either as to principal or interest, or both, and which are considered to be of eligible quality shall not be prohibited.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2060 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2070 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2080 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2090 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2100 Cash Items

A daily record shall be maintained of all cash items for anything other than currency or coin being held over until the following day's business and not in the process of being forwarded for collection or being returned to endorsers. No checks shall be held in a bank's cash account to avoid the showing of overdrafts.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2110 Banking House

A. Investment for banking house and premises requires no prior written approval of the commissioner pursuant to Minnesota Statutes, section 47.10, unless:

B. In determining the total investment in banking premises, the net book value for land, buildings, real estate for future use, leasehold improvements, and leases capitalized according to financial accounting standard board practices are to be aggregated.

C. A bank shall maintain documentation to reflect that investments in banking premises are depreciated or amortized pursuant to generally accepted accounting principles. The documentation shall disclose the period of time the assets are expected to remain on the books, and the accepted practice used to consistently assign the cost and write down the value.

D. Investment in nonadjacent real estate to be used for future banking premises not utilized as intended within five years shall be considered other real estate unless definite plans for utilization are in process and extended time is approved by the commissioner.

E. Prior to December 31, 1985, a bank may, without obtaining approval, restate the net book value of its banking premises to reflect the original cost less any prior write down required under generally accepted accounting principles. Adequate documentation shall be maintained to substantiate any restatement of banking premises. Alternatively, a bank not restating the value of banking premises may write down the remaining net book value pursuant to generally accepted accounting principles.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2120 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2130 Furniture and Fixtures, Personal Property, Automobiles, and Equipment

Purchases capitalized in this account shall be amortized as required by generally accepted accounting principles, or a greater amount as may be approved in writing by the commissioner. Furniture and fixtures, personal property, automobiles, and equipment used in the conduct of banking business may be acquired by purchase or lease without obtaining prior approval of the commissioner unless the seller or lessor has an existing direct or indirect interest in the management or ownership of the acquiring bank.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2140 Leasehold Investment Amortization

Leasehold investments shall be amortized as required by generally accepted accounting principles. Leasehold investments receiving prior approval pursuant to Minnesota Statutes, section 47.10, subdivision 3, are subject to further prior approval of renegotiated and amended terms. If there is an optional clause in such lease for an additional period to be covered thereby, this shall serve to extend the amortization period to such extent.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2150 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2160 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2170 Other Real Estate

Other real estate:

A. Any real estate acquired or owned by a bank:

B. "Other real estate" shall not be entered upon the books of a bank at an amount greater than the balance of the principal amount of the indebtedness at the time of acquisition or the remaining book value if owned. In any case, the book value of other real estate shall never exceed the estimated fair market value of the property. The fair market value shall be determined by an appraisal prepared by an independent qualified appraiser within 60 days of acquisition. The appraisal shall be made part of the other real estate file.

C. Reasonable attempts shall be made to dispose of other real estate by sale. The other real estate file shall be documented with disposal attempts. The maximum period for holding other real estate as an asset shall be five years.

D. "Other real estate" sold on contract for deed may be carried as a loan at the lesser of the principal balance due on the contract, or at its present book value. Loss on sale of "other real estate" shall be recognized in the period the sale occurs. Gains on sale of other real estate shall be either accreted ratably on the same basis as repayment, or may be deferred until title is transferred to the buyer.

E. "Other real estate" shall be documented with an attorney's opinion or equivalent evidence to reflect title and all encumbrances. Insurance must be maintained where necessary and taxes must be kept current if the "other real estate" is carried as an asset.

F. [Repealed, L 2011 c 61 s 8]

History

Statutory Authority: MS s 45.023; 46.01
History: 9 SR 1689; 14 SR 517; 20 SR 168; L 2011 c 61 s 8

Minn. R. 2675.2180 [Repealed, L 2009 c 37 art 3 s 25 subd 3]

[Repealed, L 2009 c 37 art 3 s 25 subd 3]

Minn. R. 2675.2190 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2200 Charged Off Assets; Dual Control

Subpart 1. Record.

A complete record of charged off assets shall be maintained on which all recoveries shall be shown. This record shall also cite authority of directors with regard to any debts that have been compromised, and include signed compromise agreements, if it is possible to obtain them.

The original records of charged off assets shall be maintained under dual control to effect any entry subsequent to the board's charge off resolution.

Subp. 2.

[Repealed, 9 SR 1689]

Subp. 3.

[Repealed, 9 SR 1689]

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2210 Posting Records

All asset and liability records of a bank must be posted on a daily basis.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.2220 Additional Common Stock Sales

Any bank which increases its common capital account by means of the sale of additional common stock need not carry such funds in any other bank but may carry them on its own books among demand liabilities and furnishing appropriate certificate to the commissioner as to the total paid in.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2230 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2240 Dividends

The dividend period for the purpose of declaring dividends in accordance with Minnesota Statutes, section 48.09 shall be the period commencing on January 1 and ending as of the close of business December 31 of each calendar year and the net income for each such period shall be determined from the consolidated report of income of each bank.

The Department of Commerce will supply each bank with forms to be completed with information called for. The forms must be mailed or delivered to the commissioner within ten days of the date of declaration of any dividend and at least 15 days prior to the proposed payment date of any dividend. The forms shall contain a statement by the commissioner providing that if certain requirements as set forth therein are met, the bank may pay a cash dividend or dividends without specific approval of the commissioner in the year succeeding the dividend period in such amount or amounts as will not reduce the bank's capital, surplus, undivided profits, and reserves below such requirements. Except as provided in the preceding sentence, no bank or trust company shall pay a cash dividend to its stockholders until written approval for the dividend has been obtained from the commissioner.

Declared dividends shall be deducted from undivided profits and carried on the books as another liability entitled "dividends payable." The other liability account shall be reversed upon payment or nonapproval by the commissioner.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2246 Certificate of Deposit of Other Financial Institutions

Where a bank makes a direct investment in a certificate of deposit of another financial institution, such investment shall not exceed its legal lending limit as provided in Minnesota Statutes, section 48.24; however, this limitation shall apply only to that portion, if any, of the investment which is not insured by an agency of the United States.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2250 [Repealed, L 2003 c 51 s 20]

[Repealed, L 2003 c 51 s 20]

Minn. R. 2675.2260 Records of Checks, Drafts, and Other Liabilities

A numerical record shall be installed and maintained to disclose at the time of issuance, all liabilities resulting from the issuing of checks, drafts, check certifications, and similar liabilities.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.2270 Disclosure of Contingent or Actual Liabilities

Any liability either actual or contingent that may be incurred by a bank in the conduct of its daily operations must be reflected on the bank's financial statements under an appropriate caption on its statement of condition or as a footnote to the statement. In the case of agreements which may be entered into between a Minnesota state bank and automobile manufacturers, such agreements result in a contingent liability and should be shown as a footnote to the daily statement. When a draft (whether demand or time) is received by the bank under this agreement, it becomes an actual liability and is to be entered in the general ledger as "acceptances outstanding" with a corresponding entry under assets with the caption "customers' liabilities on acceptances."

History

Statutory Authority: MS s 46.01

Minn. R. 2675.2280 Savings Passbooks

Savings passbooks must not be retained by a bank for safekeeping except for collateral purposes.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.2290 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2300 Safe Deposit Boxes

There must be a rental agreement, signed by the parties who are to have entry, and this agreement must specifically state who is to be authorized to enter.

The record to the agreement must contain the signature of each person who is to have access to the safe deposit box.

The guard key should be restricted to authorized bank personnel and must be kept in such a place as not to be available for customer's use. Bank employees are not to be permitted to enter the vault with the customer's key and to bring the box out to the customer. The customer must control the box at all times when the safe deposit box door is open.

There must be a record signed by each customer at each time the customer enters the safe deposit box.

A bank shall not retain customers' safe deposit box keys under any circumstances.

Keys to safe deposit boxes not under lease must be kept under dual control until such time as such box is rented.

History

Statutory Authority: MS s 46.01
History: 17 SR 1279

Minn. R. 2675.2400 Insurance Approval

The board of directors of each bank shall, at least once a year or at each annual meeting, approve of the amount of fidelity insurance to be carried for the ensuing year.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.2410 [Repealed, 9 SR 1689]

[Repealed, 9 SR 1689]

Minn. R. 2675.2420 Other Business; Expense Reimbursement Agreements

If an officer of a bank is acting as an insurance agent, acting to effect transactions in securities or the business of an insurance agency or securities broker-dealer not owned by the bank is being conducted on the banking premises, there must be an arrangement as to allocating overhead expenses or as to distribution of net earnings and be included in an appropriate board resolution. The allocations may include the credit insurance income required to be turned over to the bank pursuant to Minnesota Statutes, section 47.016, or commissions.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2500 Display and Replacement Copies

Every bank shall display its bank charter in a prominent place in the lobby. In case of destruction or misplacement of the charter, the commissioner will supply a duplicate, upon application, at the cost set out in Minnesota Statutes, section 46.131, subdivision 10.

History

Statutory Authority: MS s 46.01
History: 9 SR 1689

Minn. R. 2675.2600 Internal Control

Subpart 1. Written internal control policy.

Management of a bank, trust company, savings bank, or deposit taking industrial loan and thrift company shall establish a written internal control system. A report describing the scope of coverage and effectiveness of the internal control system shall be reviewed for adequacy and approved by the board annually. Documentation of internal audit procedures performed in testing this internal control system and the reports shall be maintained by the bank for inspection by the supervisory examiners and by the external auditors. The board shall consider inclusion of recommendations made by supervisory examiners and external auditors regarding the internal control system.

Subp. 2. Resolution officer.

The board of directors, through its management, will designate one or more of its officers as a resolution officer. It is the responsibility of this person to promptly investigate and respond to written complaints, disputes, and inquiries from bank customers regarding the customer's account or bank activities. Individual files containing the complaint letter, investigation procedure, and disposition of the matter shall be maintained for 18 months following disposition.

History

Statutory Authority: MS s 45.023; 46.01
History: 12 SR 623; 14 SR 517; 21 SR 1778

Minn. R. 2675.2610 Repealed by subpart

Subpart 1.

[Repealed, L 2023 c 57 art 3 s 76]

Subp. 2.

[Repealed, 14 SR 517]

Subp. 3.

[Repealed, L 2023 c 57 art 3 s 76]

Subp. 4.

[Repealed, L 2023 c 57 art 3 s 76]

Subp. 5.

[Repealed, L 2005 c 118 s 18]

Minn. R. 2675.2620 Repealed by subpart

Subpart 1.

[Repealed, L 2023 c 57 art 3 s 76]

Subp. 2.

[Repealed, L 2023 c 57 art 3 s 76]

Subp. 3.

[Repealed, L 2023 c 57 art 3 s 76]

Subp. 4.

[Repealed, L 2023 c 57 art 3 s 76]

Subp. 5.

[Repealed, L 2023 c 57 art 3 s 76]

Subp. 6.

[Repealed, 21 SR 1778]

Minn. R. 2675.2630 Opinion Audit

Subpart 1. Request by commissioner.

The board of directors of institutions covered by parts 2675.2600 to 2675.2630 will engage an independent certified public accountant to provide an opinion audit on the financial statements of the institution, any or all of its subsidiaries, or a consolidated opinion audit on the institution taken as a whole when requested to do so by the commissioner of commerce. The commissioner shall make a request under this subpart if any of the following conditions exist:

A. the commissioner has reason to believe that generally accepted accounting principles (GAAP) are not being followed and failure to properly apply such accounting principles may have a material impact on the presentation of the bank's statement of financial condition;

B. the bank maintains a subsidiary or subsidiaries as provided in Minnesota Statutes, section 48.61, subdivision 7, and the commissioner has reason to believe that the activities or financial condition of the subsidiary or subsidiaries may have a material impact on the financial condition of the bank; or

C. suspected criminal activity has been reported and certainty of the financial impact on the bank is unknown.

Subp. 2. Issuance of no opinion.

In the event of material issues leading to the issuance of a qualified or no opinion on an engagement referenced in subpart 1, the board shall direct immediate action to correct deficiencies preventing the issuance of an unqualified opinion.

Subp. 3.

[Repealed, L 2023 c 57 art 3 s 76]

History

Statutory Authority: MS s 45.023
History: 21 SR 1778

Minn. R. 2675.2640 Agreed Upon Procedures Examination

The board of directors shall engage an independent certified public accountant to conduct an agreed upon procedures examination when requested to do so by the commissioner of commerce. When requested by the Department of Commerce, the engagement letter must be forwarded to the department for acceptance and approval before the examination is performed. The commissioner shall make a request under this part if any of the following conditions exist:

A. bank management has not established a written internal control system;

B. bank management has not issued a report to the board describing the scope of coverage and effectiveness of the internal control system in the immediate 18-month period prior to the request;

C. documentation of internal audit procedures performed in testing the internal control system for the immediate 18-month period prior to the request is not evident; or

D. the commissioner, through reports received from examiners, has reason to believe that:

History

Statutory Authority: MS s 45.023
History: 21 SR 1778

Minn. R. 2675.3100 Liquidity

Subpart 1. Ratio.

An association shall maintain a liquidity ratio based upon its cash and obligations of the United States or this state, or in obligations of political subdivisions of this state, in an amount equal to a percentage from four percent up to eight percent of its outstanding withdrawable shares as the commissioner of commerce may determine at least semiannually. Each state chartered association shall be notified, by first class mail, of the liquidity ratio required for each semiannual period within 15 working days of the end of the preceding period. Semiannual periods shall end on June 30 and December 31 of each year. Such association shall also be notified immediately, by first class mail, of a change in the required liquidity ratio established at any time other than the end of a semiannual period.

Subp. 2. Definitions.

Definitions:

A. The term "cash" means cash on hand and cash invested in or on deposit in banks, including the Federal Home Loan Bank, and in other savings associations, which is not pledged as security for indebtedness.

B. The term "obligations of the United States or this state" means all unpledged evidences of indebtedness assumed by the United States or the state of Minnesota or any of its political subdivisions and all unpledged evidences of indebtedness assumed by any agency or instrumentality of the United States or of the state of Minnesota or any of its political subdivisions, which are by statute fully guaranteed as to principal and interest.

History

Statutory Authority: MS s 51A.42
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; L 1995 c 202 art 1 s 25

Minn. R. 2675.3110 Mortgage Loans

A separate individual record shall be kept of each mortgage loan. Only such advances or charges as are provided for in the loan contract and/or those specifically provided for in Minnesota Statutes, section 51A.38 may be added to the loan balance.

The loan record shall show the contractual status as to delinquency or advance payment in dollars and cents at the close of each six month accounting period. Advances charged to the loan and not repaid will be reflected in the delinquency.

An attorney's opinion or title insurance policy will be required with all loans, which opinion or policy should show the status of fee title and whether or not the association has a first valid lien on the property.

History

Statutory Authority: MS s 51A.42

Minn. R. 2675.3120 Other Real Estate

When real estate is acquired through foreclosure or by deed in lieu thereof, it shall be transferred to an account entitled "other real estate" on the date the association actually acquires title.

"Other real estate" cannot be entered on the books of an association at an amount greater than the balance of the principal amount of the loan at the time of acquisition, plus foreclosure costs and delinquent taxes and assessments paid at time of acquisition.

A separate record of each parcel shall be kept which will show among other things the legal description, the balance due on the principal debt, the cost of foreclosure, delinquent taxes, or other costs of acquisition, subsequent additions, if any, charge-offs, and final disposition.

No cost of repairs or cost of restoration of property may be added to the real estate account except such expenditures as represent permanent improvements.

No additions to book value may be made after the date of sale in cases of foreclosure, except as noted in the previous sentence. If deed is taken in lieu of foreclosure, real estate must be carried at a figure not exceeding the balance due on the mortgage, plus taxes and assessments paid by the association other than taxes which were current when deed was obtained.

When "other real estate" is sold on a contract for deed, the parcel involved shall be transferred to an account entitled "real estate contracts."

When sales are made at prices in advance of the book value of real estate, the profit involved shall be considered a deferred profit and held in a reserve account and only credited to actual profits after 33-1/3 percent of the purchase price has been paid on the contract, excluding interest payments.

History

Statutory Authority: MS s 51A.42

Minn. R. 2675.3130 Parcels of Unsold "other Real Estate."

Parcels of unsold "other real estate."

A. Parcels of "other real estate," not yet sold on contract for deed, must be charged off against the legal reserve account annually at the rate of at least five percent of the original amount. The first charge-off for each parcel must be made not later than 12 months after the date of acquisition.

B. In lieu of item A, and if an association chooses to establish a specific reserve for losses for the excess book value of unsold real estate parcels based on dated and signed appraisals by the association of qualified appraisers at the time the association acquires each parcel, it may do so by transferring these amounts from the legal reserve account. If said parcels of other real estate continue to remain unsold and when due passage of years prove the specific reserve for losses to be insufficient based on annual multiples of five percent of the original amount, as the case may be, the association shall then begin annual transfers, as provided in item A, to the specific reserve account from the legal reserve account.

History

Statutory Authority: MS s 51A.42

Minn. R. 2675.3140 Shares

Any association issuing shares by series shall keep an individual record of each certificate issued, adequate to show each payment made thereon, and at the close of each accounting period to show the value to date, the dividend credited, and the delinquent or advance payments in dollars and cents. Red figures will indicate delinquency. Black figures will indicate advance payments.

When a bonus agreement is entered into in connection with any share account the share record shall show, in addition to the customary record and stipulated monthly payment, the amount of "bonus dividend" allocated to the account, and for each and every month the amount the account is delinquent or paid in advance.

History

Statutory Authority: MS s 51A.42

Minn. R. 2675.3150 Interest Earned But Not Collected

When interest on loans is calculated and added to the loan balance, and if all or part of such interest is not paid, such amount must be set up as "interest earned but not collected" at time of adjusting the loan balance and can only be transferred to interest received after being actually paid by the borrower.

History

Statutory Authority: MS s 51A.42

Minn. R. 2675.3155 Surety Bonds

Subpart 1. Minimum coverage.

Each association shall maintain bond coverage with a bonding company acceptable to the commissioner of commerce, and such bond shall be in form known as "standard form No. 22" or its equivalent or in other form acceptable to the commissioner of commerce. The bonds shall cover each director, officer, employee, and agent who has control over or access to cash or securities of such association. Such coverage shall be maintained in the minimum amount set forth below, computed on a base consisting of the total assets of the savings association, as follows:

Subp. 2. Deductible amounts.

No association shall be required to maintain such bond coverage in an amount greater than $3,000,000. Such bond coverage may contain provision for a deductible amount from any loss which, except for such deductible provision, would be recoverable from the bonding company. A deductible shall not be in excess of the following amounts in relation to the following bond bases:

The permissible deductible amount specified in this paragraph may be increased by an association to a maximum of three times the above-specified permissible amount whenever losses under the bond exceed 50 percent of the premium payable for the current premium term. A deductible amount may be applied separately to one or more insuring agreements. The bond shall not provide that there may be more than one deductible amount from all losses caused by the same person or caused by the same persons acting in collusion or combination in cases in which such losses result from dishonesty of employees (as defined in the bond).

Subp. 3. Coverage of service organizations.

If the accounting records of an association are maintained and serviced by a data processing organization, that organization, while performing such data processing services, must be covered as an employee under the association's bond.

A service corporation of an association shall maintain such bond coverages as may be appropriate considering the nature of its activities and the practice of other corporations engaged in similar activities.

History

Statutory Authority: MS s 51A.42
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2675.3160 Branch Offices

Subpart 1. Authorizing resolution.

A savings association may make an application to establish a branch office. The application must be in writing in the form prescribed by the Department of Commerce and submitted to the commissioner of commerce.

Subp. 2. Summary denial.

The commissioner shall deny such application if it is determined that any of the following conditions exist:

A. the location of the proposed branch office is more than 100 miles from home office of the association on the effective date of this part;

B. the commissioner has granted, within one year preceding the filing of the application, another application by the association under this section for a certificate authorizing it to establish a branch office;

C. the commissioner has denied, other than summarily, within one year preceding the filing of the application, another application by the association under this part for a certificate authorizing it to establish a branch office at the same location or within the immediate vicinity thereof; or

D. the association has filed with the commissioner another application for a certificate authorizing it to establish a branch office with respect to which action by the commissioner is pending. If the commissioner summarily denies such application, the commissioner shall serve the order of summary denial upon the association by mail at its principal place of business.

Subp. 3. Hearing.

If the application is not summarily denied, the commissioner shall fix the time, within 60 days after the filing of the application, for a hearing at the commissioner's office to decide whether or not the application shall be granted. Notice of the hearing shall be published in the form prescribed by the commissioner in some newspaper published in the municipality in which the proposed branch office is to be located, and if there is no such newspaper, then at the county seat of the county in which the branch office is proposed to be located. The notice shall be published once, at the expense of the association, not less than 15 days nor more than 30 days prior to the date of the hearing. At the hearing the commissioner shall consider the application and hear such witnesses as may appear in favor of or against the granting of the application.

Subp. 4. Criteria for granting.

If upon the hearing it appears to the commissioner that there is a reasonable public demand for the branch office in the location specified by the application, that there is a reasonable probability of its usefulness and success, that it can be established without undue injury to the properly conducted, existing financial institutions in the locality, and that it will be properly and safely managed, the application shall be granted; otherwise it shall be denied.

Subp. 5. Written denial.

If the application is denied, the commissioner shall, not later than 60 days after the hearing, make an order in writing to that effect, specifying the ground for denial and forthwith give notice thereof by registered mail to the association, at its principal place of business; and, thereupon, the commissioner shall refuse to issue a certificate of authorization to the association.

Subp. 6. Authorizing certificate.

If upon hearing it shall appear to the commissioner of commerce that the application shall be granted, the commissioner shall not later than 60 days after the hearing issue a certificate authorizing the association to establish a branch office at the location stated in the application, subject to such conditions as the commissioner may deem necessary. After the issuance of the certificate of authorization by the commissioner, it shall be filed for record with the secretary of state and with the county recorder of the county of the principal place of business of the association and also with the county recorder of the county in which said branch office is to be located, if different from that of the principal place of business of the association.

Subp. 7. Deadline.

If a branch office is not opened for business to the public within 12 months following the date of issuance by the commissioner of the certificate authorizing its establishment, unless extended by order of the commissioner for a period not exceeding an additional 12 months, said certificate shall become void.

History

Statutory Authority: MS s 46.01; 51A.42
History: 9 SR 1337; L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; 17 SR 1279

Minn. R. 2675.3170 Books, Records, and Reports

An association shall keep a complete set of books and records and shall keep the commissioner of commerce advised at all times of the address at which they are maintained. Any association receiving record keeping services from another association or from a service corporation shall provide the following:

A. a certificate from the association receiving such services, stating that it will comply with the provisions of Minnesota Statutes, sections 46.04 and 51A.42 and giving full assurance that the performance of such record keeping services by the other association, or the respective clerical service corporation (name of either to be given), will be subject to Department of Commerce rules in the same manner as if such services were being performed by the association itself and on its own premises; and

B. a certificate to be furnished by the association furnishing such clerical services, or the clerical service corporation, agreeing as to performing such services as outlined in Minnesota Statutes, sections 46.04 and 51A.42 that its performance thereof will be subject to regulation and examination by the commissioner of commerce to the same extent as if such services were being performed by the serviced association itself on its own premises.

History

Statutory Authority: MS s 51A.42
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2675.3180 Investment Records

Subpart 1. Requirements.

During the period in which investments are carried on an association's books, it shall be required that:

A. original invoices of bond purchases and sales be retained as a part of the records of an association;

B. a record be maintained of all securities bought and sold, showing date of purchase or sale, interest rate, maturity, par value, description, from whom purchased, to whom sold, selling price, and where deposited for safekeeping;

C. any investment, other than U.S. governments direct and/or guaranteed, shall be supported by full credit information at the time of purchase (dealer's circular or prospectus).

Subp. 2. Purchase exceeding par.

Purchase of a security at a price exceeding par is prohibited, unless the association shall:

A. charge off the premium when the securities are placed on the books; or

B. provide for the regular amortization of the premium paid, so that the premium shall be entirely extinguished at or before the maturity of the security and the security (including premium) shall at no intervening date be carried at an amount in excess of that at which the obligor may legally redeem such security; or

C. set up a reserve account to amortize the premium, said account to be credited periodically with an amount not less than the amount required for amortization under item B; and

D. accrued interest paid on securities must be charged to interest received, and bond commissions and all costs of sales or purchases must be charged to expense.

Subp. 3. Purchase less than par.

Upon the purchase of a security at a price less than par, the association shall place such security on its books at cost and may provide for the regular accretion of the discount, ratably over the period from purchase to maturity of the security.

History

Statutory Authority: MS s 51A.42

Minn. R. 2675.3190 Charter

The charter must be framed and hung in a conspicuous place in the main lobby of the association's office.

History

Statutory Authority: MS s 51A.42

Minn. R. 2675.4100 Licensed Office

No application for a loan shall be taken, nor shall any note evidencing the loan obligation be signed, nor shall the proceeds of any loan be paid to a borrower at any other place than that named in the license; except that a renewal note to evidence the unpaid balance of an existing loan and other instruments given to secure said balance, may be taken outside of the office of the licensees, and in loan transactions where there is more than one signer only one thereof shall be required to sign in the office of the licensee; provided, however, that this part shall not apply to loans consummated by mail.

History

Statutory Authority: MS s 56.21

Minn. R. 2675.4110 Maximum Loan Applies to Multiple Offices

Licensees shall not induce or permit any borrower to become obligated, directly or contingently, for a total amount in excess of maximum limit stated in Minnesota Statutes, section 56.131 on loans obtained from two or more licensed offices operated in Minnesota by the same individual, partnership, affiliated partnership, corporation, or affiliated corporation. Licensees shall take reasonable precautions to prevent borrowers from obtaining amounts in excess of the maximum limit in this manner.

History

Statutory Authority: MS s 56.21

Minn. R. 2675.4140 Licensees to Be Responsible for Acts of Assignees

Subpart 1. Notification.

Within ten days after the transaction date, licensees shall notify the commissioner of commerce of the bulk purchase of loan accounts made pursuant to the Minnesota Regulated Loan Act from another licensee or person authorized by the Minnesota Regulated Loan Act to engage in this business without necessity of a license and of the bulk sale of loan accounts to another licensee or person authorized by the Minnesota Regulated Loan Act to engage in this business without necessity of a license. Notices of the purchase and sale of accounts shall state the name and address of the licensee or person from whom accounts are being purchased, to whom accounts are being sold, and shall state the total number of accounts and the total outstanding principal balances involved.

Subp. 2. Disposition of loan accounts to unlicensed persons.

Licensees shall not make a bulk sale or otherwise dispose of loan accounts made pursuant to the Minnesota Regulated Loan Act to any person not licensed under or authorized to engage in this business without necessity of a license by the Minnesota Regulated Loan Act unless prior approval is obtained from the commissioner of commerce. The privilege of receiving the charges allowed by the Minnesota Regulated Loan Act cannot be transferred to an unlicensed purchaser or purchaser not authorized to engage in this business without necessity of a license and all loans sold, assigned, or transferred to a nonlicensee or unauthorized person shall be endorsed to bear interest at a rate not to exceed the maximum legal contract rate of interest. This subpart does not apply to a transfer of loan accounts made pursuant to the Minnesota Regulated Loan Act that is involuntary or by operation of law.

History

Statutory Authority: MS s 56.21
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2675.4150 Management and Control

Subpart 1. License criteria.

Licenses are issued after consideration of the experience, character, and general fitness of the officer or manager in charge of the licensed office.

Subp. 2. Change of managing officer.

Changes of such managing officer which occur must be reported promptly, in writing, to the commissioner of commerce, in advance of the effective date of change when circumstances permit, but in any event within ten days of such transfer.

History

Statutory Authority: MS s 56.21
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2675.4160 Transferred Accounts

The original ledger card or record of payments on any transferred regulated loan must be retained in the transferring licensed regulated loan office for at least two years from the date of transfer.

History

Statutory Authority: MS s 56.21

Minn. R. 2675.4170 Computing Date and Time

For the purpose of computing elapsed periods of time, a month shall be considered a calendar month and, where a fraction of a month is involved, a day shall be considered 1/30 of a month. The method employed must count only 30 days for any full calendar month elapsed but count the actual days in any fractional month period. A full calendar month is the period from a given date in one month to the same numbered date in the following month and in case there is no same numbered date in the following month, to the last day in the following month. In any period extending beyond one or more full months, the one or more full months fall at the start of the period and the fractional month at the end.

History

Statutory Authority: MS s 56.21

Minn. R. 2675.4180 [Repealed, L 2000 c 427 s 21]

[Repealed, L 2000 c 427 s 21]

Minn. R. 2675.5100 Books and Records

Subpart 1. Minimum requirements.

In order to facilitate a satisfactory examination by the commissioner of commerce or the commissioner's representatives, each industrial loan and thrift company shall maintain such books and records as are deemed necessary, and a monthly trial balance as of the close of the accounting period to be in the branch office within 25 days.

Subp. 2. Additional requirements.

The principal office of each industrial loan and thrift company in this state shall maintain the following additional books and records:

A. a consolidated monthly trial balance as of the close of the accounting period to be in the principal office within 25 days;

B. copies of the corporate stock register;

C. copies of all corporate insurance policies and surety bonds, as required by part 2675.5120; and

D. copies of the minutes of all the annual, regular, and special meetings of the board of directors and stockholders.

Subp. 3. Retention period.

Unless otherwise provided, all legal instruments, supporting documents, and ledger cards or record of payments shall be maintained in the office for at least two years after recording the final entry on them.

History

Statutory Authority: MS s 46.01
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2675.5110 Cash Dividends

No industrial loan and thrift company which sells certificates of indebtedness to the public for investment purposes shall pay a cash dividend to its stockholders until written approval for such payment has been obtained from the commissioner of commerce. Banks requesting information that will be required for the approval of dividends will be supplied by the division upon request.

History

Statutory Authority: MS s 46.01
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2675.5120 Surety Bonds and Insurance

Each industrial loan and thrift company shall provide adequate corporate surety bond coverage on all its officers and employees having access to cash or other assets of the company. They shall also provide other types of insurance that may be deemed necessary.

History

Statutory Authority: MS s 46.01

Minn. R. 2675.5130 Management

Subpart 1. License criteria.

Certificates of authorization are granted after consideration of the experience, character, and general fitness of the officer or manager in charge of the licensed office.

Subp. 2. Change of managing officer.

History

Statutory Authority: MS s 46.01
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2675.6100 Books, Records, and Reports

Subpart 1.

[Repealed, 9 SR 2105]

Subp. 2. Data processing off premises.

Any credit union receiving record keeping services from another credit union or from a service corporation shall provide a certificate from the other credit union or service corporation, stating its agreement to perform the services in compliance with Minnesota Statutes, section 52.06. The certificate must acknowledge that it is subject to regulation and examination to the same extent as if the services were being performed by the credit union on its premises.

Subp. 2a. Daily closing.

Credit unions that maintain in excess of $500,000 in accounts subject to draft withdrawal shall post all assets and liabilities daily.

Subp. 3. Semiannual audit.

The supervisory committee shall file a report in duplicate on forms furnished by the Department of Commerce, within 30 days after the date of each semiannual audit.

Subp. 4. Commingled funds.

All cash receipts and assets of the credit union must be kept intact and separate from other funds.

Subp. 5.

[Repealed, 9 SR 2105]

Subp. 5a. Statement of accounts.

A statement of account that itemizes all transactions must be issued at least monthly for sharedraft accounts. A statement must be issued at the end of a dividend period on all other accounts, except that a statement need not be issued more often than quarterly and must be issued at least annually.

Subp. 5b. Inactive accounts.

If the board determines that an account is inactive and identifies the account by code or some other means, it must be issued a statement at least annually. Statements on inactive accounts must be issued under the control of the supervisory committee.

Subp. 5c. Passbooks.

When issued, passbooks must show the current position of shares, deposits, and loans. The credit union shall annually notify members to bring passbooks into the credit union office for current posting. A credit union may not hold a passbook.

Subp. 6. Issuing account numbers.

A number as determined by the board of directors in a predetermined set pattern must be assigned to each member upon election to membership and that number may never be reissued to another member. Each member's assigned number must appear on the member's individual record of accounts for shares, deposits, and loans.

History

Statutory Authority: MS s 45.023; 46.01
History: 9 SR 2105; 17 SR 1279; 18 SR 1472

Minn. R. 2675.6110 Purchase of Real Estate

A credit union may not purchase real estate other than for credit union premises.

History

Statutory Authority: MS s 46.01
History: 9 SR 2105

Minn. R. 2675.6111 Investments in Credit Union Premises

Investments in credit union premises or leasehold investments may not exceed 50 percent of total reserves of the credit union unless the Department of Commerce grants a prior approval.

History

Statutory Authority: MS s 46.01
History: 9 SR 2105

Minn. R. 2675.6120 Other Real Estate

Subpart 1. Transfers.

Whenever real estate is acquired by a credit union through foreclosure or by deed in lieu of foreclosure, it must be transferred from loans to an account titled "Other Real Estate" on the date of sheriff's certificate or other conveyance.

Subp. 2. Repair and restoration costs.

Costs of repairs and costs of restoration of the property may not be added to the real estate account, unless the expenditures are for permanent improvements. Taxes delinquent when title is acquired may, when paid by the credit union, be added to the book value of the property.

Subp. 3. Additions to book value.

Additions to book value may not be made after the date of sale in cases of foreclosure except as noted in subpart 2. If a deed is taken in lieu of foreclosure, real estate must be carried at a figure not exceeding the balance due on the mortgage, plus delinquent taxes and assessments paid by the credit union at the time of acquiring title.

Subp. 4. Sale of other real estate.

A credit union may finance the sale of other real estate or credit union premises under the terms and conditions available to any seller or owner of real property. A profit on the sale of other real estate sold on contract is considered deferred profit and must be held in reserve to be realized after two consecutive years of contracted payments have been made.

Subp. 5.

[Repealed, 18 SR 1472]

Subp. 6. Unsold other real estate.

Other real estate that is not sold must be charged off annually through earnings at the rate of at least ten percent of the original amount. The charge-off period begins at the end of the redemption period if the other real estate was acquired through foreclosure or on the date of the deed if the other real estate was acquired via a deed in lieu of foreclosure. The first charge off shall be prorated based upon the number of full months in the first year since the charge-off period began.

History

Statutory Authority: MS s 45.023; 46.01
History: 9 SR 2105; 18 SR 1472

Minn. R. 2675.6130 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6140 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6141 Real Estate Mortgages

Subpart 1.

[Repealed, L 2000 c 427 s 21]

Subp. 1a. Written policy.

A credit union taking a lien on real estate as security must maintain a written policy approved annually by its board of directors which at a minimum addresses:

A. written appraisal or valuation reports made in conjunction with federal, state, and board requirements;

B. description of fee title, validity of the credit union's lien, position of the lien, and documentation of methods used to make these determinations;

C. evidence of adequate insurance with loss payable clause payable to the credit union; and

D. exemption of documentation requirements, for any single loan or class of loans, if the loan documents reflect that the lien has been taken as collateral solely through an abundance of caution and where the terms of the transaction as a consequence have not been made more favorable than they would have been in the absence of a lien.

Subp. 2.

[Repealed, 18 SR 1472]

Subp. 3.

[Repealed, 18 SR 1472]

Subp. 4.

[Repealed, 18 SR 1472]

Subp. 5.

[Repealed, 18 SR 1472]

Subp. 6.

[Repealed, 18 SR 1472]

History

Statutory Authority: MS s 45.023; 46.01
History: 9 SR 2105; 18 SR 1472; L 2000 c 427 s 21

Minn. R. 2675.6142 Loans

Subpart 1. Fees.

As specified by board resolution, a credit union may require members to pay fees in connection with the making, closing, disbursing, extending, readjusting, or renewing of any loan. The board resolution establishing the fees to be retained by the credit union must be conspicuously posted at the principal office of the credit union for so long as the fees are in effect.

Subp. 1a. Other charges.

The borrower may be charged, or included in the amount financed, the premium on any life, accident and health, property, or other insurance written upon or in connection with a loan if notification is given in writing that the borrower has the option of furnishing this coverage through existing policies of insurance owned or controlled by the borrower or furnishing the coverage through any insurer authorized to transact business in this state. The premium may not be included as part of the loan and must be accounted for as a separate receivable unless advanced as part of the principal at the time of origination or payments are increased to provide amortization of the premium within the original maturity of the loan.

Subp. 2.

[Repealed, 18 SR 1472]

Subp. 3. Written policy.

A written loan policy is required to be reviewed and approved annually by the board. A detailed description of the frequency and depth of financial review of various classes of loans must be included in the policy.

History

Statutory Authority: MS s 45.023; 46.01
History: 9 SR 2105; 17 SR 1279; 18 SR 1472

Minn. R. 2675.6143 Delinquent Loans

Subpart 1. Installment loans.

A note due on a monthly installment basis must be scheduled for delinquency. The whole principal balance is considered past due if any portion of an installment remains unpaid 60 days after the scheduled payment date. Delinquent loans must be shown by categories coded as follows:

A. 60 days to 180 days, code A;

B. 181 days to 364 days, code B; and

C. 365 days or more, code C.

Subp. 2. Single payment loans.

A single payment loan is considered past due the next day after maturity and must be coded past due from that date according to the schedule in subpart 1.

Subp. 3. Extensions.

A loan is not considered current by extension unless accrued interest has been paid to the date of extension. Special consideration for unusual circumstances affecting the general membership may be permitted by a detailed application to the Department of Commerce.

Subp. 4. Delinquent loan report.

Each credit union board will develop and implement a program to ensure that the board is kept informed on the status of delinquent loans and collection actions monthly.

Subp. 5.

[Repealed, 18 SR 1472]

Subp. 5a. Loan reserve requirements and dividends.

Before declaration of a dividend, the board of directors shall ascertain that:

A. the allowance for a loan losses account is funded as determined by the board's internal risk rating system to present fairly the financial position and meet the requirements of the agreement for insurance of accounts; and

B. that statutory reserve transfers are made in accordance with statute. Notification to the commissioner of commerce of dividends paid will be required if the dividends paid exceed earnings for the period declared. Accrual accounting adjustments may be made for those credit unions operating on a cash, modified cash, or partial accrual account basis.

Subp. 6. Interest earned not collected.

Interest earned not collected reflected on a credit union's books under the accrual method of accounting may not be continued on a loan which is more than 90 days delinquent. Accrued interest must be reversed to earnings or undivided profits at the time a loan is charged off to the statutory reserve fund or at the time an allowance for loan losses is established.

History

Statutory Authority: MS s 45.023; 46.01
History: 9 SR 2105; 18 SR 1472

Minn. R. 2675.6150 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6160 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6170 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6180 Board of Directors

Subpart 1. Change.

Notice of any change in officers, directors, or committee members between annual meetings must be forwarded to the Department of Commerce within ten days of the effective date of the change.

Subp. 2. Review of examiner's report.

When the examiner's report is received by a credit union, it must be reviewed by the board of directors at a regular or special meeting and a reply must be submitted to the Department of Commerce within 60 days of the receipt of the report or as instructed in the transmittal letter. The letter from the Department of Commerce which accompanies the report must also be read at the directors' meeting.

Subp. 3.

[Repealed, 9 SR 2105]

Subp. 4. Minute book.

The minutes of any meeting must be written up as soon as practicable and signed by the secretary and the presiding officer at the next meeting upon approval. The minutes must be kept in a book and be available along with the credit union records for inspection by the commissioner of commerce or representatives at all times with or without previous notice.

History

Statutory Authority: MS s 46.01
History: 9 SR 2105; 17 SR 1279

Minn. R. 2675.6190 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6200 [Repealed, 18 SR 1472]

[Repealed, 18 SR 1472]

Minn. R. 2675.6210 Asset Receipt

Whenever it becomes necessary to remove any asset from the files for any reason whatsoever, a properly executed receipt attached to a copy of the asset must replace it.

History

Statutory Authority: MS s 46.01
History: 9 SR 2105

Minn. R. 2675.6220 Charged Off Assets

A record of all assets charged off, either to the statutory reserve fund or undivided earnings, along with recoveries thereto must be maintained. This record must be available to the examiners at each examination.

History

Statutory Authority: MS s 46.01
History: 9 SR 2105

Minn. R. 2675.6230 Furniture and Fixtures Account

Purchases capitalized to the furniture and fixtures account shall be amortized at the minimum rate of ten percent annually, unless exception is made by the commissioner of commerce. The charge off may be based on the number of full months in which the item was capitalized. Adequate records must be maintained to facilitate a determination of the unamortized amount of each capitalized item.

History

Statutory Authority: MS s 46.01
History: 9 SR 2105

Minn. R. 2675.6240 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6250 Fidelity Bonds

Subpart 1. Requirements.

A credit union operating under Minnesota law is required to be protected by a blanket bond with the following provisions: all officers, committee members, employees, bank messengers, and attorneys representing the credit union shall be covered by the bond. The credit union shall be protected against losses from a lack of honesty, burglary or robbery, forgery or alteration, and misplacement or mysterious and unexplainable disappearance. The bond must be approved by the Department of Commerce. The bond must provide that the commissioner of commerce will be given notice of pending cancellation within 60 days of final termination.

Subp. 2.

[Repealed, 9 SR 2105]

Subp. 3. Minimum provisions.

The board of directors shall at least once a year approve the amount of fidelity insurance to be carried for the ensuing year.

History

Statutory Authority: MS s 45.023; 46.01
History: 9 SR 2105; 18 SR 1472

Minn. R. 2675.6260 [Repealed, 18 SR 1472]

[Repealed, 18 SR 1472]

Minn. R. 2675.6270 Investments

Subpart 1. Records required.

During the period in which investments are carried on a credit union's books, original invoices of bond purchases and sales must be retained as a part of the records of a credit union.

A record must be maintained of all securities bought and sold showing date of purchase or sale, interest rate, maturity, par value, description, from whom purchased, to whom sold, selling price, and where deposited for safekeeping.

Any investment, other than United States governments direct and/or guaranteed, must be supported by full credit information at the time of purchase (dealer's circular or prospectus).

Subp. 2. Bond price exceeding par.

Purchase of a bond at a price exceeding par is prohibited, unless the credit union shall:

A. charge off the premium when the securities are placed on the books;

B. provide for the regular amortization of the premium paid so that the premium shall be entirely extinguished at or before the maturity of the security and the security (including premium) shall at no intervening date be carried at an amount in excess of that at which the obligor may legally redeem such security; or

C. set up a reserve account to amortize the premium, said account to be credited periodically with an amount not less than the amount required for amortization under item B.

Subp. 3. Charges.

Accrued interest paid on securities must be charged to interest received under the cash basis of accounting. Bond commissions and all costs of sales or purchase must be charged to expense.

Subp. 4. Security at price less than par.

Upon the purchase of a security at a price less than par, the credit union shall place the security on its books at cost and may provide for the regular accretion of the discount, ratably over the period from purchase to maturity of the security.

History

Statutory Authority: MS s 46.01
History: 9 SR 2105

Minn. R. 2675.6280 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6290 Insurance

Subpart 1. Insurance agency.

A credit union may establish, operate, or maintain an insurance agency as a separate corporation or agency within its physical premises.

Subp. 2. Policyholder.

A credit union may be the policyholder of either a group insurance plan or a subgroup under a master policy plan.

Subp. 3. Remission of premiums.

Premiums may be remitted by the credit union to an insurer or the holder of a master policy on behalf of a credit union member provided that the credit union has obtained written authorization from the member.

Subp. 4. Election by member.

Where a credit union is engaged in the facilitation of its members' voluntary purchase of insurance incidental to the borrowing of money, including but not limited to fire, theft, automobile, life, and temporary disability insurance, a member shall be given the elective of purchasing any required insurance from the vendor of the member's choice, and the members' file shall contain the signed written elective.

Subp. 5. Canceled insurance.

If the insurance is canceled, the unearned premium shall be paid to the member or credited to the member's share or deposit or loan account.

History

Statutory Authority: MS s 46.01
History: 9 SR 2105; 17 SR 1279

Minn. R. 2675.6300 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Minn. R. 2675.6301 [Repealed, 18 SR 1472]

[Repealed, 18 SR 1472]

Minn. R. 2675.6400 [Repealed, L 2003 c 51 s 20]

[Repealed, L 2003 c 51 s 20]

Minn. R. 2675.7100 [Repealed, L 2009 c 37 art 3 s 25 subd 4]

[Repealed, L 2009 c 37 art 3 s 25 subd 4]

Minn. R. 2675.7110 [Repealed, L 2009 c 37 art 3 s 25 subd 4]

[Repealed, L 2009 c 37 art 3 s 25 subd 4]

Minn. R. 2675.7120 [Repealed, L 2009 c 37 art 3 s 25 subd 4]

[Repealed, L 2009 c 37 art 3 s 25 subd 4]

Minn. R. 2675.7130 [Repealed, L 2009 c 37 art 3 s 25 subd 4]

[Repealed, L 2009 c 37 art 3 s 25 subd 4]

Minn. R. 2675.7140 [Repealed, L 2009 c 37 art 3 s 25 subd 4]

[Repealed, L 2009 c 37 art 3 s 25 subd 4]

Minn. R. 2675.8100 Definitions

Subpart 1. Scope.

Terms in parts 2675.8100 to 2675.8190 that are defined in Minnesota Statutes, sections 47.61 to 47.74, have the meanings given them. For the purpose of Minnesota Statutes, sections 47.61 to 47.74, and parts 2675.8100 to 2675.8190, the terms defined in this part have the meanings given them.

Subp. 2. Act.

"Act" means Minnesota Statutes, sections 47.61 to 47.74.

Subp. 3. Card.

"Card" means the access device used to activate a terminal, including a credit card or debit card. "Card" does not include an access device issued by a government agency solely for the purpose of electronic benefit transfer programs or stored value cards, except that a stored value card that also serves as an access device for electronic terminal transactions is considered to be a card to the extent it performs the functions of a credit card or debit card.

Subp. 4. Card issuer.

"Card issuer" means a financial institution or a person authorized by a financial institution providing the use of a terminal to a customer to be activated by a card.

Subp. 5. Control.

"Control" means the ownership of greater than 50 percent interest in the terminal or terminals; or any leasehold interest in the terminal or terminals; or the power to act as agent or card issuer authorized by those persons having ownership or leasehold interests in the terminal or terminals for purposes of the act and parts 2675.8100 to 2675.8190. No agency agreement effects transfer of control from an owner or leasehold interest unless the agreement is in writing and provides for assumption of all of the responsibilities and requirements of the act and parts 2675.8100 to 2675.8190 by the agent. If the agent is a financial institution, the agent is not required in the agreement to assume any responsibilities or requirements under the act or parts 2675.8100 to 2675.8190 which do not apply to terminals directly owned by financial institutions. If the agent is a national bank, federal savings association, or federal credit union, parts 2675.8100 to 2675.8190 apply to the extent permitted by federal law.

Subp. 6. Customer.

"Customer" means any person who has established a contractual relationship with a financial institution whereby that person is authorized to initiate any of those transactions permitted to be performed under the act at a terminal.

Subp. 6a. Establish and maintain.

"Establish and maintain" means making electronic financial terminal operations available to customers or card issuers on terms and conditions provided in the act and parts 2675.8100 to 2675.8190 by reason of having control over a terminal.

Subp. 7. Operator.

"Operator" means any person who assists in the initiation of terminal transactions on behalf of a customer. Operator does not include an employee of a financial institution, financial institution holding company or subsidiary thereof or the customer.

Subp. 8. Person.

"Person" means any individual, body politic or corporate, partnerships, or other unincorporated associations.

Subp. 9. Personal identification code.

"Personal identification code" is the confidential code provided to the customer which is necessary to the completion of a transaction at a terminal.

Subp. 10. Provider.

"Provider" means the person or persons having control over a terminal under the act.

Subp. 11. Terminal.

"Terminal" means an electronic financial terminal as defined in the act and does not include communication systems such as telephones with digital screens, personal computers, or interactive television possessed by and operated exclusively by the customer whether or not it is used to accept the disclosures required by part 2675.8160.

Subp. 12. Transaction.

"Transaction" means each separate, identifiable financial function performed at a terminal as authorized under the act.

Subp. 13. Unauthorized withdrawal.

"Unauthorized withdrawal" is a withdrawal by a person other than the customer without actual authority to initiate the withdrawal, and from which the customer receives no benefit. The term does not include any withdrawal that is initiated:

A. by a person who was furnished with the card by the customer, unless the customer has notified the financial institution involved that the transfers by that person are no longer authorized;

B. with fraudulent intent by the customer or any person acting in concert with the customer; or

C. by the financial institution or its employee.

History

Statutory Authority: MS s 45.023; 47.71
History: 22 SR 1711

Minn. R. 2675.8110 Authority, Scope, and Purpose

Minnesota Statutes, section 47.71, authorizes the commissioner of commerce to promulgate rules as are reasonably necessary to carry out and make effective the provisions and purposes of the act. Parts 2675.8100 to 2675.8190 relate to the operation of electronic funds transfer terminals and the manner and information required in the submission of applications for authorization, establish minimum technical operation standards, and require disclosure of information to customers using such terminals. Parts 2675.8100 to 2675.8190 establish an application procedure and guide to standards considered reasonable to accomplish the purposes of the act. Further, the act mandates the promulgation of rules to inform, guide, and protect consumers, retailers, and financial institutions in the utilization of electronic financial terminal systems. Parts 2675.8100 to 2675.8190 further set out specific requirements concerning the issuance of cards, disclosures of pertinent required information, and reporting of data relating to financial transactions initiated at electronic financial terminals.

History

Statutory Authority: MS s 45.023; 47.71
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; 22 SR 1711

Minn. R. 2675.8120 Application for Authorization

Any person, other than a state or federal savings association, savings bank or credit union, or state or national bank, seeking approval to establish and maintain a terminal or terminals at a specific location shall, not less than 45 days before the establishment of the terminal or terminals, file with the commissioner an application in a form provided by the commissioner entitled "Electronic Financial Terminal Authorization Application." Such application shall include the following information:

A. name and principal address of the controlling person filing the application;

B. the name and principal address of any other person or persons having control thereof, if other than the applicant;

C. descriptive information, including the number of terminals applied for, the location of each terminal by street address or other designation (including city and county);

D. whether the terminal will be attended or unattended and, if attended, by whose employees or agents as operators;

E. the transactions to be performed at the terminal;

F. schedule of charges to be paid to the provider by those financial institutions sharing the terminal or terminals;

G. a complete description of the physical and technical operation standards pertaining to the terminal, including information and specifications necessary to enable a financial institution that is eligible to share the terminal to obtain interface with the terminal, which description may be limited to the manufacturer, model number, and type of the terminal after a model of a terminal has been certified by the commissioner;

H. operational information, including the manner in which the terminal is activated, anticipated hours of use, anticipated date of first use of the terminal following approval by the commissioner;

I. all agreements used or intended to be used relating to the ownership, operation, and control of the terminal;

J. a description of the safeguards to be used to meet the terminal security requirements of Minnesota Statutes, section 47.68;

K. a description of the procedures to be used to meet the customer privacy requirements of Minnesota Statutes, section 47.69, subdivision 1;

L. a description of the procedures to be used to minimize losses due to unauthorized withdrawals from customer accounts by use of a terminal as required by Minnesota Statutes, section 47.69, subdivision 3, including procedures:

M. evidence of the bond or other means adopted to comply with Minnesota Statutes, section 47.64, subdivision 5; and

N. certification under oath by the applicant that all requirements of the act and of parts 2675.8100 to 2675.8190 pertaining to the provider of a terminal shall be met and shall be observed.

History

Statutory Authority: MS s 45.023; 47.62; 47.71
History: 22 SR 1711

Minn. R. 2675.8130 Notice to Commissioner

Notice to commissioner:

A. The commissioner shall be given written notice by the applicant not less than 30 days prior to the change of control or change of the operator of any terminal or terminals. For purposes of this item, "operator" does not include individual employees of a provider or retailer.

B. The commissioner shall be given written notice by the applicant of the termination of terminal operations at the location authorized not more than ten days after termination of all regulated activity.

C. The commissioner shall be given written notice by the applicant within 15 days following the date on which the applicant relocated an existing terminal less than three miles from its prior location.

History

Statutory Authority: MS s 45.023; 47.62; 47.71
History: 22 SR 1711

Minn. R. 2675.8140 [Repealed, 22 SR 1711]

[Repealed, 22 SR 1711]

Minn. R. 2675.8150 [Repealed, 22 SR 1711]

[Repealed, 22 SR 1711]

Minn. R. 2675.8160 Customer Disclosure Requirements

Subpart 1. Disclosure information.

Pursuant to Minnesota Statutes, section 47.69, the following information shall be disclosed in writing or by electronic communications agreed to by the customer and by the card issuer to its customer at the time the card is issued or in the event cards meeting the requirements of the act and parts 2675.8100 to 2675.8190 are outstanding (this disclosure shall be made before the customer is allowed to use a terminal):

A. the types of financial transactions available through the use of the terminal;

B. the schedule of charges made by the financial institution for the customer's use of the terminal;

C. any restrictions or limits on the number of transactions or dollar value limits that may be imposed upon the customer by the card issuer;

D. the frequency for sending periodic transaction statements to the customer;

E. the procedure to be used to give notice of error to the card issuer (said disclosure shall include the manner in which notice of error is to be filed and with whom it is to be filed, and shall include the mailing address and telephone number of the person to whom notice may be given);

F. the specific manner in which the agreement under which a card was issued may be terminated, either by the card issuer or by the customer;

G. the customary time needed to complete terminal transactions with the financial institution clearly stating differential in time if any between the various permitted transactions initiated at a terminal;

H. where payment for goods or services is made by a transfer of funds through a terminal: whether the transaction may be reversed by the customer, the procedure by which the transaction may be reversed, and a statement that the payment for goods or services made in this manner shall not affect any of the rights, protections, or liabilities in existing law concerning a cash or credit sale made by means other than through the use of a terminal;

I. a statement that the financial institution shall be liable for all unauthorized withdrawals unless the unauthorized withdrawal was due to the loss or theft of the customer machine readable card, in which case the customer shall be liable, subject to a maximum liability of $50, for those unauthorized withdrawals made prior to the time the financial institution is notified of the loss or theft. The limitation on liability is effective only if the card issuer is notified of unauthorized charges contained in a bill within 60 days of receipt of the bill by the person in whose name the card is issued;

J. a statement that any customer may bring a civil action against any person violating the consumer privacy and unauthorized withdrawal provisions of the act and may recover, in addition to actual damages, or $500, whichever is greater, punitive damages, together with the court costs and reasonable attorney's fees incurred; and

K. a statement that to protect the privacy of customers using electronic financial terminals, including any supporting equipment, structures or systems, information received by or processed through such terminals, supporting equipment, structures or systems shall be treated and used only in accordance with applicable law relating to the dissemination and disclosure of such information. The person establishing and maintaining an electronic financial terminal, including any supporting equipment, structures or systems, shall take such steps as are reasonably necessary to restrict disclosure of information to that necessary to complete the transaction and to safeguard any information received or obtained about a customer or a customer's account from misuse by any person manning an electronic financial terminal, including any supporting equipment, structures, or systems.

Subp. 2. Type sizes.

All information required to be disclosed by subpart 1 shall be printed or displayed in not less than eight-point type, .075 inch computer type, or elite size typewritten characters.

Subp. 3. Listing.

A directory listing as permitted under the act shall be made available by the applicant at the location of the terminal identifying the financial institutions using its services.

History

Statutory Authority: MS s 45.023; 47.69; 47.71
History: 17 SR 1279; 22 SR 1711

Minn. R. 2675.8170 Transaction Statement

A financial institution shall provide each customer with a periodic transaction statement at least quarterly. The statement shall include, but need not be limited to, the following: date of transaction, amount of each transaction, and type of each transaction, which may be in clear and understandable abbreviations or codes.

History

Statutory Authority: MS s 47.71

Minn. R. 2675.8180 Advertising, Exceptions

For purposes of Minnesota Statutes, section 47.67, notices on the site of a terminal intended to inform the customer of the operational characteristics, source of assistance or service, or fees or charges relating specifically to the use of the terminal are not considered prohibited advertising.

History

Statutory Authority: MS s 45.023; 47.71
History: 22 SR 1711

Minn. R. 2675.8190 Other Permissible Activities, Electronic Benefits Transfer, Consumer Convenience Services

The limitation on the financial transactions authorized to be performed at a terminal does not prohibit using the terminal's capability to:

A. dispense funds authorized and initiated by a government agency solely for the purpose of electronic benefit transfer purposes; or

B. deliver other consumer convenience services. These consumer convenience services include, but are not limited to, services that affect the payment for and dispense postage stamps, tickets, coupons, phone cards, or other media under agreements with affiliated or nonaffiliated businesses.

History

Statutory Authority: MS s 45.023; 47.71
History: 22 SR 1711

Minn. R. 2675.8500 Definitions

Subpart 1. Scope.

The terms defined in Minnesota Statutes, chapter 53B, apply to this part and part 2675.8510.

Subp. 2. Establishing a relationship.

"Establishing a relationship" means:

A. entering into an initial virtual-currency transaction for, on behalf of, or with a person; or

B. entering into a virtual-currency kiosk transaction with a new customer.

Subp. 3. Virtual-currency transaction.

"Virtual-currency transaction" means a transaction conducted or performed by any means that includes virtual-currency business activity.

History

Statutory Authority: MS s 45.023; 53B.31; 53B.72
History: 50 SR 405

Minn. R. 2675.8510 Required Disclosures

Subpart 1. Time and form.

A. A licensee must make the disclosures required by Minnesota Statutes, section 53B.72, at the time the licensee establishes a relationship to conduct a virtual-currency business activity transaction with a person. A virtual-currency business activity that constitutes a virtual-currency kiosk transaction is subject to the disclosures required under Minnesota Statutes, section 53B.75.

B. The disclosures must be provided to the person in a written notice that is clear, conspicuous, and easily readable. The written notice must be provided in English and in any other predominant language spoken by the licensee's customers, including at a minimum Spanish, Somali, Hmong, Vietnamese, and Chinese. For the purposes of this part, a clear, conspicuous, and easily readable manner means:

C. The disclosures must be displayed on the screen or virtual-currency kiosk screen used by the person to conduct the transaction and must include a means by which the person acknowledges receipt of each individual disclosure required under item D, in the order specified under item D.

D. The disclosures required must be separated into the following categories as provided for in Minnesota Statutes, section 53B.72, paragraph (b), using the following headings:

Subp. 2. Virtual-currency kiosk operator disclosures.

A. A licensee that is also a virtual-currency kiosk operator, as defined in Minnesota Statutes, section 53B.69, subdivision 11, must provide a customer with the disclosures and require acknowledgment of the disclosures required under Minnesota Statutes, section 53B.75, subdivisions 1, 2, and 3.

B. Notwithstanding item A, a customer who conducts virtual-currency transactions by any means other than through a virtual-currency kiosk is considered a new customer under Minnesota Statutes, section 53B.69, subdivision 3b, regardless of the customer's history of conducting transactions with a licensee prior to transacting at a virtual-currency kiosk.

C. In addition to the disclosure required under Minnesota Statutes, section 53B.75, subdivision 1, paragraph (b), a virtual-currency kiosk operator must provide to a new customer information that describes the process to request a refund under Minnesota Statutes, section 53B.75, subdivision 4.

Subp. 3. Acknowledgment of disclosures.

Before completing a transaction, a licensee must ensure that each person who engages in a virtual-currency transaction acknowledges receipt of all disclosures required under this part via confirmation of consent. Upon completing a transaction, the licensee must provide a person with a physical receipt, or a virtual receipt sent to the person's email address or SMS number, containing the information in subpart 4.

Subp. 4. Customer receipts.

Upon completing or concluding any transaction, a licensee must provide a receipt containing:

A. the information required under Minnesota Statutes, section 53B.72, paragraph (c), and under Minnesota Statutes, section 53B.72, paragraph (d), if the licensee discloses and elects to provide a single, daily confirmation if a licensee performs more than one virtual-currency transaction on that day with or on behalf of a person;

B. the transaction hash and each virtual currency address;

C. a statement of the licensee's liability for nondelivery or delayed delivery;

D. a statement of the licensee's refund policy; and

E. any other information required by Minnesota Statutes, section 53B.56, subdivision 4, in the form required under Minnesota Statutes, section 53B.56, subdivision 3.

Subp. 5. Receipt form; submission.

A licensee must make available to the commissioner, upon request, the form of the receipts the licensee is required to provide to customers under subpart 4.

History

Statutory Authority: MS s 45.023; 53B.31; 53B.72
History: 50 SR 405

Minn. R. 2675.9910 [Repealed, 9 SR 2105]

[Repealed, 9 SR 2105]

Chapter 2700 INSURANCE POLICIES, PRACTICES

Minn. R. 2700.0200 [Repealed, L 2013 c 130 s 4]

[Repealed, L 2013 c 130 s 4]

Minn. R. 2700.0300 Commencement of Litigation Clause

No policy, rider, or endorsement form shall be accepted for filing by this department from any casualty insurance company that contains a provision limiting the time within which legal proceedings may be instituted against the insurer by the insured to a period less than two years.

History

Statutory Authority: MS s 60A.03; 62A.04; 65A.01

Minn. R. 2700.0400 Statutory Deposits with Commissioner

Registered securities will not be accepted for deposit unless registered in the following manner: "Commissioner of commerce of the state of Minnesota for the benefit of all policyholders of the depositor."

Mortgage deposits shall be accompanied by an assignment thereof to the commissioner of commerce.

In all cases where mortgages are deposited, credit toward the deposit may not exceed the value of the lands secured without regard to improvements. Independent appraisals setting out the value of the land shall be filed to enable the department to determine the allowable value of the mortgages deposited.

History

Statutory Authority: MS s 60A.10
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92

Minn. R. 2700.0500 Equal Treatment of Minnesota Policyholders

For the purpose of eliminating discrimination against Minnesota policyholders:

A. all domestic companies issuing nonassessable policies in any other state, territory, or jurisdiction shall establish a guaranty fund as provided by law and issue a nonassessable contract in Minnesota, or withdraw immediately from other states, territories, or jurisdictions in which the issuance of an assessable policy is not permitted;

B. all foreign companies that issue nonassessable contracts in any other state, territory, or jurisdiction shall also issue nonassessable contracts in the state of Minnesota, provided the companies can comply with Minnesota laws relating to issuance of policies without a contingent liability. If compliance is not possible, then the company shall withdraw from the state of Minnesota and refrain from issuing any policies in this state, or withdraw from and surrender its license in any state, territory, or jurisdiction in which the company is issuing nonassessable contracts.

History

Statutory Authority: MS s 60A.03; 66A.21

Minn. R. 2700.0600 Actuaries

Subpart 1. Scope.

This part shall apply to annual statements filed with the commissioner of commerce in accordance with Minnesota Statutes, section 60A.13, and all other reports and documents relating to the business of insurance filed with the commissioner or issued to the public.

Subp. 2. Purpose.

The purpose of this part is to establish standards for use of the terms "actuary" and "actuarial." It is not the purpose of this part to require any insurer or other person to employ an actuary except as may be required by statute or another rule.

Subp. 3. Qualified actuary defined.

For the purpose of this part, a qualified actuary is a member of the American Academy of Actuaries, or an individual who has demonstrated to the satisfaction of the commissioner of commerce that the actuary has the educational background necessary for the practice of actuarial science, and that the actuary has not less than seven years of actuarial experience.

Subp. 4. Signing as actuary.

No annual statement, report, or document relating to the business of insurance shall be filed with the commissioner of commerce or issued to the public if it is signed by a person who represents in such instrument to be an actuary, and said person is not a qualified actuary as defined in subpart 3.

Subp. 5. Use of "actuary" and "actuarial."

Whenever the term "actuary" or "actuarial" is used in any representation relating to the business of insurance made to the commissioner of commerce or to the public, it shall be understood to mean a qualified actuary or having the attributes of a qualified actuary.

Subp. 6. Penalty.

A violation of any of the provisions of this part shall be deemed a violation of Minnesota Statutes, section 72A.19, and punishable in accordance with Minnesota Statutes, section 72A.25.

History

Statutory Authority: MS s 60A.28
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; 17 SR 1279

Minn. R. 2700.0700 [Renumbered 2795.2000]

[Renumbered 2795.2000]

Minn. R. 2700.1100 Authority

The rules hereinafter set forth are promulgated pursuant to Minnesota Statutes 1977, section 72C.07.

History

Statutory Authority: MS s 72C.07

Minn. R. 2700.1200 Purpose

The purpose of parts 2700.1100 to 2700.1300 is to provide insurance policies that are printed in typeface styles that are easily readable to the average person.

History

Statutory Authority: MS s 72C.07

Minn. R. 2700.1300 Legible Typeface

Subpart 1. Scope.

These rules shall be considered applicable in all insurance policies and contracts required to be filed under Minnesota Statutes, section 72C.11.

Subp. 2. Legibility.

All insurers upon filing shall specify the type face styles used in each policy. The commissioner will consider the following typeface styles as being legible: Aldine; Bakerville; Bodoni; Bodoni Book; Century; Century Schoolbook; Chelmsford; Copperplate; Clarendon; Fairfield; Futura; Garamond; Gothic; Helios; Helvetica; Journal; Korinna; Modern Roman; Megaron; Melior; Metro; News Gothic; Optima; Press Roman; Pyramid; Schoolbook; Sparton; Theme; Times Roman; Trade Gothic; Univers; and Universe.

This list is not intended to be exhaustive, but is intended solely as an indication of the legibility of a typeface style that is required. Any typeface selected that meets the same standard of legibility will be approved. Extreme type styles such as Old English or heavy block are not acceptable.

Italics, boldface, and contrasting styles may be used to emphasize important or technical terms and for captions. When two or more typeface styles are used, they shall be visually compatible.

History

Statutory Authority: MS s 72C.07

Minn. R. 2700.2460 Definition of Commercial Policies

"Commercial policies" means all policy forms regulated by Minnesota Statutes, section 70A.06, that by general practice are used for business entities. The term does not include policy forms providing private passenger vehicle insurance or homeowners' insurance, personal liability coverage, personal property or personal article floater coverage, credit property coverage, crop hail insurance, title insurance, or professional liability insurance covering individuals. The term does not include policy forms insuring individually owned motorcycles, motorized bicycles, recreational equipment, mobile homes, house trailers, snowmobiles, watercraft, aircraft not used in air commerce, or owner occupied residential dwellings containing fewer than five family dwelling units.

History

Statutory Authority: MS s 45.023; 70A.02
History: 19 SR 1581

Minn. R. 2700.2470 Exemption from Certain Filing Requirements

Subpart 1. Commercial policy forms.

If the commercial policy forms of an insurer comply with the requirements in Minnesota Statutes, the insurer shall be exempt from the filing and approval requirements in Minnesota Statutes, section 70A.06, subdivision 2, for those policies.

Subp. 2. Commercial policy rates.

If the rates of an insurer for commercial policy forms comply with the requirements in Minnesota Statutes, the insurer shall be exempt from the filing requirements in Minnesota Statutes, section 70A.06, subdivision 1, for those rates. This subpart does not apply to guide "a" rates or excess rates, also known as "consent to rate."

Subp. 3. Other rates.

Insurers shall be exempt from the filing requirements in Minnesota Statutes, section 70A.06, for guide "a" rates and excess rates used for commercial policies of insurance if the rates comply with the requirements in Minnesota Statutes and the insurer maintains a file containing the information required by Minnesota Statutes, section 70A.06, subdivision 1, for the policy for at least one year after the policy has terminated.

Subp. 4. Rate service organizations.

The exemption provided in this section does not apply to rate service organizations, as defined in Minnesota Statutes, section 70A.03.

History

Statutory Authority: MS s 45.023; 70A.02
History: 19 SR 1581

Minn. R. 2700.2480 Filing of Exempt Information

An insurer shall within 30 days of request provide the commissioner of commerce with any of the information for which part 2700.2470 provides exemption from filing.

History

Statutory Authority: MS s 45.023; 70A.02
History: 19 SR 1581

Minn. R. 2700.3100 Definitions

Subpart 1. Charter policy.

"Charter policy" is that form of life insurance policy, usually issued by a newly organized company, which is sold on the basis that its availability will be limited to a specific predetermined number of units of a fixed dollar amount, and which generally provides that the policyholder shall participate in the earnings resulting from either the participating policies or the nonparticipating policies sold by the company, or perhaps both. The prospective purchaser is led to believe that he or she will receive a special advantage in any future distribution of earnings, profits, dividends, or abatement of premium not available to those persons holding other types of policies issued by the company.

Subp. 2. Guaranteed annual endowment.

A "guaranteed annual endowment" is that form of life insurance policy containing a series of pure guaranteed annual endowments evidenced by coupons, passbooks, or similar devices generally identified with investment or banking operations.

Subp. 3. Lending institutions.

For the purpose of part 2700.3200, subpart 10, the term "lending institutions" shall include:

A. persons, firms, associations, or corporations engaged in the business of loaning moneys for the purchase of property and for any other purpose that involves real or personal property as security; and

B. persons, firms, associations, or corporations who act as agents for the organizations defined in item A.

Subp. 4. Person.

For the purpose of part 2700.3200, subparts 2, 3, and 6, "person" shall have the same meaning as in Minnesota Statutes, section 72A.18, subdivision 2.

Subp. 5. Premium financing plan.

"Premium financing plan" is any plan or program arranged by a licensed life insurance agent in connection with the purchase of an individual life insurance policy, annuity, or endowment contract issued for delivery within this state, pursuant to which one or more premiums on such policy are to be paid in full or in part through credit, except the extension of credit for not more than 90 days to an individual who is at least 21 years of age.

Subp. 6. Profit-sharing policy.

A "profit-sharing policy" is that form of life insurance policy that contains provisions representing or tending to create the understanding that the policyholder will be eligible to participate, with a special advantage not available to the persons holding other types of policies issued by the same company, in any future distribution of general corporate profits, as distinguished from a refund of the excess premiums paid by that policyholder.

Subp. 7. Risk.

For the purpose of part 2700.3200, subpart 10, "risk" means the potential loss covered by a policy of insurance.

History

Statutory Authority: MS s 72A.19
History: 17 SR 1279

Minn. R. 2700.3200 Unfair and Deceptive Practices

Subpart 1. Definition.

Acts or practices in subparts 2 to 10 are hereby specifically defined as "unfair and deceptive acts or practices in the business of insurance."

Subp. 2. Automatic enrollment.

It is unfair and deceptive:

A. for a person to render a billing statement to or otherwise attempt to collect premiums from a resident of Minnesota, for any insurance coverage that is in addition to or greater than that already in force, until and unless the resident has expressly given affirmative consent, oral or written, to such insurance coverage. This applies to any person whether or not the person has had, or presently has, any insurance in force for the resident from whom an attempt is made to collect premiums. This item shall not apply to:

B. for a person to render a billing statement to or otherwise attempt to collect premiums from a resident of Minnesota for any credit life insurance or credit accident and health insurance (as those terms are defined by Minnesota Statutes, section 62B.02, subdivisions 2 and 3 as amended) until and unless the debtor (as that term is defined in Minnesota Statutes, section 62B.02, subdivision 5, as amended) has expressly given affirmative consent, oral or written, to such insurance coverage. Once a debtor becomes protected either by credit life or credit accident and health insurance, or both, the premium to be paid by that debtor shall not be altered until and unless the debtor, subsequent to becoming protected by that insurance, has given prior written approval to continuing to be insured at the altered premium, unless the extent of the coverage remains unchanged. A reduction in coverage without a reduction in the premium rate will be deemed an altered premium.

Subp. 3. Premium financing.

It is unfair and deceptive for a premium financing plan to be used unless the purchaser is furnished with a copy of a clear statement of the relevant details of the credit transaction on or before the later of the date on which said premium financing plan is to become operative; or the date the policy is delivered, unless such statement is dated and contains the following:

A. the name and address of the agent and the company proposing to issue the life insurance policy, annuity, or endowment contract and the type of said policy or contract;

B. the annual premium (or total or periodic premiums per year) for said policy or contract;

C. the amount of said premiums to be financed for each year of premium financing plan;

D. the amount of charges other than principal and interest, each such charge to be labeled and stated separately;

E. the amounts and due dates of payments;

F. the name and address of the person or firm to which such payments are to be made; and

G. the signatures of the purchaser and of the insurance agent or other representative of the insurer. The provisions of this subpart do not apply to any financing of the premium for decreasing or level credit life insurance or credit accident and health insurance.

Subp. 4. Policy name or title.

It is unfair and deceptive for any insurance company, insurance agent, or company representative to deliver within this state, or issue for delivery within this state, any individual policy of life insurance without the use of the words "life insurance" on its name or title or the use of other language clearly indicating that the policy is a policy of life insurance, annuity, or an endowment contract.

Subp. 5. Certain terms.

It is unfair and deceptive to use the terms "investment," "investment plan," "expansion plan," "profit," "profit-sharing," and other similar terms in connection with life insurance policies, annuities, or endowment contracts in a context or under such circumstances or conditions as to have a capacity or tendency to mislead a purchaser or prospective purchaser of such policy or contract to believe that the purchaser or prospective purchaser will receive, or that it is possible that he or she will receive, something other than a life insurance policy, an annuity, or an endowment contract or some benefits not provided in the policy or contract or some benefit not available to other persons of the same class and equal expectation of life.

Subp. 6. Sales practices.

It is unfair and deceptive for any person within this state to:

A. make any statement or reference relating to the growth of the life insurance industry or to the tax status of life insurance companies in connection with any solicitation for life insurance, annuities, or endowment contracts in a context that could reasonably be understood to interest a prospect in the purchase of shares of stock in an insurance company rather than in the purchase of a life insurance policy, an annuity, or an endowment contract;

B. make any statement that reasonably gives rise to the inference that an insured or a prospective insured will enjoy a status common to a stockholder in the insurance company or will acquire a stock ownership interest in the insurance company;

C. make any reference to or statement concerning an insurance company's "investment department," "insured investment department," or similar terminology in such a manner as to imply that the life insurance policy, annuity, or endowment contract was sold or issued by the investment department of the life insurance company;

D. make any statement or reference that would reasonably tend to imply that by purchasing a life insurance policy, annuity, or endowment contract the purchaser or prospective purchaser will become a member of a limited group of persons who may receive special advantages from the company or favored treatment in the payment of dividends, unless such benefits are specifically provided in the policy or contract (this item has no relation or applicability to policies or contracts under which insured persons of one class of risk may receive dividends at a higher rate than persons of another class of risk);

E. state or imply that only a limited number of persons, or a limited class of persons, will be eligible to buy a particular kind of life insurance policy, annuity, or endowment contract, unless such limitation can be verified by the underwriting practices of the insurance company;

F. state or imply that policyholders or contract holders who are said to act as centers of influence for an insurance company will share, because of so acting, in the company's surplus earnings in some manner not available to other policyholders or contract holders who are otherwise in the same class;

G. describe or refer to premium payments in language that states that the payment is a "deposit" unless:

H. provide any illustrations or projection of future dividends on any policy or contract unless:

I. use the words "dividends," "cash dividends," "surplus," or similar phrases in such a manner as to state or imply that the payment of dividends is guaranteed or certain to occur;

J. state or imply that a purchaser of a life insurance policy, an annuity other than a contract on a variable basis, or an endowment contract will share in a stated percentage or portion of the earnings of the insurance company (nothing in this item is intended to prohibit a representation that a holder of a participating policy or contract will participate in the share of the divisible surplus, if any, apportioned to the policy or contract by the insurance company);

K. make any statement or imply that projected dividends under a participating policy or contract will be or can be sufficient at any time to assure the receipt of benefits, such as a paid up policy or contract, without the further payment of premiums, unless the statement is accompanied by an adequate explanation as to what benefits or coverage would be provided or discontinued at such time, and the conditions under which this would occur;

L. state that the insured is guaranteed certain benefits if the policy or contract is allowed to lapse without making an explanation of the nonforfeiture benefits;

M. describe or advertise a life insurance policy, an annuity, an endowment contract or premium payments therefor, except contracts on a variable basis, in terms of "units of participation," unless accompanied by other language clearly indicating the reference to a policy or contract or to premium payments, as the case may be;

N. include in sales kits and prepared sales presentations proposed answers to be used in response to a prospect's questions as to whether a life insurance policy, an annuity, or an endowment contract is being sold, which are designed to avoid a clear and unequivocal statement that life insurance, an annuity, or endowment contract is the subject matter of the solicitation;

O. display in any manner to a prospective policyholder any material that includes illustrations, using dollar amounts, in connection with the proposed sale of a life insurance policy, an annuity, or endowment contract, unless the material clearly identifies the source of the dollar amounts and the subject to which such amount pertains;

P. make any general statement that insurance companies make a profit as a result of policy lapses or surrenders;

Q. make unfair or misleading comparisons to the past experience of other life insurance companies as a means of projecting possible experience of the soliciting company;

R. represent pure annual endowment benefits as earnings on premiums invested, or represent that a pure annual endowment benefit in a policy is other than a guaranteed benefit for which a premium is being paid by the policyholder;

S. state that a policy or contract contains features which are not found in other life insurance policies, annuities, or endowment contracts, unless that be true;

T. represent an option to purchase life insurance in the future in such a manner that the policyholder might reasonably infer that instead of merely acquiring an option, the policyholder is purchasing present benefits that would result in a payment to the beneficiary in the event of the death of the policyholder;

U. make reference to a policy of life insurance, an annuity, or an endowment contract in such a manner as to materially misrepresent the true nature of the policy or contract; or

V. as a competitive or twisting device, inform any policyholder or prospective policyholder that any insurance company was required to change a policy or contract form or related material to comply with the provisions of this rule.

Subp. 7. Guaranteed annual endowments.

It is unfair and misleading to issue a guaranteed annual endowment policy or any other policy that is essentially a coupon policy.

Subp. 8. Charter policies.

It is unfair and misleading to issue any form of a charter policy, whether heretofore approved or not.

Subp. 9. Profit-sharing policies.

It is unfair and misleading to issue any form of a profit-sharing policy, annuity, or endowment contract whether heretofore approved or not. Provided, however, nothing in this subpart is intended to apply to contracts on a variable basis to the extent that they are permitted under the laws of this state.

Subp. 10. Disapproval of insurer or policy.

It is unfair and misleading for a lending institution to disapprove an insurer or policy of insurance, insuring or covering property, real or personal, which serves as security for loan, or the purpose of which is the object of the institution's financing loan, where such disapproval:

A. has the effect of encouraging the insured to carry insurance with an insurer of the institution's choice;

B. is based on standards unrelated to insurer's ability to assume the risk or authorization to write the risk; or

C. is based on a rating requirement disproportionate to the size of the risk.

Subp. 11. Discrimination because of blindness or partial blindness.

It is unfair and deceptive to discriminate between individuals of the same class by refusing to insure, or refusing to continue to insure, or limiting the amount, extent, or kind of coverage available to an individual, or charging an individual a different rate for the same coverage, solely because of blindness or partial blindness.

With respect to all other conditions, including the underlying cause of the blindness or partial blindness, persons who are blind or partially blind are subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are sighted persons.

Refusal to insure includes denial by an insurer of disability insurance coverage on the grounds that the policy defines "disability" as being presumed in the event that the insured loses his or her eyesight.

However, an insurer may exclude from coverage disabilities, consisting solely of blindness or partial blindness when the condition existed at the time the policy was issued.

History

Statutory Authority: MS s 45.023; 72A.19
History: 10 SR 1499; 17 SR 1279

Minn. R. 2700.3300 Penalties

A violation of any of the provisions of parts 2700.3100 to 2700.3400 by whatever means, including but not being limited to the use of certain policies or contracts or presentations, whether involving language or illustrations disseminated by means of sales kits, jackets or covers, letters, personal confrontations, visual aids, or other media, shall be deemed to be a violation of the insurance laws of this state, and shall subject any person, firm, or corporation so violating any provision of parts 2700.3100 to 2700.3400 to the penalty provided by Minnesota Statutes, section 72A.09, as amended, in addition to any other penalty provided by law.

History

Statutory Authority: MS s 72A.19

Minn. R. 2700.3400 Policies and Contracts in Effect March 1969

Parts 2700.3100 to 2700.3400 do not affect the validity of any life insurance policy, annuity, or endowment contract in force on the effective date hereof. However, the previous approval by this division of any form of policy or contract prohibited by these rules is hereby withdrawn effective March 1, 1969, and no such policy or contract shall be sold after that date.

History

Statutory Authority: MS s 72A.19

Chapter 2705 DATA SERVICE ORGANIZATIONS

Minn. R. 2705.0200 Definitions

Subpart 1. Scope.

For the purposes of this chapter, the terms defined in this part have the meanings given them.

Subp. 2. Classification plan; classification.

"Classification plan" or "classification" means the same as it is defined in Minnesota Statutes, section 79.52, subdivision 4.

Subp. 3. Commissioner.

"Commissioner" means the commissioner of commerce.

Subp. 4. Data service organization; organization.

"Data service organization" or "organization" means the same as it is defined in Minnesota Statutes, section 79.52, subdivision 3.

Subp. 5. Insurer.

"Insurer" means the same as it is defined in Minnesota Statutes, section 79.52, subdivision 13.

Subp. 6. Pure premium.

"Pure premium" means that portion of a premium, as defined in Minnesota Statutes, section 79.52, subdivision 7, designated for claim payments.

Subp. 7. Pure premium base rate schedule.

A "pure premium base rate schedule" is a set of pure premium rates that include provisions for trend, ultimate loss development, and loss adjustment expense.

Subp. 8. Pure premium rate.

"Pure premium rate" means that portion of a rate designated for claim payments.

Subp. 9. Pure premium relativities.

"Pure premium relativities" means the mathematical relationship of pure premium rates for each reporting classification one to another, to a base class or classes, or to some common index or indices.

Subp. 10. Rates.

"Rates" means the same as it is defined in Minnesota Statutes, section 79.52, subdivision 5.

Subp. 11. Rating association.

"Rating association" means the Minnesota Workers' Compensation Insurers Association, Inc.

Subp. 12. Rating plan.

"Rating plan" means the same as it is defined in Minnesota Statutes, section 79.52, subdivision 15.

History

Statutory Authority: MS s 45.023; 79.51; 79.55 to 79.61
History: 8 SR 2273; 31 SR 323; 46 SR 1177

Minn. R. 2705.1000 Application Information

A data service organization shall apply to the commissioner for a license. An application to be a data service organization shall include all information required by Minnesota Statutes, section 79.62. In addition, the application shall include:

A. the organization's plan of operation including:

B. a plan for data collection and analysis, and other activities of the data service organization, including:

History

Statutory Authority: MS s 45.023; 79.51; 79.55 to 79.61
History: 8 SR 2273; 31 SR 323

Minn. R. 2705.1100 Manuals

A. The rating association or any other licensed data service organization must file and maintain the following manuals:

B. The commissioner shall approve a uniform classification system and a uniform statistical plan and manual rules related to the classification system and the statistical plan.

C. The commissioner shall disapprove changes in the manuals which would substantially lessen competition or which would lead to premiums which are unfairly discriminatory.

D. Every workers' compensation insurer shall report its data in accordance with the uniform classification system, the unit statistical plan manual, and the related rules in the basic manual.

E. Insurers may use the premium factors, the experience rating plan, the retrospective rating plans, and other filed manual rules developed by the rating association. They may also develop and use their own factors and plans.

History

Statutory Authority: MS s 45.023; 79.51
History: 31 SR 323

Minn. R. 2705.1150 Amendments to Application

Subpart 1. Commissioner notified.

A data service organization which has applied for a license must notify the commissioner of every change in the plan of operation on which its application was based. Any amendment to a document filed under this paragraph is effective 30 days after filing unless disapproved by the commissioner.

Subp. 2. Changes filed.

A data service organization must file with the commissioner every proposed change in the uniform classification system, the uniform statistical plan, or manuals. Any change must be approved by the commissioner who shall also establish an effective date for the change. If a change is ordered by the commissioner, it must be used by every workers' compensation insurer in reporting data to the data service organization of which it is a member.

History

Statutory Authority: MS s 45.023; 79.51; 79.55 to 79.61
History: 8 SR 2273; 31 SR 323

Minn. R. 2705.1200 Granting of License

A. The commissioner shall issue a license if the commissioner finds that:

B. The commissioner shall issue a notice of the acceptance or rejection of the application for licensure as a data service organization within 90 days of receipt of a complete application.

History

Statutory Authority: MS s 79.51

Minn. R. 2705.1600 Data Service Organizations Ratemaking Reports

Subpart 1.

[Repealed, 31 SR 323]

Subp. 2. Outlines and draft.

Licensed data service organizations must submit an outline of their annual ratemaking report to the commissioner for comment by July 1 of each year. A draft of the report should be submitted to the commissioner for comment by October 1. The final ratemaking report must be submitted no later than January 1 of the succeeding year. Interim reports on the effect of changes in the law on rates may be submitted at any time during a year.

Subp. 3. Annual reports.

Licensed data service organizations shall make yearly ratemaking reports to the commissioner. Insurers may not make reference to a report in their filings until it has been filed with the commissioner.

History

Statutory Authority: MS s 45.023; 79.51
History: 31 SR 323

Minn. R. 2705.1700 Contents of Ratemaking Report

Subpart 1. Statutory and other data.

A ratemaking report shall meet all requirements of Minnesota Statutes, sections 79.55, subdivision 8, and 79.61, subdivision 1, clause (c) and, in addition, may contain information useful to data service organization members regarding factors pertinent to Minnesota workers' compensation business such as legislative concerns, Workers' Compensation Reinsurance Association operations, loss control programs, and programs developed by insurers that may be of interest and applicability to workers' compensation insurers.

Subp. 2. Minimum content.

A ratemaking report shall include:

A. a compilation of financial data collected under Minnesota Statutes, section 79.61, reconcilable to that reported by insureds in the insureds' annual financial statements to the commissioner;

B. a compilation of reporting classification data collected under Minnesota Statutes, section 79.61;

C. an analysis and calculation of factors to adjust reported premium and loss data to an ultimate development level;

D. a calculation of factors to reflect any benefit level changes mandated by statute or by the courts;

E. the development of a schedule of pure premium base rates using the data reported by insurers and the factors calculated in item C;

F. a schedule of pure premium relativities, based on the pure premium base rate schedule;

G. an analysis and calculation of factors to adjust loss data for loss adjustment expenses;

H. an analysis and calculation of trended data to reflect future conditions;

I. a calculation of any other quantitative factor or modifications and a description of any subjective considerations reflected in the determination of pure premiums in a manner so as to permit insurers to evaluate and modify the factors and considerations based on their own interpretations of underlying data; and

J. a calculation of any other quantitative factors required to maintain advisory discount factors as defined in Minnesota Statutes, section 79.52, subdivision 8 and advisory merit rating plans as defined in Minnesota Statutes, section 79.52, subdivision 9.

Subp. 3. Dissemination.

The ratemaking report shall be disseminated to all members of the data service organization. In addition, the data service organization and the commissioner shall each make a copy of the ratemaking report available for public inspection during normal working hours.

History

Statutory Authority: MS s 45.023; 79.51; 79.55 to 79.61
History: 8 SR 2273; 31 SR 323; 46 SR 1177

Minn. R. 2705.1800 Use of Ratemaking Report

A. After the ratemaking report has been filed with the commissioner, insurers may develop and use rates based upon the pure premium base rates contained in the report. Insurers may also develop and use rates based upon any reasonable factors which are not inconsistent with Minnesota Statutes, sections 79.50 to 79.62.

B. If an insurer uses the pure premium base rates contained in the ratemaking report, then the insurer may calculate rates by:

C. Insurers may adjust premiums by application of discount factors as defined in Minnesota Statutes, section 79.52, subdivision 8, and merit rating as defined in Minnesota Statutes, section 79.52, subdivision 9. Insurers may use their own filed and approved plans or plans developed by a data service organization in which they maintain membership.

D. An insurer shall not refuse to write insurance for an employer solely because:

E. All data and calculations used to calculate rates from the pure premium base rate schedule shall be clearly documented.

History

Statutory Authority: MS s 45.023; 79.51; 79.55 to 79.61
History: 8 SR 2273; 31 SR 323

Minn. R. 2705.1900 Review by Commissioner

Subpart 1. Nonconforming ratemaking report.

If the commissioner finds upon review that the ratemaking report is not as prescribed, then the commissioner shall issue an order specifying in which respects it fails to meet the requirements of Minnesota Statutes, sections 79.55, subdivision 8, and 79.61 and parts 2705.1600 to 2705.1900, and stating a reasonable period within which the defects shall be corrected.

Subp. 2. Hearing.

The data service organization shall be given a hearing to review the commissioner's order upon a written request made within 30 days after the order.

History

Statutory Authority: MS s 45.023; 79.51; 79.55 to 79.61
History: 8 SR 2273; 31 SR 323

Minn. R. 2705.2000 Uniform Classification and Statistical Plan

Subpart 1. Commissioner approves.

The commissioner shall approve a uniform classification system, a uniform statistical plan, and manual rules related to the classification system and the statistical plan. Every workers' compensation insurer must report its data in accordance with the approved uniform plans and rules.

Subp. 2. Manual rules.

No insurer shall agree with any other insurer or with any data service organization to adhere to manual rules which are not reasonably related to the recording and reporting of data pursuant to the uniform classification system or the uniform statistical plan.

History

Statutory Authority: MS s 79.55 to 79.61
History: 8 SR 2273

Minn. R. 2705.2100 Amendments to Uniform Classification or Statistical Plans

Any data service organization may file with the commissioner a petition to change the uniform classification system or the uniform statistical plan. Any change must be approved by the commissioner who shall also establish an effective date for the change. If a change is ordered by the commissioner, it must be used by every workers' compensation insurer in reporting data to the data service organization of which it is a member.

History

Statutory Authority: MS s 79.55 to 79.61
History: 8 SR 2273

Minn. R. 2705.2200 Insurer Variations

An insurer may develop variations of the uniform classification system upon which a rate may be made. A variation must be filed with the commissioner 60 days prior to its use. The commissioner shall disapprove variations if the insurer fails to demonstrate that the data produced by the variation can be reported consistent with the uniform statistical plan and classification system.

History

Statutory Authority: MS s 45.023; 79.51; 79.55 to 79.61
History: 8 SR 2273; 31 SR 323

Minn. R. 2705.2300 [Repealed, 31 SR 323]

[Repealed, 31 SR 323]

Minn. R. 2705.2400 [Repealed, 31 SR 323]

[Repealed, 31 SR 323]

Minn. R. 2705.2500 Rating Criteria

Subpart 1. Determining compliance.

In determining whether rates and rating plans comply with Minnesota Statutes, section 79.55 and part 2705.1800, the commissioner shall consider the criteria in subparts 2 to 4.

Subp. 2. Loss experience and other rate factors.

The commissioner shall consider past and prospective loss and expense experience within and outside of Minnesota, catastrophe hazards and contingencies, events or trends within and outside of the state, loadings for leveling premium rates over time or for dividends or savings to be allowed or returned by insurers to their policyholders, members, or subscribers, and any other relevant factors if they are enumerated in the commissioner's eventual determination.

Subp. 3. Expenses.

The expense provisions included in the rates to be used by an insurer shall reflect the operating methods of the insurer and, so far as it is credible, its own actual and anticipated expense experience.

Subp. 4. Profits.

The rates may contain provision for contingencies and an allowance permitting a reasonable profit. In determining the reasonableness of profit, consideration shall be given to all investment income attributable to premiums and the reserves associated with those premiums.

History

Statutory Authority: MS s 79.55 to 79.61
History: 8 SR 2273

Minn. R. 2705.2600 Experience Rating Plans

An insurer may use the experience rating plan developed by the data service organization of which it is a member. An insurer may also develop and use its own experience rating plan. Any experience rating plan is subject to the conditions in parts 2705.2800 and 2705.2900.

History

Statutory Authority: MS s 79.55 to 79.61
History: 8 SR 2273

Minn. R. 2705.2700 [Repealed, 31 SR 323]

[Repealed, 31 SR 323]

Minn. R. 2705.2800 Loss Information

Each insurer or the data service organization to which it belongs must annually provide the following loss information to each insured eligible for experience rating:

A. the insured's experience modification factor;

B. the payrolls and incurred losses used to calculate the experience modification factor; and

C. whom to contact if the insured desires more information.

History

Statutory Authority: MS s 79.55 to 79.61
History: 8 SR 2273

Minn. R. 2705.2900 Forms

The forms for providing this information may be developed by either the insurer or by the data service organization to which the insurer belongs. The forms must be filed as part of the experience rating plan.

History

Statutory Authority: MS s 79.55 to 79.61
History: 8 SR 2273

Minn. R. 2705.3000 Schedule Rating Plans

The maximum debit which can be developed by schedule rating shall be determined by the commissioner and shall be no more than 25 percent of manual premium, after application of any experience modification.

History

Statutory Authority: MS s 45.023; 79.51; 79.55 to 79.61
History: 8 SR 2273; 31 SR 323

Minn. R. 2705.3100 [Repealed, 31 SR 323]

[Repealed, 31 SR 323]

Minn. R. 2705.3200 Policy Forms

Workers' compensation insurance must be written using policy forms filed by the data service organization of which the insurer is a member except that if the insurer files a rating plan requiring a policy provision or endorsement for which the data service organization has made no usable filing, then the insurer may file its own policy forms needed to implement its rating plans.

History

Statutory Authority: MS s 79.55 to 79.61
History: 8 SR 2273

Chapter 2710 ANNUAL AUDITS

History

Statutory Authority: MS s 45.023; 61A.25
History: 37 SR 1455

Minn. R. 2711.0210 Definitions

Subpart 1. Scope.

For purposes of this chapter, the terms in this part have the meanings given them.

Subp. 2. Actuarial opinion.

"Actuarial opinion" means the opinion of an appointed actuary regarding the adequacy of the reserves and related actuarial items based on an asset adequacy analysis according to part 2711.0230 and with applicable Actuarial Standards of Practice.

Subp. 3. Actuarial Standards Board.

"Actuarial Standards Board" means the board established by the American Academy of Actuaries to develop and adopt standards of actuarial practice.

Subp. 4. Annual statement.

"Annual statement" means the statement required by Minnesota Statutes, section 60A.13, of the insurance law to be filed by the company with the commissioner annually.

Subp. 5. Appointed actuary.

"Appointed actuary" means an individual who is appointed or retained in accordance with part 2711.0220, subpart 3, to provide the actuarial opinion and supporting memorandum as required by Minnesota Statutes, section 61A.25, subdivision 2a.

Subp. 6. Asset adequacy analysis.

"Asset adequacy analysis" means an analysis that meets the standards and other requirements in part 2711.0220, subpart 4.

Subp. 7. Commissioner.

"Commissioner" means the commissioner of commerce.

Subp. 8. Company.

"Company" means a life insurance company, fraternal benefit society, or reinsurer subject to the provisions of this chapter.

Subp. 9. Qualified actuary.

"Qualified actuary" means an individual who meets the requirements in part 2711.0220, subpart 2.

History

Statutory Authority: MS s 45.023; 61A.25
History: 37 SR 1455

Minn. R. 2711.0220 General Requirements

Subpart 1. Submission of Statement of Actuarial Opinion.

A. There is to be included on or attached to page 1 of the annual statement for each year the statement of an appointed actuary, entitled, "Statement of Actuarial Opinion," setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with part 2711.0230.

B. Upon written request by the company, the commissioner may grant an extension of the date for submission of the Statement of Actuarial Opinion.

Subp. 2. Qualified actuary.

A qualified actuary is an individual who:

A. is a member in good standing of the American Academy of Actuaries;

B. is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements;

C. is familiar with the valuation requirements applicable to life and health insurance companies;

D. has not been found by the commissioner, or if so found has subsequently been reinstated as a qualified actuary, following appropriate notice and hearing, to have:

E. has not failed to notify the commissioner of any action taken by any commissioner of any other state similar to that under item D.

Subp. 3. Appointed actuary.

An appointed actuary is a qualified actuary who is appointed or retained by the board of directors to prepare the Statement of Actuarial Opinion required by this chapter. The company shall give the commissioner timely written notice of the name and title of each person appointed or retained by the company as an appointed actuary and shall state in the notice that the person meets the requirements in subpart 2. In the case of a consulting actuary, the company shall include the name of the firm in the notice. Once notice is furnished, no further notice is required with respect to this person, provided that the company gives the commissioner timely written notice in the event the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements in subpart 2. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice must so state and give the reasons for replacement.

Subp. 4. Standards for asset adequacy analysis.

The asset adequacy analysis required by this chapter:

A. must conform to the Standards of Practice as adopted from time to time by the Actuarial Standards Board and on any additional standards under this chapter, which standards are to form the basis of the Statement of Actuarial Opinion in accordance with this chapter; and

B. must be based on methods of analysis as are deemed appropriate for such purposes by the Actuarial Standards Board.

Subp. 5. Liabilities to be covered.

A. Under authority of Minnesota Statutes, section 61A.25, subdivision 2a, the Statement of Actuarial Opinion applies to all in force business on the statement date, whether directly issued or assumed, regardless of when or where issued. For example, reserves of Exhibits 5, 6, and 7, and claim liabilities in Exhibit 8, Part 1, and equivalent items in the separate account statement or statements.

B. If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods in Minnesota Statutes, section 61A.25, the company shall establish the additional reserve.

C. Additional reserves established under item B and deemed not necessary in subsequent years may be released. Any amounts released must be disclosed in the actuarial opinion for the applicable year. The release of reserves would not be deemed an adoption of a lower standard of valuation.

History

Statutory Authority: MS s 45.023; 61A.25
History: 37 SR 1455

Minn. R. 2711.0230 Statement of Actuarial Opinion Based on an Asset Adequacy Analysis

Subpart 1. General description.

The Statement of Actuarial Opinion submitted in accordance with this part consists of:

A. a paragraph identifying the appointed actuary and the actuary's qualifications;

B. a scope paragraph identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items that have been analyzed for asset adequacy and the method of analysis, and identifying the reserves and related actuarial items covered by the opinion that have not been so analyzed;

C. a reliance paragraph describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, for example, anticipated cash flows from currently owned assets, including variation in cash flows according to economic scenarios, supported by a statement of each expert in the form prescribed by subpart 5;

D. an opinion paragraph expressing the appointed actuary's opinion with respect to the adequacy of the supporting assets to mature the liabilities; and

E. one or more additional paragraphs as needed in individual company cases as follows:

Subp. 2. Recommended language.

Items A to F are included in the Statement of Actuarial Opinion in accordance with this part. Language is that which in typical circumstances should be included in a Statement of Actuarial Opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary should use language that clearly expresses professional judgment. However, in any event the opinion must retain all pertinent aspects of the language provided in this part.

A. The opening paragraph should generally indicate the appointed actuary's relationship to the company and qualifications to sign the opinion. For a company actuary, the opening paragraph of the actuarial opinion should include a statement such as: "I, [name], am [title] of [insurance company name] and a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of the insurer to render this opinion as stated in the letter to the commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies." For a consulting actuary, the opening paragraph should include a statement such as: "I, [name], a member of the American Academy of Actuaries, am associated with the firm of [name of consulting firm]. I have been appointed by, or by the authority of, the Board of Directors of [name of company] to render this opinion as stated in the letter to the commissioner dated [insert date]. I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies."

B. The scope paragraph should include a statement such as: "I have examined the actuarial assumptions and actuarial methods used in determining the reserves and related actuarial items listed below, as shown in the annual statement of the company, as prepared for filing with the state regulatory officials, as of December 31, 20... Tabulated below are those reserves and related actuarial items that have been subjected to asset adequacy analysis." Notes: (a) The additional actuarial reserves are the reserves established under part 2711.0220, subpart 5, item B. (b) The appointed actuary should indicate the method of analysis, determined in accordance with the standards for asset adequacy analysis referred to in part 2711.0220, subpart 4, by means of symbols that should be defined in footnotes to the table. (c) Allocated amount of Asset Valuation Reserve (AVR).

C. If the appointed actuary has relied on other experts to develop certain portions of the analysis, the reliance paragraph should include a statement such as: "I have relied on [name], [title] for [e.g., "anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios" or "certain critical aspects of the analysis performed in conjunction with forming my opinion"], as certified in the attached statement. I have reviewed the information relied upon for reasonableness." A statement of reliance on other experts should be accompanied by a statement by each of the experts in the form prescribed by part 2711.0230, subpart 5.

D. If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph should include a statement such as: "My examination included a review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and tests of the actuarial calculations I considered necessary. I also reconciled the underlying basic asset and liability records to [exhibits and schedules listed as applicable] of the company's current annual statement."

E. If the appointed actuary has not examined the underlying records, but has relied upon data, for example, listings and summaries of policies in force or asset records, prepared by the company, the reliance paragraph should include a statement such as: "In forming my opinion on [specify types of reserves], I relied upon data prepared by [name and title of company officer certifying in force records or other data] as certified in the attached statements. I evaluated that data for reasonableness and consistency. I also reconciled that data to [exhibits and schedules to be listed as applicable] of the company's current annual statement. In other respects, my examination included review of the actuarial assumptions and actuarial methods used and tests of the calculations I considered necessary." The section must be accompanied by a statement by each person relied upon in the form prescribed by subpart 5.

F. The opinion paragraph should include a statement such as: "In my opinion the reserves and related actuarial values concerning the statement items identified above:

Subp. 3. Assumptions for new issues.

The adoption for new issues or new claims or other new liabilities of an actuarial assumption that differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of this part.

Subp. 4. Adverse opinions.

If the appointed actuary is unable to form an opinion, then the actuary shall refuse to issue a Statement of Actuarial Opinion. If the appointed actuary's opinion is adverse or qualified, then the actuary shall issue an adverse or qualified actuarial opinion explicitly stating the reasons for the opinion. This statement should follow the scope paragraph and precede the opinion paragraph.

Subp. 5. Reliance on information furnished by other persons.

If the appointed actuary relies on the certification of others on matters concerning the accuracy or completeness of any data underlying the actuarial opinion, or the appropriateness of any other information used by the appointed actuary in forming the actuarial opinion, the actuarial opinion should indicate the persons the actuary is relying upon and a precise identification of the items subject to reliance. In addition, the persons on whom the appointed actuary relies shall provide a certification that precisely identifies the items on which the person is providing information and a statement as to the accuracy, completeness, or reasonableness, as applicable, of the items. This certification must include the signature, title, company, address, and telephone number of the person rendering the certification, as well as the date on which it is signed.

Subp. 6. Alternate option.

A. Minnesota Statutes, section 61A.25, gives the commissioner broad authority to accept the valuation of a foreign insurer when that valuation meets the requirements applicable to a company domiciled in this state in the aggregate. As an alternative to the requirements of subpart 2, item F, subitem (3), the commissioner may make one or more of the following additional approaches available to the opining actuary:

B. Notwithstanding item A, the commissioner may reject an opinion based on the laws and regulations of the state of domicile and require an opinion based on the laws of this state. If a company is unable to provide the opinion within 60 days of the request or other period of time determined by the commissioner after consultation with the company, the commissioner may contract an independent actuary at the company's expense to prepare and file the opinion.

History

Statutory Authority: MS s 45.023; 61A.25
History: 37 SR 1455

Minn. R. 2711.0240 Description of Actuarial Memorandum Including an Asset Adequacy Analysis and Regulatory Asset Adequacy Issues Summary

Subpart 1. Generally.

A. In accordance with Minnesota Statutes, section 61A.25, subdivision 2a, the appointed actuary shall prepare a memorandum to the company describing the analysis done in support of the actuary's opinion regarding the reserves. The memorandum must be made available for examination by the commissioner upon request but must be returned to the company after examination and must not be considered a record of the Department of Commerce or subject to automatic filing with the commissioner.

B. In preparing the memorandum, the appointed actuary may rely on, and include as a part of the actuary's own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of part 2711.0220, subpart 2, with respect to the areas covered in such memoranda, and so state in the memoranda.

C. If the commissioner requests a memorandum and no memorandum exists or if the commissioner finds that the analysis described in the memorandum fails to meet the standards of the Actuarial Standards Board or the standards and requirements of this chapter, the commissioner may designate a qualified actuary to review the opinion and prepare such supporting memorandum as is required for review. The reasonable and necessary expense of the independent review must be paid by the company but must be directed and controlled by the commissioner.

D. The reviewing actuary has the same status as an examiner for purposes of obtaining data from the company and the work papers and documentation of the reviewing actuary must be retained by the commissioner; provided, however, that any information provided by the company to the reviewing actuary and included in the work papers is considered material provided by the company to the commissioner and must be kept confidential to the same extent as is prescribed by law with respect to other material provided by the company to the commissioner pursuant to the statutes governing this chapter. The reviewing actuary must not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer pursuant to this chapter for any one of the current year or the preceding three years.

E. In accordance with Minnesota Statutes, section 61A.25, subdivision 2a, the appointed actuary shall prepare a regulatory asset adequacy issues summary, the contents of which are specified in subpart 3. The regulatory asset adequacy issues summary must be submitted no later than March 15 of the year following the year for which a Statement of Actuarial Opinion based on asset adequacy is required. The regulatory asset adequacy issues summary is to be kept confidential to the same extent and under the same conditions as the actuarial memorandum.

Subp. 2. Details of the memorandum section documenting asset adequacy analysis.

When an actuarial opinion is provided, the memorandum must demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in part 2711.0220, subpart 4, and any additional standards under this chapter. It must specify:

A. for reserves:

B. for assets:

C. for the analysis basis:

D. summary of material changes in methods, procedures, or assumptions from prior year's asset adequacy analysis;

E. summary of results; and

F. conclusions.

Subp. 3. Details of the regulatory asset adequacy issues summary.

A. The regulatory asset adequacy issues summary must include:

B. The regulatory asset adequacy issues summary must contain the name of the company for which the regulatory asset adequacy issues summary is being supplied and must be signed and dated by the appointed actuary rendering the actuarial opinion.

Subp. 4. Conformity to standards of practice.

The memorandum must include a statement:

"Actuarial methods, considerations, and analyses used in the preparation of this memorandum conform to the appropriate Standards of Practice as promulgated by the Actuarial Standards Board, which standards form the basis for this memorandum."

Subp. 5. Use of assets supporting interest maintenance reserve and asset valuation reserve.

An appropriate allocation of assets in the amount of the interest maintenance reserve (IMR), whether positive or negative, shall be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the asset valuation reserve (AVR). The AVR assets may not be applied for any other risks with respect to reserve adequacy. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support.

The amount of the assets used for the AVR must be disclosed in the table of reserves and liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets must be disclosed in the memorandum.

Subp. 6. Required interest scenarios.

For the purpose of performing the asset adequacy analysis required by this chapter, the qualified actuary shall follow standards adopted by the Actuarial Standards Board; nevertheless, the appointed actuary must consider in the analysis the effect of at least the following interest rate scenarios:

A. level with no deviation;

B. uniformly increasing over ten years at one-half percent per year and then level;

C. uniformly increasing at one percent per year over five years and then uniformly decreasing at one percent per year to the original level at the end of ten years and then level;

D. an immediate increase of three percent and then level;

E. uniformly decreasing over ten years at one-half percent per year and then level;

F. uniformly decreasing at one percent per year over five years and then uniformly increasing at one percent per year to the original level at the end of ten years and then level; and

G. an immediate decrease of three percent and then level. For these and other scenarios which may be used, projected interest rates for a five-year treasury note need not be reduced beyond the point where such five-year treasury note yield would be at 50 percent of its initial level. The beginning interest rates may be based on interest rates for new investments as of the valuation date similar to recent investments allocated to support the product being tested or be based on an outside index, such as treasury yields, of assets of the appropriate length on a date close to the valuation date. Whatever method is used to determine the beginning yield curve and associated interest rates should be specifically defined. The beginning yield curve and associated interest rates should be consistent for all interest rate scenarios.

Subp. 7. Documentation.

The appointed actuary shall retain on file, for at least seven years, sufficient documentation so that it will be possible to determine the procedures followed, the analyses performed, the bases for assumptions, and the results obtained.

History

Statutory Authority: MS s 45.023; 61A.25
History: 37 SR 1455

Chapter 2715 DOMESTIC STOCK COMPANIES

Minn. R. 2715.4100 Definitions

Subpart 1. Scope.

When used herein, the terms defined in this part shall have the meanings given them.

Subp. 2. Act.

"Act" means Minnesota Statutes, section 60A.22, subdivision 2.

Subp. 3. Class.

"Class" means all securities of an insurer that are of substantially similar character and the holders of which enjoy substantially similar rights and privileges.

Subp. 4. Equity security.

"Equity security" means any stock or similar security; or any voting trust certificate or certificate of deposit for such a security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right.

Subp. 5. Insurer.

"Insurer" means any domestic stock insurance company, which shall include a domestic stock and mutual company as defined in Minnesota Statutes, sections 66A.36 to 66A.39, with an equity security subject to the provisions of Minnesota Statutes, section 60A.22 and not exempt thereunder.

Subp. 6. Officer.

"Officer" means a president, vice president, treasurer, actuary, secretary, controller, and any other person who performs for the insurer functions corresponding to those performed by the foregoing officers.

History

Statutory Authority: MS s 60A.22
History: L 2005 c 69 art 2 s 18

Minn. R. 2715.4200 Securities Held of Record

Subpart 1. Identified owner.

For the purpose of determining whether the equity securities of an insurer are held of record by 100 or more persons, securities shall be deemed to be "held of record" by each person who is identified as the owner of such securities on records of security holders maintained by or on behalf of the insurer, subject to the following:

A. In any case where the records of security holders have not been maintained in accordance with accepted practice, any additional person who would be identified as such an owner on such records if they had been maintained in accordance with accepted practice shall be included as a holder of record.

B. Securities identified as held of record by a corporation, a partnership, a trust whether or not the trustees are named, or other organization shall be included as so held by one person.

C. Securities identified as held of record by one or more persons as trustees, executors, guardians, custodians, or in other fiduciary capacities with respect to a single trust, estate, or account shall be included as held of record by one person.

D. Securities held by two or more persons as coowners shall be included as held by one person.

E. Each outstanding unregistered or bearer certificate shall be included as held of record by a separate person, except to the extent that the insurer can establish that, if such securities were registered, they would be held of record, under the provisions of this rule, by a lesser number of persons.

F. Securities registered in substantially similar names, where the insurer has reason to believe because of the address or other indications that such names represent the same person, may be included as held of record by one person.

Subp. 2. Attempts to circumvent.

Notwithstanding subpart 1:

A. Securities held, to the knowledge of the insurer, subject to a voting trust, deposit agreement, or similar arrangement shall be included as held of record by the record holders of the voting trust certificates, certificates of deposit, receipts, or similar evidences of interest in such securities; provided, however, that the insurer may rely in good faith on such information as is received in response to its request from a nonaffiliated insurer of the certificates or evidences of interest.

B. If the insurer knows or has reason to know that the form of holding securities of record is used primarily to circumvent the provisions of the act, the beneficial owners of such securities shall be deemed to be the record owners thereof.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.4300 Exempted Transactions

Any acquisition or disposition of any equity security by a director or officer of an insurer within six months prior to the date on which the act shall first become applicable with respect to the equity securities of such insurer shall not be subject to the operation of clause (2) of the act.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.4400 Filing Statements

Subpart 1. Forms A and B.

Initial statements of beneficial ownership of equity securities required by clause (1) of the act shall be filed on the form specified in form A, part 2715.6401. Statements of changes in such beneficial ownership required by clause (1) shall be filed on the form specified in form B, part 2715.6403. All such statements shall be prepared and filed in accordance with the requirements of the applicable form.

Subp. 2. Form B filing.

Any director or officer who is required to file a statement on form B with respect to any change in beneficial ownership of equity securities that occurs within six months after that person became a director or officer of the insurer, or within six months after the date on which the act shall become applicable with respect to the equity securities of such insurer, shall include in the first such statement the information called for by form B with respect to all changes in beneficial ownership of equity securities of such insurer which occurred within six months prior to the date of the changes which requires the filing of such statement.

Subp. 3. Termination.

Any person who has ceased to be a director or officer of an insurer that has equity securities with respect to which the act applies, or who is a director or officer of an insurer at the time it ceases to have any equity securities with respect to which the act applies, shall file a statement on form B with respect to any change in beneficial ownership of equity securities of such insurer that shall occur on or after the date on which that person ceased to be such director or officer or the date on which the insurer ceased to have any equity securities with respect to which the act applies, as the case may be, if such change shall occur within six months after any change in beneficial ownership of such securities prior to such date. The statement on form B shall be filed within ten days after the end of the month in which the reported change in beneficial ownership occurs.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.4500 Equity Security Ownership Over Ten Percent

Subpart 1. Class of security.

In determining, for the purpose of clause (1) of the act, whether a person is the beneficial owner, directly or indirectly, of more than ten percent of any class of any equity security, such class shall be deemed to consist of the total amount of such class outstanding, exclusive of any securities of such class held by or for the account of the insurer or a subsidiary of the insurer; except that for the purpose of determining percentage ownership of voting trust certificates or certificates of deposit for equity securities, the class of voting trust certificates or certificates of deposit shall be deemed to consist of the amount of voting trust certificates or certificates of deposit issuable with respect to the total amount of outstanding equity securities of the class which may be deposited under the voting trust agreement or deposit agreement in question, whether or not all of such outstanding securities have been so deposited. For the purpose of this part a person acting in good faith may rely on the information contained in the latest convention form statement filed with the commissioner with respect to the amount of securities of a class outstanding or in the case of voting trust certificates or certificates of deposit the amount thereof issuable.

Subp. 2. Ownership.

In determining for the purpose of clause (1) of the act whether a person is the beneficial owner, directly or indirectly, of more than ten percent of any class of equity securities, such person shall be deemed to be the beneficial owner of securities of such class that such person has the right to acquire through the exercise of presently exercisable options, warrants, or rights, or through the conversion of presently convertible securities. The securities subject to such options, warrants, rights, or conversion privileges held by a person shall be deemed to be outstanding for the purpose of computing, in accordance with subpart 1, the percentage of outstanding securities of the class owned by such person but shall not be deemed outstanding for the purpose of computing the percentage of the class owned by any other person. This subpart shall not be construed to relieve any person of any duty to comply with clause (1) of the act with respect to any equity securities consisting of options, warrants, rights, or convertible securities that are otherwise subject as a class to that clause of the act.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.4600 Disclaimer of Beneficial Ownership

Any person filing a statement may expressly declare therein that the filing of such statement shall not be construed as an admission that such person is, for the purpose of the act, the beneficial owner of any equity securities covered by the statement.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.4700 Exemptions from Clauses (1) and (2) of the Act

Subpart 1. Twelve-month exemption.

During the period of 12 months following their appointment and qualifications, securities held by the following persons shall be exempt from clauses (1) and (2) of the act:

A. executors or administrators of the estate of a decedent;

B. guardians or committees for an incompetent; and

C. receivers, trustees in bankruptcy, assignees for the benefit of creditors, conservators, liquidating agents, and other similar persons duly authorized by law to administer the estate or assets of other persons.

Subp. 2. Liability after exemption.

After the 12-month period following their appointment or qualification, the persons in subpart 1 shall be required to file reports with respect to the securities held by the estates that they administer under clause (1) of the act, and shall be liable for profits realized from trading in such securities pursuant to clause (2) of the act only when the estate being administered as a beneficial owner of more than ten percent of any class of equity security (other than an otherwise exempted security) of an insurer subject to the act.

Subp. 3. Reacquisition.

Securities reacquired by or for the account of an insurer and held by it for its account shall be exempt from clauses (1) and (2) of the act during the time they are held by the insurer.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.4800 Exemption of Transactions by Odd-Lot Dealers

Securities purchased or sold by an odd-lot dealer in odd lots so far as reasonably necessary to carry on odd-lot transactions, or in round lots to offset odd-lot transactions previously or simultaneously executed or reasonably anticipated in the usual course of business, shall be exempt from the provisions of the act with respect to participation by such odd-lot dealer in such transactions.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.4900 Transactions Subject to Clause (1)

Subpart 1. Changes in ownership.

Changes in ownership:

A. The granting, acquisition, or disposition of any presently exercisable put, call, option, or other right or obligation to buy securities from, or sell securities to, another person, or any expiration or cancellation thereof, shall be deemed to effect such a change in the beneficial ownership of the securities to which the right or obligation relates as to require the filing of a statement pursuant to clause (1) of the act reflecting such change in beneficial ownership.

B. If any such right or obligation is not initially exercisable, the granting and acquisition thereof shall be reported in a statement filed for the month in which it became exercisable, unless the filing of such statement is otherwise not required.

C. The right of a pledgee or borrower of securities to sell the pledged or borrowed securities is not an option or right to sell securities within the meaning of this subpart. However, the sale of the pledged or borrowed securities by the pledgee or borrower shall be reported by the pledgor or lender.

D. The right to acquire securities, or the obligation to dispose of securities, in connection with a merger or consolidation involving the insurer issuing the securities is not a right or obligation to buy or sell securities within the meaning of this subpart.

Subp. 2. Beneficial owners.

For the purpose of clause (1) of the act, both the grantor and the holder of any presently exercisable put, call, option, or other right or obligation to buy or sell securities shall be deemed to be beneficial owners of the securities subject to such right or obligation until it is exercised or canceled or expires.

Subp. 3. Exclusions and exemptions.

Notwithstanding, a statement need not be filed pursuant to clause (1) of the act by:

A. any person with respect to the acquisition, expiration, or cancellation of any nontransferable qualified, restricted, or other stock option granted by the insurer issuing the securities to which the option relates pursuant to a plan provided for the benefit of its employees or the employees of its affiliates if such plan meets the condition specified in part 2715.5400; or

B. any insurer with respect to any put, call, option, or other right or obligation to buy or sell securities of which it is the issuer. An option, otherwise nontransferable, is deemed to be nontransferable even though it may be disposed of by will or by descent and distribution upon the death of the holder. Nothing in this part shall be deemed to exempt any person from the duty to file the statements required upon the exercise of any put, call, option, or other right or obligation to buy or sell securities.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5000 Ownership of Securities Held in Trust

Subpart 1. Inclusion.

Beneficial ownership of a security for the purpose of clause (1) of the act shall include:

A. the ownership of securities as a trustee where either the trustee or members of the trustee's immediate family have a vested interest in the income or corpus of the trust;

B. the ownership of a vested beneficial interest in a trust; and

C. the ownership of securities as a settler of a trust in which the settlor has the power to revoke the trust without obtaining the consent of all the beneficiaries.

Subp. 2. Less than 20 percent.

Except as provided in subpart 3, beneficial ownership of securities solely as a settlor or beneficiary of a trust shall be exempt from the provisions of clause (1) of the act where less than 20 percent in market value of the securities having a readily ascertainable market value held by such trust, determined as of the end of the preceding fiscal year of the trust, consists of equity securities with respect to which reports would otherwise be required. Exemption is likewise accorded from clause (1) of the act with respect to any obligation that would otherwise be imposed solely by reason of ownership as settlor or beneficiary of securities held in trust, where the ownership, acquisition, or disposition of such securities by the trust is made without prior approval by the settlor or beneficiary. No exemption pursuant to this subpart shall, however, be acquired or lost solely as a result of changes in the value of the trust assets during any fiscal year or during any time when there is no transaction by the trust in the securities otherwise subject to the reporting requirements of clause (1) of the act.

Subp. 3. Ten percent.

In the event that ten percent of any class of any equity security (other than an exempted security) of an insurer subject to the act is held in a trust, that trust and the trustees thereof as such shall be deemed a person required to file the reports specified in clause (1) of the act.

Subp. 4. Reports.

Not more than one report need be filed to report any holdings or with respect to any transactions in securities held by a trust, regardless of the number of officers, directors, or ten percent stockholders who are either trustees, settlors, or beneficiaries of a trust, provided that the report filed shall disclose the names of all trustees, settlors, and beneficiaries who are officers, directors, or ten percent stockholders. A person having an interest only as a beneficiary of a trust shall not be required to file any such report so long as that person relies in good faith upon an understanding that the trustee of such trust will file whatever reports might otherwise be required of such beneficiary.

Subp. 5. Immediate family.

As used in this rule, the "immediate family" of a trustee means:

A. a son or daughter of the trustee, or a descendant of either;

B. a stepson or stepdaughter of the trustee;

C. the father or mother of the trustee, or an ancestor of either;

D. a stepfather or stepmother of the trustee; or

E. a spouse of the trustee.

Subp. 6. Adopted persons.

For the purpose of determining whether any of the relations in subpart 5 exists, a legally adopted child of a person shall be considered a child of such person by blood.

Subp. 7. Remainders.

In determining, for the purposes of clause (1) of the act, whether a person is the beneficial owner, directly or indirectly, of more than ten percent of any class of any equity security, the interest of such person in the remainder of a trust shall be excluded from the computation.

Subp. 8. Indirect interests.

No report shall be required by any person, whether or not otherwise subject to the requirement of filing reports under clause (1) of the act, with respect to that person's indirect interest in portfolio securities held by a pension or retirement plan holding securities of an insurer whose employees generally are the beneficiaries of the plan or a business trust with over 25 beneficiaries.

Subp. 9. Limitation.

Nothing in this rule shall be deemed to impose any duties or liabilities with respect to reporting any transaction or holding prior to its effective date.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.5100 Exemption for Small Transactions

Subpart 1. Six-month period.

Any acquisition of securities shall be exempt from clause (1) of the act where:

A. the person effecting the acquisition does not within six months thereafter effect any disposition, otherwise than by way of gift, of securities of the same class; and

B. the person effecting such acquisition does not participate in acquisitions or in dispositions of securities of the same class having a total market value in excess of $3,000 for any six-month period during which the acquisition occurs.

Subp. 2. Gift.

Any acquisition or disposition of securities by way of gift, where the total amount of such gifts does not exceed $3,000 in market value for any six-month period, shall be exempt from clause (1) of the act and may be excluded from the computations prescribed in subpart 1, item B.

Subp. 3. Subsequent reports.

Any person exempted by subpart 1 or 2 shall include in the first report filed after a transaction within the exemption a statement showing acquisitions and dispositions for each six-month period or portion thereof that has elapsed since that person's last filing.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.5200 Exemption of Transactions That Need Not Be Reported Under Clause (1)

Any transaction that has been or shall be exempted from the requirements of clause (1) of the act shall, insofar as it is otherwise subject to the provisions of clause (2) of the act, be likewise exempted from clause (2) of the act.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5300 Definitions

Subpart 1. Scope.

Unless the context otherwise requires, all terms used in parts 2715.5300 and 2715.6000 shall have the same meaning as in the act and in parts 2715.4100 and 2715.4200. In addition, the following definitions apply.

Subp. 2. Employee stock purchase plan; qualified stock option.

The definition of the terms "qualified stock option" and "employee stock purchase plan" that are set forth in sections 422 and 423 of the Internal Revenue Code of 1954, as amended, are to be applied to those terms where used in parts 2715.5300 to 2715.6000.

Subp. 3. Exercise of an option, warrant, or right.

The term "exercise of an option, warrant, or right" contained in part 2715.5400, subpart 1 shall not include the making of any election to receive under any plan compensation in the form of stock or credits therefor, provided that such election is made either prior to the making of the award or prior to the fulfillment of all conditions to the receipt of the compensation and provided further that such election is irrevocable until at least six months after termination of employment; nor the subsequent crediting of such stock; nor the making of any election as to a time for delivery of such stock after termination of employment, provided that such election is made at least six months prior to any such delivery; nor the fulfillment of any condition to the absolute right to receive such stock; nor the acceptance of certificates for shares of such stock.

Subp. 4. Plan.

The term "plan" includes any plan, whether or not set forth in any formal written document or documents and whether or not approved in its entirety at one time.

Subp. 5. Restricted stock option.

The term "restricted stock option" as defined in section 424(b) of the Internal Revenue Code of 1954, as amended, shall be applied to that term as used in parts 2715.5300 to 2715.6000; provided however, that for the purposes of parts 2715.5300 to 2715.6000 an option that meets all of the conditions of that part, other than the date of issuance, shall be deemed to be a "restricted stock option."

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5350 Certain Transactions Effected in Connection with Distribution

Subpart 1. One party's exemption.

Any transaction of purchase and sale, or sale and purchase, of a security that is effected in connection with the distribution of a substantial block of securities shall be exempt from the provisions of clause (2) of the act, to the extent specified in parts 2715.5300 to 2715.6000 as not comprehended within the purpose of said clause of the act, upon the following conditions:

A. the person effecting the transaction is engaged in the business of distributing securities and is participating in good faith, in the ordinary course of such business, in the distribution of such block of securities;

B. the security involved in the transaction is a part of such block of securities and is acquired by the person effecting the transaction, with a view to the distribution thereof, from the insurer or other person on whose behalf such securities are being distributed or from a person who is participating in good faith in the distribution of such block of securities; or a security purchased in good faith by or for the account of the person effecting the transaction for the purpose of stabilizing the market price of securities of the class being distributed or to cover an over-allotment or other short position created in connection with such distribution; and

C. other persons not within the purview of clause (2) of the act are participating in the distribution of such block of securities on terms at least as favorable as those on which such person is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of clause (2) of the act by parts 2715.5300 to 2715.6000. However, the performance of the functions of manager of a distributing group and the receipt for a bona fide payment for performing such functions shall not preclude an exemption that would otherwise be available under this rule.

Subp. 2. Other parties.

The exemption of a transaction pursuant to this rule with respect to the participation therein of one party thereto shall not render such transaction exempt with respect to participation of any other party therein unless such other party also meets the conditions of this rule.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5400 Acquisitions Under Certain Stock Bonus, Option, or Similar Plans

Subpart 1. Exempt acquisitions.

Any acquisition of shares of stock (other than stock acquired upon the exercise of an option, warrant, or right) pursuant to a stock bonus, profit sharing, retirement, incentive, thrift, savings, or similar plan, or any acquisition of a qualified or a restricted stock option pursuant to a qualified or a restricted stock option plan, or a stock option pursuant to an employee stock purchase plan, by a director or officer of an insurer issuing such stock or stock option shall be exempt from the operation of clause (2) of the act if the plan meets the conditions of subparts 2 to 4.

Subp. 2. Approval of plan.

The plan must be approved, directly or indirectly:

A. by the affirmative votes of the holders of a majority of the securities of such insurer present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of the state of Minnesota; or

B. by the written consent of the holders of a majority of the securities of such insurer entitled to vote; provided, however, that if such vote or written consent was not solicited substantially in accordance with the proxy rules, if any, prescribed by the commissioner in effect at the time of such vote or written consent, the insurer shall furnish in writing to the holders of record of the securities entitled to vote for the plan substantially the same information concerning the plan that would be required by any such rules so prescribed and in effect at the time such information is furnished, if proxies to be voted with respect to the approval or disapproval of the plan were then being solicited, on or prior to the date of the first annual meeting of security holders held subsequent to the later of the date the act first applies to such insurer, or the acquisition of an equity security for which exemption is claimed. Such written information may be furnished by mail to the last known address of the security holders of record within 30 days prior to the date of mailing. Two copies of such written information shall be filed with, or mailed for filing to, the commissioner not later than the date on which it is first sent or given to security holders of the insurer. For the purposes of this subpart, the term "insurer" includes a predecessor corporation if the plan or obligations to participate thereunder were assumed by the insurer in connection with the succession.

Subp. 3. Selection of officers.

If the selection of any director or officer of the insurer to whom stock may be allocated, or to whom qualified, restricted, or employee stock purchase plan stock options may be granted pursuant to the plan, or the determination of the number or maximum number of shares of stock that may be allocated to any such director or officer or that may be covered by qualified, restricted, or employee stock purchase plan stock options granted to any such director or officer, is subject to the discretion of any person, then such discretion shall be exercised only as follows:

A. with respect to the participation of directors:

B. with respect to the participation of officers who are not directors:

C. the provisions of this subpart shall not apply with respect to any option granted, or other equity security acquired, prior to the date that clauses (1), (2), and (3) of the act became applicable with respect to any class of equity securities of any insurer.

Subp. 4. Dollar limits.

As to each participant or as to all participants the plan effectively limits the aggregate dollar amount or the aggregate number of shares of stock that may be allocated, or that may be subject to qualified, restricted, or employee stock purchase plan stock options granted pursuant to the plan, the limitations may be established on an annual basis, or for the duration of the plan, whether or not the plan has a fixed termination date; and may be determined either by fixed or maximum dollar amounts or fixed or maximum numbers of shares or by formulas based upon earnings of the insurer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares, or percentages thereof outstanding from time to time, or similar factors which will result in an effective and determinable limitation. Such limitations may be subject to any provisions for adjustment of the plan or of stock allocable or options outstanding thereunder to prevent dilution or enlargement of rights.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5500 Transactions in Which Securities Are Received by Redeeming Other Securities

Any acquisition of an equity security (other than a convertible security or right to purchase a security) by a director or officer of the insurer issuing such security shall be exempt from the operation of clause (2) of the act upon condition that:

A. the equity security is acquired by way of redemption of another security of an insurer, substantially all of whose assets other than cash (or government bonds) consist of securities of the insurer issuing the equity security so acquired, and which:

B. no security of the same class as the security redeemed was acquired by the director or officer within six months prior to such redemption or is acquired within six months after such redemption;

C. the insurer issuing the equity security acquired has recognized the applicability of item A by appropriate corporate action.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5600 Long Term Profits Incident to Sales Within Six Months of Exercise

Long term profits incident to sales within six months of exercise:

A. To the extent specified in item B, the commissioner hereby exempts as not comprehended within the purposes of clause (2) of the act any transaction or transactions involving the purchase and sale, or sale and purchase, of any equity security where such purchase is pursuant to the exercise of an option or similar right either acquired more than six months before its exercise, or acquired pursuant to the terms of an employment contract entered into more than six months before its exercise.

B. In respect of transactions specified in item A, the profits inuring to the insurer shall not exceed the difference between the proceeds of sale and the lowest market price of any security of the same class within six months before or after the date of sale. Nothing in this part shall be deemed to enlarge the amount of profit which would inure to such insurer in the absence of this part.

C. The commissioner also hereby exempts, as not comprehended within the purposes of clause (2) of the act, the disposition of a security, purchased in a transaction specified in item A, pursuant to a plan or agreement for merger or consolidation, or reclassification of the insurer's securities, or for the exchange of its securities for the securities of another person that has acquired its assets, or which is in control, as defined in section 368(c) of the Internal Revenue Code of 1954, as amended, of a person that has acquired its assets, where the terms of such plan or agreement are binding upon all stockholders of the insurer, except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings.

D. The exemptions provided by this part shall not apply to any transactions made unlawful by clause (3) of the act or by any rules thereunder.

E. The burden of establishing market price of a security for the purpose of this part shall rest upon the person claiming the exemption.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5700 Acquisitions and Dispositions of Securities Pursuant to Mergers or Consolidations

Subpart 1. Exempt.

The following transactions shall be exempt from the provisions of clause (2) of the act as not comprehended within the purposes of said clause:

A. the acquisition of a security of an insurer, pursuant to a merger or consolidation, in exchange for a security of a company that, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company;

B. the disposition of a security, pursuant to a merger or consolidation of an insurer that, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company;

C. the acquisition of a security of an insurer, pursuant to a merger or consolidation, in exchange for a security of a company that, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation as determined by reference to their most recent available financial statements for a 12-month period prior to the merger or consolidation;

D. the disposition of a security, pursuant to a merger or consolidation, of an insurer that, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation as determined by reference to their most recent available financial statements for a 12-month period prior to the merger or consolidation.

Subp. 2. Merger defined.

A "merger" within the meaning of this part shall include the sale or purchase of substantially all the assets of one insurer by another in exchange for stock which is then distributed to the security holders of the insurer which sold its assets.

Subp. 3. Excluded insider trading.

Notwithstanding the foregoing subparts, if an officer, director, or stockholder shall make any purchase (other than a purchase exempted by this part) of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by this part) of a security in any other company involved in the merger or consolidation within any period of less than six months during which the merger or consolidation took place, the exemption provided by this part shall be unavailable to such officer, director, or stockholder to the extent of such purchase and sale.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5800 Transactions Involving Deposit or Withdrawal of Equity Securities Under Voting Trust or Deposit Agreement

Any acquisition or disposition of an equity security involved in the deposit of such security under, or the withdrawal of such security from, a voting trust or deposit agreement, and the acquisition or disposition in connection therewith of the certificate representing such security, shall be exempt from the operation of clause (2) of the act if substantially all of the assets held under the voting trust or deposit agreement immediately after the deposit or immediately prior to the withdrawal, as the case may be, consisted of equity securities of the same class as the security deposited or withdrawn; provided, however, that this part shall not apply to the extent that there shall have been either a purchase of an equity security of the class deposited and a sale of any certificate representing an equity security of such class, or a sale of an equity security of the class deposited and a purchase of any certificate representing an equity security of such class (other than in a transaction involved in such deposit or withdrawal or in a transaction exempted by any other provision of the rules under clause (2) of the act) within a period of less than six months that includes the date of the deposit or withdrawal.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.5900 Transactions Involving Conversion of Equity Securities

Subpart 1. Exemption.

Any acquisition or disposition of an equity security involved in the conversion of an equity security that, by its terms, or pursuant to the terms of the insurer's charter or other governing instruments, is convertible immediately or after a stated period of time into another equity security of the same insurer shall be exempt from the operation of clause (2) of the act; provided, however, that this part shall not apply to the extent that there shall have been either:

A. a purchase of any equity security of the class convertible (including any acquisition of or change in a conversion privilege) and a sale of any equity security of the class issuable upon conversion; or

B. a sale of any equity security of the class convertible and any purchase of any equity security issuable upon conversion (otherwise than in a transaction involved in such conversion or in a transaction exempted by any other provision of the rules under clause (2) of the act) within a period of less than six months which includes the date of conversion.

Subp. 2. Acquisition or disposition.

For the purpose of this part, an equity security shall not be deemed to be acquired or disposed of upon conversion of an equity security if the terms of the equity security converted require the payment or entail the receipt, in connection with such conversion, of cash or other property (other than equity securities involved in the conversion) equal in value at the time of conversion to more than 15 percent of the value of the equity security issued upon conversion.

Subp. 3. Convertible.

For the purpose of this part, an equity security shall be deemed convertible if it is convertible at the option of the holder or of some other person or by operation of the terms of the security or the governing instruments.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.6000 Transactions Involving Sale of Subscription Rights

Transactions involving sale of subscription rights:

A. Any sale of a subscription right to acquire any subject security of the same insurer shall be exempt from the provisions of clause (2) of the act, to the extent prescribed in this part, as not comprehended with the purposes of clause (2) of the act, if:

B. When used within this part the following terms shall have the meanings indicated:

C. Notwithstanding anything contained herein to the contrary, if a person purchases subscription rights for cash or other consideration, then a sale by such person of subscription rights otherwise exempted by this part will not be so exempted to the extent of such purchases within the six-month period preceding or following such sale.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.6100 Exemption of Certain Securities

Any security shall be exempt from the operation of clause (3) of the act to the extent necessary to render lawful under such clause the execution by a broker of an order for an account in which the broker has no direct or indirect interest.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.6200 Certain Transactions Effected in Connection with a Distribution

Any security shall be exempt from the operation of clause (3) of the act to the extent necessary to render lawful under such clause any sale made by or on behalf of a dealer in connection with a distribution of a substantial block of securities, upon the following conditions:

A. the sale is represented by an over-allotment in which the dealer is participating as a member of an underwriting group, or the dealer or a person acting on the dealer's behalf intends in good faith to offset such sale with a security to be acquired by or on behalf of the dealer as a participant in an underwriting, selling, or soliciting-dealer group of which the dealer is a member at the time of the sale, whether or not the security to be so acquired is subject to a prior offering to existing security holders or some other class of persons; and

B. other persons not within the purview of clause (3) of the act are participating in the distribution of such block of securities on terms at least as favorable as those on which such dealer is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of clause (3) of the act by this part. However, the performance of the functions of manager of a distributing group and the receipt of a bona fide payment for performing such functions shall not preclude an exemption that would otherwise be available under this part.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.6300 Sales of Securities to Be Acquired

Whenever any person is entitled, as an incident to ownership of an issued security and without the payment of consideration, to receive another security "when issued" or "when distributed," the security to be acquired shall be exempt from the operation of clause (3) of the act, provided that:

A. the sale is made subject to the same conditions as those attaching to the right of acquisition;

B. such person exercises reasonable diligence to deliver such security to the purchaser promptly after the right of acquisition matures; and

C. such person reports the sale on the appropriate form for reporting transactions by persons subject to clause (1) of the act. This part shall not be construed as exempting transactions involving both a sale of a security "when issued" or "when distributed" and a sale of the security by virtue of which the seller expects to receive the "when issued" or "when distributed" security, if the two transactions combined result in a sale of more units than the aggregate of those owned by the seller plus those to be received by the seller pursuant to the right of acquisition.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.6400 Arbitrage Transactions Under Clause (5) of the Act

It shall be unlawful for any director or officer of an insurer to effect any foreign or domestic arbitrage transaction in any equity security of such insurer, unless:

A. the director or officer shall include such transaction in the statements required by clause (1) of the act; and

B. the director or officer shall account to such insurer for the profits arising from such transaction, as provided in clause (2) of the act. The provisions of clause (3) of the act shall not apply to such arbitrage transactions. The provisions of the act shall not apply to any bona fide foreign or domestic arbitrage transaction insofar as it is effected by any person other than such director or officer of the insurer.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.6401 Form A: Statement of Ownership

EQUITY SECURITIES BENEFICIALLY OWNED

Remarks (See Part 2715.6402, Subpart 8):

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.6402 Instructions for Form a

Subpart 1. Persons required to file statements.

A statement on this form is required to be filed by every person who is directly or indirectly the beneficial owner of more than ten percent of any class of any equity security of a Minnesota domestic stock insurance company, including a domestic stock and mutual insurance company as defined in Minnesota Statutes, sections 66A.36 to 66A.43 (but not including a company if any equity security thereof is registered, or required to be registered, pursuant to section 12 of the federal Securities Exchange Act of 1934, or if the company does not have equity securities held of record by 100 or more persons on the last day of the year next preceding the year in which this statement would otherwise be required to be filed), or who is a director or an officer of such company. The term "officer" means a president, vice president, treasurer, actuary, secretary, controller, and any other person who performs for the insurer functions corresponding to those performed by the foregoing officers. A separate statement shall be filed with respect to the equity securities of each insurer.

Subp. 2. When statements to be filed.

Persons who hold any of the relationships specified in subpart 1 are required to file a statement on this form within ten days after assuming such relationship.

Subp. 3. Where statements to be filed.

One signed copy of each statement shall be filed with the Commissioner of Commerce, State of Minnesota, Metro Square Building, Saint Paul, Minnesota 55101.

Subp. 4. Relationship of reporting person to insurer.

Indicate clearly the relationship of the reporting person to the insurer; for example, "director," "director and vice president," "beneficial owner of more than ten percent of the insurer's common stock."

Subp. 5. Title of security.

Clearly identify the equity security, even though there is only one class; for example, "common stock," "class A common stock," "four percent convertible preferred stock." Persons required to file the statement with respect to any class of equity security of the insurer shall include information as to their beneficial ownership of all classes of equity securities of the insurer.

Subp. 6. Nature of ownership.

Under "nature of ownership" state whether ownership of the equity securities is "direct" or "indirect." If the ownership is indirect, i.e., through a partnership, corporation, trust, or other entity, indicate in a footnote or other appropriate manner the name or identity of the medium through which the stock is indirectly owned. The fact that securities are held in the name of a broker or other nominee does not, of itself, constitute indirect ownership. Equity securities owned indirectly shall be reported on separate lines from those owned directly and also from those owned through a different type of indirect ownership.

Subp. 7. Amount beneficially owned.

In the case of equity securities owned indirectly, the entire amount of equity securities owned by the partnership, corporation, trust, or other entity shall be stated. If desired, the person filing the statement may also indicate in a footnote or other appropriate manner the extent of that person's interest in the partnership corporation, trust, or other entity. If desired, the person filing the statement may declare that the filing of the statement shall not be construed as an admission that such person is, for the purposes of Minnesota Statutes, section 60A.22, the beneficial owner of any equity securities covered by the statement.

Subp. 8. Inclusion of additional information.

A statement may include any additional information or explanation deemed relevant by the person filing the statement.

Subp. 9. Signature.

If the statement is filed for a corporation, partnership, trust, etc., the name of the organization shall appear over the signature of the officer or other person authorized to sign the statement. If the statement is filed for an individual, it shall be signed by that person or specifically on that person's behalf by another person authorized to sign for him or her.

History

Statutory Authority: MS s 60A.22
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; 17 SR 1279; L 2005 c 69 art 2 s 18

Minn. R. 2715.6403 Form B: Changes in Ownership

CHANGES DURING MONTH, AND MONTH-END OWNERSHIP

(See Part 2715.6404, Subpart 5)

Remarks (See Part 2715.6404, Subparts 10 and 11):

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.6404 Instructions for Form B

Subpart 1. Persons required to file statements.

A statement on this form is required to be filed by every person who at any time during any calendar month was directly or indirectly the beneficial owner of more than ten percent of any class of any equity security of a Minnesota domestic stock insurance company, including a domestic stock and mutual insurance company as defined in Minnesota Statutes, sections 66A.36 to 66A.43 (but not including a company if any equity security thereof is registered, or required to be registered, pursuant to section 12 of the federal Securities Exchange Act of 1934, or if the company does not have equity securities held of record by 100 or more persons on the last day of the year next preceding the year in which this statement would otherwise be required to be filed), or who was a director or an officer of such company, and who during such month had any change in the nature or amount of beneficial ownership of any class of equity securities of such company. The term "officer" means a president, vice president, treasurer, actuary, secretary, controller, and any other person who performs for the insurer functions corresponding to those performed by the foregoing officers. A separate statement shall be filed with respect to the equity securities of each insurer.

Subp. 2. When statements to be filed.

Statements are required to be filed on or before the tenth day after the end of each calendar month in which any change in the nature or amount of beneficial ownership has occurred.

Subp. 3. Where statements to be filed.

One signed copy of each statement shall be filed with the Commissioner of Commerce, Metro Square Building, Saint Paul, Minnesota 55101.

Subp. 4. Relationship of reporting person to insurer.

Subp. 5. Transactions and holdings to be reported.

Every change in beneficial ownership shall be reported even though purchases and sales during the month are equal or the change involves only the nature of beneficial ownership (for example, from direct to indirect ownership or from one type of indirect ownership to another). Persons required to file the statement with respect to any class of equity security of the insurer shall include information as to changes in their beneficial ownership of all classes of equity securities of the insurer and shall show their beneficial ownership at the end of the month of all classes of equity securities of the insurer even though there has been no reportable change during the month in the ownership of equity securities of a particular class.

Subp. 6. Title of security.

Clearly identify the equity security, even though there is only one class; for example, "common stock," "class A common stock," "four percent convertible preferred stock."

Subp. 7. Date of transaction.

The exact date (month, date, and year) of each transaction shall be stated opposite the amount involved in the transaction.

Subp. 8. Amounts of equity securities.

In the case of equity securities owned indirectly, the entire amount of equity securities owned by the partnership, corporation, trust, or other entity shall be stated. If desired, the person filing the statement may also indicate in a footnote or other appropriate manner the extent of that person's interest in the partnership, corporation, trust, or other entity. If desired, the person filing the statement may declare that the filing of the statement shall not be construed as an admission that such person is, for the purposes of Minnesota Statutes, section 60A.22, the beneficial owner of any equity securities covered by the statement.

Subp. 9. Nature of ownership.

Under "nature of ownership" state whether ownership of the equity securities is "direct" or "indirect." If the ownership is indirect, i.e., through a partnership, corporation, trust, or other entity, indicate in a footnote or other appropriate manner the name or identity of the medium through which the stock is indirectly owned. The fact that securities are held in the name of a broker or other nominee does not, of itself, constitute indirect ownership. Equity securities owned indirect shall be reported on separate lines from those owned directly and also from those owned through a different type of indirect ownership.

Subp. 10. Character of transaction.

If the transaction in equity securities was with the insurer or one of its subsidiaries, so state. If it involved the purchase of equity securities through the exercise of options, so state. If any other purchase or sale was effected otherwise than in the open market, that fact shall be indicated. If the transaction was not a purchase or sale, indicate its character; for example, gift or stock dividend, etc., as the case may be. The foregoing information may be appropriately set forth in the table or under remarks below the table.

Subp. 11. Inclusion of additional information.

A statement may include any additional information or explanation deemed relevant by the person filing the statement.

Subp. 12. Signature.

History

Statutory Authority: MS s 60A.22
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; 17 SR 1279; L 2005 c 69 art 2 s 18

Minn. R. 2715.7100 Definitions

Subpart 1. Scope.

For the purposes of parts 2715.7100 to 2715.8400, the terms defined in this rule have the meanings given them unless the context otherwise requires.

Subp. 2. Affiliate.

An "affiliate" of, or a person affiliated with, a specified person is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

Subp. 3. Associate.

The term "associate" used to indicate a relationship with any person means any corporation or organization, other than the issuer or a majority-owned subsidiary of the issuer, of which the person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent or more of any class of equity security; any trust or other estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity; and any relative or spouse of the person, or any relative or the spouse, who has the same home as the person or who is a director or officer of the issuer or any of its parents or subsidiaries.

Subp. 4. Beneficial owner.

The term "beneficial owner" includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares voting power including the power to vote or direct the voting of a security, or investment power including the power to dispose of or direct the disposition of the security.

Subp. 5. Control.

The term "control," including the terms "controlling," "controlled by," and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities by contract or otherwise.

Subp. 6. Issuer.

The term "issuer" means the issuer of the securities in respect of which a proxy is solicited.

Subp. 7. Last fiscal year.

The term "last fiscal year" means the last fiscal year of the issuer ending prior to the date of the meeting for which proxies are to be solicited.

Subp. 8. Officer.

The term "officer" means the president, secretary, treasurer, any vice president in charge of a principal business function such as sales, administration or finance and any other person who performs similar policy-making functions for the insurer.

Subp. 9. Parent.

A "parent" of a specified person is an affiliate controlling the person directly, or indirectly through one or more intermediaries.

Subp. 10. Person.

The term "person" means an individual, corporation, partnership, association, joint stock company, trust, unincorporated organization, or government or political subdivision thereof. As used in this subpart, the term "trust" includes only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security.

Subp. 11. Proxy statement.

The term "proxy statement" means the statement required by part 2715.7310, whether or not contained in a single document.

Subp. 12. Solicitation.

The terms "solicit" and "solicitation" include:

A. any request for a proxy, whether or not accompanied by or included in a form of proxy;

B. any request to execute, not to execute or revoke a proxy; or

C. the furnishing of a form of proxy or other communication to security holders under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy. The terms do not apply to the furnishing of a form of proxy to a security holder upon the unsolicited request of the security holder, the performance by the issuer of acts required by part 2715.7350, or the performance by any person of ministerial acts on behalf of a person soliciting a proxy.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7200 Scope

Subpart 1. Domestic stock and mutual insurers.

Parts 2715.7100 to 2715.8400 apply to each domestic stock insurer, including a domestic stock and mutual insurer as defined in Minnesota Statutes, sections 66A.36 to 66A.39, which has any class of equity security held of record by 100 or more persons. Parts 2715.7100 to 2715.8400 shall not apply to any insurer if 95 percent or more of its equity securities are owned or controlled by a parent or an affiliated insurer and the remaining securities are held of record by less than 500 persons. A domestic stock insurer which files with the Securities and Exchange Commission forms of proxies, consents and authorizations complying with the requirements of the Securities Exchange Act of 1934, as amended, and the applicable regulations promulgated thereunder shall be exempt from parts 2715.7100 to 2715.8400.

Subp. 2. Written statement.

Unless proxies, consents or authorizations in respect of any class of equity securities of a domestic insurer subject to subpart 1 are solicited by or on behalf of the management of the insurer from the holders of record of the securities in accordance with parts 2715.7100 to 2715.8400 and the schedules hereunder prior to any annual or other meeting of the security holders, the insurer shall, in accordance with parts 2715.7100 to 2715.8400 and other rules the commissioner may adopt, file with the commissioner and transmit to all equity security holders who are entitled to vote in regard to any matter to be acted upon at the meeting and from whom a proxy is not solicited a written information statement containing the information specified in part 2715.8400 (schedule C).

History

Statutory Authority: MS s 60A.22
History: L 2005 c 69 art 2 s 18

Minn. R. 2715.7300 Solicitations to Which Rules Apply

Part 2715.7370 applies to every solicitation that is subject to part 2715.7200. Parts 2715.7100, 2715.7300 to 2715.7360, and 2715.7380 apply to every solicitation that is subject to part 2715.7200 except the following:

A. any solicitation made otherwise than on behalf of the issuer where the total number of persons solicited is not more than ten;

B. any solicitation by a person in respect of securities carried in that person's name or in the name of that person's nominee, otherwise than as voting trustee, or held in the person's custody, if the person:

C. any solicitation by a person in respect of securities of which it is the beneficial owner; or

D. any solicitation through the medium of a newspaper advertisement which informs security holders of a source from which they may obtain copies of a proxy statement, form of proxy and any other soliciting material and does no more than name the issuer, state the reason for the advertisement, and identify the proposal or proposals to be acted upon by security holders.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.7310 Information to Be Furnished to Security Holders

Subpart 1. Proxy statement.

No solicitation subject to parts 2715.7100 to 2715.8400 shall be made unless each person solicited is concurrently furnished or has previously been furnished with a written proxy statement containing the information specified in parts 2715.7700 to 2715.7910 (schedule A).

Subp. 2. Annual report.

If the solicitation is made on behalf of the issuer and relates to an annual meeting of security holders at which directors are to be elected, each proxy statement furnished pursuant to subpart 1 shall be accompanied or preceded by an annual report to security holders. The report shall comply with the requirements of items A to G.

A. The report shall contain in comparative columnar form such financial statements for the last two fiscal years, prepared on a consistent basis, as will in the opinion of the management adequately reflect the financial position of the issuer at the end of each year and the results of its operations for each year. Consolidated financial statements of the issuer and its subsidiaries shall be included in the report if they are necessary to reflect the financial position and results of operations of the issuer and its subsidiaries, but in that case the individual statements of the issuer may be omitted. The commissioner shall, upon the request of the issuer, permit the omission of financial statements for the earlier of the two fiscal years upon a showing of good cause.

B. The financial statements for the last two fiscal years required by item A shall be prepared in a manner acceptable to the commissioner.

C. The report shall include in comparative columnar form a summary of issuer's operations or the operations of the issuer and its subsidiaries consolidated, or both as appropriate, for each of the last five fiscal years of the issuer, or the life of the issuer and its predecessors if less.

D. The report shall contain a brief description of the business or businesses done by the issuer and its subsidiaries during the most recent fiscal year which will, in the opinion of management, indicate the general nature and scope of the business of the issuer and its subsidiaries.

E. The report shall identify each of the issuer's directors and officers and shall indicate the principal occupation or employment of each of them and the name and principal business of any organization by which they are employed.

F. The report shall identify the principal market in which securities of any class entitled to vote at the meeting are traded, stating the range of bid and asked quotations for each quarterly period during the issuer's two most recent fiscal years, and shall set forth each dividend paid during the two-year period.

G. Subject to the requirements of items A to F, the report may be in any form deemed suitable by management and the information required by items C to F may be presented in an appendix or other separate section of the report if the attention of security holders is called to this presentation. The requirement of this subpart shall not apply to solicitations made on behalf of the management before the financial statements are available if solicitation is being made at the time in opposition to the management and if the management's proxy statement includes an undertaking in bold face type to furnish the annual report to all persons being solicited at least 20 days before the date of the meeting.

Subp. 3. Information to commissioner.

Two copies of the report sent to the security holders pursuant to parts 2715.7100 to 2715.8400 shall be mailed to the commissioner solely for informational purposes not later than the date on which the report is first sent or given to security holders or the date on which preliminary copies of solicitation material are filed with the commissioner pursuant to part 2715.7340, whichever date is later.

Subp. 4. Information to beneficial owners.

If the issuer knows that securities of any class entitled to vote at a meeting with respect to which the issuer intends to solicit proxies, consents or authorizations are held of record by a broker, dealer, bank or voting trustee, or their nominees, the issuer shall inquire of the record holder at least ten days prior to the record date for the meeting of security holders whether other persons are the beneficial owners of the securities and, if so, the number of copies of the proxy and other soliciting material and, in the case of an annual meeting at which directors are to be elected, the number of copies of the annual report to security holders, necessary to supply the material to beneficial owners. The issuer shall supply the record holder in a timely manner with additional copies in the quantities, assembled in the form and at the place, the record holder reasonably requests in order to address and send one copy of each to each beneficial owner of securities so held. The issuer shall pay, upon the request of the record holder, its reasonable expenses for mailing the material to security holders to whom the material is sent.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.7320 Proxy Requirements

Subpart 1. Form.

The form of proxy shall:

A. indicate in boldface type whether or not the proxy is solicited on behalf of the issuer's board of directors and not by whom it is issued;

B. provide a specifically designated blank space for dating the proxy; and

C. identify clearly and impartially each matter or group of related matters intended to be acted upon, whether proposed by the issuers or security holders. No reference need be made to proposals as to which discretionary authority is conferred pursuant to subpart 3.

Subp. 2. Ballots.

Means shall be provided in the proxy for the person solicited to specify by ballot a choice between approval or disapproval of, or abstention with respect to, each matter or group of related matters referred to in it, other than elections to office. A proxy may confer discretionary authority with respect to matters as to which a choice is not specified if the form of proxy states in boldface type how it is intended to vote the shares represented by the proxy in each case.

Subp. 3. Authority to vote in elections.

A form of proxy which provides both for election of directors and for action on other specified matters shall be prepared so as clearly to provide, by a box or otherwise, means by which the security holder may withhold authority to vote for election as a director. Any form of proxy which is executed by the security holder in this manner so as not to withhold authority to vote for elections of all nominees shall be deemed to grant this authority for all nominees for which a vote is not withheld, if the form of proxy states this in boldface type.

Subp. 4. Discretionary authority conferred.

A proxy may confer discretionary authority with respect to any of the following matters:

A. matters to be presented at the meeting but not known by the person making the solicitation within a reasonable time before the solicitation if a specific statement to that effect is made in the proxy statement or form of proxy;

B. approval of the minutes of the prior meeting if approval does not amount to ratification of the action taken at that meeting;

C. the election of any person to any office for which a bona fide nominee is named in the proxy statement and the nominee is unable to serve or for good cause will not serve;

D. any proposal omitted from the proxy statement and form of proxy pursuant to part 2715.7360, subpart 3, or 2715.7370; or

E. matters incident to the conduct of the meeting.

Subp. 5. Authority not conferred.

No proxy shall confer authority to vote for the election of any person to any office for which a bona fide nominee is not named in the proxy statement, or to vote at any annual meeting, other than the next annual meeting or any adjournment thereof, to be held after the date on which the proxy statement and form of proxy are first sent or given to security holders. A person is not a bona fide nominee unless the person has consented to being named in the proxy statement and to serve if elected.

Subp. 6. Voting.

The proxy statement or form of proxy shall provide, subject to reasonable specified conditions, that the securities represented by the proxy will be voted and that where the person solicited specifies by means of ballot provided pursuant to subparts 2 and 3 a choice with respect to any matter to be acted upon, the securities will be voted in accordance with the specifications.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.7330 Presentation of Information in Proxy Statement

Subpart 1. Organization.

The information included in the proxy statement shall be clearly presented and divided into groups according to subject matter. The various groups of information shall be preceded by appropriate headings.

Subp. 2. Disclosure of deadline for inclusion of proposal in proxy statement.

All proxy statements shall disclose, under an appropriate caption, the date by which proposals of security holders intended to be presented at the next annual meeting must be received by the issuer for inclusion in the issuer's proxy statement and form of proxy relating to that meeting. The date shall be calculated in accordance with the provisions of part 2715.7360, subpart 1. If the date of the next annual meeting is subsequently advanced by more than 30 calendar days or delayed by more than 90 calendar days from the date of the annual meeting to which the proxy statement relates, the issuer shall, in a timely manner, notify security holders of the change, and the date by which proposals of security holders must be received.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7340 Material Required to Be Filed

Subpart 1. Preliminary soliciting material.

Two preliminary copies of the information statement or the proxy statement, form of proxy, and any other soliciting material to be furnished to security holders concurrently with it, or the information statement pursuant to part 2715.8400, shall be filed with the commissioner at least ten days prior to the date definitive copies of the material are first sent or given to security holders, or a shorter period prior to that date the commissioner authorizes upon a showing of good cause.

Subp. 2. Additional preliminary soliciting material.

Two preliminary copies of any additional soliciting material relating to the same meeting or subject matter to be furnished to security holders subsequent to the proxy statement shall be filed with the commissioner at least two days, exclusive of Saturdays, Sundays and holidays, prior to the date copies of this material are first sent or given to security holders, or a shorter period prior to that date the commissioner authorizes upon a showing of good cause.

Subp. 3. Soliciting material.

Two definitive copies of the information statement or the proxy statement, form of proxy, and all other soliciting material, in the form in which the material is furnished to security holders, shall be filed with or mailed for filing to the commissioner not later than the date the material is first sent or given to any security holders.

Subp. 4. Revised material.

Where the proxy statement, form of proxy, or other material filed pursuant to this rule is amended or revised, one of the copies of the amended or revised material filed pursuant to this rule shall be marked to indicate clearly and precisely the changes made.

Subp. 5. Information that need not be filed.

Copies of replies to inquiries from security holders requesting further information and copies of communications which do no more than request that forms of proxy previously solicited be signed and returned need not be filed pursuant to parts 2715.7100 to 2715.8400.

Subp. 6. Discretionary filings.

Notwithstanding the provisions of subparts 1 and 2 and part 2715.7390, subpart 5, preliminary copies of soliciting material in the form of speeches, press releases, and radio or television scripts may be filed with the commissioner prior to use or publication. Definitive copies, however, shall be filed with or mailed for filing to the commissioner as required by subpart 3 not later than the date the material is used or published. The provisions of subparts 1 and 2 and part 2715.7390, subpart 5 apply to any reprints or reproductions of all or any part of this material.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7350 Mailing Communications for Security Holders

Subpart 1. Duties of issuer.

If the management of the issuer has made or intends to make any solicitation subject to this rule, the issuer shall perform any of the acts in subparts 2 and 3 requested in writing with respect to the same subject matter or meeting by any security holder who is entitled to vote at least one percent of the votes entitled to be voted on the matter and who defrays the reasonable expenses incurred by the issuer in the performance of the act or acts requested.

Subp. 2. Information required.

The issuer shall mail or otherwise furnish to the security holder, as promptly as practicable after the receipt of the request:

A. a statement of the approximate number of record owners and, to the extent known to the issuer, the approximate number of beneficial owners of any class of securities, any of whom have been or are to be solicited on behalf of the management, or any group of whom the security holder shall designate; and

B. an estimate of the cost of mailing a specified proxy statement, form of proxy or other communication to the owners.

Subp. 3. Material furnished by security holder.

A. Copies of any proxy statement, form of proxy and other communication furnished by the security holder shall be mailed by the issuer to the security owners specified in subpart 2, item A the security holder designates.

B. The material furnished by the security holder shall be mailed with reasonable promptness after receipt of the material to be mailed, the envelopes or other containers therefor, and postage or payment for postage. The issuer need not mail any material prior to the first day on which solicitation is made on behalf of the issuer.

C. The issuer shall not be responsible for the proxy statement, form of proxy or other communication.

Subp. 4. Alternative compliance.

In lieu of performing the acts specified in subparts 2 and 3, the issuer may furnish promptly to the security holder a reasonably current list of the names and addresses of any of the record owners and, to the extent known to the issuer, the beneficial owners the security holder designates along with a schedule of the handling and mailing costs if the schedule has been supplied to the issuer.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7360 Proposals of Security Holders

Subpart 1. Inclusion in proxy statement and form of proxy.

If any holder of the securities of an issuer, hereafter referred to as the "proponent," notifies the issuer in writing not less than 90 days before the issuer's annual meeting of the intention to present a lawful proposal for action at a forthcoming meeting of the issuer's security holders and at the time of the notice the proponent is entitled to vote at least one percent of the votes entitled to be voted on the proposal, the issuer shall set forth the proposal in its proxy statement and identify it in its form of proxy and provide for the specification of approval or disapproval of the proposal. The proxy statement shall also include the name and address of the proponent.

Subp. 2. Statement of support.

If the issuer opposes any proposal received from a proponent, it shall, at the request of the proponent, include in its proxy statement a statement of the proponent of not more than 200 words in support of the proposal.

Subp. 3. Omissions.

The issuer may omit a proposal and any statement in support of it from its proxy statement and form of proxy under any of the following circumstances:

A. the proponent has submitted more than one proposal in connection with a particular meeting;

B. the proposal is more than 300 words in length;

C. the proposal or the supporting statement is contrary to any provision of this rule or the schedules hereto, including part 2715.7370 which prohibits false or misleading statements in proxy soliciting materials;

D. the proposal relates to the enforcement of a personal claim or the redress of a personal grievance against the issuer, its management, or any other person;

E. the proposal deals with a matter not significantly related to the issuer's business, a matter beyond the issuer's power to effectuate, a matter relating to the conduct of the ordinary business operations of the issuer, or an election to office;

F. the proposal is counter to a proposal to be submitted by the issuer at the meeting, the proposal has been rendered moot, or the proposal relates to specific amounts of cash or stock dividends;

G. the proposal is substantially duplicative of a proposal previously submitted to the issuer by another proponent, which proposal will be included in the management's proxy material for the meeting; or

H. substantially the same proposal has previously been submitted to security holders in the issuer's proxy statement and form of proxy relating to any annual or special meeting of security holders held within the preceding five calendar years and received less than five percent of the total number of votes cast in respect thereof at the time of its most recent submission.

Subp. 4. Notice of omission.

If the issuer intends to omit any proposal from its proxy statement or forms of proxy, it shall notify the proponent in writing of its intention at least ten days before the issuer's preliminary proxy material is filed pursuant to part 2715.7340, subpart 1.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.7370 False or Misleading Statements

No proxy statement, form of proxy, notice of meeting, information statement, or other communication, written or oral, subject to parts 2715.7100 to 2715.8400 shall contain any statement which, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements in it not false or misleading or necessary to correct any statement in any earlier communication with respect to the same meeting or subject matter which has become false or misleading.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7380 Prohibition of Certain Solicitations

No person making a solicitation which is subject to this rule shall solicit any undated or postdated proxy or any proxy which provides that it shall be deemed to be dated as of any date subsequent to the date on which it is signed by the security holder.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7390 Special Provisions Applicable to Election Contests

Subpart 1. Scope.

This part applies to any solicitation subject to parts 2715.7100 to 2715.8400 by any person or group for the purpose of opposing a solicitation subject to parts 2715.7100 to 2715.8400 by any other person or group with respect to the election or removal of directors at any annual or special meeting of security holders.

Subp. 2. Participant; participant in a solicitation.

A. For purposes of this part the terms "participant" and "participant in a solicitation" include the issuer; any director of the issuer, and any nominee for whose election as a director proxies are solicited; or any other person, acting alone, or with one or more other persons, committees, or groups, in organizing, directing or financing the solicitation.

B. For the purpose of this part the terms "participant" and "participant in a solicitation" do not include a bank, broker or dealer who, in the ordinary course of business, lends money or executes orders for the purchase or sale of securities and who is not otherwise a participant; any person or organization retained or employed by a participant to solicit security holders, or any person who merely transmits proxy soliciting material or performs ministerial or clerical duties; any person employed in the capacity of attorney, accountant, or advertising, public relations or financial adviser, and whose activities are limited to the performance of duties in the course of that employment; any person regularly employed as an officer or employee of the issuer, or any of its subsidiaries or affiliates who is not otherwise a participant; or any officer or director of, or any person regularly employed by, any other participant, if the officer, director, or employee is not otherwise a participant.

Subp. 3. Filing of information required by schedule B.

A. No solicitation subject to this rule shall be made by any person other than the issuer unless at least five business days prior to it, or any shorter period the commissioner authorizes upon a showing of good cause, there has been filed with the commissioner, by or on behalf of each participant in the solicitation, a statement in duplicate containing the information specified in parts 2715.8300 to 2715.8350 (schedule B) and a copy of any material proposed to be distributed to security holders in furtherance of the solicitation.

B. Within five business days after a solicitation subject to this rule is made by the issuer, or any longer period the commissioner authorizes upon a showing of good cause, there shall be filed with the commissioner by or on behalf of each participant in the solicitation, other than the issuer, a statement in duplicate containing the information specified in parts 2715.8300 to 2715.8350.

C. If any solicitation on behalf of the issuer or any other person has been made, or if proxy material is ready for distribution, prior to a solicitation subject to this subpart in opposition to it, a statement in duplicate containing the information specified in parts 2715.8300 to 2715.8350 shall be filed with the commissioner by or on behalf of each participant in the prior solicitation, other than the issuer, as soon as reasonably practicable after the commencement of the solicitation in opposition to it.

D. If, subsequent to the filing of the statements required by items A to C, additional persons become participants in a solicitation subject to this rule, there shall be filed with the commissioner, by or on behalf of each person, a statement in duplicate containing the information specified in parts 2715.8300 to 2715.8350, within three business days after the person becomes a participant, or any longer period the commissioner authorizes upon a showing of good cause.

E. If any material change occurs in the facts reported in any statement filed by or on behalf of any participant, an appropriate amendment to the statement shall be filed promptly with the commissioner.

F. Each statement and amendment to it filed pursuant to this subpart shall be part of the public files of the commissioner.

Subp. 4. Solicitations prior to furnishing required written proxy statement.

Notwithstanding the provisions of part 2715.8300, a solicitation subject to this rule may be made prior to furnishing security holders a written proxy statement containing the information specified in parts 2715.7700 to 2715.7910 (schedule A) with respect to the solicitation if:

A. the statements required by subpart 5 are filed by or on behalf of each participant in the solicitation;

B. no form of proxy is furnished to security holders prior to the time the written proxy statement required by part 2715.7310, subpart 1 is furnished to those persons. This subpart does not apply where a proxy statement then meeting the requirements of parts 2715.7700 to 2715.7910 (schedule A) has been furnished to security holders;

C. at least the information specified in the statements required by subpart 3, items B and C to be filed by each participant, or an appropriate summary thereof, is included in each communication sent or given to security holders in connection with the solicitation;

D. a written proxy statement containing the information specified in parts 2715.7700 to 2715.7910 (schedule A) with respect to a solicitation is sent or given security holders at the earliest practicable date.

Subp. 5. Filing requirements of solicitations prior to furnishing required written proxy statement.

Two copies of any soliciting material proposed to be sent or given to security holders prior to the furnishing of the written proxy statement required by part 2715.7310, subpart 1 shall be filed with the commissioner in preliminary form at least five business days prior to the date definitive copies of the material are first sent or given to these persons, or any shorter period the commissioner authorizes upon a showing of good cause.

Subp. 6. Annual report.

Notwithstanding the provisions of part 2715.7310, subpart 2, two copies of any portion of the annual report referred to in part 2715.7310, subpart 2 which comments upon or refers to any solicitation subject to this rule, or to any participant in any such solicitation, other than the solicitation by the management, shall be filed with the commissioner as proxy material subject to parts 2715.7100 to 2715.8400. This portion of the report shall be filed with the commissioner in preliminary form at least five business days prior to the date copies of the report are first sent or given to security holders.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.7700 Minimum Requirement

The proxy statement shall contain the information required by parts 2715.7710 to 2715.7910.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7710 Revocability of Proxy

State whether or not the person giving the proxy has the power to revoke it. If the right of revocation before the proxy is exercised is limited or is subject to compliance with any formal procedure, briefly describe the limitation or procedure.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7720 Dissenters' Right of Appraisal

Outline briefly any rights of appraisal or similar rights of dissenting security holders with respect to any matter to be acted upon and indicate any statutory procedure required to be followed by dissenting security holders in order to perfect these rights. Where these rights may be exercised only within a limited time after the date of the adoption of a proposal, the filing of a charter amendment, or other similar act, state whether the person solicited will be notified of the date.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7730 Persons Making Solicitations

Subpart 1. Other than election contests.

Items B and C apply to solicitations not subject to part 2715.7390.

A. If the solicitation is made by the issuer, so state. Give the name of any director of the issuer who has informed the issuer in writing of intent to oppose any action intended to be taken by the issuer and indicate the action which the director intends to oppose.

B. If the solicitation is made otherwise than by the issuer, so state and give the names of the persons by whom and on whose behalf it is made.

C. If the solicitation is to be made otherwise than by use of the mails, describe the methods to be employed. If the solicitation is to be made by specially engaged employees or paid solicitors, state the material features of any contract or arrangement for the solicitation and identify the parties and the cost or anticipated cost of it.

D. State the name of the persons by whom the cost of solicitation has been or will be borne, directly or indirectly.

Subp. 2. Election contests.

This subpart applies to solicitations subject to part 2715.7390.

A. State by whom the solicitation is made and describe the methods employed and to be employed to solicit security holders.

B. If regular employees of the issuer or any other participant in a solicitation have been or are to be employed to solicit security holders, describe the class or classes of employees to be so employed and the manner and nature of their employment for this purpose.

C. If specially engaged employees, representatives or other persons have been or are to be employed to solicit security holders, state the material features of any contract or arrangement for the solicitation and identify the parties, the cost or anticipated cost of it, and the approximate number of the employees or employees of any other person and the name of the other person who will solicit security holders.

D. State the total amount estimated to be spent and the total expenditures to date for or in connection with the solicitation of security holders.

E. State who will bear the cost of the solicitation. If reimbursement will be sought from the issuer, state whether the question of the reimbursement will be submitted to a vote of security holders.

F. If the solicitation is terminated pursuant to a settlement between the issuer and any other participant in the solicitation, describe the terms of the settlement, including the cost or anticipated cost of it to the issuer.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.7740 Interest of Certain Persons in Matters to Be Acted Upon

A. For solicitations not subject to part 2715.7390, describe briefly any substantial interest, either direct or indirect, of each of the following persons, in any matter to be acted upon other than elections to office:

B. For solicitations subject to part 2715.7390, describe briefly any substantial interest, either direct or indirect, of each participant, except the issuer in any matter to be acted upon at the meeting, and include with respect to each participant the information or an adequate summary thereof, required by parts 2715.8320, items A and D, 2715.8330, and 2715.8340, items B and C.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7750 Voting Securities and Principal Holders of Them

A. State, as to each class of voting securities of the insurer entitled to be voted at the meeting, the number of shares outstanding and the number of votes to which each class is entitled.

B. Give the date as of which the record list of security holders entitled to vote at the meeting will be determined. If the right to vote is not limited to security holders of record on that date, indicate the conditions under which other security holders may be entitled to vote.

C. If action is to be taken with respect to the election of directors and if the persons solicited have cumulative voting rights:

D. Furnish the following information as of the most recent practicable date, in substantially the tabular form indicated, with respect to any person or group of persons who is known to be the beneficial owner of more than five percent of any class of securities; and all directors and nominees, naming them, and directors and officers of the issuer as a group, without naming them:

E. If, to the knowledge of the persons on whose behalf the solicitation is made, a change in control of the issuer has occurred since the beginning of its last fiscal year, state the following: the name of the person who acquired control; the amount and the source of the consideration used by the person; the basis of the control; the date and a description of the transaction which resulted in the change of control and the percentage of voting securities of the issuer now beneficially owned directly or indirectly by the person who acquired control; and the identity of the person from whom control was assumed. Describe any arrangements which may at a subsequent date result in a change of control of the issuer.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7760 Directors and Executive Officers

If action is to be taken with respect to the election of directors, furnish the information required by items A to K, in tabular form to the extent practicable, with respect to each person nominated for election as a director and each other person whose term of office as a director will continue after the meeting. If the solicitation is made on behalf of persons other than the issuer, the information required need be furnished only as to nominees of the persons making the solicitation.

A. List the names and ages of all directors and officers of the issuer and all persons nominated or chosen to become directors or officers; indicate all positions and offices with the issuer held by each person; state the person's term of office as director or officer and any period during which the person has served as officer or director; briefly describe any arrangement or understanding between him or her and any other person pursuant to which he or she was or is to be selected as a director, officer, or nominee, and name this other person. The information regarding officers need not be furnished in proxy or information statements if the information is furnished in a separate item in the issuer's annual report to stockholders.

B. State the nature of any family relationship not more remote than first cousin between any director, officer, or person nominated or chosen by the issuer to become a director or officer and also any similar family relationship between the person and any officer or director of any of the issuer's parents, subsidiaries or other affiliates.

C. State the principal occupations and employment during the past five years of each director and each person nominated or chosen to become a director or officer and the name and principal business of any corporation or other organization in which the occupations and employment were carried on.

D. Indicate other directorships held by each director or person nominated or chosen to become a director.

E. Describe any legal proceedings which have occurred during the past five years or which are pending which are material to an evaluation of the ability or integrity of any director or person nominated to become a director or officer of the issuer.

F. Describe any of the following relationships which exist:

G. State whether or not the issuer has standing audit, nominating, and compensation committees of the board of directors, or committees performing similar functions. If the issuer has the committees, however designated, identify each committee member, state the number of committee meetings held by each committee during the last fiscal year and describe briefly the functions performed by the committees. If the issuer has a nominating or similar committee, state whether the committee will consider nominees recommended by shareholders and describe the procedures to be followed by shareholders in submitting these recommendations.

H. State the total number of meetings of the board of directors, including regularly scheduled and special meetings, which were held during the last full fiscal year. Name each incumbent director who during the last full fiscal year attended fewer than 75 percent of the aggregate of the total number of meetings of the board of directors held during the period for which that person has been a director, and the total number of meetings held by all committees of the board on which the director served during the periods that he or she served.

I. If a director has resigned or declined to stand for reelection to the board of directors since the date of the last annual meeting of shareholders because of a disagreement with the issuer on any matter relating to the issuer's operations, policies or practices, and if the director has furnished the issuer with a letter describing the disagreement and requesting that the matter be disclosed, the issuer shall state the date of resignation or declination to stand for reelection and summarize the director's description of the disagreement. If the issuer believes that the description provided by the director is incorrect or incomplete, it may include a brief statement presenting its views of the disagreement.

J. With respect to those classes of voting stock which participated in the election of directors at the most recent meeting at which directors were elected:

K. Instructions:

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.7770 Remuneration of Directors and Officers

Furnish the information required by items A to G if action is to be taken with respect to the election of directors; any bonus, profit sharing or other remuneration plan, contract or arrangement in which any director, nominee for election as a director, or officer of the insurer will participate; any pension or retirement plan in which any such person will participate; or the granting or extension to any such person of any options, warrants or rights to purchase any securities other than warrants or rights issued to security holders, as such, on a pro rata basis. If the solicitation is made on behalf of persons other than the issuer, the information required need be furnished only as to nominees of the persons making the solicitation and associates of the nominees.

A. Current remuneration: furnish the information required in item B, in substantially the tabular form specified, concerning all remuneration of the persons and groups in subitems (1) and (2) for services in all capacities to the issuer and its subsidiaries during the issuer's last fiscal year, or, in specified instances, certain prior fiscal years.

B. Current remuneration: Columns (C1), (C2) and (D) should contain with respect to each person or group of persons specified in item A, subitems (1) and (2) a dollar amount which reflects the total of all items of remuneration described in the heading to that column including those items set forth in the subparagraphs of that column.

C. Proposed remuneration:

D. Remuneration of directors: Describe any standard or special arrangements by which directors of the issuer are compensated for services as a director. State the amount of compensation.

E. Options, warrants, or rights:

F. Indebtedness of management:

G. Transactions with management:

H. Transactions with pension or similar plans:

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279; L 1998 c 254 art 1 s 107

Minn. R. 2715.7780 Matters Related to Accounting

If the solicitation is made on behalf of the issuer and relates to an annual meeting of security holders at which directors are to be elected or financial statements are included, furnish the information contained in items A to C.

A. If the issuer's financial statements are not certified by independent public or certified accountants, so state.

B. If the board of directors has no audit or similar committee, so state.

C. If the issuer's financial statements are certified by independent public or certified accountants, so state and provide the following information:

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.7790 Bonus, Profit Sharing, Other Remuneration Plans, Pension, and Retirement Plans

If action is to be taken with respect to any bonus, profit sharing, or other remuneration plan or any pension or retirement plan, furnish the information contained in items A to F.

A. Describe briefly the material features of the plan; identify each class of persons who will participate in it; indicate the approximate number of persons in each class; and state the basis of the participation.

B. Furnish the information, in addition to that required by this part and part 2715.7770, necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other remuneration or incentive plans, now in effect or in effect within the past five years, for each director or officer named in answer to part 2715.7770, item A who may participate in the plan to be acted upon; all present directors and officers of the issuer as a group, if any director or officer may participate in the plan, and all employees, if employees may participate in the plan.

C. If the plan to be acted upon can be amended otherwise than by a vote of stockholders to increase the cost of it to the issuer or to alter the allocation of the benefits as between the directors and officers on the one hand and employees on the other hand, state the nature of the amendments which can be made.

D. With regard to any bonus, profit sharing or other remuneration plan on which action is to be taken, furnish the following information:

E. With regard to any pension or retirement plan on which action is to be taken furnish the following information:

F. Instructions:

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7800 Options, Warrants, or Rights

If action is to be taken with respect to the granting or extension of any options to purchase securities of the issuer or any subsidiary, furnish the information contained in items A to D.

A. State the following:

B. State separately the amount of options received or to be received by the following persons, naming each person:

C. In addition to that required by this part and part 2715.7770, furnish the information necessary to describe adequately the provisions already made pursuant to all bonus, profit sharing, pension, retirement, stock option, stock purchase, deferred compensation, or other remuneration or incentive plans, now in effect or in effect within the past five years, for each director or officer named in answer to part 2715.7770, item A who may participate in the plan to be acted upon; all present directors and officers of the issuer as a group, if any director or officer may participate in the plan; and all employees, if employees may participate in the plan.

D. Instructions:

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7810 Authorization or Issuance of Securities Other Than for Exchange

If action is to be taken with respect to the authorization or issuance of any securities otherwise than for exchange for outstanding securities of the issuer, furnish the information contained in items A to D.

A. State the title and amount of the securities to be authorized or issued.

B. If the securities are other than additional shares of common stock of a class outstanding, furnish a brief summary of the following, if applicable: dividend, voting, liquidation, preemptive, and conversion rights; redemption and sinking fund provisions; interest rate and date of maturity.

C. Describe briefly the transaction in which the securities are to be issued, including a statement as to the nature and approximate amount of consideration received or to be received by the issuer; and the approximate amount devoted to each purpose, as far as is determinable, for which the net proceeds have been or are to be used. If it is impracticable to describe the transaction in which the securities are to be issued, state the reason, indicate the purpose of the authorization of the securities and state whether further authorization for the issuance of the securities by a vote of security holders will be solicited prior to the issuance.

D. If the securities are to be issued otherwise than in a general public offering for cash, state the reasons for the proposed authorization or issuance and the general effect of it upon the rights of existing security holders.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7820 Modification of or Exchange of Securities

If action is to be taken with respect to the modification of any class of securities of the issuer, or the issuance or authorization for issuance of securities of the issuer in exchange for outstanding securities of the issuer, furnish the information contained in items A to E.

A. If outstanding securities are to be modified, state the title and amount of the securities. If securities are to be issued in exchange for outstanding securities, state the title and the amount of securities to be so issued, the title and the amount of outstanding securities to be exchanged, and the basis of the exchange.

B. Describe any material differences between the outstanding securities and the modified or new securities.

C. State the reasons for the proposed modification or exchange and the general effect of it upon the rights of existing security holders.

D. Furnish a brief statement as to arrears in dividends or defaults in principal or interest in respect to the outstanding securities which are to be modified or exchanged and other information appropriate in the particular case to disclose adequately the nature and effect of the proposed action.

E. Outline briefly any other material features of the proposed modification or exchange. If the plan of proposed action is set forth in a written document, file copies of it with the commissioner at the time the preliminary proxy material is filed.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7830 Mergers, Consolidations, Acquisitions, and Similar Matters

Furnish the information contained in items A to C if action is to be taken with respect to any plan for: the merger or consolidation of the issuer into or with any other person or of any other person into or with the issuer; the acquisition by the issuer or any of its security holders of securities of another issuer; the acquisition by the issuer of any other going business or of the assets thereof; the sale or other transfer of all or any substantial part of the assets of the issuer; or the liquidation or dissolution of the issuer.

A. Outline briefly the material features of the plan. State the reasons for it and the general effect of it upon the rights of existing security holders. If the plan is set forth in a written document, file three copies of it with the commissioner at the time preliminary copies of the proxy statement and form of proxy are filed.

B. Furnish the information contained in subitems (1) to (8) as to the issuer and each person to be merged into the issuer or into or with which the issuer is to be merged or consolidated or the business or assets of which are to be acquired or which is the issuer of securities to be acquired by the issuer in exchange for all or a substantial part of its assets or to be acquired by security holders of the issuer. What is required is information essential to an investor's appraisal of the action proposed to be taken.

C. As to each class of securities of the issuer, or of any person specified in item B, which is admitted to dealing on a national securities exchange or with respect to which a market otherwise exists and which will be materially affected by the plan, state the high and low sale prices, or, in the absence of trading in a particular period, the range of the bid and asked prices for each quarterly period within two years. This information may be omitted if the plan involves merely the liquidation or dissolution of the issuer.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7840 Financial Statements

A. If action is to be taken with respect to any matter specified in parts 2715.7810 to 2715.7830, furnish financial statements of the issuer and its subsidiaries complying with the requirements of part 2715.7310, subpart 2, items A to C including schedules of supplementary profit and loss information. The statements may be omitted with respect to a plan described in answer to part 2715.7830 if the plan involves only the issuer and one or more of its totally held subsidiaries.

B. If action is to be taken with respect to any matter specified in part 2715.7830, item B, furnish for each person specified, other than the issuer, financial statements complying with the requirements of part 2715.7310, subpart 2, items A to C.

C. The commissioner may, upon the request of the issuer, permit the omission of any of the statements required in this part where the statements are not necessary for the exercise of prudent judgment in regard to any matter to be acted upon, or may permit the filing in substitution therefor of appropriate statements of comparable character. The commissioner may also require the filing of other statements in addition to, or in substitution for, the statements required in this part in any case where the statements are necessary or appropriate for an adequate presentation of the financial condition of any person whose financial statements are required, or whose statements are otherwise material for the exercise of prudent judgment in regard to any matter to be acted upon. In the usual case, financial statements are deemed material to the exercise of prudent judgment where the matter to be acted upon is the authorization or issuance of a material amount of senior securities, but are not deemed material where the matter to be acted upon is in the authorization or issuance of common stock, otherwise than in an exchange, merger or consolidation, acquisition or similar transaction.

D. The proxy statement may incorporate by reference any financial statements contained in an annual report sent to security holders with respect to the same meeting as that to which the proxy statement relates, if the financial statements substantially meet the requirements of this part.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7850 Acquisition or Disposition of Property

If action is to be taken with respect to the acquisition or disposition of any property, furnish the information contained in items A to D.

A. Describe briefly the general character and location of the property.

B. State the nature and amount of consideration to be paid or received by the issuer or any subsidiary. To the extent practicable, outline briefly the facts bearing upon the question of the fairness of the consideration.

C. State the name and address of the transferor or transferee as the case may be, and the nature of any material relationship of the person to the issuer or an affiliate of the issuer.

D. Outline briefly any other material features of the contract or transaction.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7860 Restatement of Accounts

If action is to be taken with respect to the restatement of any asset, capital, or surplus account of the issuer, furnish the information contained in items A to D.

A. State the nature of the restatement and its effective date.

B. Outline briefly the reasons for the restatement and the selection of the particular effective date.

C. State the name and amount of each account, including any reserve accounts, affected by the restatement and the effect of the restatement on it. Tabular presentation of the amounts shall be made when appropriate, particularly in the case of recapitalizations.

D. To the extent practicable, state whether and the extent, if any, to which the restatement will, as of the date of it, alter the amount available for distribution to the holders of equity securities.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7870 Action with Respect to Reports

If action is to be taken with respect to any report of the issuer or of its directors, officers or committees or any minutes of meetings of its stockholders, furnish the information contained in items A and B.

A. State whether or not the action constitutes approval or disapproval of any of the matters referred to in the reports or minutes.

B. Identify each of the matters which it is intended will be approved or disapproved and furnish the information required by the appropriate provisions of parts 2715.7700 to 2715.7910 with respect to each matter.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7880 Matters Not Required to Be Submitted

If action is to be taken with respect to any matter which is not required to be submitted to a vote of security holders, state the nature of the matter, the reasons for submitting it to a vote of security holders and what action is intended to be taken by the management in the event of a negative vote on the matter by the security holders.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7890 Amendment of Charter, Bylaws, or Other Documents

A. If action is to be taken with respect to any amendment of the issuer's charter, bylaws or other documents as to which information is not required in parts 2715.7100 to 2715.7910, state briefly the reasons for and general effect of the amendment.

B. Where the matter to be acted upon is the classification of directors, state whether vacancies which occur during the year may be filled by the board of directors to serve only until the next annual meeting or may be filled for the remainder of the full term.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7900 Other Proposed Action

If action is to be taken with respect to any matter not specifically referred to in parts 2715.7100 to 2715.7910 describe briefly the substance of each matter in substantially the same degree of detail as is required by parts 2715.7750 to 2715.7890.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.7910 Vote Required for Approval

As to each matter which is to be submitted to a vote of security holders, other than elections to office or the selection or approval of auditors, state the vote required for its approval.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.8300 Minimum Requirement

The proxy statement shall contain the information required by parts 2715.8310 to 2715.8340.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.8310 Issuer

State the name and address of the issuer.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.8320 Identity and Background

A. State your name and business address and your present principal occupation or employment and the name, principal business and address of any corporation or other organization in which this employment is carried on.

B. State your residence address and information as to all material occupations, positions, offices or employments during the last ten years, giving starting and ending dates of each and the name, principal business and address of any business corporation or other business organization in which each occupation, position, office or employment was carried on.

C. State whether or not you are or have been a participant in any other proxy contest involving this company or other companies within the past ten years. If so, identify the principals, the subject matter and your relationship to the parties and the outcome.

D. State whether or not, during the past ten years, you have been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, and, if so, give dates, nature of conviction, name and location of court, and penalty imposed or other disposition of the case. A negative answer to this paragraph need not be included in the proxy statement or other proxy soliciting material.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.8330 Interest in Securities of Issuer

A. State the amount of each class of securities of the issuer which you own beneficially, directly or indirectly.

B. State the amount of each class of securities of the issuer which you own of record but not beneficially.

C. State with respect to all securities of the issuer purchased or sold within the past two years, the dates on which they were purchased or sold and the amounts purchased or sold on each date.

D. If any part of the purchase price or market value of any of the securities specified in item C is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding the securities, so state and indicate the amount of the indebtedness as of the latest practicable date. If the funds were borrowed or obtained otherwise than pursuant to a margin account or bank loan in the regular course of business of a bank, broker or dealer, briefly describe the transaction, and state the names of the parties.

E. State whether or not you are a party to any contracts, arrangements or understandings with any person with respect to any securities of the issuer, including joint ventures, loan or option arrangements, puts or calls, guarantees against losses or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. If so, name the persons with whom the contracts, arrangements, or understandings exist and give the details of them.

F. State the amount of securities of the issuer owned beneficially, directly or indirectly, by each of your associates and the name and address of each associate.

G. State the amount of each class of securities of any parent, subsidiary or affiliate of the issuer which you own beneficially, directly or indirectly.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.8340 Further Matters

A. Describe the time and circumstances under which you became a participant in the solicitation and state the nature and extent of your activities or proposed activities as a participant.

B. Describe briefly, and where practicable state the approximate amount of, any material interest, direct or indirect, of yourself and of each of your associates in any material transactions since the beginning of the company's last fiscal year, or in any material proposed transactions, to which the company or any of its subsidiaries or affiliates was or is to be a party.

C. State whether or not you or any of your associates have any arrangement or understanding with any person with respect to any future employment by the issuer or its subsidiaries or affiliates; or with respect to any future transactions to which the issuer or any of its subsidiaries or affiliates will or may be a party. If so, describe the arrangement or understanding and state the names of the parties to it.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.8350 Signature

The statement shall be dated and signed in the following manner:

I certify that the statements made in this statement are true, complete, and correct, to the best of my knowledge and belief.

History

Statutory Authority: MS s 60A.22

Minn. R. 2715.8400 Minimum Requirement

Subpart 1. Contents.

The information statement shall contain the information required by subparts 2 to 7.

Subp. 2. Limitation.

Where any provision other than subpart 6 calls for information with respect to any matter to be acted upon at the meeting, the provision need be answered only with respect to proposals to be made by the issuer.

Subp. 3. Information required by schedule A.

Furnish the information called for by parts 2715.7700 to 2715.7910 except parts 2715.7700, 2715.7710, 2715.7730, and 2715.7740 which would be applicable to any matter to be acted upon at the meeting if proxies were to be solicited in connection with the meeting.

Subp. 4. Statement that proxies not solicited.

The following statement shall be set forth on the first page of the information statement in bold face type:

"WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE

REQUESTED NOT TO SEND US A PROXY."

Subp. 5. Date, time, and place of meeting.

State the date, time, and place of the meeting of security holders, unless the information is otherwise disclosed in material furnished to security holders with the information statement.

Subp. 6. Interest of certain persons.

A. Describe briefly any substantial interest, direct or indirect, by security holdings or otherwise, of each of the following persons in any matter to be acted upon, other than elections to office:

B. Give the name of any director of the issuer who has informed the management in writing of intent to oppose any action to be taken by the management at the meeting and indicate the action which that person intends to oppose.

Subp. 7. Proposals by security holders.

If any security holder entitled to vote at the meeting has, not less than 90 days before the issuer's annual meeting, submitted to the issuer a proposal which is accompanied by notice of intention to present the proposal for action at the meeting, make a statement to that effect, identify the proposal and indicate the disposition proposed to be made of the proposal by the management at the meeting.

History

Statutory Authority: MS s 60A.22
History: 17 SR 1279

Minn. R. 2715.8500 Alternative Compliance

Notwithstanding the provisions of parts 2715.7100 to 2715.8400, the commissioner shall permit the solicitation of proxies, consents, or authorizations if the manner of solicitation and the form of proxy, proxy statement and other documents used in the solicitation comply with the National Association of Insurance Commissioner's Model Regulation and the Schedules thereto.

History

Statutory Authority: MS s 60A.22

Chapter 2720 INSURANCE HOLDING COMPANY SYSTEMS

Minn. R. 2720.0100 Definitions

Subpart 1. Scope.

For the purposes of this chapter, the terms defined in this part have the meanings given them.

Subp. 2. Acquisition filing statement.

"Acquisition filing statement" means the statement that must be filed prior to the acquisition of control or an attempt to acquire control, as specified in Minnesota Statutes, section 60D.17.

Subp. 3.

[Repealed, 17 SR 1272]

Subp. 4.

[Repealed, 17 SR 1272]

Subp. 5. Executive officer.

"Executive officer" means any individual charged with active management and control in an executive capacity of a person, whether incorporated or unincorporated, including a chief executive officer, chief operating officer, chief financial officer, treasurer, secretary, controller, and any other individual performing functions corresponding to those performed by the foregoing officers under any title.

Subp. 6. Foreign insurer.

"Foreign insurer" includes an alien insurer.

Subp. 7. Registration statement.

"Registration statement" means the statement that must be filed pursuant to Minnesota Statutes, section 60D.19.

Subp. 8. Ultimate controlling person.

"Ultimate controlling person" means that person within an insurance holding company system that is not controlled by any other person; provided, however, that if the commissioner so determines, the ultimate controlling person shall be the affiliated person about which the disclosures required hereunder would be most meaningful and would best serve to effectuate the purposes of Minnesota Statutes, chapter 60D.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.0200 [Repealed, 17 SR 1272]

[Repealed, 17 SR 1272]

Minn. R. 2720.0300 Purpose

The purposes of these rules are to set forth procedural requirements that the commissioner deems necessary to carry out the provisions of the act. The information called for by these rules is hereby declared to be necessary and appropriate, in the public interest, and for the protection of policyholders and shareholders of insurance companies in this state.

History

Statutory Authority: MS s 60D.07

Minn. R. 2720.0350 Severability Clause

If any provision of this chapter or the application of it to any person or circumstance is held invalid, the determination shall not affect other provisions or applications of these rules which can be given effect without the invalid provision or application and to that end, the provisions of these rules are severable.

History

Statutory Authority: MS s 45.023; 60D.23
History: 17 SR 1272

Minn. R. 2720.0400 Approval of Acquisition of Control

The commissioner may order a public hearing prior to approval of an acquisition of control, but the hearing is not mandatory prior to approval except as provided in Minnesota Statutes, chapter 60D.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.0500 Extraordinary Dividends and Other Distributions

Subpart 1. Format for request.

Requests for approval of extraordinary dividends or any other extraordinary distribution to shareholders shall include the following:

A. the amount of the proposed dividend;

B. the date established for payment of the dividend;

C. a statement as to whether the dividend is to be in cash or other property and, if in property, a description thereof, its cost, and its fair market value, together with an explanation of the basis for valuation;

D. a copy of the calculations determining that the proposed dividend is extraordinary. The work paper must include the following information:

E. a balance sheet and statement of income for the period intervening from the last annual statement filed with the commissioner and the end of the month preceding the month in which the request for dividend approval is submitted; and

F. a brief statement as to the effect of the proposed dividend upon the insurer's surplus and the reasonableness of surplus in relation to the insurer's outstanding liabilities and the adequacy of surplus relative to the insurer's financial needs.

Subp. 2. Report of distributions.

Subject to Minnesota Statutes, section 60D.20, subdivision 2, each registered insurer shall report to the commissioner all dividends and other distributions to shareholders within 15 business days following the declaration of them, including the same information required by subpart 1, item D, subitems (4) and (5).

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.0600 Adequacy of Surplus

The factors set forth under Minnesota Statutes, section 60D.20, subdivision 4, are not intended to be an exhaustive list. In determining the adequacy and reasonableness of an insurer's surplus no single factor shall be controlling. The commissioner, instead, will consider the net effect of all of these factors plus other factors bearing on the financial condition of the insurer. In comparing the surplus maintained by other insurers, the commissioner will consider the extent to which each of these factors varies from company to company, and in determining the quality and liquidity of investments in subsidiaries the commissioner will consider the individual subsidiary and may discount or disallow its valuation to the extent that the individual investments so warrant.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.1100 Forms

The forms described in parts 2720.9910 to 2720.9940 are intended to be guides in the preparation of the statements required by Minnesota Statutes, chapter 60D, and are not intended to be blank forms to be filled in. The statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers thereto are prepared in such a manner as to indicate to the reader the scope and coverage of the items without the necessity of referring to the text of the items or the instructions thereto. All instructions, whether appearing under the items of the form or elsewhere thereon, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made.

Two complete copies of each form or statement, including exhibits and all other papers and documents filed as a part of the form or the statement, shall be filed with the commissioner by personal delivery or mail addressed to the Commissioner of Commerce. A copy of form C, part 2720.9930, shall be filed in each state in which an insurer is authorized to do business if the commissioner of that state has notified the insurer of its request in writing, in which case, the insurer has 30 days from receipt of the notice to file the form. At least one of the copies shall be manually signed in the manner prescribed on the form. Unsigned copies shall be conformed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of such power of attorney or other authority shall be filed with the statement.

Statements should be prepared on paper 8-1/2 inches by 11 inches in size and preferably bound at the top or the top left-hand corner. Exhibits and financial statements, unless specifically prepared for the filing, may be submitted in their original size. All copies of any statement, financial statements, or exhibits shall be clear, easily readable, and suitable for photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies. Statements shall be in the English language and monetary values shall be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language, and any monetary value normally shown in a foreign currency shall be converted into United States currency.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; 17 SR 1272

Minn. R. 2720.1200 Incorporations by Reference, Summaries, and Omissions

Information required by any item of the forms described in parts 2720.9910 to 2720.9940 may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of these forms, provided the document or paper is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents already on file with the commissioner which were filed within three years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material, the date of filing, and shall specifically indicate that such material is to be incorporated by reference in the answer to the item. Information shall not be incorporated by reference in any case where the incorporation would render the statement incomplete, unclear, or confusing.

Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the most important provisions of the document. In addition to such statement, the summary or outline may incorporate by reference particular parts of any exhibit or document on file with the commissioner and may be qualified in its entirety by such reference.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.1300 Information Unknown or Unavailable

Subpart 1. Conditions for omission.

Information required need be given only insofar as it is known or reasonably available to the person filing the statement. If any required information is unknown and not reasonably available to the person filing, either because the obtaining thereof would involve unreasonable effort or expense, or because it rests particularly within the knowledge of another person not affiliated with the person filing, the information may be omitted, subject to the following conditions:

A. the person filing shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof; and

B. the person filing shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests, and stating the result of a request made to such person for the information.

Subp. 2. Extension of time.

If it is impractical to furnish any required information, document, or report at the time it is required to be filed, a separate document may be filed identifying the information, document, or report in question; stating why the filing at the time required is impractical; and requesting an extension of time to a specified date for filing the information, document, or report. The request for extension of time shall be deemed granted unless the commissioner, within 30 days after receipt of the request, enters an order denying the request for extension of time.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.1400 Additional Information and Exhibits

In addition to the information expressly required to be included in the statements under parts 2720.9910 to 2720.9940, further material information shall be added as may be necessary to clarify and eliminate any misleading information in the documents filed. The person filing may also file exhibits in addition to those expressly required by the statement. Additional exhibits shall be marked to indicate clearly the subject matters to which they refer.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.1500 Amendments

Any amendment to the forms or statements required under parts 2720.9910 to 2720.9940 must include on the top of the cover page the phrase: "Amendment No. ____ to" and must indicate the date of the amendment and not the date of the original filing.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.1600 Acquisition Filing Statement

Subpart 1. Statement required.

A person required to file a statement under Minnesota Statutes, section 60D.17, must furnish the information required by these rules, specifically including the information on form A, part 2720.9910.

Subp. 2. Amendments.

The applicant must, within two business days of the change, advise the commissioner of any changes in the information furnished which occur after the date the information was furnished but before the commissioner's disposition of the application.

Subp. 3. Acquisition of other insurers.

If the person being acquired is deemed to be a "domestic insurer" solely because of Minnesota Statutes, section 60D.18, the name of the "domestic insurer" on the cover page should be indicated as follows: "ABC Insurance Company, a subsidiary of XYZ Holding Company"; and all references to "the insurer" contained in form A, part 2720.9910, shall refer to both the domestic subsidiary insurer and the person being acquired.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.1700 Annual Registration of Insurers; Statement; Filing

Subpart 1. Statement required.

An insurer required to file an annual registration statement pursuant to Minnesota Statutes, section 60D.19, and this chapter shall furnish the required information on form B, part 2720.9920.

Subp. 2. Summary of registration.

An insurer required to file an annual registration statement pursuant to Minnesota Statutes, section 60D.19, is also required to furnish information required on form C, part 2720.9930. An insurer must file a completed copy of form C in each state in which the insurer is authorized to do business, if requested by the commissioner of that state.

Subp. 3. Amendments.

An amendment to form B must be filed within 15 days after the end of any month in which the following occurs: there is a change in the control of the registrant, in which case the entire statement shall be made current; or there is a material change in the information provided in the annual registration statement.

Amendments shall be filed in the form B, part 2720.9920 format with only those items which are being amended reported. Each amendment shall include at the top of the cover page "Amendment No. _____ to Form B" and shall indicate the date of the change, not the date of the original filings.

Subp. 4. Alternative and consolidated registrations.

Alternatives and consolidated registrations:

A. Any authorized insurer may file a registration statement on behalf of any affiliated insurer or insurers required to register under Minnesota Statutes, section 60D.19. A registration statement may include information not required by Minnesota Statutes, chapter 60D, regarding any insurer in the insurance holding company system even if the insurer is not authorized to do business in this state. In lieu of filing a registration statement as prescribed in form B, part 2720.9920, the authorized insurer may file a copy of the registration statement or similar report that it is required to file in its state of domicile; provided the statement or report contains substantially similar information required to be furnished by part 2720.9920 and the filing insurer is the principal insurance company in the insurance holding company system.

B. The question of whether the filing insurer is the principal insurance company in the insurance holding company system is a question of fact and an insurer filing a registration statement or report in lieu of form B, part 2720.9920, on behalf of an affiliated insurer shall set forth a simple statement of facts that will substantiate the filing insurer's claim that it, in fact, is the principal insurer in the insurance holding company system.

C. With the prior approval of the commissioner, an unauthorized insurer may follow any of the procedures that could be done by an authorized insurer under item A.

D. Any insurer may take advantage of the provisions of Minnesota Statutes, section 60D.19, subdivision 8 or 9, without obtaining the prior approval of the commissioner. The commissioner, however, reserves the right to require individual filings if the commissioner considers the filings necessary in the interest of clarity, ease of administration, or the public good.

E. The state of entry of an alien insurer shall be deemed to be its domiciliary state for the purposes of Minnesota Statutes, section 60D.19.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272

Minn. R. 2720.1800 Exemptions from Filing

The provisions of the act, section 3, shall not apply in those situations described therein and in this part.

A. The registration and amendments required in the act, section 3, shall not be required for any insurance company domiciled in the state of Minnesota if and so long as that company and all insurance company affiliates in its insurance holding company system do not sell any insurance or otherwise provide insurance protection to any person outside of the insurance holding company system, and it does not hold itself out as willing or available to sell insurance or otherwise provide insurance protection to members of the general public.

B. The registration and amendments required in the act, section 3, shall not be required for any insurance company not domiciled in the state of Minnesota that is otherwise required to file a registration statement, if the insurance company is included in a filing as an affiliate of another insurance company that is exempt from the requirements of the act, section 3, by virtue of the fact that it must file a registration statement in another state under statutes and regulations which are substantially similar to the act and these rules. However, the commissioner may request a copy of the registration statement filed in another state.

History

Statutory Authority: MS s 60D.07

Minn. R. 2720.1900 Disclaimers and Termination of Registration

Subpart 1. Information required.

A disclaimer of affiliation or a request for termination of registration, claiming that a person does not or will not, upon the taking of some proposed action, control another person (hereinafter referred to as the "subject") shall contain the following information:

A. the number of authorized, issued, and outstanding voting securities of the subject;

B. with respect to the person whose control is denied and all affiliates of such person, the number and percentage of shares of the subject's voting securities that are held of record or known to be beneficially owned, and the number of such shares concerning which there is a right to acquire, directly or indirectly;

C. all material relationships and bases for affiliation between the subject and the person whose control is denied, and all affiliates of such person; and

D. a statement explaining why such person should not be considered to control the subject.

Subp. 2. Automatic termination.

A request for termination of registration shall be deemed to have been granted unless the commissioner, within 30 days after receiving the request, notifies the registrant otherwise.

History

Statutory Authority: MS s 60D.07
History: 17 SR 1279

Minn. R. 2720.2000 Transactions Subject to Prior Notice

An insurer required to give notice of a proposed transaction pursuant to Minnesota Statutes, section 60D.20, shall furnish the required information on form D, part 2720.9940.

History

Statutory Authority: MS s 45.023; 60D.23
History: 17 SR 1272

Minn. R. 2720.9910 Form A; Acquisition Filing Statement

Name, title, address and telephone number of individual to whom notices and correspondence concerning this statement should be addressed:

ITEM 1. INSURER AND METHOD OF ACQUISITION

State the name and address of the domestic insurer to which this application relates and a brief description of how control is to be acquired.

ITEM 2. IDENTITY AND BACKGROUND OF THE APPLICANT

(a) State the name and address of the applicant seeking to acquire control over the insurer.

(b) If the applicant is not an individual, state the nature of its business operations for the past five years or for such lesser period as such person and any predecessors thereof shall have been in existence. Briefly describe the business intended to be done by the applicant and the applicant's subsidiaries.

(c) Furnish a chart or listing clearly presenting the identities of the interrelationships among the applicant and all affiliates of the applicant. No affiliate need be identified if its total assets are equal to less than one-half of one percent of the total assets of the ultimate controlling person affiliated with the applicant. Indicate in such chart or listing the percentage of voting securities of each such person which is owned or controlled by the applicant or by any other such person. If control of any person is maintained other than by ownership or control of voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g. -- corporation, trust, partnership) and the state or other jurisdiction of domicile. If court proceedings involving a reorganization or liquidation are pending with respect to any such person, indicate which person, and set forth the title of the court, nature of proceedings and the date when commenced.

ITEM 3. IDENTITY AND BACKGROUND OF INDIVIDUALS ASSOCIATED WITH THE APPLICANT

State the following with respect to (1) the applicant if the applicant is an individual or (2) all persons who are directors, executive officers or owners of ten percent or more of the voting securities of the applicant if the applicant is not an individual:

(a) Name and business address;

(b) Present principal business activity, occupation or employment including position and office held and the name, principal business and address of any corporation or other organization in which such employment is carried on;

(c) Material occupations, positions, offices or employment during the last five years, giving the starting and ending dates of each and the name, principal business and address of any business corporation or other organization in which each such occupation, position, office or employment was carried on; if any such occupation, position, office or employment required licensing by or registration with any federal, state or municipal governmental agency, indicate such fact, the current status of such licensing or registration, and an explanation of any surrender, revocation, suspension or disciplinary proceedings in connection therewith;

(d) Whether the individual has been convicted of or is currently charged with any criminal offense other than minor traffic violations during the past ten years (if so, explain); whether the individual or any company for which the individual was then acting as an officer or director has been the subject of any inquiry or investigation by any state agency, administrative body, or law enforcement unit and the results of these proceedings (this includes inquiries or investigations which may have begun after the individual ceased acting as an officer or director but which pertain to the time period during which the individual was acting as an officer or director); and whether the individual has ever been a defendant in any lawsuit involving claims of fraud, misrepresentation, conversion, mismanagement of funds, breach of fiduciary duty, or breach of contract. If any of the provisions of this subdivision apply to the individual or company described in the filing, please give a detailed explanation, including dates, nature of the investigation or proceeding, names and location of courts, and penalties imposed or other disposition of the case.

ITEM 4. NATURE, SOURCE AND AMOUNT OF CONSIDERATION

(a) Describe the nature, source and amount of funds or other considerations used or to be used in effecting the merger or other acquisition of control. If any part of the same is represented or is to be represented by funds, or other consideration borrowed or otherwise obtained for the purpose of acquiring, holding, or trading securities, furnish a description of the transaction, the names of the parties thereto, the relationship, if any, between the borrower and the lender, the amounts borrowed or to be borrowed, and copies of all agreements, promissory notes and security arrangements relating thereto.

(b) Explain the criteria used in determining the nature and amount of such consideration.

(c) If the source of the consideration is a loan made in the lender's ordinary course of business and if the applicant wishes the identity to remain confidential, the applicant must specifically request that the identity be kept confidential.

ITEM 5. FUTURE PLANS OF INSURER

Describe any plans or proposals which the applicant may have to declare an extraordinary dividend, to liquidate such insurer, to sell its assets to or merge it with any person or persons or to make any other material change in its business operations or corporate structure or management.

ITEM 6. VOTING SECURITIES TO BE ACQUIRED

State the number of shares of the insurer's voting securities which the applicant, its affiliates and any person listed in Item 3 plan to acquire, and the terms of the offer, request, invitation, agreement or acquisition, and a statement as to the method by which the fairness of the proposal was arrived at.

ITEM 7. OWNERSHIP OF VOTING SECURITIES

State the amount of each class of any voting security of the insurer which is beneficially owned or concerning which there is a right to acquire beneficial ownership by the applicant, its affiliates or any person listed in Item 3.

ITEM 8. CONTRACTS, ARRANGEMENTS, OR UNDERSTANDINGS WITH RESPECT TO VOTING SECURITIES OR THE INSURER

Give a full description of any contracts, arrangements or understandings with respect to any voting security of the insurer in which the applicant, its affiliates or any persons listed in Item 3 is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. Such description shall identify the persons with whom such contracts, arrangements or understandings have been entered into.

ITEM 9. RECENT PURCHASES OF VOTING SECURITIES

Describe any purchases of any voting securities of the insurer by the applicant, its affiliates or any person listed in Item 3 during the 12 calendar months preceding the filing of this statement. Include in such description the dates of purchase, the names of the purchasers, and the consideration paid or agreed to be paid therefor. State whether any such shares so purchased are hypothecated.

ITEM 10. RECENT RECOMMENDATIONS TO PURCHASE

Describe any recommendations to purchase any voting security of the insurer made by the applicant, its affiliates or any person listed in Item 3, or by anyone based upon interviews or at the suggestion of the applicant, its affiliates or any person listed in Item 3 during the 12 calendar months preceding the filing of this statement.

ITEM 11. AGREEMENTS WITH BROKER-DEALERS

Describe the terms of any agreement, contract or understanding made with any broker-dealer as to solicitation of voting securities of the insurer for tender, and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto.

ITEM 12. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements and exhibits shall be attached to this statement as an appendix, but list under this item all the financial statements and exhibits so attached.

(b) The financial statements shall include the annual financial statements of the persons identified in Item 2 (c) for the preceding five fiscal years (or for such lesser period as such applicant and its affiliates and any predecessors thereof shall have been in existence), and similar information covering the period from the end of such person's last fiscal year, if such information is available. Such statements may be prepared on either an individual basis, or, unless the Commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.

The annual financial statements of the applicant shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the applicant is an insurer which is actively engaged in the business of insurance, the financial statements need not be certified, provided they are based on the Annual Statement of such person filed with the insurance department of the person's domiciliary state and are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of such state.

(c) File as exhibits copies of, or a statement fully describing, all tender offers for, requests or invitations for, tenders of, exchange orders for and agreements to acquire or exchange any voting securities of the insurer and (if distributed) of additional soliciting material relating thereto; and proposed employment, consultation, advisory or management contracts concerning the insurer; annual reports to the stockholders of the insurer and the applicant for the last two fiscal years; and any additional documents or papers required by form A or parts 2720.1100 and 2720.1300.

ITEM 13. SIGNATURE AND CERTIFICATION

Signature and certification of the following form:

SIGNATURE

Pursuant to the requirements of Minnesota Statutes, section 60D.17, and parts 2720.1100 and 2720.1600, subpart 1, ______________________ (name of applicant) has caused this application to be duly signed on its behalf in the city of __________________ and state of ____________________ (seal) on the _____ day of ______________, ____.

CERTIFICATION

The undersigned deposes and says that the undersigned has duly executed the attached application dated _______, ____, for and on behalf of __________; that the undersigned is the __________ of such company, and that the undersigned is authorized to execute and file such statement. Deponent further says that the deponent is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of the undersigned's knowledge, information, and belief.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272; 17 SR 1279; L 1998 c 254 art 1 s 107

Minn. R. 2720.9920 Form B; Annual Registration Statement

Name, title, address, and telephone number of individual to whom notices and correspondence concerning this statement should be addressed:

ITEM 1. IDENTITY AND CONTROL OF REGISTRANT

Furnish the exact name of each insurer registering or being registered (hereinafter called "the Registrant"), the home office address and principal executive offices of each; the date on which each Registrant became part of the insurance holding company system; and the method(s) by which control of each Registrant was acquired and is maintained.

ITEM 2. ORGANIZATIONAL CHART

Furnish a chart or listing clearly presenting the identities of and interrelationships among all affiliated persons within the insurance holding company system. No affiliate need be shown if its total assets are equal to less than one-quarter of one percent of the total assets of the ultimate controlling person within the insurance holding company system, or the affiliate has assets valued at $250,000 or less. The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g. -- trust, partnership, corporation) and the state or other jurisdiction of domicile.

ITEM 3. THE ULTIMATE CONTROLLING PERSON

As to the ultimate controlling person in the insurance holding company system furnish the following information:

(a) name;

(b) home office address;

(d) the organization structure of the person, i.e., corporation, partnership, individual, or trust;

(e) the principal business of the person;

(f) the name and address of any person who holds or owns ten percent or more of any class of voting security, the class of such security, the number of shares held of record or known to be beneficially owned, and the percentage of class so held or owned; and

(g) If court proceedings involving a reorganization or liquidation are pending, indicate the title and location of the court, the nature of proceedings, and the date when commenced.

ITEM 4. BIOGRAPHICAL INFORMATION

Furnish the following information for the directors and executive officers of the ultimate controlling person: the individual's name and address; the principal occupation and all offices and positions held by this individual during the past five years; whether the individual has been convicted of or is currently charged with any criminal offense other than minor traffic violations during the past ten years (if so, explain); whether the individual or any company for which the individual was then acting as an officer or director has been the subject of any inquiry or investigation by any state agency, administrative body, or law enforcement unit and the results of these proceedings (this includes inquiries or investigations which may have begun after the individual ceased acting as an officer or director but which pertain to the time period during which the individual was acting as an officer or director); and whether the individual has ever been a defendant in any lawsuit involving claims of fraud, misrepresentation, conversion, mismanagement of funds, breach of fiduciary duty, or breach of contract. If any of the provisions of this subdivision apply to the individual or company described in the filing, please give a detailed explanation, including dates, nature of the investigation or proceeding, names and location of courts, and penalties imposed or other disposition of the case.

ITEM 5. TRANSACTIONS, RELATIONSHIPS, AND AGREEMENTS

(a) Briefly describe the following agreements in force, relationships subsisting, and transactions currently outstanding or which have occurred during the last calendar year between the Registrant and its affiliates:

(1) loans, other investments, or purchases, sales or exchanges of securities of the affiliates by the Registrant or of the Registrant by its affiliates;

(2) purchases, sales, or exchanges of assets;

(3) transactions not in the ordinary course of business;

(4) guarantees or undertakings for the benefit of an affiliate which result in an actual contingent exposure of the Registrant's assets to liability, other than insurance contracts entered into in the ordinary course of the Registrant's business;

(5) all management and service contracts and all cost-sharing arrangements;

(6) reinsurance agreements;

(7) dividends and other distributions to shareholders;

(8) consolidated tax allocation agreements; and

(9) any pledge of the registrant's stock and/or of the stock of any subsidiary or controlling affiliate, for a loan made to any member of the insurance company holding system.

No information need be disclosed if the commissioner determines that such information is not material for purposes of Minnesota Statutes, section 60D.19. Sales, purchases, exchanges, loans, or extensions of credit, investments, or guarantees involving one-half of one percent or less of the registrant's admitted assets as of the preceding December 31 shall not be deemed material.

The description shall be in a manner as to permit the proper evaluation thereof by the commissioner, and shall include at least the following: the nature and purpose of the transaction; the nature and amounts of any payments or transfers of assets between the parties; the identity of all parties to such transactions; and the relationship of the affiliated parties to the Registrant.

ITEM 6. LITIGATION OR ADMINISTRATIVE PROCEEDINGS

A brief description of any litigation or administrative proceedings of the following types, either then pending or concluded within the preceding fiscal year, to which the ultimate controlling person or any of its directors or executive officers was a party or of which the property of any such person is or was the subject; give the names of the parties and the court or agency in which such litigation or proceeding is or was pending:

(a) Criminal prosecutions or administrative proceedings by any government agency or authority which may be relevant to the trustworthiness of any party thereto; and

(b) Proceedings which may have a material effect upon the solvency or capital structure of the ultimate holding company including, but not necessarily limited to, bankruptcy, receivership, or other corporate reorganizations.

ITEM 7. STATEMENT REGARDING PLAN OR SERIES OF TRANSACTIONS

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions, the purpose of which is to avoid statutory threshold amounts and the review that might otherwise occur.

ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements and exhibits should be attached to this statement as an appendix, but list under this item the financial statements and exhibits so attached.

(b) The financial statements shall include the annual financial statements of the ultimate controlling person in the insurance holding company system as of the end of the person's latest fiscal year.

If at the time of the initial registration, the annual financial statements for the latest fiscal year are not available, annual statements for the previous fiscal year may be filed and similar financial information shall be filed for any subsequent period to the extent such information is available. Such financial statements may be prepared on either an individual basis, or unless the commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business.

Unless the commissioner otherwise permits, the annual financial statements shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of the ultimate controlling person and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the annual statement of such insurer filed with the insurance department of the insurer's domiciliary state and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of such state.

(c) Exhibits shall include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person; and any additional documents or papers required by this part or part 2720.1100 or 2720.1300.

ITEM 9. FORM C REQUIRED

A Form C, Summary of Registration Statement, must be prepared and filed with this Form B.

SIGNATURES

Signatures and certification of the form as follows:

SIGNATURE

Pursuant to the requirements of Minnesota Statutes, section 60D.19, and part 2720.1700, subpart 1, the Registrant has caused this registration statement to be duly signed on its behalf in the City of _____________________ and State of _______________________, on the ________ day of ________, ____.

CERTIFICATION

The undersigned deposes and says that the undersigned has duly executed the attached registration statement dated ____________, ____, for and on behalf of ______________________ (Name of Company); that the undersigned is the _________________________ (Title of Officer) of such company, and that the undersigned has authority to execute and file such instrument. Deponent further says that the deponent is familiar with such instrument and that the facts therein set forth are true to the best of the undersigned's knowledge, information, and belief.

History

Statutory Authority: MS s 45.023; 60D.07; 60D.23
History: 17 SR 1272; L 1998 c 254 art 1 s 107

Minn. R. 2720.9930 Form C; Registration Summary Statement

Name, Title, Address, and Telephone Number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:

Furnish a brief description of all items in the current annual registration statement which represent changes from the prior year's annual registration statement. The description shall be in a manner as to permit the proper evaluation thereof by the Commissioner, and shall include specific references to Item numbers in the annual registration statement and to the terms contained therein.

Changes occurring under Item 2 of Form B insofar as changes in the percentage of each class of voting securities held by each affiliate is concerned, need only be included where such changes are ones which result in ownership or holdings of ten percent or more of voting securities, loss or transfer of control, or acquisition or loss of partnership interest.

Changes occurring under Item 4 of Form B need only be included where: an individual is, for the first time, made a director or executive officer of the ultimate controlling person; a director or executive officer terminates responsibilities with the ultimate controlling person; or an individual is named president of the ultimate controlling person.

If a transaction disclosed on the prior year's annual registration statement has been changed, the nature of such change shall be included. If a transaction disclosed on the prior year's annual registration statement has been effectuated, furnish the mode of completion and any flow of funds between affiliates resulting from the transaction.

The insurer shall furnish a statement that transactions entered into since the filing of the prior year's annual registration statement are not part of a plan or series of like transactions whose purpose it is to avoid statutory threshold amounts and the review that might otherwise occur.

SIGNATURE AND CERTIFICATION

Signature and certification required as follows:

SIGNATURE

Pursuant to the requirements of Minnesota Statutes, section 60D.19, the registrant has caused this summary of registration statement to be duly signed on its behalf in the City of _____________________ and State of _______________________, on the ________ day of ________, ____.

CERTIFICATION

The undersigned deposes and says that the undersigned has duly executed the attached summary of registration statement dated ____________, ____, for and on behalf of ______________________ (Name of Company); that the undersigned is the _________________________ (Title of Officer) of such company, and that the undersigned is authorized to execute and file such instrument. Deponent further says that the deponent is familiar with such instrument and the contents thereof, and that the facts therein set forth are true to the best of the undersigned's knowledge, information, and belief.

History

Statutory Authority: MS s 45.023; 60D.23
History: 17 SR 1272; L 1998 c 254 art 1 s 107

Minn. R. 2720.9940 Form D; Transaction Notice

Name, Title, Address, and Telephone Number of Individual to Whom Notices and Correspondence Concerning This Statement Should Be Addressed:

ITEM 1. IDENTITY OF PARTIES TO TRANSACTION

Furnish the following information for each of the parties to the transaction:

(a) name;

(b) home office address;

(d) the organizational structure, i.e. corporation, partnership, individual, or trust;

(e) a description of the nature of the parties' business operations;

(f) relationship, if any, of other parties to the transaction to the insurer filing the notice, including any ownership or debtor/creditor interest by any other parties to the transaction in the insurer seeking approval, or by the insurer filing the notice in the affiliated parties; and

(g) where the transaction is with a nonaffiliate, the names of the affiliates which will receive, in whole or in substantial part, the proceeds of the transaction.

ITEM 2. DESCRIPTION OF TRANSACTION

Furnish the following information for each transaction for which notice is being given:

(a) a statement as to whether notice is being given under Minnesota Statutes, section 60D.20;

(b) a statement of the nature of the transaction; and

ITEM 3. SALES, PURCHASES, EXCHANGES, LOANS, EXTENSIONS OF CREDIT, GUARANTEES, OR INVESTMENTS

Furnish a brief description of the amount and source of funds, securities, property, or other consideration for the sale, purchase, exchange, loan, extension of credit, guarantee, or investment, whether any provision exists for purchase by the insurer filing notice, by any party to the transaction, or by any affiliate of the insurer filing notice, a description of the terms of any securities being received, if any, and a description of any other agreements relating to the transaction such as contracts or agreements for services and consulting agreements. If the transaction involves other than cash, furnish a description of the consideration, its cost, and its fair market value, together with an explanation of the basis for evaluation.

If the transaction involves a loan, extension of credit, or a guarantee, furnish a description of the maximum amount which the insurer will be obligated to make available under the loan, extension of credit, or guarantee, the date on which the credit or guarantee will terminate, and any provisions for the accrual of or deferral of interest.

If the transaction involves an investment, guarantee, or other arrangement, state the time period during which the investment, guarantee, or other arrangement will remain in effect, together with any provisions for extensions or renewals of the investments, guarantees, or arrangements. Furnish a brief statement as to the effect of the transaction on the insurer's surplus.

No notice need be given if the maximum amount which can at any time be outstanding or for which the insurer can be legally obligated under the loan, extension of credit, or guarantee is less than: (a) in the case of a nonlife insurer, the lesser of three percent of the insurer's admitted assets or 25 percent of surplus as regards policyholders, or (b) in the case of a life insurer, three percent of the insurer's admitted assets, each as of the preceding December 31.

ITEM 4. LOANS OR EXTENSIONS OF CREDIT TO A NONAFFILIATE

If the transaction involves a loan or extension of credit to any person who is not an affiliate, furnish a brief description of the agreement or understanding whereby the proceeds of the proposed transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase the assets of, or to make investments in any affiliate of the insurer making the loans or extensions of credit, and specify in what manner the proceeds are to be used to loan to, extend credit to, purchase assets of, or make investments in any affiliate. Describe the amount and source of duns, securities, property, or other consideration for the loan or extension of credit and, if the transaction is one involving consideration other than cash, a description of its cost and its fair market value, together with an explanation of the basis for evaluation. Furnish a brief statement as to the effect of the transaction on the insurer's surplus.

No notice need be given if the loan or extension of credit is one which equals less than, in the case of a nonlife insurer, the lesser of three percent of the insurer's admitted assets or 25 percent of surplus as regards policyholders or, with respect to life insurers, three percent of the insurer's admitted assets, each as of the preceding December 31.

ITEM 5. REINSURANCE

If the transaction is a reinsurance agreement or modification to the agreement, as described by Minnesota Statutes, section 60D.20, subdivision 1, paragraph (b), clause (3), furnish a description of the known and/or estimated amount of liability to be ceded and/or assumed in each calendar year, the period of time during which the agreement will be in effect, and a statement whether an agreement or understanding exists between the insurer and nonaffiliate to the effect that any portion of the assets constituting the consideration for the agreement will be transferred to one or more of the insurer's affiliates. Furnish a brief description of the consideration involved in the transaction, and a brief statement as to the effect of the transaction on the insurer's surplus.

No notice need be given for reinsurance agreements or modifications to the agreement if the reinsurance premium or a change in the insurer's liabilities in connection with the reinsurance agreement or modification to the agreement is less than five percent of the insurer's surplus as regards policyholders, as of the preceding December 31.

ITEM 6. MANAGEMENT AGREEMENTS, SERVICE AGREEMENTS, AND COST-SHARING ARRANGEMENTS

(a) For management and service agreements, furnish:

(1) a brief description of the managerial responsibilities, or services to be performed; and

(2) a brief description of the agreement, including a statement of its duration, together with brief descriptions of the basis for compensation and the terms under which payment or compensation is to be made.

(b) For cost-sharing arrangements, furnish:

(1) a brief description of the purpose of the agreement;

(2) a description of the period of time during which the agreement is to be in effect;

(3) a brief description of each party's expenses or costs covered by the agreement; and

(4) a brief description of the accounting basis to be used in calculating each party's costs under the agreement.

ITEM 7. SIGNATURE AND CERTIFICATION

Signature and certification are required as follows:

SIGNATURE

Pursuant to Minnesota Statutes, section 60D.20, ___________________ (Applicant) has caused this notice to be duly signed on its behalf in the City of _____________________ and State of _______________________, on the ________ day of ________, ____.

CERTIFICATION

The undersigned deposes and says that the undersigned has duly executed the attached notice dated ____________, ____, for and on behalf of ______________________ (Name of Applicant); that the undersigned is the _________________________ (Title of Officer) of the company, and that the undersigned is authorized to execute and file the instrument. Deponent further says that the deponent is familiar with the instrument and the contents of the instrument, and that the facts in the instrument set forth are true to the best of the undersigned's knowledge, information, and belief.

History

Statutory Authority: MS s 45.023; 60D.23
History: 17 SR 1272; L 1998 c 254 art 1 s 107

Chapter 2725 INSURANCE CONTINUING EDUCATION

Minn. R. 2725.0100 Repealed by subpart

Subpart 1.

[Repealed, 21 SR 88]

Subp. 1a.

[Repealed, 21 SR 88]

Subp. 1b.

[Repealed, 21 SR 88]

Subp. 2.

[Repealed, 21 SR 88]

Subp. 3.

[Repealed, 12 SR 283]

Subp. 4.

[Repealed, 21 SR 88]

Subp. 5.

[Repealed, 21 SR 88]

Subp. 6.

[Repealed, 12 SR 283]

Subp. 7.

[Repealed, 21 SR 88]

Subp. 8.

[Repealed, 21 SR 88]

Minn. R. 2725.0110 Repealed by subpart

Subpart 1.

[Repealed, 21 SR 88]

Subp. 1a.

[Repealed, 21 SR 88]

Subp. 2.

[Repealed, 21 SR 88]

Subp. 3.

[Repealed, 21 SR 88]

Subp. 4.

[Repealed, 21 SR 88]

Subp. 5.

[Repealed, 21 SR 88]

Subp. 6.

[Repealed, 21 SR 88]

Subp. 7.

[Repealed, 21 SR 88]

Subp. 8.

[Repealed, 21 SR 88]

Subp. 9.

[Repealed, 21 SR 88]

Subp. 10.

[Repealed, 21 SR 88]

Subp. 11.

[Repealed, 21 SR 88]

Subp. 12.

[Repealed, 21 SR 88]

Subp. 13.

[Repealed, 21 SR 88]

Subp. 14.

[Repealed, 21 SR 88]

Subp. 15.

Minn. R. 2730.0200 Authority and Purpose

Parts 2730.0200 to 2730.0700 are promulgated pursuant to the authority granted by Minnesota Statutes, sections 14.05 to 14.28, 62D.10, subdivision 4, and 62D.19 for the purpose of setting forth rules and procedural standards that the commissioner of commerce deems necessary to carry out the provisions of the act.

History

Statutory Authority: MS s 62D.10; 62D.19
History: 9 SR 1187

Minn. R. 2730.0300 Examination of Agents, Solicitors, and Brokers

Pursuant to Minnesota Statutes, section 62D.22, subdivision 8, and in accordance with Minnesota Statutes, chapter 60K, and agents' license rules of the Department of Commerce, part 2795.2000, the commissioner shall conduct written examinations for the licensing of health maintenance organization agents, solicitors, and brokers. Such examinations shall be designed to determine:

A. the abilities and qualifications of each license applicant to protect the rights of health maintenance organizations, enrollees, providers association with health maintenance organizations, and the general public relative to solicitations for enrollment in health maintenance organizations; and

B. each license applicant's familiarity with enrollee obligations, rights, and duties under health maintenance contracts and evidences of coverage, health service benefits thereunder, charges for and limitations upon services, and the authorized forms of solicitation and advertising of health maintenance organization services.

History

Statutory Authority: MS s 62D.10; 62D.19
History: 9 SR 1187

Minn. R. 2730.0400 Special Examinations

Upon application in writing, affirmatively showing the reason or reasons therefor, the commissioner of commerce may conduct special examinations for purposes of authorizing solicitation or advertising limited in scope or duration or for particular requirements of health maintenance organization agent, solicitor, and broker license applicants.

History

Statutory Authority: MS s 62D.10; 62D.19
History: 9 SR 1187

Minn. R. 2730.0500 Determination of Unreasonable Expenses

Not less frequently than once every three years, the commissioner of health or the commissioner of commerce shall determine whether any expense a health maintenance organization incurs or pays is unreasonably high in relation to the value of any service or good provided to it. In making such determinations, to the extent possible, due consideration shall be given to:

A. the expense incurred or paid by other health maintenance organizations and other health care delivery systems for the same or similar service or goods;

B. the cost of such service or goods to the supplier thereof;

C. the impact of such expense upon the finance solvency of the health maintenance organization;

D. all pertinent cost/service data obtained or obtainable by the commissioner of health from the health maintenance organization pursuant to Minnesota Statutes, sections 62D.03, 62D.04, 62D.08, 62D.10, and 62D.14;

E. guidelines developed and published pursuant to Minnesota Statutes, section 145.61, subdivision 5, clause (e);

F. pertinent data available from any rating organization approved by the commissioner of commerce;

G. such other information and information collection techniques as the commissioner of health may employ that show the real cost or fair market value of such service or goods; and

H. whether the officers and trustees of the health maintenance organization have acted with good faith and in the best interests of the health maintenance organization in entering into, and performing under, a contract under which the health maintenance organization has incurred an expense.

History

Statutory Authority: MS s 62D.10; 62D.19
History: 9 SR 1187

Minn. R. 2730.0600 Commissioner's Enforcement Authority

Upon a finding by the commissioner of health or the commissioner of commerce that a health maintenance organization is incurring or paying for any expense that is unreasonably high in relation to the value of the service or goods provided, the commissioner of health may:

A. issue an order pursuant to Minnesota Statutes, section 62D.17;

B. consider the unreasonable expense to constitute a failure of the health maintenance organization to satisfy Minnesota Statutes, section 62D.12, subdivision 9, paragraph (c) or 62D.15, subdivision 1, clause (9), and to proceed accordingly; or

C. exercise such other statutory power as is available to the commissioner and that the commissioner deems appropriate.

History

Statutory Authority: MS s 62D.10; 62D.19
History: 9 SR 1187; 17 SR 1279

Minn. R. 2730.0700 Interagency Agreement

The commissioner of commerce may by agreement with the commissioner of health provide procedures for the implementation and coordinated enforcement of part 2730.0500.

History

Statutory Authority: MS s 62D.10; 62D.19
History: 9 SR 1187

Chapter 2735 SEXUAL DISCRIMINATION IN INSURANCE

Minn. R. 2735.0100 Definitions

Subpart 1. Scope.

For the purposes of parts 2735.0100 to 2735.0500, the terms defined in this part have the meanings given them.

Subp. 2. Contracts.

"Contracts" means any insurance policy, plan, group contract certificate, or binder, including any rider or endorsement offered by an insurer.

Subp. 3. Insurer.

"Insurer" means any insurance company, association, reciprocal or interinsurance exchange, nonprofit hospital plan, nonprofit professional health service plan, health maintenance organization, fraternal benefit society, or beneficial association.

History

Statutory Authority: MS s 72A.19
History: 10 SR 1266

Minn. R. 2735.0200 Purpose

The purpose of parts 2735.0100 to 2735.0500 is to eliminate the act of denying benefits or coverage on the basis of sex or marital status in the terms and conditions of insurance contracts and in the underwriting criteria of insurance carriers.

History

Statutory Authority: MS s 72A.19
History: 10 SR 1266

Minn. R. 2735.0300 Authority

Parts 2735.0100 to 2735.0500 are adopted pursuant to Minnesota Statutes, sections 45.023; 72A.19, subdivision 2; and 72A.20, subdivision 16.

History

Statutory Authority: MS s 72A.19
History: 10 SR 1266

Minn. R. 2735.0400 Applicability and Scope

Parts 2735.0100 to 2735.0500 apply to all contracts delivered or issued for delivery in this state by an insurer on or after December 9, 1985, to all existing group contracts which are amended on or after these parts, and to all group insurance policies or group subscriber contracts that provide coverage for Minnesota residents enrolled thereunder.

History

Statutory Authority: MS s 72A.19
History: 10 SR 1266

Minn. R. 2735.0500 Availability Requirements

Availability of any insurance contract shall not be denied to an insured or prospective insured on the basis of sex or marital status of the insured or prospective insured. The amount of benefits payable, or any term, condition, or type of coverage shall not be restricted, modified, excluded, or reduced on the basis of the sex or marital status of the insured or prospective insured except to the extent the amount of benefits, term, condition, or type of coverage vary as a result of the application of rate differentials permitted under Minnesota law. However, nothing in this part prohibits an insurer from taking marital status into account for the purpose of defining persons eligible for dependent benefits. Practices prohibited by this part include but are not limited to the following:

A. denying coverage to females gainfully employed at home, employed part time, or employed by relatives when coverage is offered to males similarly employed;

B. denying policy riders to females when the riders are available to males;

C. denying maternity benefits to insureds or prospective insureds purchasing an individual contract when comparable family coverage contracts offer maternity benefits;

D. denying, under group contracts, dependent coverage to husbands of female employees, when dependent coverage is available to wives of male employees;

E. denying disability income contracts to employed women when coverage is offered to men similarly employed;

F. treating complications of pregnancy differently from any other illness or sickness under the contract;

G. restricting, reducing, modifying, or excluding benefits relating to coverage involving the genital organs of only one sex;

H. offering lower maximum monthly benefits to women than to men who are in the same classification under a disability income contract;

I. offering more restrictive benefit periods and more restrictive definitions of disability to women than to men in the same classifications under a disability income contract;

J. establishing different conditions by sex under which the policyholder may exercise benefit options contained in the contract; and

K. limiting the amount of coverage an insured or prospective insured may purchase based upon the insured's or prospective insured's marital status unless the limitation is for the purpose of defining persons eligible for dependent benefits.

History

Statutory Authority: MS s 72A.19
History: 10 SR 1266

Chapter 2737 PHARMACY BENEFIT MANAGEMENT

Minn. R. 2737.0100 Definitions

Subpart 1. Scope.

For the purposes of this chapter, the terms defined in Minnesota Statutes, chapter 62W, have the meanings given them. For purposes of this chapter, the terms defined in this part have the meanings given them.

Subp. 2. Aggregate.

"Aggregate" means the sum total of the particular reporting element at the national drug code level.

Subp. 3. Doing business in Minnesota.

"Doing business in Minnesota" means a pharmacy benefit manager is in contract to perform pharmacy benefits services with a plan sponsor that either (1) is a Minnesota entity, or (2) makes a contract or engages in a terms of service agreement with a Minnesota resident that is performed in whole or in part by either party in Minnesota.

Subp. 4. Machine readable format.

"Machine readable format" has the meaning given in United States Code, title 44, section 3502(18).

Subp. 5. Owned pharmacy.

"Owned pharmacy" means (1) a pharmacy, whether retail, mail order, specialty, or other, or a pharmacy provider in which a pharmacy benefit manager has a direct or indirect ownership interest, or (2) a pharmacy provider has an ownership interest, whether direct or indirect, in the pharmacy benefit manager.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.0200 Authority, Scope, and Purpose

This chapter is promulgated pursuant to Minnesota Statutes, chapter 62W, and Laws 2019, chapter 39, section 20. This chapter applies to all pharmacy benefit managers that are licensed or authorized to do business in or otherwise doing business in Minnesota and subject to the provisions of the Minnesota Pharmacy Benefit Manager Licensure and Regulation Act. This chapter is promulgated to carry out the act, as amended, and to facilitate the act's full and uniform implementation, enforcement, and application.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.0300 Government Programs

Subpart 1. Governmental agencies providing pharmacy management services.

Where an agency of the state of Minnesota directly provides pharmacy management services, the agency is extended the exemption granted to the Department of Human Services under Minnesota Statutes, section 62W.02, subdivision 16.

Subp. 2. Managed care plans in contract with state agencies.

A managed care plan that has entered into a contract with the Department of Human Services that otherwise meets the definition of a plan sponsor under Minnesota Statutes, section 62W.02, subdivision 16, is not entitled to the exemption granted to the Department of Human Services.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.0400 Business License Requirements; Initial Application

Subpart 1. Application.

A pharmacy benefit manager doing business in Minnesota on or after January 1, 2020, must apply to the commissioner in the manner and form prescribed by the commissioner in order to perform, act, or do business in Minnesota as a pharmacy benefit manager. The forms must be submitted no later than 90 days prior to the first day business is effective, offered, or maintained.

Subp. 2. Application contents.

Each application for a license as pharmacy benefit manager must:

A. be signed and sworn to by the applicant, or the applicant's owners, and be accompanied by the license fee required by Minnesota Statutes, section 62W.03. If the applicant is a corporate applicant, the application must be verified by the president and secretary of the corporation;

B. designate an agent for service of process in Minnesota;

C. provide the name, address, identifying information, official position, and professional qualifications of each person responsible for conducting the affairs of the pharmacy benefit manager, including owners, key employees, as well as all members of the board of directors, board of trustees, executive committee, or other governing board or committee; for a corporation, the principal officers; or for a partnership or association, the partners or members;

D. for the applicant and each person identified under item C:

E. provide the identities of any plan sponsors for whom the applicant provides pharmacy benefit manager services in Minnesota, and the identity of any utilization review companies required to be licensed under Minnesota Statutes, chapter 62W, that the applicant uses in Minnesota; and

F. provide the total number of insureds residing in Minnesota for each plan sponsor for which the applicant provides services.

Subp. 3. Network adequacy report.

As part of any application for a license under this chapter, an applicant must provide a pharmacy network adequacy report to the Department of Health in the manner and form prescribed by the Department of Health. Pharmacy benefit managers must have a network adequacy report approval issued by the Department of Health no less than 90 days prior to the desired license effective date. The Department of Health's review of the report, and any geographic or other restrictions determined by the Department of Health, may become part of any license issued.

Subp. 4. Fee.

Each initial pharmacy benefit manager application for licensure must be accompanied by a nonrefundable fee of $8,500. An additional administration fee may be charged by the service provider retained by the commissioner.

Subp. 5. Updated information required.

If any of the information provided on the initial application under subpart 2, item C, D, or E, changes at any time following submission, the applicant must provide updated information to the commissioner within 30 days of the date the applicant becomes aware of the changed information. If any of the information provided on the network adequacy report changes at any time following submission, the applicant must provide updated information to the Department of Health within 30 days of the date the applicant becomes aware of the changed information.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.0500 Business License Requirements; Renewal Application

Subpart 1. Renewal application.

In order to obtain a renewal of a license, a pharmacy benefit manager must annually meet the requirements needed to obtain an initial pharmacy benefit management license under part 2737.0400. The commissioner must consider those areas of law described in part 2737.0700, subpart 2, in order to determine whether to approve the renewal of a pharmacy benefit manager's license each year.

Subp. 2. Timeline.

A. Renewal application. Applications for renewal may be submitted as soon as 90 days before the date the current license expires, but must be submitted no later than 60 days before the date the current license expires. Renewal applications must be submitted in the manner and form prescribed by the commissioner. Applications submitted after the required date are considered a late application and may result in enforcement action, in addition to the late fee provided under subpart 3.

B. Network adequacy report. As part of any renewal application for a license under this chapter, an applicant must provide a pharmacy network adequacy report to the Department of Health, in the manner and form prescribed by the Department of Health. Pharmacy benefit managers must submit a complete network adequacy report to the Department of Health no less than 90 days prior to the date the current license expires. The Department of Health's review of the report, and any geographic or other restrictions determined by the Department of Health, may become part of any license issued.

C. Determination. Within 90 days after the date a completed renewal application, the network adequacy report, and the license fee are received, the commissioner must review the application and issue a license if the applicant is deemed qualified under this part. If the commissioner determines the applicant is not qualified, the commissioner must notify the applicant and must specify the reason or reasons for the denial.

Subp. 3. Fee.

Each application for pharmacy benefit manager licensure renewal must be accompanied by a nonrefundable fee of $8,500. The deadline for submitting the renewal application is 60 days before the date the license expires. A renewal application submitted after the renewal deadline must be accompanied by a nonrefundable $500 late fee. An additional administration fee may be charged by the service provider retained by the commissioner.

Subp. 4. Updated information required.

If any of the information provided on the renewal application changes at any time following submission, the applicant must provide updated information to the commissioner within 30 days after the date the applicant becomes aware the information changed. If any of the information provided on the network adequacy report changes at any time following submission, the applicant must provide updated information to the Department of Health within 30 days after the date the applicant becomes aware the information changed.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.0600 Review by Commissioner

Subpart 1. Additional information.

The commissioner may request additional information within 30 days of receiving completed initial or renewal application data. The 30-day initial review period does not begin until complete application data has been submitted to the commissioners of commerce and health. Incomplete applications will not be reviewed, but incomplete items will be identified and communicated within 30 days.

Subp. 2. Determination.

Within 90 days after the date a complete initial or renewal application is received, the commissioner must:

A. issue an initial or renewal license if the applicant is determined to be qualified;

B. issue a limited or restricted license; or

C. notify the applicant if the submission is denied, specifying the reason for the denial. If the applicant provides a remedy for the denial within 30 days of the date the denial notice is received, or submits and receives approval for a corrective action plan to cure and correct deficiencies within 30 days of the date the denial notice is received, the commissioner must not assess a new application fee. The commissioner may provide temporary, contingent approval for a pharmacy benefit manager while the pharmacy benefit manager is participating in the corrective action plan process.

Subp. 3. Limited or restricted license.

As part of a license application review, the commissioner may issue a restricted or limited license, including limitations based on the network adequacy report. A pharmacy benefit manager whose application for a full license results in a limited or restricted license may provide the Department of Commerce with additional information that addresses the basis for the limited or restricted license and request that a full license be restored.

Subp. 4. Appeals process.

The commissioner's decision to deny a license, deny a renewal, or issue a limited or restricted license may be appealed subject to the following procedure:

A. within 30 days of the date the denial or limited or restricted license is issued, a pharmacy benefit manager must make a written request to the commissioner for a hearing to determine whether the decision or action complies with this chapter and Minnesota Statutes, chapter 62W;

B. within 30 days after the date the hearing request is made, the commissioner must provide notice of a hearing to be conducted under Minnesota Statutes, chapter 14, and must give not less than ten days' written notice of the hearing date, time, and location; and

C. the commissioner's order or decision is a final decision subject to appeal under Minnesota Statutes, chapter 14.

Subp. 5. License continuity.

If a renewal license is not granted before the previous year's license expires and the pharmacy benefit manager has a timely filed renewal application pending, the pharmacy benefit manager may continue to provide services under the terms of the previous year's license until the renewal application is approved or denied.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.0700 Enforcement by Commissioner

Subpart 1. Acting without a license.

If a pharmacy benefit manager acts without a license, the pharmacy benefit manager may be subject to a fine of up to $5,000 per day for the period the pharmacy benefit manager is found to be in violation. The commissioner must consider timeliness of responses, content of responses, and progress toward licensure when assessing fines.

Subp. 2. Basis for suspension, revocation, or probation.

The commissioner may consider the following when suspending, revoking, or placing a pharmacy benefit manager license on probation:

A. failure to comply with relevant state and federal law, as determined by the relevant regulatory body:

B. fraudulent activity that constitutes a violation of state or federal law;

C. consumer, plan sponsor, or health care provider complaints that have led to a civil or criminal action to protect the safety and interests of consumers;

D. failure to pay any fees and penalties; and

E. compliance with federal pharmacy laws, including but not limited to the following laws, regulations, and guidance, as applicable to the plan sponsor or product that the pharmacy benefit manager serves.

Subp. 3. Notice.

The commissioner must provide a 30-day notice before suspending, revoking, or placing a pharmacy benefit manager license on probation. If the pharmacy benefit manager demonstrates remedy or good faith progress toward remediation before the 30-day notice period expires, the commissioner may approve the license, reduce the enforcement action to probation, or provide an extended timeline for probation and remediation.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.0800 Adequate Network

Subpart 1. Pharmacy type.

A network is adequate if it contains at least one of each of the following types of pharmacies:

A. retail;

B. specialty;

C. home infusion;

D. mail order;

E. long-term care; and

F. Indian health service, Tribal organizations, and urban Indian organizations.

Subp. 2. Plan to provide services.

If a pharmacy benefit manager does not include a pharmacy type listed in subpart 1, the pharmacy benefit manager must provide the Department of Health an explanation why the pharmacy type is excluded and describe how an enrollee requiring services from the excluded pharmacy types may access them.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.0900 Transparency Reports to Plan Sponsors

Subpart 1. Publication of template.

The commissioner must post on the Department of Commerce's website a template that a plan sponsor may use to submit a transparency request of the data provided under Minnesota Statutes, section 62W.06, subdivision 1, paragraph (a). A plan sponsor is not required to use this template to submit a transparency data request.

Subp. 2. Time to respond.

A pharmacy benefit manager doing business in Minnesota must reply to a formal transparency report request within 60 days of the date the request is made. A formal request is made when:

A. the plan sponsor has met criteria to request a transparency report from the pharmacy benefit manager under Minnesota Statutes, section 62W.06, subdivision 1, for the first time (but not for data prior to the execution of the initial contract start date); or

B. the plan sponsor provides evidence of perceived negligence with respect to a contractual duty between the pharmacy benefit manager and plan sponsor during the last contractual year.

Subp. 3. Penalties and fines.

If a plan sponsor believes a pharmacy benefit manager has violated Minnesota Statutes, section 62W.06, subdivision 1, paragraph (a), the plan sponsor may file a complaint with the department 60 days after the date the transparency report request was made. A transparency report requested under Minnesota Statutes, section 62W.06, subdivision 1, paragraph (a), is untimely and subject to penalties on the 61st day after the date the report was requested by the plan sponsor.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.1000 Transparency Reports to Commissioner

Subpart 1. Publication of submission form.

Annually no later than 60 days before the transparency reporting deadline date, the commissioner must post to the department's website the transparency report submission process, including the format, data specifications, and other pertinent information necessary to collect and report all data, including templates used for submission of the aggregate data required by Minnesota Statutes, section 62W.06, subdivision 2, paragraph (a), clauses (1) to (6); the claims-level data required by Minnesota Statutes, section 62W.02, subdivision 2, paragraph (a), clause (7); and the data publicly reported by the commissioner under Minnesota Statutes, section 62W.02, paragraph (b).

Subp. 2. Use of submission forms and templates.

Unless given written permission by the commissioner not to, the templates annually published by the commissioner for submission of aggregate data, claims-level data, and data to be publicly reported must be used.

Subp. 3. Notice of no data to report.

A pharmacy benefit manager that claims to be exempt from the requirement to submit the transparency reports under Minnesota Statutes, section 62W.06, subdivision 2, must, no later than the date the reports are due, submit to the commissioner a statement specifying the basis for nonreporting.

Subp. 4. Therapeutic categories.

The commissioner must select a preexisting and commonly used therapeutic classification system to group drugs into like categories. The commissioner may consult with state agencies and other experts in the field in order to determine the best classification system. The commissioner must publish the classification system on the department's website at the same time transparency report templates are published. The classification system must be consistent with industry standards and must be reviewed on a periodic basis.

Subp. 5. Delegation of data collection.

The commissioner may delegate or engage staff within the various divisions of the Department of Commerce, an outside third party, or another state agency to assist in data collection and analysis. The commissioner must ensure that delegated persons do not have a conflict of interest with respect to a particular data review.

Subp. 6. Use of third party for data submission.

A pharmacy benefit manager may satisfy the requirements of Minnesota Statutes, section 62W.06, subdivision 2, paragraph (a), clause (7), by delegating data submission to a third-party administrator, health carrier, or another pharmacy benefit manager. The pharmacy benefit manager and the third-party administrator, health carrier, or other pharmacy benefit manager must have a contract provision that dictates which party is responsible for claims-level reporting. If a contract provision does not exist, the commissioner must enforce the data submission requirements of this subpart on the pharmacy benefit manager responsible for processing pharmacy claims. The transparency reporting submission process must provide an opportunity for a pharmacy benefit manager doing business in Minnesota to indicate the party that is submitting claims-level data on behalf of the pharmacy benefit manager. A pharmacy benefit manager's use of third parties for data submission does not absolve the licensed pharmacy benefit manager of any responsibility for compliance issues determined during the department's report review.

Subp. 7. Penalties and fines.

If a pharmacy benefit manager has violated Minnesota Statutes, section 62W.06, by failing to timely submit a transparency report, the commissioner may assess a penalty of up to $1,000 per day until the pharmacy benefit manager provides the requested transparency report. A transparency report requested under Minnesota Statutes, section 62W.06, subdivision 2, paragraph (a), is untimely and subject to penalties beginning the day after the date the report is due.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.1100 Pharmacy Ownership Interest

Subpart 1. Networks with only owned pharmacies.

A pharmacy benefit manager requires an enrollee to use a pharmacy if the pharmacy benefit manager establishes a network of pharmacies that includes only pharmacies directly or indirectly owned by the pharmacy benefit manager.

Subp. 2. Exemptions to prohibitions.

A pharmacy benefit manager is exempt from the prohibitions in Minnesota Statutes, section 62W.07, paragraph (b), if the owned and nonowned pharmacies are of the same type, as provided in this subpart.

A. Retail. To be exempt from Minnesota Statutes, section 62W.07, paragraph (b), if the pharmacy benefit manager or health carrier attempts to incentivize use of an owned retail pharmacy, the pharmacy benefit manager or health carrier must provide the same incentive at a nonowned retail pharmacy.

B. Specialty. To be exempt from Minnesota Statutes, section 62W.07, paragraph (b), if the pharmacy benefit manager or health carrier attempts to incentivize use of an owned specialty pharmacy, the pharmacy benefit manager or health carrier must provide the same incentive at a nonowned specialty pharmacy.

C. Mail order. To be exempt from Minnesota Statutes, section 62W.07, paragraph (b), if the pharmacy benefit manager or health carrier attempts to incentivize use of an owned mail order pharmacy, the pharmacy benefit manager or health carrier must provide the same incentive at a nonowned mail order pharmacy.

Subp. 3. Use of quantity and refill limits.

A pharmacy benefit manager may use quantity and refill limits only as provided in this subpart.

A. Retail. A pharmacy benefit manager or health carrier may only impose quantity limits or refill frequency limits at a nonowned retail pharmacy when the pharmacy benefit manager or health carrier has imposed the same limits at the pharmacy benefit manager's or health carrier's owned retail pharmacies.

B. Mail order. A pharmacy benefit manager or health carrier may only impose quantity limits or refill frequency limits at a nonowned mail order pharmacy when the pharmacy benefit manager or health carrier has imposed the same limits at the pharmacy benefit manager's or health carrier's owned mail order pharmacies.

Subp. 4. Exclusively owned mail order pharmacy networks.

If a pharmacy benefit manager administers a network with only mail order pharmacies that are owned pharmacies, the pharmacy benefit manager is prohibited from (1) offering financial incentives to use the mail order pharmacies, or (2) imposing limits on an enrollee's access to medication.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.1200 Section 340b Participants

Subpart 1. Prohibition on 340B participants.

A pharmacy benefit manager is prohibited from adopting a rule, requirement, or condition that provides that, in order to be included in the pharmacy benefit manager's pharmacy network, a pharmacy, mail order pharmacy, or specialty pharmacy is prohibited from participating in the federal 340B Drug Pricing Program under section 340B of the Public Health Service Act, United States Code, title 42, chapter 6A.

Subp. 2. Continued access.

A pharmacy benefit manager is prohibited from conditioning continued access to network status on nonparticipation in the 340B program.

Subp. 3. Specific terms or reimbursement rates.

A pharmacy benefit manager is prohibited from requiring that 340B participants agree to specific terms or reimbursement rates, based on the participant's participation in the 340B program, in order to access network status.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.1300 Out-of-Pocket Cost Comparisons

Subpart 1. Request format.

A pharmacy benefit manager may create specific forms, rules, or guidelines for an enrollee to request out-of-pocket cost information. Any forms, rules, or guidelines a pharmacy benefit manager creates must not be unreasonably onerous or burdensome.

Subp. 2. Response format.

The pharmacy benefit manager's response to an enrollee's request must be consistent with the manner in which the request is made. If a pharmacy benefit manager creates specific forms, rules, or guidelines for out-of-pocket cost information requests, the pharmacy benefit manager must provide an enrollee with information regarding the format of the pharmacy benefit manager's response. The response must use plain language that clearly delineates the difference in out-of-pocket costs based on the pharmacy used.

Subp. 3. Time to respond.

A pharmacy benefit manager must respond to an enrollee's request for out-of-pocket cost information within five business days of the date of the request.

Subp. 4. Existing system.

If an enrollee seeks the information available under Minnesota Statutes, section 62W.076 or 62W.077, and if a pharmacy benefit manager maintains an online system that is easily accessible, the pharmacy benefit manager may comply with this part by directing the enrollee to the online system.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.1400 Maximum Allowable Cost Pricing

Subpart 1. Maximum allowable cost price list.

A pharmacy benefit manager subject to Minnesota Statutes, section 62W.08, must make available to all pharmacies the pharmacy benefit manager has a contract with a version of the pharmacy benefit manager's maximum allowable cost price list that comports with the following requirements:

A. Form. Pharmacy benefit managers must allow pharmacies the pharmacy benefit manager contracts with to review the maximum allowable cost price list in electronic, print, or telephonic format.

B. Electronic availability. A pharmacy benefit manager must ensure that the electronically available maximum allowable cost price list is presented in a machine readable format, such as CSV, JSON, XML, or another commonly available digital format.

C. Date updated. The date the maximum allowable cost price list was last updated must be prominently displayed on both electronic and paper formats of the list and must be clearly announced via the telephonic format.

D. Updated items. A list must clearly identify prices that have changed.

Subp. 2. Contracts.

A pharmacy benefit manager is prohibited from requiring a pharmacy to waive or modify Minnesota Statutes, section 62W.08, as a condition of inclusion in a network. Contract provisions related to appeal, investigation, and dispute resolution processes regarding maximum allowable cost pricing that are in addition to the requirements under Minnesota Statutes, section 62W.08, paragraph (c), clauses (1) to (3), are not a modification to Minnesota Statutes, section 62W.08.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.1500 Pharmacy Audits

Subpart 1. Publication of pharmacy audit standards.

A. A pharmacy benefit manager must make available to a pharmacy or pharmacist the standards and parameters under which the pharmacy or pharmacist is audited.

B. The entity conducting the audit must provide the entity under audit with information regarding the written appeals process at the commencement of the audit, as well as at any time the entity under an audit is provided a report that could be appealed.

Subp. 2. Contracts.

Except as authorized under Minnesota Statutes, section 62W.09, subdivision 6, a pharmacy benefit manager is prohibited from requiring a pharmacy to waive or modify Minnesota Statutes, section 62W.09, as a condition of inclusion in a network.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.1600 Allowable Claim Amount

The allowable claim amount is equivalent to the amount the health carrier or pharmacy benefit manager has agreed to pay the pharmacy for the prescription medication.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Minn. R. 2737.1700 Retroactive Adjustments

Subpart 1. Contracts.

Minnesota Statutes, section 62W.13, must not be waived or modified by contract.

Subp. 2. Billing errors.

A claim for a billing error must be documented and the information supporting the claim, if any, must be provided to the pharmacy upon request. A pharmacy benefit manager must allow a pharmacy an opportunity to rebut a billing error claim.

Subp. 3. Fees not subject to adjustment.

Payment for quality performance metrics included in a prescription drug plan that are based on a pharmacy's quality performance and calculated on prescription count are not retroactive claim adjustments.

History

Statutory Authority: L 2019 c 39 s 20
History: 46 SR 809

Chapter 2740 COMPREHENSIVE HEALTH INSURANCE

Minn. R. 2740.0100 Definitions

Subpart 1. Scope.

All terms used herein that are defined in Minnesota Statutes, chapter 62E shall have the meanings attributed to them therein. For the purpose of Minnesota Statutes, chapter 62E and these rules, the terms defined herein shall have the meanings given to them.

Subp. 2. Accident only coverage.

"Accident only coverage" means a policy designed to provide coverage solely upon the occurrence of an accidental injury or death.

Subp. 3. Act.

"Act" means Minnesota Statutes, sections 62E.01 to 62E.16, as amended, which shall be cited as the Minnesota Comprehensive Health Insurance Act of 1976.

Subp. 4. Actuarial equivalent.

"Actuarial equivalent" or "an actuarially equivalent benefit" means a benefit, the expected value of which when substituted for another benefit or benefits in a plan of health coverage will be the same as the benefit or benefits for which it was substituted, and which will result in the plan of health coverage after substitution of the actuarially equivalent benefit, being the actuarial equivalence of the original plan of health coverage. "Actuarial equivalence" shall be recognized for two plans where, employing the same set of assumptions for the same population, the expected value of benefits provided by the plans is equal. Expected value of benefits shall be measured by the probability of the claim for each benefit multiplied by the average expected amount of each of those benefits.

Subp. 5. Administrative expenses of the pool.

"Administrative expenses of the pool" means the actual operating and administrative expenses of the association incurred directly in the operation of the reinsurance plan including fees to a reinsurance administrator.

Subp. 6. Association.

"Association" means the Minnesota Comprehensive Health Association.

Subp. 7. Board.

"Board" means the board of directors of the association.

Subp. 8. Calendar year.

"Calendar year" means a 12-month period from January 1 to and including December 31.

Subp. 9. Certificate of eligibility and enrollment form.

"Certificate of eligibility" or "certificate of eligibility and enrollment form" means the document entitled "certificate of eligibility and enrollment form" or any other document which is used to apply for coverage under the state plan.

Subp. 9a. Child with a disability; dependent child of any age who is disabled.

"Child with a disability" or a "dependent child of any age who is disabled" means a child, married or unmarried, who is and has been continuously incapable of self-sustaining employment by reason of developmental disability or physical disability and is financially dependent upon the insured, provided proof of such incapacity and dependency is furnished to the insurer or to the association within 31 days of the child's attainment of the limiting age and subsequently as may be required by the insurer or the association, but not more frequently than annually after the two-year period following the child's attainment of the limiting age.

Subp. 10. Claims expenses; payment of benefits.

"Claims expenses" or "payment of benefits" means all payments to covered persons or providers including payments for hospital, surgical and medical care, and reasonable estimates, as determined by the association and approved by the commissioner, of the incurred but not reported claims of the state plan.

Subp. 11. Close relative.

"Close relative" means the insured person's spouse, brother, sister, parent or child.

Subp. 12. Commercial reinsurance; excess of loss reinsurance.

"Commercial reinsurance" or "excess of loss reinsurance" means reinsurance arranged by the association under which the pool pays premiums to a reinsurer which assumes part of the risk of the reinsurance plan.

Subp. 13. Covered expenses.

"Covered expenses" means the usual and customary charges for the services and articles listed in Minnesota Statutes, section 62E.06, or, with respect to qualified plans, the actuarial equivalence thereof, when prescribed for a covered person by a physician and when the expenses are incurred during a period in which the policy or contract is in effect.

Subp. 14. Covered person.

"Covered person" means the insured person or an insured dependent.

Subp. 15. Dental care.

"Dental care" means those services which a person licensed to practice dentistry may provide as defined in Minnesota Statutes, section 150A.05, subdivision 1.

Subp. 16.

[Renumbered Subp. 9a]

Subp. 17. Employee welfare benefit plan.

"Employee welfare benefit plan" means any plan, fund, or program through which an employer provides, directly or indirectly, accident and health benefits to its employees through a trust, through the purchase of insurance, or through the provision of benefits for medical, surgical, or hospital care.

Subp. 18. Financially dependent.

A person shall be considered "financially dependent" if that person is chiefly dependent upon the insured person for support and maintenance.

Subp. 19. Free standing ambulatory surgical or medical center.

"Free standing ambulatory surgical center" or "free standing ambulatory medical center" means a surgical or medical center approved as such by the state of Minnesota.

Subp. 20. Home health agency.

"Home health agency" means a public or private agency that specializes in giving nursing service and other therapeutic services in the insured person's home and is approved as such by the state of Minnesota.

Subp. 21. Hospital.

"Hospital" means:

A. an institution which is operated pursuant to law and which is primarily engaged in providing on an inpatient basis for the medical care and treatment of sick and injured persons through medical, diagnostic, and surgical facilities, under the supervision of a staff of physicians and with 24-hour a day nursing service; or

B. an institution not meeting all the requirements of item A, but which is accredited as a hospital by the Joint Commission on Accreditation of Hospitals; but

C. in no event shall the term "hospital" include a nursing home or any institution or part thereof which is used principally as a convalescent facility, rest facility, nursing facility, or facility for the aged.

Subp. 22. Hospital indemnity coverage.

"Hospital indemnity coverage" means coverage which provides a fixed dollar benefit on the occurrence of the condition precedent that the covered person was confined in a hospital.

Subp. 23. Illness.

"Illness" means disease, injury, or a condition involving bodily or mental disorder of any kind, and including pregnancy.

Subp. 24. Independent contractor.

"Independent contractor" means a person who exercises an independent employment and contracts to do certain work without being subject to the control of the employer except as to the results of the work.

Subp. 25. Individual insured.

"Individual insured" means the covered employee or surviving spouse or surviving dependent of a covered employee as those terms are used in Minnesota Statutes, section 62A.17, subdivision 6.

Subp. 26. Insured dependent.

"Insured dependent" means an eligible dependent originally named in the policy or contract schedule or otherwise insured subsequent to the effective date of the policy or contract.

Subp. 27. Insured person.

"Insured person" means the person named in the policy or contract schedule.

Subp. 28. Interim reinsurance assessment.

"Interim reinsurance assessment" means an assessment at any time other than at the end of a calendar year (or other fiscal year end as determined by the association) of participating members when pooling payments and payments by reinsurers for the year are not sufficient to fund paid and estimated obligations of the pool and administrative expenses of the pool.

Subp. 29. Licensed and tested insurance agent or insurance agent.

"Licensed and tested insurance agent" or "insurance agent" means an insurance agent as defined in Minnesota Statutes, section 60A.02, subdivision 7, and licensed as such by the commissioner.

Subp. 30. Losses.

"Losses" means all claims expenses.

Subp. 31. Major medical expenses.

"Major medical expenses" as used in Minnesota Statutes, section 62E.04 means the covered expenses for services and articles listed in Minnesota Statutes, section 62E.06, subdivision 1, or the actuarial equivalence thereof, provided that the maximum lifetime benefit limit shall not be less than $250,000.

Subp. 32. Net gains.

"Net gains" means the excess of premiums or contract charges over claims expenses, after the writing carrier's expenses and agent referral fees, not to exceed 15 percent of premiums or contract charges, have been paid as provided in part 2740.4400, subpart 4.

Subp. 33. Nonqualified policy; unqualified policy or plan.

A "nonqualified policy" or "unqualified policy" or "unqualified plan" means a policy, contract, or plan which has not been certified by the commissioner as qualified pursuant to the terms of the act.

Subp. 34. Nursing home.

"Nursing home" means an institution meeting the following requirements:

A. It is operated pursuant to law and is primarily engaged in providing the following services for persons convalescing from illness: room, board, and 24-hour a day nursing service by one or more professional nurses and such other nursing personnel as are needed to provide adequate medical care.

B. It provides such services under the full-time supervision of a proprietor or employee who is a physician or a registered nurse.

C. It maintains adequate medical records and has available the services of a physician under an established agreement if not supervised by a physician.

Subp. 35. Operating and administrative expenses of association.

"Operating and administrative expenses of association" means expenditures reasonably necessary to the operation and administration of the association including but not limited to rents, stationery, telegraph and telephone charges, salaries and expenses of office employees, investigators or adjusters, and legal expenses, as well as expenses of directors of the board of the association relating to the conduct of or attendance at meetings. The operating and administrative expenses of the association do not include the operating and administrative expenses of the writing carrier.

Subp. 36. Out-of-pocket expenses.

"Out-of-pocket expenses" means any cost or charge in a calendar year for a health service or article that is included in the list of covered services and articles under the qualified plan, qualified Medicare supplement plan, policy or contract of major medical coverage, or state plan policy or contract under which the person is a covered person, and which is not paid or payable if claim were made under any plan of health coverage, Medicare, or other governmental program.

Subp. 37. Participating members.

"Participating members" means insurer and fraternal members of the association that elect to reinsure risks of issuing certain coverages required under the act through the association under its reinsurance plan.

Subp. 38. Per diem policies.

"Designed solely to provide payments on a per diem, fixed indemnity or nonexpense incurred basis" means policies that provide benefits upon the occurrence or existence of a condition precedent, without reference to expenses incurred or services provided, for hospital, surgical, or medical care.

Subp. 39. Policies or contracts of accident and health insurance.

"Policies or contracts of accident and health insurance" means accident and health insurance policies as defined by Minnesota Statutes, section 62E.02, subdivision 11.

Subp. 40. Pooling payment.

"Pooling payment" means the amount each participating member pays the association or its reinsurance administrator during a given period of time as determined by the association or its reinsurance administrator based on pooling rates and volume of policies and contracts reinsured by the participating member in each category.

Subp. 41. Pooling rates.

"Pooling rates" means unit rates approved by the association and used as the basis for pooling payments.

Subp. 42. Preexisting condition.

"Preexisting condition" means an injury, illness, or other physical or mental condition of a covered person that existed prior to the issuance of the covered person's policy or contract.

Subp. 43. Preexisting conditions limitation.

"Preexisting conditions limitation" means a limitation excluding coverage for an injury, illness, or other physical or mental condition of an applicant that existed prior to the issuance of the applicant's policy or contract.

Subp. 44. Professional services.

"Professional services" means only services rendered by a physician or at the physician's direction by a private duty, licensed, registered nurse or an allied health professional. Professional services shall not include a service rendered by a close relative.

Subp. 44a. Qualified Medicare supplement plan.

"Qualified Medicare supplement plan" means a plan of health coverage meeting the requirements of Minnesota Statutes, sections 62A.31, 62E.02, subdivision 5, and 62E.07.

Subp. 45. Reasonable benefits in relation to cost of covered services.

"Reasonable benefits in relation to cost of covered services" means reasonable benefits in relation to premium charged for coverage under a policy as determined by the minimum anticipated loss ratio requirement of Minnesota Statutes, section 62A.02, subdivision 3.

Subp. 46. Reimbursable services.

"Reimbursable services" means eligible services under Medicare.

Subp. 47. Reinsurance administrator.

"Reinsurance administrator" means an entity with which the association contracts for administration of its reinsurance plan.

Subp. 48. Reinsurance assessment.

"Reinsurance assessment" means a calendar year end (or other fiscal year end as determined by the association) assessment of participating members when pooling payments and payments by reinsurers for the year are not sufficient to fund paid and estimated obligations of the pool and administrative expenses of the pool.

Subp. 49. Reinsurance plan.

"Reinsurance plan" means any mechanism by which the association undertakes to reinsure the risks which Minnesota Statutes, section 62E.10, subdivision 7 authorizes the association to reinsure.

Subp. 50. Reinsurance pool; pool.

"Reinsurance pool" or "pool" means the pool or fund into which the association or the reinsurance administrator deposits pooling payments, interim reinsurance assessments and reinsurance assessments paid to the association or its reinsurance administrator by insurer or fraternal members wishing to reinsure certain risks, as well as claims paid by reinsurers under contract for commercial reinsurance with the association, and other receipts, and from which the association or its reinsurance administrator pays premiums for commercial reinsurance, administrative expenses of the pool, and reimbursement for claims paid by insurer or fraternal members that have reinsured all or any portion of risks covered under policies or contracts which have been reinsured pursuant to a reinsurance pooling agreement with the association.

Subp. 51. Reinsurance pooling agreement.

"Reinsurance pooling agreement" means the agreement between the association and participating members which establishes a reinsurance plan.

Subp. 52. Reinsurer.

"Reinsurer" means the commercial reinsurance company that contracts with the association to provide excess of loss coverage for the risks which participating members reinsure through the association.

Subp. 53. Rejection.

"Rejection," for the purpose of state plan eligibility, means refusal by any association member, or any authorized representative, including any insurance agent, acting on behalf of any association member, to issue a qualified plan or a qualified Medicare supplement plan to a person who completes an application for coverage under such qualified plan, or a qualified Medicare supplement plan, as determined by the board.

Subp. 54. Renewal date.

"Renewal date" means the date specified in a policy or contract on which renewal occurs. In the absence of a specified renewal date in a policy or contract, renewal date shall be determined in reference to the anniversary date specified in the policy or contract and shall occur in intervals of no greater than 12 months duration as determined in reference to the date on which the policy or contract became effective. Renewal of a policy or contract shall be deemed to occur upon the expiration of a renewal date if coverage under the policy or contract is continued.

Subp. 55. Resident of Minnesota.

"Resident of Minnesota" means a person who is an actual resident of Minnesota, having there his or her principal and permanent abode.

Subp. 56. Restrictive rider.

"Restrictive rider" means a document or contractual provision adding certain conditions to the policy's or contract's coverage, the effect of which is to substantially reduce coverage from that received by a person who is considered a standard risk.

Subp. 56a. Self-insurer.

"Self-insurer" means an entity defined by Minnesota Statutes, section 62E.02, subdivision 21, which is a "governmental plan" as defined by United States Code, title 29, section 1002(32) or a "church plan" as defined by United States Code, title 29, section 1002(33)(A) or which is otherwise exempt from or outside of the scope of the provisions of the Employee Retirement Income Security Act of 1974, United States Code, title 29, sections 1001 to 1381, as amended.

Subp. 57. Student.

"Student" means any unmarried child under the age of 25 who during the calendar year is enrolled in and attends an educational institution as a full-time student and who is financially dependent upon an insured person.

Subp. 58. Total cost of self-insurance.

"Total cost of self-insurance" includes any direct and indirect administrative expenses incurred that are related to the operation of a plan of self-insurance, plus the sum of any payment made to or on behalf of Minnesota residents for costs or charges for health benefits by a self-insurer under a plan of health coverage, which is not counted as premium by an insurer, except to the extent of such payments made for coverage of the types described in Minnesota Statutes, section 62E.02, subdivision 11, clauses (1) to (8).

Subp. 59. Usual and customary charge.

"Usual and customary charge" for the purpose of the state plan means the normal charge, in absence of insurance, of the provider for a service or article, but not more than the prevailing charge in the area for a like service or article. A "like service" is of the same nature and duration, requires the same skill and is performed by a provider of similar training and experience. A "like article" is one that is identical or substantially equivalent. "Area" means the municipality or, in the case of a large city, a subdivision thereof, in which the service or article is actually provided or such greater area as is necessary to obtain a representative cross-section of charges for a like service or article.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; 17 SR 1279; L 2005 c 56 s 2

Minn. R. 2740.0200 Authority, Scope, and Purpose

These rules are promulgated pursuant to Minnesota Statutes, section 62E.09, clause (i) relating to qualified comprehensive health insurance plans and the operations of the Minnesota Comprehensive Health Association. These rules and all future changes herein apply to all insurers (including nonprofit health service plan corporations), self-insurers, fraternals, health maintenance organizations and other organizations that are at the time of adoption of these rules, or at any time in the future, licensed or authorized to do business in or otherwise doing business in this state and thereby subject to the provisions of the Minnesota Comprehensive Health Insurance Act of 1976, as amended. These rules are promulgated to carry out the act, as amended, and to facilitate its full and uniform implementation, enforcement and application to all persons affected thereby.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.1100 Duties of Employers

Subpart 1. Duty to make available a qualified plan.

An employer shall be deemed to have made available a qualified plan to its employees as required in Minnesota Statutes, section 62E.03, subdivision 1 when participation under a number 2 or number 3 qualified plan or a health maintenance plan is offered to the employee by a self-insurer or through an insurer or health maintenance organization, without regard to whether the cost of such participation is paid directly or indirectly by the employer or by the employee or by their joint payment.

Subp. 2. Effect of collective bargaining on duty to make available a qualified plan.

An employer whose employees are represented by one or more exclusive bargaining representatives shall be deemed to have complied with the provisions of Minnesota Statutes, section 62E.03, subdivision 1 with respect to all employees within each unit for collective bargaining if the employer makes available qualified plans of health coverage to the exclusive bargaining representatives.

A. Such employers shall be deemed to have complied with requirements of Minnesota Statutes, section 62E.03, subdivision 1 for each accounting period utilized by the employer for Minnesota income tax purposes during the entire term of any collective bargaining agreement executed after an offer of qualified health coverage has been made.

B. Nothing in this part shall require the employer to renegotiate any collectively bargained agreement solely for the purposes of compliance with this act.

Subp. 3. Frequency of required offer.

Except as provided in subpart 2, an employer shall be deemed to have complied with the requirements of Minnesota Statutes, section 62E.03, subdivision 1 if the employer makes available to the employer's employees a plan of health coverage which is certified as a number 2 or number 3 qualified plan or a health maintenance plan at least once during each accounting period utilized by the employer for Minnesota income tax purposes.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.1200 Duties of Insurers and Fraternals

Subpart 1. Exception to definition of accident and health insurance policy.

The exception provided by Minnesota Statutes, section 62E.02, subdivision 11, clause (4) shall apply with respect to hospital indemnity coverage sold by an insurer to an applicant who is, at the time of application for hospital indemnity coverage, covered by a qualified plan, notwithstanding the possibility that the applicant may subsequently terminate coverage under a qualified plan.

A. The exclusion of Minnesota Statutes, section 62E.02, subdivision 11, clause (4) shall also apply to a hospital indemnity coverage which is sold by an insurer to an applicant who is then currently covered by a health maintenance plan.

B. Insurers shall be entitled to conclusively rely upon the written statement of an applicant for hospital indemnity coverage that such applicant is, at the time of the application, covered by a qualified plan or a health maintenance plan.

Subp. 2. Timing of required offer of a qualified plan or qualified Medicare supplement plan.

Timing of required offer of a qualified plan or qualified Medicare supplement plan is as follows:

A. The offer of each type of qualified plan (that is, a number 1, number 2, and number 3 qualified plan) that is required when an insurer or fraternal is offering an individual policy of accident and health insurance shall occur no later than the date of delivery of such policy to the applicant.

B. The offer of a qualified Medicare supplement plan that is required when an insurer or fraternal is offering a Medicare supplement policy shall occur no later than the date of delivery of such policy to the applicant.

C. The offer of each type of qualified plan (that is, a number 1, number 2, or number 3 qualified plan) required when an insurer or fraternal is offering a group policy of accident and health insurance shall occur no later than the date of delivery of such policy to the applicant.

D. "Each person who applies" and "applicant" for the purposes of Minnesota Statutes, section 62E.04 and this part shall be deemed to be only the individual making an initial application for an individual policy or in the case of a group policy, the corporation, partnership, proprietorship, association or other qualified entity making application for a group policy.

E. Minnesota Statutes, section 62E.04, subdivisions 1, 2, and 3 shall not be deemed to require an insurer or fraternal to offer a qualified plan or qualified Medicare supplement plan at the time a policy is subject to renewal.

Subp. 3. No duty to offer particular category of insurance.

For the purposes of the act, individual accident and health insurance, group accident and health insurance, individual Medicare supplement plans, and group medicare supplement plans are recognized as separate and distinct categories of insurance. Nothing in Minnesota Statutes, section 62E.04, subdivisions 1, 2, and 3 shall be construed as requiring an insurer or fraternal to engage in the business of offering or issuing a particular category of accident and health insurance policy or Medicare supplement plan that it does not otherwise offer or issue in this state.

Subp. 4. Duty to offer major medical coverage.

Each insurer and fraternal shall affirmatively offer, subject to its underwriting standards, coverage of major medical expenses to every applicant for a new unqualified policy at the time of application and annually thereafter to every holder of an unqualified policy of accident and health insurance renewed by the insurer or fraternal as required by Minnesota Statutes, section 62E.04, subdivision 4. "Affirmatively offer" shall mean written advice to the applicant for, or the holder of, an unqualified policy of accident and health insurance, of the availability of coverage for major medical expenses. Such written advice of the availability of the coverage for major medical expenses may be satisfied by a contractual provision in the unqualified policy that gives the insured the contractual right to apply to the insurer or fraternal for a new policy or a rider on an existing unqualified policy that provides coverage for 80 percent of the covered expenses for services listed in Minnesota Statutes, section 62E.06, subdivision 1 or the actuarial equivalence thereof subject to a $5,000 deductible for out-of-pocket expenses, subject to the insurer's or fraternal's underwriting requirements.

Subp. 5. Effect on foreign contracts.

No provision of the act shall be construed to require any insurer or fraternal to alter or amend any policy or contract issued outside the state of Minnesota.

Subp. 6. Exclusion of certain foreign conversion policies.

The issuance of individual group conversion policies or contracts in Minnesota pursuant to Minnesota Statutes, section 62A.17 or 62E.16 shall not, in and of itself, constitute the transaction of accident and health insurance business by an insurer or fraternal that has relinquished prior authority to transact such business in Minnesota and that is not otherwise currently issuing policies or contracts in Minnesota.

Subp. 7. Exceptions to duties for certain policies and contracts.

Exceptions to duties for certain policies and contracts are as follows:

A. The continuation in force of a policy or contract under which there is no unilateral right of the insurer or fraternal to cancel, nonrenew, amend or change the terms, conditions or premium rate of the policy or contract in any way, shall not be considered a renewal for the purposes of Minnesota Statutes, section 62E.04 and part 2740.2100 if the policy or contract:

B. The issuance or renewal by an insurer or fraternal on or after June 3, 1977, of a policy or contract that is designed solely to provide payments on a per diem, fixed indemnity, or nonexpense incurred basis, shall not be subject to Minnesota Statutes, section 62E.04, except for policies and contracts sold by an insurer to provide payments on a hospital indemnity basis if such coverage is issued to an applicant who is not covered by a qualified plan or a health maintenance plan at the time of issue.

Subp. 8. Sanction for failure to comply with duties of insurers and fraternals.

Any insurer or fraternal not in compliance with Minnesota Statutes, section 62E.04 shall cease and desist from transacting accident and health insurance business in the state of Minnesota. Nothing in this part shall prohibit such an insurer or fraternal no longer meeting the definition of insurer in Minnesota Statutes, section 62E.02, subdivision 10 or fraternal in Minnesota Statutes, section 62E.02, subdivision 19, from continuing to maintain in force any policies or contracts described in subpart 7, item A.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.1300 Qualified Plan Preexisting Conditions

A qualified plan may include provisions consistent with generally accepted underwriting practices that provide that any preexisting condition for any person covered under the policy which was diagnosed prior to the effective date of the policy, and for which medical care or treatment was rendered or prescribed during the 90 days immediately prior to the application for such policy, shall not be covered or eligible for the payment of any benefits for care or treatment rendered during a period of time beginning on the effective date of the policy and ending 24 months after the policy has been continuously in force.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.1400 Minimum Benefits of Qualified Medicare Supplement Plans

The minimum benefits of qualified Medicare supplement plans shall be as provided in Minnesota Statutes, section 62E.07 and as described for the purposes of the state plan in part 2740.3100.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.1500 Certification of Qualified Plans

Subpart 1. Application for certification.

The application of an insurer, fraternal, or employer for certification by the commissioner of a plan of health coverage as a qualified plan or a qualified Medicare supplement plan under Minnesota Statutes, section 62E.05 shall include the qualification number of the plan for which certification is sought pursuant to the procedures specified in the actuarial equivalence tables set forth in parts 2740.9909 to 2740.9993.

Subp. 2. Certification by commissioner.

An accident and health insurance policy or plan is deemed certified as a qualified plan or qualified Medicare supplement plan for the purpose of Minnesota Statutes, section 62E.05 if it meets the requirements of these rules and other relevant laws of the state upon the expiration of 90 days after receipt of the request for certification by the commissioner, unless earlier rejected or certified by the commissioner. In the event the commissioner rejects such request, the commissioner shall give written notice of the grounds for rejection to the person submitting the plan, and the insurer, fraternal, or employer has the same rights in the event of such rejection as provided in Minnesota Statutes, section 62A.02.

Subp. 3. Required benefits under the act.

On or after June 3, 1977 each plan of health coverage, in order to be certified as a number 1, number 2, or number 3 qualified plan, shall provide a limitation of $3,000 per person on total annual out-of-pocket expenses and a maximum lifetime benefit of not less than $250,000, and shall provide all other benefits required under the act that are not subject to substitution of actuarially equivalent benefits under Minnesota Statutes, section 62E.06.

Subp. 4. Certification of an employer's plan of health coverage.

For purposes of certification of an employer's plan of health coverage pursuant to Minnesota Statutes, section 62E.03, any plan of health coverage that constitutes a qualified plan at the time of issue shall continue to be a qualified plan until the later of the next renewal date of the plan of health coverage or the expiration of an applicable collective bargaining agreement, if any.

History

Statutory Authority: MS s 62E.09
History: 17 SR 1279

Minn. R. 2740.1600 Termination of Coverage; Conversion Privileges

Subpart 1.

[Repealed, L 1998 c 407 art 8 s 14]

Subp. 2. Duty to offer conversion policy or contract.

Duty to offer conversion policy or contracts:

A. For the purposes of Minnesota Statutes, section 62E.16, an insurer, health maintenance organization, or self-insurer shall not be required to offer a conversion policy or contract to a person who is then covered by a qualified plan or eligible for Medicare.

B. An insurer, health maintenance organization, or self-insurer shall not be required to renew a conversion policy or contract issued to a person who, during the prior policy or contract year, became covered by a qualified plan, or became eligible for Medicare.

C. An insurer, health maintenance organization, or self-insurer that is required to offer conversion coverage to a terminated employee must offer, at the employee's option, a number 1, number 2, or number 3 qualified plan. A policy providing reduced benefits at a reduced premium rate may be accepted by the employee, spouse or a dependent in lieu of the optional coverage otherwise required by Minnesota Statutes, sections 62A.17, subdivision 6 and 62E.16.

Subp. 3. Due notice of cancellation or termination.

An insurer, health maintenance organization, or self-insurer shall be deemed to have provided "due notice of cancellation or termination" as required in Minnesota Statutes, section 62E.16 if the insurer, health maintenance organization, or self-insurer notifies in writing those employees at their respective addresses as provided to the insurer, health maintenance organization, or self-insurer by the employer pursuant to the terms of Minnesota Statutes, section 62E.16.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; L 1998 c 407 art 8 s 14

Minn. R. 2740.1700 Revision of Actuarial Equivalence Tables

The commissioner shall periodically, no less frequently than biennially, review the actuarial equivalence tables set forth in parts 2740.9909 to 2740.9993, and shall require that the relative point values set forth therein be actuarially updated when required to more accurately reflect changes in the relative values of benefits, including copayments. Any revision of relative point values which the commissioner shall make shall be promulgated pursuant to the rulemaking requirements of the Administrative Procedure Act, Minnesota Statutes, chapter 14. Following revision of the actuarial equivalence tables pursuant to this part, recertification of existing plans of health coverage may be required subject to the provisions set forth in parts 2740.1100, 2740.1200, and 2740.1500.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.2100 Definitions

Subpart 1. Accident and health insurance business.

"Accident and health insurance business" means the issuance or renewal of any accident and health insurance policy as defined in Minnesota Statutes, section 62E.02, subdivision 11.

A. An insurer is engaged in accident and health insurance business during the period in which any policy or contract which has been issued or renewed remains in effect.

B. Such business shall not include the issuance or renewal of policies or contracts providing coverage that is:

Subp. 2. Health maintenance organization business.

"Health maintenance organization business" means the operation of a nonprofit corporation licensed and operated as provided in Minnesota Statutes, chapter 62D.

Subp. 3. Licensed or authorized to do business.

"Licensed or authorized to do business" means:

A. licensed by the commissioner to conduct business under Minnesota Statutes, chapter 62A or 62C, or by the commissioner of health under Minnesota Statutes, chapter 62D; or

B. authorized by the secretary of state to carry on any business in the state of Minnesota or otherwise doing business in this state and acting as an insurer, self-insurer, fraternal, or health maintenance organization.

Subp. 4. Self-insurance business.

"Self-insurance business" means the provision, directly or indirectly, of a plan of health coverage by a self-insurer. "Self-insurance business" does not include the direct provision of health care services to employees at no charge to them by an employer engaged in the business of providing health care services to the public, nor does it include provision of benefits that, if provided by an insurer doing accident and health insurance business, would be excluded under subpart 1, item B. "Directly or indirectly" for the purposes of parts 2740.2100 to 2740.5500 means that the self-insurer funds the plan of health coverage in any amount or collects any employee contributions which are used to pay for the plan of health coverage.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.2200 Mandatory Membership

As a condition of doing accident and health insurance business, self-insurance business, or health maintenance organization business in Minnesota, all insurers, self-insurers, fraternals, and health maintenance organizations licensed or authorized to do business in this state shall become members of the association and maintain their membership therein.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.2300 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.2400 Assessments

Contributing members will be assessed for their proportionate share of the operating and administrative expenses of the association, incurred or estimated to be incurred, together with losses, if any, incurred by the association as a result of operation of the state plan. The total amount of operating and administrative expenses and losses:

A. shall be determined annually by the board at each fiscal year end;

B. may, at the recommendation of the board, subject to the approval of the commissioner, consist of a reasonable estimate of the operating and administrative expenses of the association for the succeeding fiscal year, which amount shall be adjusted at the end of the succeeding fiscal year to the amount of actual operating and administrative expenses, and contributing members shall be entitled to credit for any excess or shall be assessed for any deficit in these expenses in future assessments.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.2500 Levy of Assessments

Subpart 1. Annual.

The association shall make an annual determination of each contributing member's liability, if any, and may levy assessments following each fiscal year end. The fiscal year ends on December 31 unless the association establishes a different fiscal year end. Assessments are due and payable 30 days after receipt of a written assessment notice.

Subp. 2. Interim.

The association may also, upon approval of the commissioner, levy interim assessments when deemed necessary to assure the financial capability of the association to meet the incurred or estimated operating and administrative expenses of the association and losses resulting from the state plan. Interim assessments shall be due and payable within 30 days of receipt by a contributing member of a written interim assessment notice.

Subp. 3. Member share.

The association shall levy each contributing member's share of the total assessment based on the ratio of: the contributing member's total premium for accident and health insurance business as defined in part 2740.2100, subparts 1 and 2, received from or on behalf of residents of Minnesota, as determined by the commissioner; to the total premium for accident and health insurance business for all contributing members.

Subp. 4. Costs and charges.

The costs and charges referred to in the ratio in subpart 3 shall, to the extent possible, be determined by reference to a form issued by the association or the commissioner which all contributing members shall submit to the commissioner annually for the preceding calendar year.

A. If the required information is not available to the commissioner when necessary to levy an assessment, the commissioner may estimate the member's share based on other available information relative to its experience, including but not limited to, the annual statement that all insurers are required to transmit to the commissioner under Minnesota Statutes, section 60A.13.

B. The commissioner shall have the authority to audit the accounts and records of any contributing member for the purpose of obtaining information necessary to levy an assessment.

Subp. 5. Discretionary waiver.

The board may, in its discretion, decline to levy assessments against contributing members that owe $10 or less in a given year.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.2600 Failure to Pay Assessments

Any contributing members that fail to pay annual or interim assessments when such assessments become payable will be reported by the association to the commissioner for appropriate action within the discretion of the commissioner.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.2700 Organization and Approval

Subpart 1. Powers.

The association shall operate pursuant to the provisions of Minnesota Statutes, chapter 62E, with all the powers of a corporation formed under Minnesota Statutes, chapter 317A, except that if the provisions of the two chapters conflict, Minnesota Statutes, chapter 62E shall govern.

Subp. 2. Amendments to articles of incorporation.

Amendments to the articles of incorporation shall be submitted to and approved by the commissioner before filing with the secretary of state.

Subp. 3. Amendments to bylaws.

All amendments to the bylaws of the association shall be submitted to and approved by the commissioner before they become effective.

Subp. 4. Operating rules.

The board is authorized to adopt and to amend from time to time reasonable operating rules that are not inconsistent with the act and these rules for the management and operation of the association. Upon submission to and approval by the commissioner, these operating rules shall become effective.

History

Statutory Authority: MS s 62E.09
History: L 1989 c 304 s 137

Minn. R. 2740.2800 Board of Directors

Subpart 1. Composition.

The management of the association shall be vested in a board of seven directors who shall be representative of the membership of the association, and be officers, employees, or agents of members of the association during their terms of office, and shall automatically be removed for failure to meet this qualification.

Subp. 2. Election.

The board shall be elected by members at the annual meeting of the association in accordance with the bylaws of the association, to the extent that such bylaws are consistent with the provisions of Minnesota Statutes, chapters 62E and 317A, and in accordance with the provisions relating to voting rights as outlined in part 2740.2900.

Prior to the election, the association may submit the names of proposed board members to the commissioner for approval. After the annual meeting, the results of the election shall be certified and submitted to the commissioner for approval pursuant to criteria set forth in Minnesota Statutes, section 62E.10, subdivision 2.

Subp. 3. Duties and compensation.

The duties of the board shall include management of the association in furtherance of its purposes as provided in the act, and as authorized in the articles of incorporation and bylaws of the association.

Members of the board may be reimbursed by the association for expenses incurred by them in attending board or board committee meetings and for other reasonable expenses incurred within the scope of their activities as directors and within guidelines established by the board and approved by the commissioner, but shall not otherwise be compensated for their services.

Subp. 4. Officers and committees.

The board may elect officers and establish committees as provided in the bylaws of the association. These officers and committees shall be charged with such duties as authorized by the board in accordance with the bylaws of the association.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.2900 Determination of Member's Voting Rights

Subpart 1. Meetings.

Every member is entitled to vote at the annual meeting and at any special meeting of the members.

Subp. 2. Weighted vote.

A member's vote shall be a weighted vote based on the member's total cost of self-insurance, accident and health insurance premiums, subscriber contract charges, or health maintenance contract charges derived from or on behalf of residents of Minnesota in the previous calendar year, as determined by the commissioner. To the extent possible, this figure shall be determined by reference to the annual reporting form submitted by contributing members to the commissioner in accordance with part 2740.2500, subpart 4, and similar forms showing all other members' total accident and health insurance premiums, subscriber contract charges (defined as charges for business specified in part 2740.2100, subparts 1 and 2) received from or on behalf of residents of Minnesota, or total cost of self-insurance, as defined in part 2740.0100, subpart 58, as determined by the commissioner.

If the necessary information is not available to the commissioner on the form described in this subpart at the time that voting rights must be determined, the commissioner may estimate the member's weighted vote based on other information available to the commissioner.

Subp. 3. Voting procedures.

Members are entitled to vote in person, by proxy, or by mail as determined by the board.

When a member elects to vote in person at a members' meeting, the representative casting the vote shall present credentials as required pursuant to the bylaws or operating rules of the association.

When a member elects to vote by proxy, the proxy statement as approved by the board shall be returned on or before the date indicated in the meeting notice sent to the members.

Voting by mail may be permitted as authorized by the bylaws or operating rules of the association, and the meeting notice to members shall so indicate.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.3000 Meetings of Association

Subpart 1. Annual meeting.

An annual meeting of the members shall be held for the purpose of electing directors as provided in part 2740.2800, subpart 2 and for the purpose of transacting any other appropriate business of the membership of the association.

The meeting shall be held in the second calendar quarter of each year unless otherwise determined by the board, and shall occur at such date, time, and place as the board determines.

"Appropriate business" includes any activities related to the powers and duties of the association under Minnesota Statutes, chapter 62E or 317A.

Notice and quorum requirements shall be as provided in the articles of incorporation or bylaws of the association or as otherwise authorized by the board.

Subp. 2. Special meetings.

Special meetings of the members shall be held at the request of the commissioner and may otherwise be held as provided by the articles of incorporation or bylaws of the association for the purpose of conducting any appropriate business of the association.

A special meeting may be held at such date, time, and place designated in the notice of the meeting.

Notice and quorum requirements shall be as provided in the articles of incorporation or bylaws of the association or as otherwise authorized by the board.

Subp. 3. Open meetings.

All meetings of the association membership, board, and any committees established in accordance with part 2740.2800, subpart 4 shall be held in compliance with the provisions of the open meeting law (Minnesota Statutes, section 13D.01 to 13D.07).

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.3100 Minimum Benefits of Comprehensive Health Insurance Plans

Subpart 1. Duty to offer.

The association shall offer a number 1 and number 2 qualified plan and a qualified Medicare supplement plan to eligible persons. The association shall offer health maintenance plans in areas of the state where a health maintenance organization has agreed to make the coverage available and has been selected as a writing carrier in accordance with part 2740.4300. The association may provide for coverage for eligible dependents.

Subp. 2. Benefits of number 1 and number 2 qualified plan.

Benefits shall meet or exceed the requirements of Minnesota Statutes, section 62E.06 or the actuarial equivalence thereof as determined pursuant to the actuarial equivalence tables in parts 2740.9909 to 2740.9993, except where substitution of an actuarially equivalent benefit is not permissible under the act.

A. The minimum benefits shall be equal to at least 80 percent of the charges for covered expenses in excess of the annual deductible, which shall not exceed $500 for a number 2 qualified plan, or $1,000 for a number 1 qualified plan.

B. Coverage shall include an annual (calendar year) limitation of not more than $3,000 per covered person on total out-of-pocket expenses, which out-of-pocket expenses shall include the deductible under the state plan policy or contract, and which out-of-pocket expense limitation is not subject to substitution of an actuarially equivalent benefit.

C. Coverage shall be subject to a maximum lifetime benefit of not less than $250,000 per covered person, less any amount paid to or on behalf of the covered person under any other qualified plan of the state plan. This benefit is not subject to substitution of an actuarially equivalent benefit.

Subp. 3. Benefits of qualified Medicare supplement plan.

Benefits of a qualified Medicare supplement plan shall meet or exceed the following minimum standards.

A. The plan shall provide benefits to covered persons by supplementing Medicare through provision of:

B. The plan shall provide 80 percent of the covered charges for expenses as provided in Minnesota Statutes, section 62E.06, which charges are not paid or payable under Medicare or would not have been paid or payable had the covered person who is or was entitled or eligible to enroll in Medicare been so enrolled or which charges are not paid or payable under item A.

C. Coverage shall include an annual limitation of $1,000 total out-of-pocket expenses per covered person for covered charges, provided that an annual deductible of not more than $200 is permissible for those covered charges not paid or payable under Medicare or otherwise included in item A or B.

D. Coverage shall be subject to a maximum lifetime benefit of not less than $100,000 per covered person, less any amount paid to or on behalf of the covered person under any other qualified Medicare supplement plan of the state plan.

E. The minimum coverage of a qualified Medicare supplement plan required by this subpart is not subject to substitution of actuarially equivalent benefits.

Subp. 4. Benefits of health maintenance plan.

Benefits of a health maintenance plan shall include those comprehensive health maintenance services required by Minnesota Statutes, chapter 62D and rules promulgated thereunder.

Subp. 5. Preexisting conditions.

No person who obtains coverage under a policy or contract of the state plan shall be covered for any preexisting condition during the first six months of coverage under the state plan if such covered person was diagnosed or treated for that condition during the 90 days immediately preceding the filing of a completed certificate of eligibility.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.3200 Approval of State Plan

Subpart 1. Submission of proposed state plan.

Members of the association may submit to the association policies or contracts that have been approved by the commissioner for selection by the association as the state plan.

Subp. 2. Approval of policies or contracts by association.

The association shall select policies or contracts to constitute the state plan from among the proposals submitted by the members or from proposals developed by the association or others. These policies and contracts, or parts thereof, may be used to develop specifications for bids from members that wish to be selected as a writing carrier to administer the state plan.

Subp. 3. Approval of state plan.

The policies or contracts approved by the association as the state plan shall be approved by the commissioner prior to issuance.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.3600 Enrollment

Subpart 1. Open enrollment.

The state plan shall be open for enrollment by eligible persons at all times.

Subp. 2. Eligible person.

"Eligible person," as used in subpart 1, means a resident of Minnesota who submits or on whose behalf is submitted a complete certificate of eligibility and enrollment form to the association or its writing carrier and who is not already covered by another state plan policy or contract.

A. A complete certificate of eligibility and enrollment form may provide:

B. In lieu of evidence of rejection, or a requirement of a restrictive rider, rate-up, or preexisting conditions limitation on a qualified plan or qualified Medicare supplement plan, as required by item A, subitem (3), a complete certificate of eligibility and enrollment form may provide evidence which meets the requirements of an operating rule adopted by the association of a proposed covered person having been treated within three years of the date of the certificate of eligibility and enrollment form for one or more conditions listed in the operating rule.

C. Before a person is determined to be an eligible person, the board may require that any items listed in items A and B or, if acting pursuant to provisions of the association's operating rules, other necessary information be submitted to the association or its writing carrier and may also investigate the authenticity of information submitted as a part of the certificate of eligibility.

D. If a covered person, under a qualified plan of the state plan, upon reaching age 65, or becoming enrolled in Medicare, wishes to purchase a state plan qualified Medicare supplement plan, the requirement that the person obtain one rejection, restrictive rider, rate-up, or preexisting conditions limitation on a qualified Medicare supplement plan, the effect of which is to substantially reduce coverage from that received by a person who is considered a standard risk, from one member of the association, or from an authorized representative, including an insurance agent acting on behalf of an association member, within the preceding six months may be waived by the board if acting pursuant to provisions of the association's operating rules.

E. A person who is age 65 or older shall be eligible for coverage only under the state plan's qualified Medicare supplement plan and when an insured person under a qualified plan reaches age 65, the board may, if acting pursuant to provisions of the association's operating rules, terminate or refuse to renew coverage under the qualified plan. A person under age 65 who is otherwise eligible for coverage under the state plan and is enrolled in Medicare shall be permitted to purchase a qualified plan 1 or 2 or the qualified Medicare supplement plan of the state plan.

F. An applicant or any person proposed to be covered under a qualified plan of the state plan who has previously been covered under one or more qualified plans of the state plan and who has exhausted the $250,000 maximum lifetime benefit shall not be an eligible person for coverage under a qualified plan of the state plan; an applicant or any person proposed to be covered under a qualified Medicare supplement plan of the state plan who has previously been covered under one or more qualified Medicare supplement plans of the state plan and who has exhausted the $100,000 maximum lifetime benefit shall not be an eligible person for coverage under a qualified Medicare supplement plan of the state plan.

G. When a covered person under the state plan no longer meets one or more of the requirements for eligibility for coverage under the state plan, the board may, if acting pursuant to the association's operating rules, terminate or refuse to renew coverage under the state plan.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.3700 Association's Response

Subpart 1. Time limitation.

Within 30 days of receipt of a complete certificate of eligibility and enrollment form pursuant to part 2740.3600, subpart 2, items A, B, and C, the association or the writing carrier shall accept the certificate of eligibility or shall reject the certificate of eligibility for failure to meet the eligibility requirements.

Subp. 2. Acceptance.

If the association or its writing carrier accepts the certificate of eligibility, it shall forward a notice of acceptance, billing information, and a policy or contract or certificate that shall evidence coverage under the state plan.

A. Such policy or contract or certificate of coverage shall include but not be limited to:

B. When the state plan premium is received by the association or its writing carrier for the first billing period and accepted in accordance with this part, the coverage shall be effective retroactive to the date of receipt by the association or its writing carrier of the completed certificate of eligibility pursuant to part 2740.3600, subpart 2, items A, B, and C unless otherwise requested by the insured person and approved by the board.

Subp. 3. Nonacceptance.

If the association does not accept the certificate of eligibility, the applicant shall be informed of the reason for the rejection and shall have the opportunity to submit additional information to substantiate eligibility for coverage under the state plan and to request reconsideration of the decision. The board may establish a review mechanism for reviewing requests for reconsideration of rejected certificates of eligibility. The association shall give notice of a final determination of ineligibility to the applicant stating the reasons therefor and advising the applicant of the right to appeal to the commissioner within a reasonable period of time.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.3800 Appeal to Commissioner

Any applicant or covered person who is determined by the association to be ineligible for coverage under the state plan may appeal such determination to the commissioner within a reasonable period of time. Upon receipt of an appeal from a determination of ineligibility, the commissioner may, in the commissioner's discretion, affirm, reverse, or modify the determination of the association.

History

Statutory Authority: MS s 62E.09
History: 17 SR 1279

Minn. R. 2740.3900 Dissemination of Information Concerning State Plan

Subpart 1. Plan.

The association shall develop a plan for use by the association, upon approval by the commissioner, to publicize the existence of the state plan and the eligibility requirements and procedures for enrollment, and to maintain public awareness of and participation in the state plan.

Subp. 2. Forms and instructions.

The association shall prepare and make available certificate of eligibility forms and enrollment instruction forms to members, insurance agents and brokers, and to the general public in Minnesota.

Subp. 3. Referral fee.

The association shall require the writing carrier to pay a referral fee of $50 for any certificate of eligibility accepted by the association or its writing carrier if the referring agent is licensed by the commissioner as an insurance agent and if the referring agent's signature appears as the agent on the accepted certificate of eligibility. The referral fee shall be paid from the premium received for the state plan. Referring agents shall not be authorized to interpret, amend, or alter the terms of the state plan policy or contract, nor shall referring agents be authorized to bind the association in any way. Referring agents shall not be agents of the association for any purpose, and the association shall not bear responsibility for acts of referring agents.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.4300 Selection and Approval of Writing Carriers

Subpart 1. Selection.

The association may select a writing carrier or writing carriers on the basis of criteria for selection which shall include but not be limited to:

A. the member's proven ability to handle large group accident and health insurance cases;

B. the efficiency of the member's claim paying capacity;

C. an estimate of total charges for administering the plan; and

D. other criteria developed by the association and set forth in its operating rules.

Subp. 2. Approval.

The writing carrier selected by the association shall be approved by the commissioner prior to the establishment of a contract with the association and prior to the commencement of its duties pursuant to Minnesota Statutes, section 62E.13 and part 2740.4400.

Subp. 3. Term.

The writing carrier shall serve for a period of three years, unless the commissioner approves an earlier termination at the request of the writing carrier or the association in accordance with the terms of its contract with the writing carrier.

The commissioner shall approve or deny a request for termination within 90 days of receipt of such request. Failure to make a determination within 90 days of receipt of such request shall be deemed to be an approval.

Subp. 4. Termination.

If termination is approved by the commissioner, the writing carrier shall serve for up to six months from the date of the writing carrier's request for termination, at the discretion of the association, to allow the association to select another writing carrier.

Subp. 5. Bids for renewal.

Six months prior to the expiration of each three-year period of service by a writing carrier, the association shall invite members of the association, including the current writing carriers, to submit bids to serve as writing carrier for the succeeding three-year period.

History

Statutory Authority: MS s 62E.09
History: 10 SR 1265

Minn. R. 2740.4400 Operations of Writing Carrier

Subpart 1. Administrative and claims payment functions.

The writing carrier shall perform all administrative and claims payment functions relating to the state plan.

A. The writing carrier shall establish a premium billing procedure for collection of premiums from insured persons.

B. The writing carrier shall perform all necessary functions to assure timely payment of benefits to covered persons under the state plan.

Subp. 2. Monthly reports.

The writing carrier shall submit monthly reports to the commissioner and the board on the operation of the state plan. The content and form of the report shall be as determined by the board and approved by the commissioner.

Subp. 3. Claims expenses.

The writing carrier shall pay claims expenses from the premium payments received from or on behalf of covered persons under the state plan. If the writing carrier's payments for claims expenses exceed the portion of the state plan premiums allocated by the board for payment of claims expenses, the association shall provide to the writing carrier additional funds for payment of claims expenses. Not less than 85 percent of the state plan premium, as determined by the board, shall be used to pay claims expenses, and not more than 15 percent of the state plan premium shall be used to pay agent referral fees (authorized by Minnesota Statutes, section 62E.15, subdivision 3) and to pay the writing carrier's direct and indirect expenses, as defined and authorized in Minnesota Statutes, section 62E.13, subdivision 7 and described in subpart 5.

Subp. 4. Direct and indirect expense reimbursement.

The writing carrier shall be paid from time to time as provided in the association's contract with the writing carrier for its direct and indirect expenses incurred in the performance of its services from the state plan premiums received in an amount not to exceed the lesser of:

A. 15 percent of the state plan premium, less agent referral fees payable under part 2740.3900, subpart 3;

B. direct and indirect operating and administrative expenses incurred in the performance of its services; or

C. an amount agreed upon by the board and the writing carrier.

Subp. 5. Direct and indirect expenses.

Direct and indirect expenses shall include that portion of the writing carrier's actual administrative, printing, claims administration, management, building overhead expenses, and other actual operating and administrative expenses approved by the board as allocable to the administration of the state plan.

Subp. 6. Cost accounting method.

The board shall approve cost accounting methods of the writing carrier, which shall be consistent with generally accepted accounting principles.

Subp. 7. Audits.

The board shall have the authority to conduct periodic audits to verify the accuracy of financial data and reports submitted by the writing carrier.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.4500 Appeal to Commissioner

Any covered person whose claim for benefits under the state plan is denied, in whole or in part, may appeal such determination to the commissioner within a reasonable period of time. Upon receipt of an appeal from a claim denial, the commissioner may, in the commissioner's discretion, affirm, reverse or modify the determination of the association.

History

Statutory Authority: MS s 62E.09
History: 17 SR 1279

Minn. R. 2740.5100 Authority to Make Available Reinsurance

The association may provide for reinsurance of risks incurred by insurer or fraternal members resulting from such members' issuance of all or any of the following categories of coverage as provided in the act. A member may make a separate election to reinsure each of these categories:

A. individual qualified plans, but not including group conversions;

B. individual qualified Medicare supplement plans but not including group conversions;

C. group conversions on qualified plans; "group conversions" means the conversion policies or contracts required to be issued under Minnesota Statutes, sections 62A.16 and 62A.17 or 62E.16;

D. group qualified plans which cover fewer than 50 employees or insured persons;

E. group qualified Medicare supplement plans with fewer than 50 employees or insured persons;

F. individual major medical coverage; and

G. group major medical coverage.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.5200 Reinsurance Plan

Subpart 1. Pool agreement.

The association may enter into reinsurance pooling agreements with insurer and fraternal members to establish a reinsurance plan for risks of categories of coverage described in part 2740.5100. The reinsurance plan may provide for a reinsurance pool.

Subp. 2. Application and acceptance.

Insurer or fraternal members wishing to participate in the pool shall apply to the association for participation in the pool, specifying the categories of coverage that the member desires to reinsure.

Each member entering into a reinsurance pooling agreement for a particular category or categories of coverage shall offer to place in the pool all policies and contracts that it issues in the category or categories listed in part 2740.5100 that it wishes to reinsure.

Only policies and contracts acceptable to the association or its reinsurance administrator may be accepted for reinsurance. The association is under no obligation to accept any but standard risks in the reinsurance plan.

Subp. 3. Commercial reinsurance.

The association may obtain commercial reinsurance to reduce the risk of loss through the pool to insurer or fraternal members entering into reinsurance pooling agreements. Any contract for commercial reinsurance entered into between the association and a commercial reinsurer shall be binding on any insurer or fraternal member entering into a reinsurance pooling agreement.

Subp. 4. Pool administration.

The association may administer the pool directly or through a reinsurance administrator.

The association or its reinsurance administrator may establish underwriting standards with which participating members shall comply and may perform reinsurance underwriting on all policies or contracts submitted for reinsurance.

The association or its reinsurance administrator may perform benefit calculation (claims processing) for all claims eligible for reimbursement to participating members. Only claims paid by participating members and approved by the association or its reinsurance administrator shall be eligible for reimbursement by the association or its reinsurance administrator in accordance with the reinsurance pooling agreement.

Except for underwriting and claims processing functions, the association or the reinsurance administrator shall have no responsibility for other administration functions for any member's reinsured policies or contracts unless otherwise agreed to by the association.

Subp. 5. Duties of members.

Participating members shall have the duties established in the reinsurance pooling agreement, including but not limited to:

A. submitting reports that provide all information deemed necessary by the association or its reinsurance administrator for performance of reinsurance, underwriting, and claims processing functions;

B. paying all pooling payments; and

C. paying all reinsurance assessments and interim reinsurance assessments as required by the board.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.5300 Pooling Payments

The association may require pooling payments from all participating members, to provide for reimbursement to participating members for claims paid under reinsured policies and contracts and for payment of administrative expenses of the pool incurred or estimated to be incurred during the period for which the pooling payment is made. Pooling payments shall be established by the association to provide at least 110 percent of total anticipated expenses for reinsurance and for administration of the policies or contracts which are reinsured.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.5400 Assessment of Participating Members

Subpart 1. Annual.

At the end of each calendar year (or other fiscal year end established by the association) the board may assess participating members on the basis of the formula established in or as a part of the reinsurance pooling agreement.

Subp. 2. Interim.

The board may also levy interim reinsurance assessments to assure the financial ability of the association to reimburse participating members for claims paid under reinsured policies and contracts and operating and administrative expenses incurred or estimated to be incurred in the operation of the reinsurance plan until the calendar year end (or other fiscal year end established by the association) reinsurance assessment.

Interim reinsurance assessments shall be due and payable within 30 days of receipt by a participating member of an interim reinsurance assessment notice.

Interim reinsurance assessments shall be credited to each participating member in the year end reinsurance assessment calculation.

Subp. 3. Time for payment.

Each participating member's reinsurance assessment (net after credit for any interim reinsurance assessment) shall be billed to the member by the association following each calendar year end (or other fiscal year end established by the association) and shall be due and payable within 30 days of receipt by the member of the reinsurance assessment notice.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.5500 Excess Receipts

If pooling payments, reinsurance assessments and other receipts by the association or its reinsurance administrator as a result of the reinsurance plan exceed actual reinsurance losses and administrative expenses of the pool, such excess shall be held at interest and used by the association to offset losses (including but not limited to reserves for incurred but not reported claims) due to claims expenses of the state plan or allocated to reduce state plan premiums.

History

Statutory Authority: MS s 62E.09

Minn. R. 2740.9904 Purpose

Minnesota Statutes, section 62E.02, defines "qualified plans" as health benefit plans that provide the benefits required in Minnesota Statutes, section 62E.06 or "the actuarial equivalent of those benefits." Minnesota Statutes, section 62E.06 describes three qualified plans. These statutes require all plans of health coverage subject to Minnesota Statutes, section 62E.06 to be labeled as qualified or nonqualified. The commissioner may be requested to determine whether a plan is qualified and may take up to 90 days to make that determination. Minnesota Statutes, section 62E.02 defines a qualified Medicare supplement plan as one which has been certified by the commissioner as providing the minimum benefits required by Minnesota Statutes, section 62E.07. Since the definition does not allow the option of an actuarial equivalent plan, the current rules do not include actuarial equivalent tables for Medicare supplement policies.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9905 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9909 Composite Point Values for Qualified Plan Number Three

The composite point values for a qualified plan number three for 1984 are as shown herein.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; L 2014 c 291 art 9 s 5

Minn. R. 2740.9910 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9914 Determination of Average Semiprivate Hospital Room and Board Level of Surgical Charges

Subpart 1. When values determined.

In December of each year, the commissioner will publish the following values:

A. the average semiprivate hospital room and board (ASP value);

B. the value of surgical charges (SURG value);

C. the ratios of the average semiprivate hospital room and board for the year to that in 1984 (ASP factor);

D. the ratio of the value of surgical charges for the year to that in 1984 (SURG factor); and

E. the composite ratio of medical care for the year to that in 1984 (COMP factor). The commissioner may appoint a service agency to calculate these values on a consistent basis each year.

Subp. 2. How values determined.

Values will be determined as follows:

A. The ASP value will be the weighted bed average of semiprivate room and board charges for acute hospitals in Minnesota. The information will be derived from each hospital's latest room and board charge filed with the commissioner or the service agency. A semiprivate room will be defined as a room with two beds.

B. The SURG value will be the sum of the product of the average charge, filed with the commissioner or the service agency, for each of the surgical operations shown below times the factor shown for that operation. The surgical operations and their factors are shown in part 2740.9919.

C. The ASP factor will be the ASP value to be published for the year divided by that published for 1984. For 1984, this will be 1.000 by definition.

D. The SURG factor is the ratio of the SURG value for the year divided by that published for 1984. For 1984, this will be 1.000 by definition.

E. The COMP factor is the composite factor for medical care. This equals 54 percent times the ASP factor for the year plus 46 percent times the SURG factor for the year.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9915 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9919 Table of Surgical Factors to Develop Surg Value

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9920 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9924 How to Use the List

Subpart 1. Basic and comprehensive major medical plans.

The list is used in the following manner:

A. Determine the ASP value, SURG value, ASP factor, SURG factor, and COMP factor for the calendar year. This is published annually by the commissioner.

B. List the plan benefits, ignoring deductibles, coinsurance, well baby care, emergency accident, supplemental accident, and student dependents. Include the plan maximum in the plan benefits.

C. For each benefit, find the appropriate table of equivalent points for basic and major medical plans.

D. Extract the appropriate point value for the benefit from the table, interpolating as necessary or indicated, and place it opposite the listed benefit. Ignore benefits for which no table exists.

E. Total the points for these benefits.

F. List deductible and coinsurance if the plan is a comprehensive major medical plan.

G. Determine the appropriate point values for deductible, interpolating as necessary, and place the value in the list of points. Calculate the coinsurance points and place the values in the list of points.

H. Determine the total points after the deduction for deductible and coinsurance.

I. Determine the deduction for coordination and nonduplication of benefits.

J. Determine the number of points for the limit on "out-of-pocket" expenses, well baby care, emergency accident, supplemental accident, and student dependents.

K. Calculate the grand total.

L. To determine qualification, utilize the grand total in the test for actuarial equivalence in part 2740.9949.

Subp. 2. Superimposed major medical plans.

The following govern superimposed major medical plans:

A. Follow steps outlined in subpart 1, items A to D for basic health plan benefits.

B. Total the points for the basic plan.

C. Utilize part 2740.9964, subparts 23, 24, and 25 to determine the point value of a Minnesota qualified plan superimposed over the basic plan with the deductible and benefit period of the plan at hand, interpolating as necessary. Put the points in the point column.

D. Compare the benefits in the superimposed major medical plan with the benefit structure of a Minnesota qualified plan:

E. Consult the tables for point adjustments (usually negative for Minnesota qualified plan benefits not in the superimposed major medical plan being tested). Put the adjustments in the point column.

F. Calculate the total by adding the points for the basic plan (item B), the superimposed major medical plan (item C), and the adjustments (item E).

G. To determine qualification, utilize the grand total in the test for actuarial equivalence in part 2740.9949.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9925 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9929 Benefit Variations Not Covered by Tables

Only those plan variations that are most common are recognized. For instance, comprehensive plan coinsurance was assumed normally not to exceed 20 percent. Therefore, no points are shown for 25 percent. However, points for such missing benefit variations can be extrapolated or estimated.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9930 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9934 Use of Tables

Subpart 1. Certification of plans.

Any insurer, self-insurer, or policyholder may use the test for actuarial equivalence as a guide. To obtain certification of any plan of health benefits as qualified, it must be submitted to the commissioner.

Subp. 2. Filing with commissioner.

The following must be sent to the commissioner:

A. The plan document if an uninsured plan or the policy form if an insured plan.

B. A statement of the grand total from part 2740.9924.

C. A certification that the plan is qualified as either a plan 1, 2, or 3, or is nonqualified, by using the test of actuarial equivalence in part 2740.9949. The certification must be by a principal or officer, or by a member of the Academy of Actuaries.

D. If the plan is not a qualified plan by using the test of actuarial equivalence, and the insurer or self-insurer desires to have it certified as a qualified plan, a statement of the specific reasons for the desired qualification.

Subp. 3. Certification by commissioner.

If the documents required by subpart 2 are filed and the plan is a qualified plan by using the test of actuarial equivalence in part 2740.9949, then the plan will be deemed certified as filed. If the documents required by subpart 2 are filed and the plan is not a qualified plan by using the test of actuarial equivalence in part 2740.9949, then the plan will be qualified upon certification by the commissioner.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9935 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9939 Update of Tables

Periodically, the tables may be revised as health care costs change. Also, as health care costs change, a plan may automatically lose or change its qualification. Annual revaluation of plans is required. When a plan is revalued and its qualification status changes, the filing procedures in part 2740.9934 will be followed.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9940 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9944 Misuse of Tables

The tables of equivalent points are not intended for any other use, especially not for premium calculations. They represent a composite of data and were adjusted to be usable for testing actuarial equivalence. No other use is contemplated.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9945 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9949 Test for Actuarial Equivalence for Plans Other Than Medicare Supplement Plans

Subpart 1. Table for 1984.

Subp. 2. Effect of inflation.

Each year the number of points required for each qualified plan will increase due to the effects of inflation on the benefits. Particular care must be taken to revalue any policy form which contains scheduled benefits or other policy forms which have different deductible or coinsurance provisions.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Minn. R. 2740.9950 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9954 Worksheet for Other Than Medicare Supplement Plans

Comprehensive Health Insurance

Test for Actuarial Equivalence

Other than Medicare Supplement Plans

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; L 2014 c 291 art 9 s 5

Minn. R. 2740.9955 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9959 Location of Tables of Equivalent Points for Basic and Major Medical Health Plans

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; L 2014 c 291 art 9 s 5

Minn. R. 2740.9960 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9964 Equivalent Points for Basic and Major Medical Health Plans; Not to Be Used for Medicare Supplement Plans

Subpart 1. Hospital room and board.

A. Room and board is defined to include a semiprivate room, or charges for a private room if prescribed as medically necessary by a physician. If the policy does not pay the additional charges for a private room, then deduct three points from hospital room and board.

B. If the policy pays the private room charge even though not medically necessary, then add ten points if average charge per day is four percent greater than the average semiprivate room and board charge.

C. If the policy pays the hospital room and board charge up to a maximum daily benefit which is less than the average semiprivate room and board charge in the area, then multiply the points for the semiprivate room and board at the indicated maximum days by the ratio of the scheduled amount to the ASP value in the area for the year.

Subp. 2. Hospital extras.

Hospital extras such as hospital services, special hospital services, ancillary services, and hospital therapeutics.

*Before entering this table, divide the maximum amount in the policy by the ASP factor for the year.

**Anesthesia does not include the administration of anesthesia.

This is for miscellaneous hospital services and includes the cost for inpatient hospital care, the cost for outpatient hospital treatment and the excess cost of intensive care unit or coronary care unit over the average semiprivate room and board.

Subp. 3. Surgery.

If the policy pays the reasonable and customary charges up to a maximum in a schedule, then multiply the points for the prevailing fee by the ratio of the value of the schedule used in the policy to the SURG value for the year.

Subp. 4. Home and office physician care.

*Before entering this table, divide the annual maximum in the policy by SURG factor for the year.

Subp. 5. In-hospital physician care.

A. This benefit pays the reasonable and customary charge to the physician (other than the surgeon, assistant surgeon, or anesthetist) while confined in the hospital for medical or surgical reasons.

B. If the policy pays the greater of this benefit or the surgical benefit, then reduce these points by 30 percent.

C. A number of policies pay a limited amount per visit (limited to one visit per day) which is less than or equal to the cost for a routine follow-up visit in the hospital. If it is equal to the cost for a routine follow-up visit (assumed to be $24.20*/day in 1984), then deduct 14 points from the above points. If it is less than that, then use a proportional part of the points determined as if the maximum was equal to the cost for a routine follow-up visit. *Multiply the indicated value by the SURG factor for the year.

Subp. 6. Maternity.

A. complications only:

B. full maternity (including complications): *Before entering this table, divide maximum limit in the policy by the ASP factor for the year.

Subp. 7. X-rays and laboratory tests (out of hospital).

*Before entering this table, divide the maximum in the policy by the ASP factor for the year.

Subp. 8. Prescription drugs and medicine (out of hospital).

*Before entering this table, divide the deductible per prescription by the SURG factor for the year.

Subp. 9. Radioactive therapy (out of hospital).

Subp. 10. Nursing or convalescent home care (within 14 days of hospital confinement of at least three days).

Subp. 11. Home health care agency services.

Subp. 12. Miscellaneous.

A. physical therapy (out of hospital), 10;

B. oxygen (out of hospital), 4;

C. prostheses (out of hospital), 5;

D. durable medical equipment rental or purchase (out of hospital), 5;

E. second opinion surgery, 2;

F. home care nursing (in hospital only), 2; and

G. ambulance, 3.

Subp. 13. Hospital room and board in full to indicated limit (basic and comprehensive major medical plans).

Add these points to the points in subpart 1 if the maximum hospital room and board is the semiprivate room and board. If it is less than the semiprivate room and board, make an appropriate adjustment.

*Before entering the table, divide the deductible and the "in full limit" by the ASP factor for the year.

A. The above table assumes that the policyholder pays 20 percent after the deductible. If the policyholder pays a different percentage, multiply the above points by the ratio of the percentage being paid by the insured to 20 percent.

B. This benefit assumes that hospital room and board will be paid at 100 percent and that the deductible will not be applied to it. The deductible will be applied to the other covered expenses. After the limit is attained, any remaining deductible will not be applied but the coinsurance will be applied, to the hospital room and board benefits.

Subp. 14. All hospital charges in full to indicated limit (basic and comprehensive major medical plans).

Add these points to the total points in subparts 1 and 2 if the maximum hospital room and board is the semiprivate room and board. If it is less than the semiprivate room and board, make an appropriate adjustment.

*Before entering the table, divide the deductible and the "in full limit" by the ASP factor for the year.

A. The above table assumes that the insured pays 20 percent of the costs after the deductible and that the number of points before the deductible and coinsurance is 1800. If the percentage being paid by the insured is not 20 percent, multiply the above points by the ratio of the percentage being paid by the insured to 20 percent.

B. This benefit assumes that the hospital room and board and hospital services will be paid at 100 percent and that the deductible will not be applied to them. The deductible will be applied to the other covered expenses. After the limit is attained, any remaining deductible will not be applied but the coinsurance will be applied, to either hospital room and board or hospital services benefits.

Subp. 15. Major medical maximum (comprehensive and superimposed plans).

*Before entering the table, divide the maximum in the policy by the COMP factor for the year.

The smallest maximum in a qualified plan is $250,000. The $100,000 maximum as provided must be used in future years to help determine the reduction for a $250,000 plan.

Subp. 16. Coinsurance and deductibles (comprehensive major medical plans).

A. This table assumes that the point values for all medical services and supplies are approximately 1800 points before deduction for the maximum on total benefits. If the total points are significantly greater or smaller, then the point values must be adjusted. *Before entering this table, divide the deductible in the policy by the COMP factor for the year.

B. To determine the deduction for the coinsurance, subtract the points deducted for the deductible from the total point value for the benefits and then multiply the result by the coinsurance percentage.

Subp. 17. Combined dental and health insurance deductible (comprehensive major medical plans).

*Before entering this table, divide the deductible in the policy by the COMP factor for the year.

Subp. 18. Coordination and nonduplication of benefits (all plans).

A. The following percentage of points after deduction for deductible and coinsurance must be subtracted if the policy coordinates benefits with other plans and its pricing assumes that a number of insured will have other policies in force.

B. The percentage must be applied to the total points after deduction for deductible and coinsurance.

Subp. 19. Limit on "out-of-pocket" expenses (maximum copayment and deductible per benefit year) -- comprehensive and superimposed major medical plans.

*Before entering this table, divide the maximum claim when out-of-pocket limit by the COMP factor for the year.

A. The above table assumes that the insured pays 20 percent of the costs after the deductible and that the number of points before the deductible and coinsurance is about 1800. If the percentage of claims being paid by the insured is other than 20 percent, multiply the number of points above by the ratio of the coinsurance being paid by the insured to 20 percent.

B. The above table assumes that the amounts paid by the policyholder for deductible and coinsurance are included in determining the out-of-pocket limitation.

Subp. 20. Well baby care.

*Before entering this table, multiply the deductible in the policy by the COMP factor for the year.

The above benefit assumes that the deductible and coinsurance are applied to the costs of the newborn.

Subp. 21. Emergency and supplemental accident (basic plans only).

*Before entering this table, divide the maximum in the policy by the SURG factor for the year.

Subp. 22. Student dependents.

Subp. 23. Superimposed major medical plans; over basic health plans with less than 500 points.

A. Calculate point value of a comprehensive major medical plan by using deductible* $200 greater than actual.

B. Add basic health plan points. *Before entering the table, divide the deductible in the policy by the COMP factor for the year before adding $200. Do not make any further adjustments to the deductible.

Subp. 24. Superimposed major medical plans; 80/20 coinsurance; over basic health plans with 500-799 points.

Note: Points assume major medical contains Minnesota qualified plan number 3 benefits. Adjust for benefits not included and for variation in coinsurance.

*Before entering this table, divide the deductible in the policy by the COMP factor for the year.

Subp. 25. Superimposed major medical plans; 80/20 coinsurance; over basic health plans with 800 or more points.

Note: Points assume major medical contains Minnesota qualified plan number 3 benefits. Adjust for benefits not included and for variation in coinsurance.

*Before entering this table, divide the deductible in the policy by the COMP factor for the year.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; L 2014 c 291 art 9 s 5

Minn. R. 2740.9965 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9970 [Repealed, 10 SR 474]

[Repealed, 10 SR 474]

Minn. R. 2740.9979 Basic Background for Examples

Subpart 1. Inflation assumptions for 1985.

The examples which follow assume that the actuarial equivalence of a series of plans is being calculated for calendar year 1985. Inflation was assumed to be 15.5 percent and 8.0 percent for hospital related and all other services, respectively.

Subp. 2. Values published by commissioner for 1985.

*Estimated. Please substitute the actual values.

Subp. 3. Point values for qualified plans in 1985.

The following are the revised point values used to determine plans which are actuarially equivalent to qualified plans 1, 2, and 3 for 1985.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474

Subp. 2. Worksheet.

Test for actuarial equivalence other than Medicare supplement plans.

A. Worksheet.

B. Miscellaneous calculations.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; L 2014 c 291 art 9 s 5

Minn. R. 2740.9992 Example Ii

Subpart 1. Use of actuarial equivalence test.

A. Question: Is the following plan actuarially equivalent to any Minnesota qualified plan?

B. Answer (calculated January 1, 1985): test result is 1004 points. This plan is a Minnesota qualified plan number two.

Subp. 2. Worksheet.

Test for actuarial equivalence other than Medicare supplement plans.

A. Worksheet.

B. Miscellaneous calculations.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; L 2014 c 291 art 9 s 5

Minn. R. 2740.9993 Example Iii

Subpart 1. Use of actuarial equivalence test.

A. Question: Is the following plan actuarially equivalent to any Minnesota qualified plan?

B. Answer (calculated January 1, 1985): test result is 1147 points. This plan is a Minnesota qualified plan number two.

Subp. 2. Worksheet.

A. Test for actuarial equivalence other than Medicare supplement plans.

B. Miscellaneous calculations.

History

Statutory Authority: MS s 62E.09
History: 10 SR 474; L 2014 c 291 art 9 s 5

Chapter 2742 COORDINATION OF HEALTH INSURANCE BENEFITS

Minn. R. 2742.0100 Purpose and Scope

Subpart 1. Generally.

Parts 2742.0100 to 2742.0400 are intended to establish uniformity in the permissive use of overinsurance provisions and to avoid claim delays and misunderstandings that could otherwise result from the use of inconsistent or incompatible provisions among plans.

Subp. 2. Description.

A coordination of benefits provision is one that is intended to avoid claims payment delays and duplication of benefits when a person is covered by two or more plans providing benefits or services for medical, dental, or other care or treatment. It avoids claims payment delays by establishing an order in which plans pay claims and providing authority for the orderly transfer of information needed to pay claims promptly. It avoids duplication of benefits by permitting a reduction of the benefits of a plan when, by the rules established by parts 2742.0100 to 2742.0400, it does not have to pay its benefits first.

Subp. 3. Rules permissive.

Parts 2742.0100 to 2742.0400 permit, but do not require, plans to include coordination of benefits provisions.

Subp. 4. Effect.

If a group contract includes a coordination of benefits provision, it must be consistent with parts 2742.0100 to 2742.0400. A plan that does not include such a provision may not take the benefits of another plan as defined in part 2742.0200 into account when it determines its benefits. There is one exception: a contract holder's coverage that is designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder.

History

Statutory Authority: MS s 45.023; 72A.19
History: 10 SR 2234

Minn. R. 2742.0200 Definitions

Subpart 1. Scope.

For the purposes of parts 2742.0100 to 2742.0400, the terms in this part have the meanings given them.

Subp. 2. Plan.

"Plan" is a form of coverage with which coordination is allowed. The definition of plan in the group contract must state the types of coverage which will be considered in applying the coordination of benefits provision of that contract. The right to include a type of coverage is limited by the rest of this subpart.

The definition in part 2742.0300 is an example of what may be used. Any definition that satisfies this subpart may be used.

Parts 2742.0100 to 2742.0400 use the term "plan." However, a group contract may, instead, use "program" or some other term.

The term "plan" does not include individual or family:

A. insurance contracts;

B. subscriber contracts;

C. coverage through health maintenance organizations; or

D. coverage under other prepayment, group practice, and individual practice plans; except as otherwise provided in this part. "Plan" includes: group insurance and group subscriber contracts; uninsured arrangements of group or group-type coverage; group or group-type coverage through health maintenance organizations and other prepayment, group practice, and individual practice plans; and group-type contracts. Group-type contracts are contracts which are not available to the general public and can be obtained and maintained only because of membership in or connection with a particular organization or group. Group-type contracts answering this description may be included in the definition of plan, at the option of the insurer or the service provider and its contract-client, whether or not uninsured arrangements or individual contract forms are used and regardless of how the group-type coverage is designated (for example, "franchise" or "blanket"). The use of payroll deductions by the employee, subscriber, or member to pay for the coverage is not sufficient, of itself, to make an individual contract part of a group-type plan. This description of group-type contracts is not intended to include individually underwritten and issued, guaranteed renewable policies that may be purchased through payroll deduction at a premium savings to the insured. "Plan" may include the medical benefits coverage in group, group-type, and individual automobile "no-fault" and traditional automobile "fault" type contracts. "Plan" may include Medicare or other governmental benefits. That part of the definition of "plan" may be limited to the hospital, medical, and surgical benefits of the governmental program. However, "plan" shall not include a state plan under Medicaid, and shall not include a law or plan when, by law, its benefits are excess to those of any private insurance plan or other nongovernmental plan. The term "plan" shall not be construed to include group or group-type hospital indemnity benefits of $100 per day or less, but may be construed to include the amount by which group or group-type hospital indemnity benefits exceed $100 per day. "Plan" shall not include school accident-type coverages. These cover grammar, high school, and college students for accidents only, including athletic injuries, either on a 24-hour basis or on a "to and from school" basis.

Subp. 3. Hospital indemnity benefits.

"Hospital indemnity benefits" are those not related to expenses incurred. The term does not include reimbursement-type benefits even if they are designed or administered to give the insured the right to elect indemnity-type benefits at the time of claim.

Subp. 4. This plan.

In a coordination of benefits provision, this term refers to the part of the group contract providing the health care benefits to which the coordination of benefits provision applies and which may be reduced on account of the benefits of other plans. Any other part of the group contract providing health care benefits is separate from "this plan."

A group contract may apply one coordination of benefits provision to certain of its benefits (such as dental benefits), coordinating only with like benefits, and may apply other separate coordination of benefits provisions to coordinate other benefits.

Subp. 5. Primary plan.

A primary plan is one whose benefits for a person's health care coverage must be determined without taking the existence of any other plan into consideration. A plan is a primary plan if either item A or B is true.

A. The plan either has no order of benefit determination rules, or it has rules which differ from those permitted by parts 2742.0100 to 2742.0400.

B. All plans which cover the person use the order of benefit determination rules required by parts 2742.0100 to 2742.0400 and under those rules the plan determines its benefits first. There may be more than one primary plan (for example, two plans which have no order of benefit determination rules).

Subp. 6. Secondary plan.

A secondary plan is one which is not a primary plan. If a person is covered by more than one secondary plan, the order of benefit determination rules of parts 2742.0100 to 2742.0400 decide the order in which their benefits are determined in relation to each other. The benefits of each secondary plan may take into consideration the benefits of the primary plan or plans and the benefits of any other plan which, under parts 2742.0100 to 2742.0400, has its benefits determined before those of that secondary plan.

Subp. 7. Allowable expense.

"Allowable expense" is the necessary, reasonable, and customary item of expense for health care, when the item of expense is covered at least in part under any of the plans involved, except where a statute requires a different definition. However, items of expense under coverages such as dental care, vision care, prescription drugs, or hearing aid programs may be excluded from the definition of allowable expense. A plan which provides benefits only for any items of expense may limit its definition of allowable expenses to like items of expense.

When a plan provides benefits in the form of services, the reasonable cash value of each service will be considered as both an allowable expense and a benefit paid.

When coordination of benefits is restricted in its use to a specific coverage in a contract (for example, major medical or dental), the definition of allowable expense must include the corresponding expenses or services to which coordination of benefits applies.

Subp. 8. Claim.

"Claim" means a request that benefits of a plan be provided or paid. The benefits claimed may be in the form of services, (including supplies); payment for all or a portion of the expenses incurred; a combination of services and payment for expenses incurred; or an indemnification.

Subp. 9. Claim determination period.

"Claim determination period" means a period of time, which must not be less than 12 consecutive months, over which allowable expenses are compared with total benefits payable in the absence of coordination of benefits, to determine whether overinsurance exists; and how much each plan will pay or provide. Claim determination period does not mean the period of time in which a plan may take to pay.

A claim determination period usually is a calendar year, but a plan may use some other period of time that fits the coverage of the group contract. A person may be covered by a plan during a portion of a claim determination period if that person's coverage starts or ends during that claim determination period.

As each claim is submitted, each plan is to determine its liability and pay or provide benefits based upon allowable expenses incurred to that point in the claim determination period. A determination is subject to adjustment as later allowable expenses are incurred in the same claim determination period.

History

Statutory Authority: MS s 45.023; 72A.19
History: 10 SR 2234

Minn. R. 2742.0300 Model Coordination of Benefits Contract Provision

Subpart 1. General.

Subpart 4 contains a model coordination of benefits provision for use in group contracts. That use is subject to parts 2742.0200, subpart 2, items B and C and 2742.0400.

Subp. 2. Flexibility.

A group contract's coordination of benefits provision does not have to use the words and format shown in parts 2742.0100 to 2742.0400. Changes may be made to fit the language and style of the rest of the group contract or to reflect the differences among plans which provide services, which pay benefits for expenses incurred, and which indemnify.

Substantive changes are allowed only as set forth in parts 2742.0100 to 2742.0400.

Subp. 3. Prohibited coordination and benefit design.

A group contract may not reduce benefits on the basis that another plan exists; except with respect to Part B of Medicare, that a person is or could have been covered under another plan; or a person has elected an option under another plan providing a lower level of benefits than another option which could have been elected.

No contract may contain a provision that its benefits are "excess" or "always secondary" to any plan defined in part 2742.0200, subpart 2, except in accord with the rules permitted by parts 2742.0100 to 2742.0400.

Subp. 4. Text of model coordination of benefits provision.

COORDINATION OF THE GROUP CONTRACT'S BENEFITS WITH OTHER BENEFITS

(I) APPLICABILITY.

(A) This coordination of benefits provision applies to this plan when an employee or the employee's covered dependent has health care coverage under more than one plan. "Plan" and "this plan" are defined below.

(B) If this coordination of benefits provision applies, the order of benefit determination rules should be looked at first. Those rules determine whether the benefits of this plan are determined before or after those of another plan. The benefits of this plan:

(i) shall not be reduced when, under the order of benefit determination rules, this plan determines its benefits before another plan; but

(ii) may be reduced when, under the order of benefit determination rules, another plan determines its benefits first. The above reduction is described in section (IV) Effect on the Benefits of This Plan.

(II) DEFINITIONS.

(A) A "plan" is any of these which provides benefits or services for, or because of, medical or dental care or treatment:

(i) Group insurance or group-type coverage, whether insured or uninsured. This includes prepayment, group practice, or individual practice coverage. It also includes coverage other than school accident-type coverage.

(ii) Coverage under a governmental plan or required or provided by law. This does not include a state plan under Medicaid (Title XIX, Grants to States for Medical Assistance Programs, of the United States Social Security Act as amended from time to time). It also does not include any plan when, by law, its benefits are excess to those of any private insurance program or other nongovernmental program.

Each contract or other arrangement for coverage under (i) or (ii) is a separate plan. Also, if an arrangement has two parts and coordination of benefits rules apply only to one of the two, each of the parts is a separate plan.

(B) "This plan" is the part of the group contract that provides benefits for health care expenses.

(C) "Primary plan/secondary plan." The order of benefit determination rules state whether this plan is a primary plan or secondary plan as to another plan covering the person.

When this plan is a primary plan, its benefits are determined before those of the other plan and without considering the other plan's benefits.

When this plan is a secondary plan, its benefits are determined after those of the other plan and may be reduced because of the other plan's benefits.

When there are more than two plans covering the person, this plan may be a primary plan as to one or more other plans, and may be a secondary plan as to a different plan or plans.

(D) "Allowable expense" means a necessary, reasonable, and customary item of expense for health care, when the item of expense is covered at least in part by one or more plans covering the person for whom the claim is made.

The difference between the cost of a private hospital room and the cost of a semiprivate hospital room is not considered an allowable expense under the above definition unless the patient's stay in a private hospital room is medically necessary either in terms of generally accepted medical practice, or as specifically defined in the plan.

When a plan provides benefits in the form of services, the reasonable cash value of each service rendered will be considered both an allowable expense and a benefit paid.

(E) "Claim determination period" means a calendar year. However, it does not include any part of a year during which a person has no coverage under this plan, or any part of a year before the date this coordination of benefits provision or a similar provision takes effect.

(III) ORDER OF BENEFIT DETERMINATION RULES.

(A) General. When there is a basis for a claim under this plan and another plan, this plan is a secondary plan which has its benefits determined after those of the other plan, unless:

(i) the other plan has rules coordinating its benefits with those of this plan; and

(ii) both those rules and this plan's rules, in subparagraph (B) below, require that this plan's benefits be determined before those of the other plan.

(B) Rules. This plan determines its order of benefits using the first of the following rules which applies:

(i) Nondependent/dependent. The benefits of the plan which covers the person as an employee, member, or subscriber (that is, other than as a dependent) are determined before those of the plan which covers the person as a dependent.

(ii) Dependent child/parents not separated or divorced. Except as stated in subparagraph (B)(iii) below, when this plan and another plan cover the same child as a dependent of different persons, called "parents":

a. the benefits of the plan of the parent whose birthday falls earlier in a year are determined before those of the plan of the parent whose birthday falls later in that year; but

b. if both parents have the same birthday, the benefits of the plan which covered the parent longer are determined before those of the plan which covered the other parent for a shorter period of time.

However, if the other plan does not have the rule described in a. above, but instead has a rule based upon the gender of the parent, and if, as a result, the plans do not agree on the order of benefits, the rule in the other plan will determine the order of benefits.

(iii) Dependent child/separated or divorced parents. If two or more plans cover a person as a dependent child of divorced or separated parents, benefits for the child are determined in this order:

a. first, the plan of the parent with custody of the child;

b. then, the plan of the spouse of the parent with custody of the child; and

c. finally, the plan of the parent not having custody of the child.

However, if the specific terms of a court decree state that one of the parents is responsible for the health care expenses of the child, and the entity obligated to pay or provide the benefits of the plan of that parent has actual knowledge of those terms, the benefits of that plan are determined first. This paragraph does not apply with respect to any claim determination period or plan year during which any benefits are actually paid or provided before the entity has that actual knowledge.

(iv) Active/inactive employee. The benefits of a plan which covers a person as an employee who is neither laid off nor retired (or as that employee's dependent) are determined before those of a plan which covers that person as a laid off or retired employee (or as that employee's dependent). If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, (iv) is ignored.

(v) Longer/shorter length of coverage. If none of the above rules determines the order of benefits, the benefits of the plan which covered an employee, member, or subscriber longer are determined before those of the plan which covered that person for the shorter time.

(IV) EFFECT ON THE BENEFITS OF THIS PLAN.

(A) When this section applies. This section applies when, in accordance with section (III) Order of Benefit Determination Rules, this plan is a secondary plan as to one or more other plans. In that event the benefits of this plan may be reduced under this section. Such other plan or plans are referred to as "the other plans" in (B) below.

(B) Reduction in this plan's benefits. The benefits of this plan will be reduced when the sum of:

(i) the benefits that would be payable for the allowable expenses under this plan in the absence of this coordination of benefits provision; and

(ii) the benefits that would be payable for the allowable expenses under the other plans, in the absence of provisions with a purpose like that of this coordination of benefits provision, whether or not claim is made; exceeds those allowable expenses in a claim determination period. In that case, the benefits of this plan will be reduced so that they and the benefits payable under the other plans do not total more than those allowable expenses.

When the benefits of this plan are reduced as described above, each benefit is reduced in proportion. It is then charged against any applicable benefit limit of this plan.

(V) RIGHT TO RECEIVE AND RELEASE NEEDED INFORMATION.

Certain facts are needed to apply these coordination of benefits rules. [The XYZ Company] has the right to decide which facts it needs. It may get needed facts from or give them to any other organization or person. [The XYZ Company] need not tell, or get the consent of, any person to do this unless applicable federal or state law prevents disclosure of the information without the consent of the patient or the patient's representative. Each person claiming benefits under this plan must give [The XYZ Company] any facts it needs to pay the claim.

(VI) FACILITY OF PAYMENT.

A payment made under another plan may include an amount which should have been paid under this plan. If it does, [The XYZ Company] may pay that amount to the organization which made that payment. That amount will then be treated as though it were a benefit paid under this plan. [The XYZ Company] will not have to pay that amount again. The term "payment made" includes providing benefits in the form of services, in which case "payment made" means reasonable cash value of the benefits provided in the form of services.

(VII) RIGHT OF RECOVERY.

If the amount of the payments made by [The XYZ Company] is more than it should have paid under this coordination of benefits provision, it may recover the excess from one or more of:

(A) the persons it has paid or for whom it has paid;

(B) insurance companies; or

The "amount of the payments made" includes the reasonable cash value of any benefits provided in the form of services.

History

Statutory Authority: MS s 45.023; 72A.19
History: 10 SR 2234

Minn. R. 2742.0400 Rules for Coordination of Benefits

Subpart 1. General.

The primary plan must pay or provide its benefits as if the secondary plan or plans did not exist.

A secondary plan may take the benefits of another plan into account only when, under this part, it is secondary to that other plan.

Subp. 2. Dependent child/parents not separated or divorced.

The word "birthday" in the wording shown in subsection (4)(d)(III)(B)(ii) of part 2742.0300, subpart 4 refers only to month and day in a calendar year, not the year in which the person was born.

A group contract which includes coordination of benefits and which is issued or renewed, or which has an anniversary date of July 5, 1986, shall include the substance of the provision in subsection (4)(d)(III)(B)(ii) of part 2742.0300, subpart 4. That provision shall become effective July 5, 1987. Until that provision becomes effective, the group contract shall, instead, use wording like this:

"(ii) ... Except as stated in (iii) ......, the benefits of a plan which covers a person as a dependent of a male are determined before those of a plan which covers the person as a dependent of a female."

Subp. 3. Longer/shorter length of coverage.

To determine the length of time a person has been covered under a plan, two plans shall be treated as one if the claimant was eligible under the second within 24 hours after the first ended. Thus, the start of a new plan does not include a change in the amount or scope of a plan's benefits; a change in the entity which pays, provides, or administers the plan's benefits; or a change from one type of plan to another (such as, from a single employer plan to that of a multiple employer plan).

The claimant's length of time covered under a plan is measured from the claimant's first date of coverage under that plan. If that date is not readily available, the date the claimant first became a member of the group shall be used as the date from which to determine the length of time the claimant's coverage under the present plan has been in force.

Subp. 4. Reduction in plan's benefits when it is secondary.

A secondary plan may reduce its benefits by using the alternatives in items A to C, or any version thereof which is more favorable to a covered person. This is subject to the conditions and limits described in this subpart.

A. Alternative 1, total allowable expenses. When this alternative is used, a secondary plan may reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than total allowable expenses. The amount by which the secondary plan's benefits have been reduced shall be used by the secondary plan to pay allowable expenses, not otherwise paid, which were incurred during the claim determination period by the person for whom the claim is made. As each claim is submitted, the secondary plan determines its obligation to pay for allowable expenses based on all claims which were submitted up to that point in time during the claim determination period. When this alternative is used, the suggested contract provision is as shown in part 2742.0300, subpart 4, (IV)(B). The last paragraph quoted in part 2742.0300, subpart 4, (IV)(B) may be omitted if the plan provides only one benefit, or may be altered to suit the coverage provided.

B. Alternative 2, total allowable expenses with coinsurance. When this alternative is used, a secondary plan may reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than a stated percentage, but not less than 80 percent, of total allowable expenses. The amount by which the secondary plan's benefits have been reduced shall be used by the secondary plan to pay the stated percentage of allowable expenses, not otherwise paid, which were incurred during the claim determination period by the person for whom the claim is made. As each claim is submitted, the secondary plan determines its obligation to pay for the stated percentage of allowable expenses based on all claims which were submitted up to that point in time during the claim determination period. When this alternative is used, the suggested contract provision for use in part 2742.0300, subpart 4, (IV)(B) is as follows: The benefits of this plan will be reduced when the sum of: (a) the benefits that would be payable for the allowable expenses under this plan in the absence of this coordination of benefits provision; and (b) the benefits that would be payable for the allowable expenses under the other plans in the absence of provisions with a purpose like that of this coordination of benefits provision, whether or not claim is made; exceeds the greater of (i) 80 percent of those allowable expenses or (ii) the amount of the benefits in (a). In that case, the benefits of this plan will be reduced so that they and the benefits in (b) do not total more than the greater of (i) and (ii). When the benefits of this plan are reduced as described above, each benefit is reduced in proportion. It is then charged against any applicable benefit limit of this plan. The paragraph immediately above may be omitted if the plan provides only one benefit, or may be altered to suit the coverage provided.

C. Alternative 3, maintenance of benefits. When this alternative is used, a secondary plan may reduce its benefits by the amount of the benefits payable under the other plans for the same expenses. When this alternative is used, the suggested contract provision for use in part 2742.0300, subpart 4, (IV)(B) is shown below. The benefits that would be payable under this plan in the absence of this coordination of benefits provision will be reduced by the benefits payable under the other plans for the expenses covered in whole or in part under this plan. This applies whether or not claim is made under a plan. When a plan provides benefits in the form of services, the reasonable cash value of each service rendered will be considered both an expense incurred and a benefit payable. When the benefits of this plan are reduced as described above, each benefit is reduced in proportion. It is then charged against any applicable benefit limit of this plan. The paragraph immediately above may be omitted if the plan provides only one benefit, or may be altered to suit the coverage provided. This alternative may be used in a plan only when, in the absence of coordination of benefits, the benefits of the plan (excluding benefits for dental care, vision care, prescription drugs, or hearing aid programs) will, after any deductible, be not less than 50 percent of covered expenses for the treatment of mental or nervous disorders or alcoholism or drug abuse, or under cost containment provisions with alternative benefits, such as those applicable to second surgical opinions, precertification of hospital stays, etc.; and not less than 75 percent of other covered expenses. A plan using this alternative may exclude definitions of and references to allowable expenses, claim determination period, or both.

Subp. 5. Conditions for use of alternatives 2 and 3.

Alternatives 2 and 3 in subpart 4 permit a secondary plan to reduce its benefits so that total benefits may be less than 100 percent of allowable expenses.

A plan using alternatives 2 and 3 in subpart 4 must comply with the following conditions:

A. The plan must provide prior notice to employees or members that when it is secondary (that is, it determines benefits after another plan) its benefits plus those of the primary plan will be less than 100 percent of allowable expenses; unless the primary plan, by itself, provides benefits at 100 percent of allowable expenses.

B. When the plan is secondary, it must provide a limit on the amount the employee, member, or subscriber is required to pay toward the expenses or services covered under the plan and for which the plan is secondary. The limit shall not exceed $2,000 for any covered person, or $3,000 for any family in any claim determination period.

C. The plan must permit a person to be enrolled for its health care coverage when that person's eligibility for health care coverage under another plan ends for any reason; if the person is eligible for coverage under the plan, and the enrollment is made before the end of the 31-day period immediately following either the date when health care coverage under the other plan ends; or the end of any continuation period elected by or for that person. This unrestricted enrollment is not required if a person remains eligible for coverage under that other plan, or a plan which replaces it, without interruption of that person's coverage.

D. If the person is enrolled before the end of the 31-day period, there shall be no interruption of coverage. Thus, the requirements concerning active work of employees, members, or subscribers, or nonconfinement of dependents on the effective date of coverage, shall not be applied. However, coverage for the person under the plan may be subject to the same requirements including underwriting requirements, benefit restrictions, waiting periods, and preexisting condition limitations that would have applied had the person been enrolled under the plan on the later of (a) the date the person first became eligible for the plan's coverage; or (b) the date the employee, member, or subscriber last became covered under the plan. Credit shall be given under any preexisting condition limitation or waiting period from the later of the dates described in (a) or (b) to the date the person actually enrolled pursuant to the unrestricted enrollment provisions above.

E. A secondary plan which provides benefits in the form of services may recover the reasonable cash value of providing the services from the primary plan, to the extent that benefits for the services are covered by the primary plan and have not already been paid or provided by the primary plan. Nothing in this provision shall be interpreted to require a plan to reimburse a covered person in cash for the value of services provided by a plan which provides benefits in the form of services.

Subp. 6. Excess and other nonconforming provisions.

Some plans have order of benefit determination rules not consistent with parts 2742.0100 to 2742.0400 which declare that the plan's coverage is "excess" to all others, or "always secondary." This occurs because certain plans may not be subject to insurance regulation; or some group contracts have not yet been conformed with parts 2742.0100 to 2742.0400 pursuant to the effective date provisions of these rules.

A plan with order of benefit determination rules which comply with parts 2742.0100 to 2742.0400 (herein called a complying plan) may coordinate its benefits with a plan which is "excess" or "always secondary" or which uses order of benefit determination rules which are inconsistent with those contained in parts 2742.0100 to 2742.0400 (herein called a noncomplying plan) on the following basis:

A. If the complying plan is the primary plan, it shall pay or provide its benefits on a primary basis.

B. If the complying plan is the secondary plan, it shall, nevertheless, pay or provide its benefits first, but the amount of the benefits payable shall be determined as if the complying plan were the secondary plan. In such a situation, payment shall be the limit of the complying plan's liability.

C. If the noncomplying plan does not provide the information needed by the complying plan to determine its benefits within a reasonable time after it is requested to do so, the complying plan shall assume that the benefits of the noncomplying plan are identical to its own, and shall pay its benefits accordingly. However, the complying plan must adjust any payments it makes based on such assumption whenever information becomes available as to the actual benefits of the noncomplying plan.

D. If the noncomplying plan reduces its benefits so that the employee, subscriber, or member receives less in benefits than he or she would have received had the complying plan paid or provided its benefits as the secondary plan and the noncomplying plan paid or provided its benefits as the primary plan; and governing state law allows the right of subrogation in subpart 8; then the complying plan shall advance to or on behalf of the employee, subscriber, or member an amount equal to the difference. However, in no event shall the complying plan advance more than the complying plan would have paid had it been the primary plan less any amount it previously paid. In consideration of such advance, the complying plan shall be subrogated to all rights of the employee, subscriber, or member against the noncomplying plan. An advance by the complying plan shall also be without prejudice to any claim it may have against the noncomplying plan in the absence of subrogation.

Subp. 7. Allowable expense.

A term such as "usual and customary," "usual and prevailing," or "reasonable and customary" may be substituted for the term "necessary, reasonable, and customary." Terms such as "medical care" or "dental care" may be substituted for "health care" to describe the coverages to which the coordination of benefits provisions apply.

Subp. 8. Subrogation.

The coordination of benefits concept clearly differs from that of subrogation. Provisions for one may be included in health care benefits contracts without compelling the inclusion or exclusion of the other.

History

Statutory Authority: MS s 45.023; 72A.19
History: 10 SR 2234

Minn. R. 2742.0500 Effective Date

Parts 2742.0100 to 2742.0400 are effective July 5, 1986.

Parts 2742.0100 to 2742.0400 apply to every group contract which provides health care benefits and is issued on or after that date.

A group contract which provides health care benefits and was issued before that date shall be brought into compliance with parts 2742.0100 to 2742.0400 by the later of the next anniversary date or renewal date of the group contract; or the expiration of any applicable collectively bargained contract pursuant to which it was written.

History

Statutory Authority: MS s 45.023; 72A.19
History: 10 SR 2234

Chapter 2745 LONG-TERM CARE INSURANCE

Minn. R. 2745.0010 Purpose

Parts 2745.0010 to 2745.0050 are authorized and adopted pursuant to Minnesota Statutes, section 62A.56, subdivision 2. Their purpose is to establish general standards to ensure that assessments used in prescribing long-term care are reliable, valid, and clinically appropriate. Parts 2745.0010 to 2745.0050 apply exclusively to insurance and subscriber contracts that determine benefit entitlement based on an assessment of the insured's ability to perform the activities of daily living and to perform basic cognitive functions. Assessments satisfying the general standards in parts 2745.0010 to 2745.0050 are considered reliable, valid, and clinically appropriate.

History

Statutory Authority: MS s 45.023; 62A.56
History: 17 SR 482

Minn. R. 2745.0020 Activities of Daily Living

General standards for determining coverage of long-term care based on an assessment of the insured's inability to perform activities of daily living include the following activities with definitions of performance not more restrictive than those shown in items A to E.

A. "Bathing" means washing oneself in either a tub or shower, including getting into and out of the tub or shower, or by sponge bath without the aid of another person.

B. "Dressing" means getting clothes from the closet or drawers, putting on clothes, and attaching any necessary braces or prosthesis without the aid of another person.

C. "Toileting" means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene without the aid of another person.

D. "Transferring" means moving in and out of a bed, chair, or wheelchair without the aid of another person.

E. "Eating" means feeding oneself by any means without the aid of another person. In addition to the activities in items A to E, other reasonable activities of daily living such as continence, walking, and wheeling may be taken into account if specified in the insurance contract.

History

Statutory Authority: MS s 45.023; 62A.56
History: 17 SR 482

Minn. R. 2745.0030 Cognitive Impairment

General standards for determining coverage of long-term care based on cognitive impairment shall be based on an assessment of the insured's ability to perform basic cognitive functions. The definition of cognitive impairment shall not be more restrictive than the definition in this part. "Cognitive impairment" means deficiency in the ability to think, perceive, reason, and/or remember that results in the inability to take care of oneself without the ongoing assistance of or supervision by another person.

History

Statutory Authority: MS s 45.023; 62A.56
History: 17 SR 482

Minn. R. 2745.0040 Use of Assessments

A long-term care insurance policy may use activities of daily living and cognitive impairment assessments as a basis for defining when a service, type of care, or procedure could not be omitted without adversely affecting the patient's illness or condition.

Determining impairment under the insurance contract shall not be more restrictive than requiring either a deficiency in three of the above activities of daily living or the presence of cognitive impairment. An insurer may, by contract, require less restrictive criteria than the above determining benefit eligibility.

The determination of physical or cognitive impairment shall be based on generally accepted tests that use objective measures and produce verifiable results such as, but not limited to, the most recently adopted Minnesota Department of Human Services Preadmission Screening Assessment Form.

History

Statutory Authority: MS s 45.023; 62A.56
History: 17 SR 482

Minn. R. 2745.0050 Alternative Standards and Certification

If an insurer proposes standards other than those described in parts 2745.0020, 2745.0030, and 2745.0040, upon request the insurer shall provide to the department a detailed description of the proposed assessment methodology explaining how the assessment would reasonably be expected to produce reliable, valid, and clinically appropriate results. The insurer is responsible for demonstrating that the assessment is reliable, valid, and clinically appropriate and not less beneficial to the policyholder than the standards described in parts 2745.0020, 2745.0030, and 2745.0040. An officer of the insurance company shall provide a certification that, to the best of the officer's knowledge, the assessment methodology is reliable, valid, and clinically appropriate.

History

Statutory Authority: MS s 45.023; 62A.56
History: 17 SR 482

Subpart 1. Generally.

This chapter applies to all life insurance policies, with or without nonforfeiture values, issued on or after January 1, 2000, subject to the exceptions and conditions in subparts 2 and 3.

Subp. 2. Exceptions.

A. This chapter does not apply to an individual life insurance policy issued on or after January 1, 2000, if the policy is issued according to and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before January 1, 2000, that guarantees the premium rates of the new policy. This chapter also does not apply to subsequent policies issued as a result of the exercise of such a provision, or a derivation of the provision, in the new policy.

B. This chapter does not apply to any universal life policy that meets all of the following requirements:

C. This chapter does not apply to any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

D. This chapter does not apply to a variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

E. This chapter does not apply to a group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year.

Subp. 3. Conditions.

A. Calculation of the minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits, other than universal life policies, or both, is according to part 2747.0040.

B. Calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies, that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period, is according to part 2747.0050.

History

Statutory Authority: MS s 45.023; 61A.25
History: 24 SR 800

Minn. R. 2747.0020 Definitions

Subpart 1. Scope.

For purposes of this chapter, the terms defined in this part have the meanings given them.

Subp. 2. Basic reserves.

"Basic reserves" means reserves calculated according to Minnesota Statutes, section 61A.25, subdivision 4.

Subp. 3. Contract segmentation method.

"Contract segmentation method" means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment, from policy inception for the first segment, to the end of the latest policy year as determined in this subpart. All calculations are made using the 1980 CSO valuation tables, as defined in subpart 7, or any other valuation mortality table adopted by the National Association of Insurance Commissioners after January 1, 2000, and adopted by rule by the commissioner for this purpose, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in part 2747.0030, subpart 2.

The length of a particular contract segment must be set equal to the minimum of the value t for which Gt is greater than Rt (if Gt never exceeds Rt the segment length is deemed to be the number of years from the beginning of the segment to the mandatory expiration date of the policy), where Gt and Rt are defined as follows:

However, if GPx+k+t is greater than 0 and GPx+k+t-1 is equal to 0, Gt shall be deemed to be 1,000. If GPx+k+t and GPx+k+t-1 are both equal to 0, Gt shall be deemed to be 0.

Subp. 4. Deficiency reserves.

"Deficiency reserves" means the excess, if greater than zero, of:

A. minimum reserves calculated according to Minnesota Statutes, section 61A.25, subdivision 7; over

B. basic reserves.

Subp. 5. Guaranteed gross premiums.

"Guaranteed gross premiums" means the premiums under a policy of life insurance that are guaranteed and determined at issue.

Subp. 6. Maximum valuation interest rates.

"Maximum valuation interest rates" means the interest rates defined in Minnesota Statutes, section 61A.25, subdivision 3b, that are to be used in determining the minimum standard for the valuation of life insurance policies.

Subp. 7. 1980 CSO valuation tables.

"1980 CSO valuation tables" means the Commissioners 1980 Standard Ordinary Mortality Table (1980 CSO Table) without ten-year selection factors, incorporated into the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law, and variations of the 1980 CSO Table approved by the National Association of Insurance Commissioners, such as the smoker and nonsmoker versions approved in December 1983.

Subp. 8. Scheduled gross premium.

"Scheduled gross premium" means the smallest illustrated gross premium at issue for other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in part 2747.0050, subpart 1, item C, if any, or else the minimum premium described in part 2747.0050, subpart 1, item D.

Subp. 9. Segmented reserves.

"Segmented reserves" means reserves, calculated using segments produced by the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment. The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals:

A. the present value of the death benefits within the segment; plus

B. the present value of any unusual guaranteed cash value as in part 2747.0040, subpart 4, occurring at the end of the segment; less

C. any unusual guaranteed cash value occurring at the start of the segment; plus

D. for the first segment only, the excess of the subitem (1) over subitem (2), as follows:

Subp. 10. Tabular cost of insurance.

"Tabular cost of insurance" means the net single premium at the beginning of a policy year for one-year term insurance in the amount of the guaranteed death benefit in that policy year.

Subp. 11. Ten-year select factors.

"Ten-year select factors" means the select factors adopted with the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law.

Subp. 12. Unitary reserves.

"Unitary reserves" means the present value of all future guaranteed benefits less the present value of all future modified net premiums, where:

A. guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and

B. modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of subitem (1) over subitem (2), as follows:

Subp. 13. Universal life insurance policy.

"Universal life insurance policy" means an individual life insurance policy under the provisions of which separately identified interest credits, other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts, and mortality or expense charges are made to the policy.

History

Statutory Authority: MS s 45.023; 61A.25
History: 24 SR 800

Minn. R. 2747.0030 General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves

Subpart 1. Basic reserves.

At the election of the company for any one or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors, or any other valuation mortality table adopted by the National Association of Insurance Commissioners after January 1, 2000, and adopted by rule by the commissioner for this purpose. If select mortality factors are elected, they may be:

A. the ten-year select mortality factors incorporated into the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law;

B. the select mortality factors in part 2747.0060; or

C. any other table of select mortality factors adopted by the National Association of Insurance Commissioners after January 1, 2000, and adopted by rule by the commissioner for the purpose of calculating basic reserves.

Subp. 2. Deficiency reserves.

Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero, of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the election of the company for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon the 1980 CSO valuation tables with select mortality factors, or any other valuation mortality table adopted by the National Association of Insurance Commissioners after January 1, 2000, and adopted by rule by the commissioner. If select mortality factors are elected, they may be:

A. the ten-year select mortality factors incorporated into the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law;

B. the select mortality factors in part 2747.0060;

C. for durations in the first segment, X percent of the select mortality factors in part 2747.0060, subject to the following:

D. any other table of select mortality factors adopted by the National Association of Insurance Commissioners after January 1, 2000, and adopted by rule by the commissioner for the purpose of calculating deficiency reserves.

Subp. 3. Use of select mortality factors.

This subpart applies to both basic reserves and deficiency reserves. Any set of select mortality factors may be used only for the first segment. However, if the first segment is less than ten years, the appropriate ten-year select mortality factors incorporated into the 1980 amendments to the National Association of Insurance Commissioners Standard Valuation Law may be used thereafter through the tenth policy year from the date of issue.

Subp. 4. Gross premiums and policy fees.

In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used where the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums, even if not included in the actual calculation of basic reserves.

Subp. 5. Reserves for changed policies.

Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one year after the date of the change shall be the greatest of the following:

A. reserves calculated ignoring the guarantee;

B. reserves assuming the guarantee was made at issue; and

C. reserves assuming that the policy was issued on the date of the guarantee.

Subp. 6. Documentation.

The commissioner may require that the company document the extent of the adequacy of reserves for specified blocks, including, but not limited to, policies issued prior to January 1, 2000. This documentation may include a demonstration of the extent to which aggregation with other nonspecified blocks of business is relied upon in the formation of the appointed actuary opinion pursuant to and consistent with part 2711.0230.

History

Statutory Authority: MS s 45.023; 61A.25
History: 24 SR 800; 37 SR 1455; 38 SR 847

Minn. R. 2747.0040 Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits Other Than Universal Life Policies

Subpart 1. Basic reserves.

Basic reserves are calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for a policy shall use the same valuation mortality table and selection factors. At the option of the insurer, in calculating segmented reserves and net premiums, either of the adjustments described in items A and B may be made:

A. treat the unitary reserve, if greater than zero, applicable at the end of each segment as a pure endowment; and subtract the unitary reserve, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment; or

B. treat the guaranteed cash surrender value, if greater than zero, applicable at the end of each segment as a pure endowment; and subtract the guaranteed cash surrender value, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.

Subp. 2. Deficiency reserves.

A. The deficiency reserve at any duration is calculated on:

B. This subpart applies to a policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality, specified in part 2747.0030, subpart 2, and rate of interest.

C. Deficiency reserves, if any, are calculated for each policy as the excess if greater than zero, for the current and all remaining periods, of the quantity A over the basic reserve, where quantity A is obtained as indicated in part 2747.0030, subpart 2.

D. For deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves.

Subp. 3. Minimum value.

Basic reserves may not be less than the tabular cost of insurance for the balance of the policy year, if mean reserves are used. Basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if later, but not beyond the next policy anniversary, if mid-terminal reserves are used. The tabular cost of insurance shall use the same valuation mortality table and interest rates as that used for the calculation of the segmented reserves. However, if select mortality factors are used, they shall be the ten-year select factors incorporated into the 1980 amendments of the National Association of Insurance Commissioners Standard Valuation Law. In no case may total reserves, including basic reserves, deficiency reserves and any reserves held for supplemental benefits that would expire upon contract termination, be less than the amount that the policyowner would receive, including the cash surrender value of the supplemental benefits, if any, exclusive of any deduction for policy loans, upon termination of the policy.

Subp. 4. Unusual pattern of guaranteed cash surrender values.

A. For a policy with an unusual pattern of guaranteed cash surrender values, the reserves actually held before the first unusual guaranteed cash surrender value must not be less than the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n-year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.

B. The reserves actually held subsequent to any unusual guaranteed cash surrender value must not be less than the reserves calculated by treating the policy as an n-year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where:

C. For purposes of this subpart, a policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year's guaranteed cash surrender value by more than the sum of:

Subp. 5. Optional exemption for yearly renewable term reinsurance.

At the option of the company, the following approach for reserves on yearly renewable term reinsurance may be used:

A. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

B. Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in subpart 3.

C. Deficiency reserves.

D. For purposes of this subpart, the calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without ten-year select mortality factors, or any other table adopted after January 1, 2000, by the National Association of Insurance Commissioners and adopted by rule by the commissioner for this purpose.

E. A reinsurance agreement shall be considered yearly renewable term reinsurance for purposes of this subpart if only the mortality risk is reinsured.

F. If the assuming company chooses this optional exemption, the ceding company's reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.

Subp. 6. Optional exemption for attained-age-based yearly renewable term life insurance policies.

At the option of the company, the following approach for reserves for attained-age-based yearly renewable term life insurance policies may be used:

A. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

B. Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in subpart 3.

C. Deficiency reserves.

D. For purposes of this subpart, the calculations use the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other table adopted after January 1, 2000, by the National Association of Insurance Commissioners and adopted by rule by the commissioner for this purpose.

E. A policy shall be considered an attained-age-based yearly renewable term life insurance policy for purposes of this subpart if:

F. For policies that become attained-age-based yearly renewable term policies after an initial period of coverage, the approach of this subpart may be used after the initial period if:

G. If this election is made, this approach shall be applied in determining reserves for all attained-age-based yearly renewable term life insurance policies issued on or after January 1, 2000.

Subp. 7. Exemption from unitary reserves for certain n-year renewable term life insurance policies.

Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:

A. the policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, n may be truncated or extended to reach the expiry age, provided that this final renewal period is less than ten years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;

B. the guaranteed gross premiums in all n-year periods are not less than the corresponding net premiums based upon the 1980 CSO Table with or without the ten-year select mortality factors; and

C. there are no cash surrender values in any policy year.

Subp. 8. Exemption from unitary reserves for certain juvenile policies.

Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue:

A. at issue, the insured is age 24 or younger;

B. until the insured reaches the end of the juvenile period, which shall occur at or before age 25, the gross premiums and death benefits are level, and there are no cash surrender values; and

C. after the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy.

History

Statutory Authority: MS s 45.023; 61A.25
History: 24 SR 800

Minn. R. 2747.0050 Minimum Valuation Standard for Certain Flexible Premium and Fixed Premium Universal Life Insurance Policies; Secondary Guarantee Period Policies

Subpart 1. General.

A. Policies with a secondary guarantee include:

B. A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue must be considered to have been made at issue. Reserves described in subparts 2 and 3 shall be recalculated from issue to reflect these changes.

C. Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed.

D. For purposes of this part, the minimum premium for a policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors, including mortality charges, loads and expense charges, and the interest crediting rate, which are all guaranteed at issue.

E. The one-year valuation premium means the net one-year premium based upon the original schedule of benefits for a given policy year. The one-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in part 2747.0030, subpart 2, items B to D, may not be used to calculate the one-year valuation premiums.

F. The one-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.

Subp. 2. Basic reserves for secondary guarantees.

Basic reserves for the secondary guarantees must be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments will be determined according to the contract segmentation method as defined in part 2747.0020, subpart 3.

Subp. 3. Deficiency reserves for secondary guarantees.

Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in part 2747.0040, subpart 2, with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force.

Subp. 4. Minimum reserves.

The minimum reserves during the secondary guarantee period are the greater of:

A. the basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees; or

B. the minimum reserves required by other rules or regulations governing universal life plans.

History

Statutory Authority: MS s 45.023; 61A.25
History: 24 SR 800

Minn. R. 2747.0060 Select Mortality Factors

Subpart 1. Generally.

The tables of select mortality factors contained in subparts 2 to 7 include: (1) male aggregate; (2) male nonsmokers; (3) male smoker; (4) female aggregate; (5) female nonsmoker; and (6) female smoker.

These tables apply to both age last birthday and age nearest birthday mortality tables.

For sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are 80 percent of the appropriate male table in this part, plus 20 percent of the appropriate female table in this part.

Subp. 2. Male, aggregate.

Subp. 3. Male, nonsmoker.

Subp. 4. Male, smoker.

Subp. 5. Female, aggregate.

Subp. 6. Female, nonsmoker.

Subp. 7. Female, smoker.

History

Statutory Authority: MS s 45.023; 61A.25
History: 24 SR 800

Minn. R. 2747.0065 2001 Cso Mortality Table

The 2001 CSO Mortality Table, as defined in part 2748.0010, subpart 2, shall be used for purposes of parts 2747.0010 to 2747.0060 pursuant to the requirements of parts 2748.0010 to 2748.0050.

History

Statutory Authority: MS s 45.023; 61A.24; 61A.25
History: 28 SR 1039

Chapter 2748 2001 COMMISSIONERS STANDARD ORDINARY MORTALITY TABLE

Minn. R. 2748.0010 Definitions

Subpart 1. Scope.

For the purposes of parts 2748.0010 to 2748.0050, the terms defined in subparts 2 to 6 have the meanings given them.

Subp. 2. 2001 CSO Mortality Table.

"2001 CSO Mortality Table" means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the National Association of Insurance Commissioners in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002). Unless the context indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last birthday bases of the mortality tables.

Subp. 3. 2001 CSO Mortality Table (F).

"2001 CSO Mortality Table (F)" means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.

Subp. 4. 2001 CSO Mortality Table (M).

"2001 CSO Mortality Table (M)" means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.

Subp. 5. Composite mortality tables.

"Composite mortality tables" means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.

Subp. 6. Smoker and nonsmoker mortality tables.

"Smoker and nonsmoker mortality tables" means mortality tables with separate rates of mortality for smokers and nonsmokers.

History

Statutory Authority: MS s 45.023; 61A.24; 61A.25
History: 28 SR 1039

Minn. R. 2748.0020 2001 Cso Mortality Table

Subpart 1. Permissive use.

At the election of the company for any one or more specified plans of insurance and subject to the conditions stated in parts 2748.0010 to 2748.0050, the 2001 CSO Mortality Table may be used as the minimum standard for policies issued on or after January 1, 2004, and before the date specified in subpart 2 to which part 2747.0030, subparts 1 and 2 and Minnesota Statutes, sections 61A.24, subdivision 12, paragraph (h), clause (6), and 61A.25, subdivision 3, paragraph (a), clause (3), are applicable. If the company elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and nonforfeiture purposes.

Subp. 2. Required use.

Subject to the conditions stated in parts 2748.0010 to 2748.0050, the 2001 CSO Mortality Table must be used in determining minimum standards for policies issued on and after January 1, 2009, to which part 2747.0030, subparts 1 and 2, and Minnesota Statutes, sections 61A.24, subdivision 12, paragraph (h), clause (6), and 61A.25, subdivision 3, paragraph (a), clause (3), are applicable.

Subp. 3. Incorporation by reference.

The 2001 CSO Mortality Table adopted by the National Association of Insurance Commissioners, December 2002, is incorporated by reference. It is not subject to frequent change and is available at the State Law Library.

History

Statutory Authority: MS s 45.023; 61A.24; 61A.25
History: 28 SR 1039

Minn. R. 2748.0030 Conditions

Subpart 1. Plans with separate smoker/nonsmoker rates.

For each plan of insurance with separate rates for smokers and nonsmokers, an insurer may use:

A. composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits;

B. smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by Minnesota Statutes, section 61A.25, subdivision 7, and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values, and amounts of paid-up nonforfeiture benefits; or

C. smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.

Subp. 2. Plans without separate smoker/nonsmoker rates.

For plans of insurance without separate rates for smokers and nonsmokers, the composite mortality tables must be used.

Subp. 3. Use of table for determining minimum reserve liabilities and minimum cash surrender values.

For the purpose of determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of the company for each plan of insurance, be used in its ultimate or select and ultimate form, subject to the restrictions of parts 2747.0030, 2747.0040, 2747.0050, and 2748.0040 relative to use of the select and ultimate form.

Subp. 4. Table as minimum reserve standard; actuarial opinion.

When the 2001 CSO Mortality Table is the minimum reserve standard for any plan for a company, the actuarial opinion in the annual statement filed with the commissioner must be based on an asset adequacy analysis as specified in parts 2711.0230 to 2711.0240. The commissioner may exempt a company from this requirement if it only does business in this state and in no other state.

History

Statutory Authority: MS s 45.023; 61A.24; 61A.25
History: 28 SR 1039; 37 SR 1455

Minn. R. 2748.0040 Applicability of 2001 Cso Mortality Table to Parts 2747.0010 to 2747.0060

Subpart 1. Application to specific rule parts.

The 2001 CSO Mortality Table may be used in applying parts 2747.0010 to 2747.0060 in the following manner, subject to the transition dates for use of the 2001 CSO Mortality Table in part 2748.0020:

A. Part 2747.0010, subpart 2, item B, subitem (2): The net level reserve premium is based on the ultimate mortality rates in the 2001 CSO Mortality Table.

B. Part 2747.0020, subpart 3: All calculations are made using the 2001 CSO Mortality Rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in item D. The value of "qx+k+t-1" is the valuation mortality rate for deficiency reserves in policy year k+t, but using the unmodified select mortality rates if modified select mortality rates are used in the computation of deficiency reserves.

C. Part 2747.0030, subpart 1: The 2001 CSO Mortality Table is the minimum standard for basic reserves.

D. Part 2747.0030, subpart 2: The 2001 CSO Mortality Table is the minimum standard for deficiency reserves. If select mortality rates are used, they may be multiplied by X percent for durations in the first segment, subject to the conditions specified in part 2747.0030, subpart 2, and item C, subitems (1) to (9). In demonstrating compliance with those conditions, the demonstrations may not combine the results of tests that utilize the 1980 CSO Mortality Table with those tests that utilize the 2001 CSO Mortality Table, unless the combination is explicitly required by regulation or necessary to be in compliance with relevant Actuarial Standards of Practice.

E. Part 2747.0040, subpart 3: The valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO Mortality Table.

F. Part 2747.0040, subpart 5, item D: The calculations specified in part 2747.0040, subpart 5, shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

G. Part 2747.0040, subpart 6, item D: The calculations specified in part 2747.0040, subpart 6, shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

H. Part 2747.0040, subpart 7, item B: The calculations specified in part 2747.0040, subpart 7, shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

I. Part 2747.0050, subpart 1, item A, subitem (2): The one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO Mortality Table.

Subp. 2. Exemptions retained.

Nothing in this part shall be construed to expand the applicability of parts 2747.0010 to 2747.0060 to include life insurance policies exempted under part 2747.0010, subpart 2.

History

Statutory Authority: MS s 45.023; 61A.24; 61A.25
History: 28 SR 1039

Minn. R. 2748.0050 Gender-Blended Tables

Subpart 1. Use authorized.

For any ordinary life insurance policy delivered or issued for delivery in this state on and after January 1, 2004, that utilizes the same premium rates and charges for male and female lives or is issued in circumstances where applicable law does not permit distinctions on the basis of gender, a mortality table that is a blend of the 2001 CSO Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of the company for each plan of insurance, be substituted for the 2001 CSO Mortality Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits. No change in minimum valuation standards is implied by this subpart.

Subp. 2. Choices.

The company may choose from among the blended tables developed by the American Academy of Actuaries CSO Task Force and adopted by the National Association of Insurance Commissioners in December 2002.

Subp. 3. As violation of unfair trade practices statute.

It is not, in and of itself, a violation of Minnesota Statutes, sections 72A.17 to 72A.32 for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis.

History

Statutory Authority: MS s 45.023; 61A.24; 61A.25
History: 28 SR 1039

Chapter 2750 VARIABLE LIFE INSURANCE

Minn. R. 2750.0100 Definitions

Subpart 1. Scope.

For the purposes of this chapter, the terms defined in this part have the meanings given them.

Subp. 1a. Affiliate.

"Affiliate" of an insurer means any person, directly or indirectly, controlling, controlled by, or under common control with the insurer; any person who regularly furnishes investment advice to the insurer with respect to its separate accounts for which a specific fee or commission is charged; or any director, officer, partner, or employee of an insurer, controlling or controlled person, or person providing investment advice or any member of the immediate family of this person.

Subp. 2. Assumed investment rate.

"Assumed investment rate" means the rate of investment return which would be required to be credited to a variable life insurance policy, after deduction of charges for taxes, investment expenses, and mortality and expense guarantees to maintain the variable death benefit equal at all times to the amount of death benefit, other than incidental insurance benefits, which would be payable under the plan of insurance if the death benefit did not vary according to the investment experience of the separate account.

Subp. 3. Benefit base.

"Benefit base" means the amount to which the net investment return is applied.

Subp. 3a. Control.

"Control," including the terms "controlling," "controlled by," and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing more than ten percent of the voting securities of any other person. This presumption may be rebutted by a showing made to the satisfaction of the commissioner that control does not exist in fact. The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

Subp. 4. Employee Retirement Income Security Act of 1974.

"Employee Retirement Income Security Act of 1974" means the Federal Employee Retirement Income Security Act of 1974, United States Code, title 29, section 1001 et. seq.

Subp. 4a. Flexible premium policy.

"Flexible premium policy" means any variable life insurance policy other than a scheduled premium policy as specified in subpart 12a.

Subp. 5. General account.

"General account" means all assets of the insurer other than assets in separate accounts established pursuant to Minnesota Statutes, section 61A.14, or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer, whether or not for variable life insurance.

Subp. 6. Incidental insurance benefit.

"Incidental insurance benefit" means all insurance benefits in a variable life insurance policy, other than the variable death benefit and the minimum death benefit, including accidental death and dismemberment benefits, disability benefits, guaranteed insurability options, family income, or term riders.

Subp. 7. Investment Company Act of 1940.

"Investment Company Act of 1940" means the Federal Investment Company Act of 1940, United States Code, title 15, section 80a-1 et. seq.

Subp. 8. Minimum death benefit.

"Minimum death benefit" means the amount of the guaranteed death benefit, other than incidental insurance benefits, payable under a variable life insurance policy regardless of the investment performance of the separate account.

Subp. 9. Net investment return.

"Net investment return" means the rate of investment return in a separate account to be applied to the benefit base.

Subp. 9a. Policy processing day.

"Policy processing day" means the day on which charges authorized in the policy are deducted from the policy's cash value.

Subp. 10. Securities Act of 1933.

"Securities Act of 1933" means the Federal Securities Act of 1933, United States Code, title 15, section 77a et. seq.

Subp. 11. Securities Exchange Act of 1934.

"Securities Exchange Act of 1934" means the Federal Securities Exchange Act of 1934, United States Code, title 15, section 78a et. seq.

Subp. 12. Separate account.

"Separate account" means a separate account established for variable life insurance pursuant to Minnesota Statutes, section 61A.14, or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

Subp. 12a. Scheduled premium policy.

"Scheduled premium policy" means any variable life insurance policy under which both the amount and timing of premium payments are fixed by the insurer.

Subp. 13. Variable death benefit.

"Variable death benefit" means the amount of the death benefit, other than incidental insurance benefits, payable under a variable life insurance policy dependent on the investment performance of the separate account, which the insurer would have to pay in the absence of any minimum death benefit.

Subp. 14. Variable life insurance policy.

"Variable life insurance policy" means any individual policy which provides for life insurance the amount or duration of which varies according to the investment experience of any separate account or accounts established and maintained by the insurer as to this policy, pursuant to Minnesota Statutes, section 61A.14, or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.0200 Authority and Scope

This chapter applies to all variable life insurance policies issued in this state, and are adopted under the authority of Minnesota Statutes, section 61A.20.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.0300 Qualification of Insurer to Issue Variable Life Insurance

Subpart 1. Compliance with laws and grant of authority.

An insurer shall not deliver or issue for delivery in this state any variable life insurance policy unless it has complied with this chapter and Minnesota Statutes, sections 61A.13 to 61A.21, and the commissioner has granted the insurer the authority to issue variable life insurance policies in the state of Minnesota pursuant to Minnesota Statutes, section 61A.20.

Subp. 2. Required filing.

Before any insurer delivers or issues for delivery any variable life insurance policy in this state, it must file with the commissioner the information contained in items A to D for the consideration of the commissioner in making the determination required by Minnesota Statutes, section 61A.19:

A. Copies of and a general description of the variable life insurance policies it intends to issue.

B. A general description of the methods of operation of the variable life insurance business of the insurer, including methods of distribution of policies and the names of those persons or firms proposed to supply consulting, investment, administrative, custodial, or distribution services to the insurer.

C. With respect to any separate account maintained by an insurer for any variable life insurance policy, a statement of the investment policy the insurer intends to follow for the investment of the assets held in such separate account, and a statement of the procedures for changing such investment policy. The statement of investment policy shall include a description of the investment objective intended for the separate account.

D. A statement of the insurer's actuary describing the mortality and expense risks which the insurer will bear under the policy.

Subp. 3. Applicability.

The requirements of this part apply to all insurers either seeking authority to issue variable life insurance in this state or having authority to issue variable life insurance in this state.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.1100 Conformance with Statutes

The commissioner shall not accept the filing of any variable life insurance policy form unless it conforms to the requirements of parts 2750.1100 to 2750.1500 and Minnesota Statutes, chapter 61A.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.1200 Mandatory Policy Benefit and Design Requirements

Variable life insurance policies delivered or issued for delivery in this state shall comply with the following minimum requirements:

A. Mortality and expense risk shall be borne by the insurer. The mortality and expense charges shall be subject to the maximums stated in the contract.

B. For scheduled premium policies, a minimum death benefit shall be provided in an amount at least equal to the initial face amount of the policy so long as premiums are duly paid, subject to the provisions of part 2750.1400, item B.

C. The policy shall reflect the investment experience of one or more separate accounts established and maintained by the insurer. The insurer must demonstrate that the reflection of investment experience in the variable life insurance policy is actuarially sound.

D. Each variable life insurance policy shall be credited with the full amount of the net investment return applied to the benefit base.

E. Any changes in variable death benefits of each variable life insurance policy shall be determined at least annually.

F. The cash value of each variable life insurance policy shall be determined at least monthly. The method of computation of cash values and other nonforfeiture benefits, as described either in the policy or in a statement filed with the commissioner or person fulfilling the equivalent function of the state in which the policy is delivered, or issued for delivery, shall be in accordance with actuarial procedures that recognize the variable nature of the policy. The method of computation must be such that, if the net investment return credited to the policy at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the policy, then the resulting cash values and other nonforfeiture benefits must be at least equal to the minimum values required by Minnesota Statutes, section 61A.24, the Standard Nonforfeiture Law, for a general account policy with these premiums and benefits. The assumed investment rate shall not exceed the maximum interest rate permitted under Minnesota Statutes, section 61A.24. If the policy does not contain an assumed investment rate, this demonstration must be based on the maximum interest rate permitted under Minnesota Statutes, section 61A.24. The method of computation may disregard incidental minimum guarantees as to the dollar amounts payable. Incidental minimum guarantees include, for example, but are not to be limited to, a guarantee that the amount payable at death or maturity shall be at least equal to the amount that otherwise would have been payable if the net investment return credited to the policy at all times from the date of issue had been equal to the assumed investment rate.

G. The computation of values required for each variable life insurance policy may be based upon reasonable and necessary approximations.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.1300 Mandatory Policy Provisions

Every variable life insurance policy filed for approval in this state shall contain at least the following:

A. The cover page or pages corresponding to the cover page of each policy shall contain:

B. For scheduled premium policies, a provision for a grace period of not less than 31 days from the premium due date which shall provide that where the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium, as if the premium were paid on or before the due date. For flexible premium policies, the variable life insurance policy must contain a provision for a grace period beginning on the policy processing day when the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay these charges in accordance with the terms of the policy. The grace period shall end on a date not less than 61 days after the mailing date of the Report to Policyholders required by part 2750.4300, item C. The death benefit payable during the grace period will equal the death benefit in effect immediately prior to the period less any overdue charges. If the policy processing days occur monthly, the insurer may require the payment of not more than three times the charges which were due on the policy processing day on which the amounts available under the policy were insufficient to pay all charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day.

C. For scheduled premium policies, a provision that the policy will be reinstated at any time within three years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:

D. A full description of the benefit base and of the method of calculation and application of any factors used to adjust variable benefits under the policy.

E. A provision designating the separate account to be used and stating that:

F. A provision stating that the approval process for a change in the investment policy of the separate account is on file with the commissioner.

G. A provision that the policy shall be incontestable by the insurer after it has been in force for two years during the lifetime of the insured; provided, however, that any increase in the amount of the policy's death benefits subsequent to the policy issue date, which increase occurred upon a new application or request of the owner and was subject to satisfactory proof of the insured's insurability, shall be incontestable after an increase has been in force, during the lifetime of the insured, for two years from the date of issue of the increase.

H. A provision that payment of variable death benefits in excess of any minimum death benefits, cash values, policy loans, or partial withdrawals (except when used to pay premiums) or partial surrenders may be deferred:

I. If settlement options are provided, at least one option shall be provided on a fixed basis only.

J. A description of the basis for computing the cash value and the surrender value under the policy shall be included.

K. Premiums or changes for incidental insurance benefits shall be stated separately.

L. A provision for nonforfeiture insurance benefits. The insurer may establish a reasonable minimum cash value below which nonforfeiture insurance options will not be available.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.1400 Policy Loan Provisions

Every variable life insurance policy, other than term insurance policies and pure endowment policies, delivered or issued for delivery in this state must contain provisions for policy loans after the policy has been in force for three full years which are not less favorable to the policyholder than the following:

A. At least 75 percent of the policy's cash surrender value may be borrowed.

B. The amount borrowed shall bear interest at a rate not to exceed that permitted by Minnesota Statutes, section 61A.03.

C. Any indebtedness shall be deducted from the proceeds payable on death.

D. Any indebtedness shall be deducted from the cash surrender value upon surrender or in determining any nonforfeiture benefit.

E. For scheduled premium policies, whenever the indebtedness exceeds the cash surrender value, the insurer shall give notice of any intent to cancel the policy if the excess indebtedness is not repaid within 31 days after the date of mailing of the notice. For flexible premium policies, whenever the total charges authorized by the policy that are necessary to keep the policy in force until the next following policy processing day exceed the amounts available under the policy to pay these charges, a report must be sent to the policyholder containing the information specified by part 2750.4300, item C.

F. The policy may provide that if, at any time, so long as premiums are duly paid, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, the policyholder may increase such variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding 110 percent of the corresponding increase in cash value and by furnishing such evidence of insurability as the insurer may request.

G. The policy loan provisions shall be constructed so that variable life insurance policyholders who have not exercised this provision are not disadvantaged by the exercise of it.

H. Amounts paid to the policyholders upon the exercise of any policy loan provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment except that a stock insurer may provide the amounts for policy loans from the general account.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.1500 Other Policy Provisions

Other policy provisions include the following:

A. Incidental insurance benefits, if offered, may be offered on a fixed or variable basis.

B. Policies issued on a participating basis shall offer to pay dividend amounts in cash. In addition, the policies may offer the following dividend options:

C. A provision allowing the policyholder to elect in writing in the application for the policy or thereafter an automatic premium loan on a basis not less favorable than that required of policy loans under part 2750.1400, except that a restriction that no more than two consecutive premiums can be paid under this provision may be imposed.

D. An exclusion for suicide within two years of the issue date of the policy. However, to the extent of the increased death benefits only, the policy may provide an exclusion for suicide within two years of any increase in death benefits which results from an application of the owner subsequent to the policy issue date.

E. A provision allowing the policyholder to make partial withdrawals.

F. Any other policy provision not inconsistent with this chapter or Minnesota law.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.2100 Standard Valuation Law

Reserve liabilities for variable life insurance policies shall be established under the Standard Valuation Law, Minnesota Statutes, section 61A.25, in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.2200 Scheduled Premium Policies

For scheduled premium policies, reserve liabilities for the guaranteed minimum death benefit shall be the reserve needed to provide for the contingency of death occurring when the guaranteed minimum death benefit exceeds the death benefit that would be paid in the absence of the guarantee, and shall be maintained in the general account of the insurer and shall be not less than the greater of the following minimum reserves:

A. The aggregate total of the term costs, if any, covering a period of one full year from the valuation date, of the guarantee on each variable life insurance contract, assuming an immediate one-third depreciation in the current value of the assets of the separate account followed by a net investment return equal to the assumed investment rate; or

B. The aggregate total of the "attained age level" reserves on each variable life insurance contract. The "attained age level" reserve on each variable life insurance contract shall not be less than zero and shall equal the "residue," as described in subitem (1), of the prior year's "attained age level" reserve on the contract, with any such "residue," increased or decreased by a payment computed on an attained age basis as described in subitem (2).

C. The valuation interest rate and mortality table used in computing the two minimum reserves described in item B, subitems (1) and (2) shall conform to permissible standards for the valuation of life insurance contracts. In determining such minimum reserve, the company may employ suitable approximations and estimates, including but not limited to groupings and averages.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.2201 Flexible Premium Policies

For flexible premium policies, reserve liabilities for any guaranteed minimum death benefit shall be maintained in the general account of the insurer and shall be not less than the aggregate total of the term costs, if any, covering the period provided for in the guarantee not otherwise provided for by the reserves held in the separate account assuming an immediate one-third depreciation in the current value of the assets of the separate account followed by a net investment return equal to the valuation interest rate.

The valuation interest rate and mortality table used in computing this additional reserve, if any, shall conform to permissible standards for the valuation of life insurance contracts. In determining the minimum reserve, the company may employ suitable approximations and estimates, including but not limited to groupings and averages.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.2300 Fixed Incidental Insurance Benefits

Reserve liabilities for all fixed incidental insurance benefits and any guarantees associated with variable incidental insurance benefits shall be maintained in the general account and reserve liabilities for all variable aspects of the variable incidental insurance benefits must be maintained in a separate account in amounts determined in accordance with the actuarial procedures appropriate to such benefit.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.3000 Requirements

The requirements in parts 2750.3100 to 2750.3700 apply to the establishment and administration of variable life insurance separate accounts by any domestic insurer.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.3100 Establishment and Administration of Separate Accounts

Any domestic insurer issuing variable life insurance shall establish and administer one or more separate accounts pursuant to Minnesota Statutes, section 61A.14:

A. All persons with access to the cash, securities, or other assets of the separate account shall be under bond in an amount not less than $3,000,000.

B. The assets of these separate accounts shall be valued at least as often as variable benefits are determined but in any event at least monthly.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.3200 Amounts in the Separate Account

The insurer shall maintain in each separate account assets with a value at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance policies or the benefit base for such policies.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.3300 Investments by the Separate Account

The separate account shall have sufficient net investment income and readily marketable assets to meet anticipated withdrawals under policies funded by the account and be registered under the Investment Company Act of 1940.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.3400 Limitations on Ownership

Subpart 1. Securities.

A separate account shall not purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal and interest by the United States, if immediately after the purchase or acquisition the value of the investment, together with prior investments of the account in the security valued as required by parts 2750.3000 to 2750.3700, would exceed ten percent of the value of the assets of the separate account. The commissioner shall waive this limitation in writing if the commissioner believes the waiver will not render the operation of the separate account hazardous to the public or the policyholders in this state.

Subp. 2. Voting securities.

No separate account shall purchase or otherwise acquire the voting securities of any issuer if as a result of the acquisition the insurer and its separate accounts, in the aggregate, will own more than ten percent of the total issued and outstanding voting securities of the issuer. The commissioner shall waive this limitation in writing if the commissioner believes the waiver will not render the operation of the separate account hazardous to the public or the policyholders in this state or jeopardize the independent operation of the issuer of the securities.

Subp. 3. Investments allowed.

The percentage limitation specified in subpart 1 shall not be construed to preclude the investment of the assets of separate accounts in shares of investment companies registered pursuant to the Investment Company Act of 1940 or other pools of investment assets if the investments and investment policies of the investment companies or asset pools comply substantially with part 2750.3300 and other applicable portions of parts 2750.3000 to 2750.3700.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948; 17 SR 1279

Minn. R. 2750.3500 Valuation of Separate Account

Investments of the separate account shall be valued at their market value on the date of valuation, or at amortized cost if it approximates market value.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.3600 Separate Account Investment Policy

The investment policy of a separate account operated by a domestic insurer filed under part 2750.0300, subpart 2, item C shall not be changed without first filing the change with the commissioner.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.3700 Charges Against a Variable Life Insurance Separate Account

The insurer must disclose in writing, prior to or contemporaneously with delivery of the policy, all charges that may be made against the separate account, including, but not limited to the following:

A. taxes or reserves for taxes attributable to investment gains and income of the separate account;

B. actual cost of reasonable brokerage fees and similar direct acquisition and sales costs incurred in the purchase or sale of separate account assets;

C. actuarially determined costs of insurance (tabular costs) and the release of reserves and benefit base consistent with the release of separate account liabilities;

D. charges for administrative expenses and investment management expenses, including internal costs attributable to the investment management of assets of the separate account;

E. a charge, at a rate specified in the policy for mortality and expense guarantees;

F. any amounts in excess of those required to be held in the separate account;

G. charges for incidental insurance benefits.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.4100 Information Furnished to Applicants

The requirements of this part shall be deemed to have been satisfied to the extent that a disclosure containing information required by this part is delivered, either in the form of a prospectus included in a registration statement relating to the policies which satisfies the requirements of the Securities Act of 1933 and which was declared effective by the Securities and Exchange Commission; or all information and reports required by the Employee Retirement Income Security Act of 1974 if the policies are exempted from the registration requirements of the Securities Act of 1933 pursuant to section 3(a)(2) thereof. An insurer delivering or issuing for delivery in this state any variable life insurance policies shall deliver to the applicant for the policy, and obtain a written acknowledgment of receipt from the applicant coincident with or prior to the execution of the application, the following information:

A. A summary explanation, in nontechnical terms, of the principal features of the policy, including a description of the manner in which the variable benefits will reflect the investment experience of the separate account and the factors which affect the variation. The explanation must include notices of the provision required by part 2750.1300, item A, subitem (5) and Minnesota Statutes, section 61A.03, subdivision 1, paragraph (f), clause (3).

B. A statement of the investment policy of the separate account, including:

C. A statement of the net investment return of the separate account for each of the last ten years or a lesser period the separate account was in existence.

D. A statement of the charges levied against the separate account during the previous year.

E. A summary of the method to be used in valuing assets held by the separate account.

F. A summary of the federal income tax aspects of the policy applicable to the insured, the policyholder, and the beneficiary.

G. Illustrations of benefits payable under the variable life insurance contract. The illustrations must be prepared by the insurer and must not include projections of past investment experience into the future or attempted predictions of future investment experience, provided that nothing contained herein prohibits use of hypothetical assumed rates of return to illustrate possible levels of benefits if it is made clear that the assumed rates are hypothetical only.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.4200 Applications

The application for a variable life insurance policy shall contain:

A. a prominent statement that the death benefit may be variable or fixed under specified conditions;

B. a prominent statement that cash values may increase or decrease in accordance with the experience of the separate account, subject to any specified minimum guarantees; and

C. questions designed to elicit information which enables the insurer to determine the suitability of variable life insurance for the applicant.

History

Statutory Authority: MS s 61A.20

Minn. R. 2750.4300 Reports to Policyholders

Any insurer delivering or issuing for delivery in this state any variable life insurance policies shall mail to each variable life insurance policyholder at his or her last known address the following reports:

A. Within 30 days after each anniversary of the policy, a statement or statements of the cash surrender value, death benefit, any partial withdrawal or policy loan, any interest charge, and any optional payments allowed pursuant to part 2750.1300 under the policy computed as of the policy anniversary date. Provided, however, that such statement may be furnished within 30 days after a specified date in each policy year so long as the information contained therein is computed as of a date not more than 60 days prior to the mailing of the notice. This statement shall state that, in accordance with the investment experience of the separate account, the cash values and the variable death benefit may increase or decrease, and shall prominently identify any value described therein which may be recomputed prior to the next statement required by this part. If the policy guarantees that the variable death benefit on the next policy anniversary date will not be less than the variable death benefit specified in the statement, the statement shall be modified to so indicate. For flexible premium policies, the report must contain a reconciliation of the change since the previous report in cash value and cash surrender value, if different, because of payments made, less deductions for expense charges, withdrawals, investment experience, insurance charges, and any other charges made against the cash value. In addition, the report must show the projected cash value and cash surrender value, if different, as of one year from the end of the period covered by the report assuming that: planned periodic premiums, if any, are paid as scheduled; guaranteed costs of insurance are deducted; and the net investment return is equal to the guaranteed rate or, in the absence of a guaranteed rate, is not greater than zero. If the projected value is less than zero, a warning message must be included that states that the policy may be in danger of terminating without value in the next 12 months unless additional premium is paid.

B. Annually, a statement or statements including:

C. For flexible premium policies, a report must be sent to the policyholder if the amounts available under the policy on any policy processing day to pay the charges authorized by the policy are less than the amount necessary to keep the policy in force until the next following policy processing day. The report must indicate the minimum payment required under the terms of the policy to keep it in force and the length of the grace period for payment of the amount.

History

Statutory Authority: MS s 61A.20
History: 8 SR 1948

Minn. R. 2750.4400 Foreign Companies

If the law, rule, or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public that is substantially greater than that provided by this chapter, the commissioner shall consider compliance with such law, rule, or regulation as compliance with these rules.

History

Statutory Authority: MS s 61A.20

Minn. R. 2750.4500 Qualification of Agents for Sale of Variable Life Insurance

Any person who holds a valid license to solicit and sell life insurance in this state and has filed with the commissioner evidence of compliance with all applicable state and federal securities laws shall be qualified pursuant to Minnesota Statutes, chapter 60K, to sell or offer for sale variable life insurance policies in this state.

History

Statutory Authority: MS s 61A.20

Chapter 2751 MODIFIED GUARANTEED ANNUITIES

Minn. R. 2751.0100 Purpose

This chapter regulates modified guaranteed annuities, a new form of variable annuity, the assets of which are placed in a separate account.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.0200 Authority

This chapter is adopted pursuant to the authority granted to the commissioner of the Department of Commerce in Minnesota Statutes, section 61A.20.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.0300 Applicability and Scope

This chapter applies to:

A. the qualifications of agents to be authorized to sell modified guaranteed annuity contracts in this state;

B. the qualification of insurers to be authorized to issue these contracts;

C. the required contract form and provisions for issuance of this coverage in this state; and

D. the manner in which separate account assets, supporting these contracts, are to be maintained and reported.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.0400 Definitions

Subpart 1. Scope.

For the purposes of this chapter, the terms defined in this part have the meanings given them.

Subp. 2. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce of the state of Minnesota.

Subp. 3. Interest credits.

"Interest credits" means all interest that is credited to the contract.

Subp. 4. Modified guaranteed annuity.

"Modified guaranteed annuity" is a deferred annuity contract, the underlying assets of which are held in a separate account, and the values of which are guaranteed if held for specified periods. The annuity contains nonforfeiture values based upon a market-value adjustment formula if held for shorter periods. This formula may, or may not, reflect the value of assets held in a separate account during the period, or periods, when the contract holder can surrender the contract.

Subp. 5. NAIC.

"NAIC" means the National Association of Insurance Commissioners.

Subp. 6. Separate account.

"Separate account" means a separate account established pursuant to Minnesota Statutes, sections 61A.13 to 61A.21 or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.0500 Authority of Insurers

Subpart 1. Application.

The following requirements in this part apply to all insurers seeking authority to issue modified guaranteed annuities in this state.

Subp. 2. Licensing and approval to do business.

No company shall deliver or issue for delivery modified guaranteed annuities within this state unless it is licensed or organized to do a life insurance or annuity business in their state pursuant to Minnesota Statutes, section 60A.07, and the commissioner is satisfied that its condition or method of operation in connection with the issuance of these contracts will not render its operation hazardous to the public or its policyholders in this state. In this connection, the commissioner shall consider among other things the history and financial condition of the company; the character, responsibility, and fitness of the officers and directors of the company; and the law and regulation under which the company is authorized in the state of domicile to issue these annuities.

If the company is a subsidiary of an admitted life insurance company, or affiliated with the company by common management or ownership, it may be considered by the commissioner to have satisfied the requirements of this subpart, if either it or the admitted life company satisfies the requirements of this subpart. Companies licensed and having a satisfactory record of doing business in this state for a period of at least three years may be considered by the commissioner to have satisfied the requirements of this subpart.

Before any company delivers or issues for delivery modified guaranteed annuities within this state, it shall submit to the commissioner a general description of the kinds of these annuities it intends to issue; if requested by the commissioner, a copy of the statutes and regulations of its state of domicile under which it is authorized to issue these annuities; and if requested by the commissioner, biographical data with respect to officers and directors of the company on the NAIC uniform biographical data form.

Subp. 3. Use of sales materials.

An insurer authorized to transact modified guaranteed annuity business in this state shall not use any sales material, advertising material, or descriptive literature or other materials of any kind in connection with its modified guaranteed annuity business in this state that is false, misleading, deceptive, or inaccurate.

Illustrations of benefits payable under any modified guaranteed annuity shall not include projections of past investment experience into the future or attempted predictions of future investment experience. Hypothetical assumed interest credits may be used to illustrate possible levels of benefits.

Before any insurer delivers or issues for delivery any modified guaranteed annuity contract in this state, the commissioner may require the filing of a copy of any prospectus or other sales material to be used in connection with the marketing of that insurer's modified guaranty annuity contract. The sales material must clearly illustrate that there can be both upward and downward adjustments due to the application of the market value adjustment formula in determining nonforfeiture benefits.

Subp. 4. Reports.

An insurer authorized to transact the business of modified guaranteed annuities in this state shall submit to the commissioner:

A. a separate account annual statement that includes the business of its modified guaranteed annuities; and

B. additional information concerning its modified guaranteed annuity operations or separate accounts the commissioner considers necessary.

Subp. 5. Authority of commissioner to disapprove.

Any material required to be filed with and approved by the commissioner shall be disapproved by the commissioner if the commissioner finds that it does not comply with the standards established by this chapter.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.0600 Filing of Contracts

The filing requirements applicable to modified guaranteed annuities are those filing requirements otherwise applicable under existing statutes and rules of this state with respect to individual and group life insurance and annuity contract form filings, to the extent appropriate. Filings shall include a demonstration in a form satisfactory to the commissioner that the nonforfeiture provisions of the contract comply with part 2751.0700, subpart 1.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.0700 Contract Requirements

Subpart 1. Mandatory contract benefit and design requirements.

The following benefit and design requirements apply to a modified guaranteed annuity contract delivered or issued for delivery in this state:

A. The contract must contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of nonforfeiture benefits.

B. If the contract calls for the payment of periodic stipulated payments, it must contain in substance the following provisions:

C. The market-value adjustment formula, used in determining nonforfeiture benefits, must be stated in the contract, and must be applicable for both upward and downward adjustments. When a contract is filed, it must be accompanied by an actuarial statement indicating the basis for the market-value adjustment formula and that the formula provides reasonable equity to both the contract holder and the insurance company.

D. If and to the extent so provided under the applicable contracts, that portion of the assets of any separate account equal to the reserves and other contract liabilities with respect to such account shall not be chargeable with liabilities arising out of any other business the company may conduct.

E. The application for a modified guaranteed annuity shall prominently set forth immediately preceding the signature line, language denoting that amounts payable under the contract are subject to a market value adjustment prior to a date or dates specified in the contract.

Subp. 2. Nonforfeiture benefits.

The following nonforfeiture benefit requirements apply to a modified guaranteed annuity contract delivered or issued for delivery in this state:

A. This subpart does not apply to any:

B. The contract must contain in substance the provisions of subitems (1) and (2).

C. The minimum values as specified in this part of any paid-up annuity, cash surrender, or death benefits available under a modified guaranteed annuity contract must be based upon nonforfeiture amounts meeting the requirements of this item. The unadjusted minimum nonforfeiture amount on any data prior to the annuity commencement date must be an amount equal to the percentages of net considerations, as specified in item D, increased by the interest credits allocated to the percentage of net considerations, which shall be reduced to reflect the effect of the following:

D. The percentages of net considerations used to define the minimum nonforfeiture amount in item C must meet the requirements of this item.

E. Any paid-up annuity benefit available under a modified guaranteed annuity contract shall be that its present value on the annuity commencement date is at least equal to the minimum nonforfeiture amount on that date. The present value shall be computed using the mortality table, if any, and the guaranteed or assumed interest rates used in calculating the annuity payments.

F. For modified guaranteed annuity contracts that provide cash surrender benefits, the cash surrender benefit at any time prior to the annuity commencement date shall not be less than the minimum nonforfeiture amount next computed after the request for surrender is received by the insurer. The death benefit under the contracts shall be at least equal to the cash surrender benefit.

G. Any modified guaranteed annuity contract that does not provide cash surrender benefits, or does not provide death benefits at least equal to the minimum nonforfeiture amount, prior to the annuity commencement date shall include a statement in a prominent place in the contract that these benefits are not provided.

H. Notwithstanding the requirements of this part, a modified guaranteed annuity contract may provide under the situations specified below that the insurer, at its option, may cancel the annuity and pay the contract holder the larger of the unadjusted minimum nonforfeiture amount and the minimum nonforfeiture amount, and by this payment be released of any further obligation under the contract:

I. For any modified guaranteed annuity contract that provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of item B, additional benefits payable:

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.0800 Reserve Liabilities

Reserve liabilities for modified guaranteed annuities shall be established in accordance with actuarial procedures that recognize:

A. that assets of the separate account are based on market values;

B. the variable nature of benefits provided; and

C. any mortality guarantees. As a minimum, the separate account liability will equal the surrender value based upon the market-value adjustment formula contained in the contract. If that liability is greater than the market value of the assets, a transfer of assets will be made into the separate account so that the market value of the assets at least equals that of the liabilities. Also, any additional reserve that is needed to cover future guaranteed benefits will also be set up by the valuation actuary. The market-value adjustment formula, the interest guarantee, and the degree to which projected cash flow of assets and liabilities are matched must also be considered. Each year, the valuation actuary must provide an opinion on whether the assets in the separate account are adequate to provide all future benefits that are guaranteed.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.0900 Separate Accounts

Subpart 1. Establishment and administration.

Any domestic insurer issuing modified guaranteed annuities shall establish one or more separate accounts pursuant to Minnesota Statutes, section 61A.14.

Subp. 2. Amounts.

The insurer shall maintain in each separate account assets with a market or other value meeting the standards set out in Minnesota Statutes, section 61A.14, at least equal to the valuation reserves and other contract liabilities respecting such account.

Subp. 3. Valuation of assets.

Investments of the separate account shall be valued at their market value on the date of valuation, or at amortized cost if it approximates market value, or pursuant to standards contained in Minnesota Statutes, section 61A.14.

Subp. 4. Applicability of other laws.

Unless otherwise approved by the commissioner, separate accounts relating to modified guaranteed annuities will be subject to investment laws applicable to the insurer's general asset account.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.1000 Reports to Policyholders

Companies shall annually provide their contract holders with a report showing both the account value and the cash surrender value. The report must clearly indicate that the account value is prior to the application of any surrender charges or market value adjustment formula. It must also specify the surrender charge and market value adjustment used to determine the cash surrender value.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.1100 Foreign Companies

If the law or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public which is substantially similar to that provided by this chapter, the commissioner to the extent the commissioner considers appropriate may consider compliance with that law or regulation as compliance with this chapter.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.1200 Authorization of Agents

No person, corporation, partnership, or other legal entity may sell or offer for sale in this state any modified guaranteed annuity contract unless licensed to sell variable annuities under the insurance laws of this state.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Minn. R. 2751.1300 Restriction on Issuance

Notwithstanding parts 2751.0100 to part 2751.1200, no modified guaranteed annuity shall be issued to any Minnesota resident. The commissioner may by order authorize the sale of modified guaranteed annuities to Minnesota residents if the commissioner determines that the order is in the public interest.

History

Statutory Authority: MS s 45.023; 61A.20
History: 14 SR 2052

Chapter 2752 ANNUITY MORTALITY TABLES

Minn. R. 2752.0010 Definitions

Subpart 1. Terms.

For purposes of this chapter, the terms in this part have the meanings given them.

Subp. 2. 1983 Table "a."

"1983 Table 'a'" means the mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation, adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners, and published on page 454, NAIC Proceedings, Volume II, 1982.

Subp. 3. 1983 GAM Table.

"1983 GAM Table" means the mortality table developed by the Society of Actuaries Committee on Annuities, adopted as a recognized mortality table for annuities in December 1983 by the National Association of Insurance Commissioners, and published on pages 414-415, NAIC Proceedings, Volume I, 1984.

Subp. 4. 1994 GAR Table.

"1994 GAR Table" means the mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force, adopted as a recognized mortality table for annuities in December 1996 by the National Association of Insurance Commissioners, and published on pages 866-867, Transactions of the Society of Actuaries, Volume XLVII, 1995.

Subp. 5. Annuity 2000 Mortality Table.

"Annuity 2000 Mortality Table" means the mortality table developed by the Society of Actuaries Committee on Life Insurance Research, adopted as a recognized mortality table for annuities in December 1996 by the National Association of Insurance Commissioners, and published on page 240, Transactions of the Society of Actuaries, Volume XLVII, 1995.

Subp. 6. Generational Mortality Table.

"Generational Mortality Table" means a mortality table containing a set of mortality rates that decrease for a given age from one year to the next based on a combination of a Period Table and a projection scale containing rates of mortality improvement.

Subp. 7. Period Table.

"Period Table" means a table of mortality rates applicable to a given calendar year (the Period).

Subp. 8. 2012 Individual Annuity Reserving (IAR) Table.

"2012 Individual Annuity Reserving (IAR) Table" means the Generational Mortality Table developed by the Society of Actuaries Committee on Life Insurance Research, adopted as a recognized mortality table for annuities in December 2012 by the National Association of Insurance Commissioners, and containing rates, qx2012+n, derived from a combination of the 2012 IAM Period Table and Projection Scale G2, using the methodology stated in part 2752.0025.

Subp. 9. 2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table.

"2012 Individual Annuity Mortality Period Life (2012 IAM Period) Table" means the Period Table containing loaded mortality rates for calendar year 2012. This table contains rates, qx2012, developed by the Society of Actuaries Committee on Life Insurance Research, was adopted as a recognized mortality table for annuities in December 2012 by the National Association of Insurance Commissioners, and is shown in parts 2752.0011 and 2752.0012, Tables 1 and 2.

Subp. 10. Projection Scale G2 (Scale G2).

"Projection Scale G2 (Scale G2)" is a table of annual rates, G2x, of mortality improvement by age for projecting future mortality rates beyond calendar year 2012. This table was developed by the Society of Actuaries Committee on Life Insurance Research, was adopted as a recognized table of mortality improvement rates for annuities in December 2012 by the National Association of Insurance Commissioners, and is shown in parts 2752.0013 and 2752.0014, Tables 3 and 4.

History

Statutory Authority: MS s 45.023; 61A.25
History: 23 SR 806; 39 SR 418

Minn. R. 2752.0011 2012 Individual Annuity Mortality Period Life; Female

History

Statutory Authority: MS s 45.023; 61A.25
History: 39 SR 418

Minn. R. 2752.0012 2012 Individual Annuity Mortality Period Life; Male

History

Statutory Authority: MS s 45.023; 61A.25
History: 39 SR 418

Minn. R. 2752.0013 Projection Scale G2; Female

History

Statutory Authority: MS s 45.023; 61A.25
History: 39 SR 418

Minn. R. 2752.0014 Projection Scale G2; Male

History

Statutory Authority: MS s 45.023; 61A.25
History: 39 SR 418

Minn. R. 2752.0015 [Repealed, 39 SR 418]

[Repealed, 39 SR 418]

Minn. R. 2752.0020 Individual Annuity or Pure Endowment Contracts

Subpart 1. Approved table for annuity or pure endowment contract issued on or after August 1, 1978.

Except as provided in subparts 2, 3, and 4, the 1983 Table "a" and the Annuity 2000 Mortality Table are recognized and approved as individual annuity mortality tables for valuation and, at the option of the company, either of these tables may be used for purposes of determining the minimum standard of valuation for an individual annuity or pure endowment contract issued on or after August 1, 1978.

Subp. 2. Approved table for annuity or pure endowment contract issued on or after January 1, 1999.

Except as provided in subparts 3 and 4, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for an individual annuity or pure endowment contract issued on or after January 1, 1999.

Subp. 3. Approved table for annuity or pure endowment contract based on life contingencies issued to fund periodic benefits.

The 1983 Table "a" without projection is to be used for determining the minimum standard of valuation for an individual annuity or pure endowment contract issued on or after January 1, 1999, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

A. settlements of various forms of claims pertaining to court settlements or out-of-court settlements from tort actions;

B. settlements involving similar actions such as workers' compensation claims; or

C. settlements of long-term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

Subp. 4. Approved table for annuity or pure endowment contract issued on or after January 1, 2015.

Except as provided in subpart 3, the 2012 IAR Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 2015.

History

Statutory Authority: MS s 45.023; 61A.25
History: 23 SR 806; 39 SR 418

Minn. R. 2752.0025 Application of the 2012 Iar Table

In using the 2012 IAR Table, the mortality rate for a person age x in year (2012+n) is calculated as follows:

qx2012+n = qx2012 (1 - G2x)n

where the qx2012 and G2x are as specified in the 2012 IAM Period Table and Projection Scale G2, respectively.

The resulting qx2012+n shall be rounded to three decimal places per 1,000, e.g., 0.741 deaths per 1,000. Also, the rounding shall occur according to the method in the example below, starting at the 2012 IAM Period Table rate.

For example, for a male age 30, q302012 = 0.741.

q302013 = 0.741 * (1 - 0.010) ^ 1 = 0.73359, which is rounded to 0.734.

q302014 = 0.741 * (1 - 0.010) ^ 2 = 0.7262541, which is rounded to 0.726.

A method leading to incorrect rounding would be to calculate q302014 as q302013 * (1 - 0.010), or 0.734 * 0.99 = 0.727.

It is incorrect to use the already rounded q302013 to calculate q302014.

History

Statutory Authority: MS s 45.023; 61A.25
History: 39 SR 418

Minn. R. 2752.0030 Group Annuity or Pure Endowment Contracts

Subpart 1. Approved table for annuity or pure endowment purchased on or after August 1, 1978, under a group annuity or pure endowment contract.

Except as provided in subpart 2, the 1983 GAM Table, the 1983 Table "a," and the 1994 GAR Table are recognized and approved as group annuity mortality tables for valuation and, at the option of the company, any one of these tables may be used for purposes of valuation for an annuity or pure endowment purchased on or after August 1, 1978, under a group annuity or pure endowment contract.

Subp. 2. Approved table for annuity or pure endowment purchased on or after January 1, 1999, under a group annuity or pure endowment contract.

The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after January 1, 1999, under a group annuity or pure endowment contract.

History

Statutory Authority: MS s 45.023; 61A.25
History: 23 SR 806

Minn. R. 2752.0040 Application of the 1994 Gar Table

In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follows:

qx1994+n = qx1994(1-AAx)n

where the qx1994s and AAxs are as specified in the 1994 GAR Table.

History

Statutory Authority: MS s 45.023; 61A.25
History: 23 SR 806

Chapter 2753 LIFE INSURANCE SALES TO ACTIVE DUTY MILITARY

Minn. R. 2753.0100 Purpose

A. The purpose of this chapter is to set forth standards to protect active duty service members of the United States armed forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive, or unfair.

B. Nothing in this chapter creates or implies a private cause of action for a violation of this chapter.

History

Statutory Authority: MS s 45.023; 79A.19
History: 34 SR 789

Minn. R. 2753.0200 Scope

This chapter applies only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance producer to an active duty service member of the United States armed forces.

History

Statutory Authority: MS s 45.023; 79A.19
History: 34 SR 789

Minn. R. 2753.0300 Exemptions

Subpart 1. Generally.

This chapter does not apply to solicitations or sales involving:

A. credit insurance;

B. group life insurance or group annuities where there is no in-person, face-to-face solicitation of individuals by an insurance producer or where the contract or certificate does not include a side fund;

C. an application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or, when a term conversion privilege is exercised among corporate affiliates;

D. individual stand-alone health policies, including disability income policies;

E. contracts offered by Servicemembers' Group Life Insurance (SGLI) or Veterans' Group Life Insurance (VGLI), as authorized by United States Code, title 38, section 1965, et seq.;

F. life insurance contracts offered through or by a nonprofit military association, qualifying under section 501(c)(23) of the Internal Revenue Code, and which are not underwritten by an insurer; or

G. contracts used to fund:

Subp. 2. Commercial solicitations on DoD installations.

Nothing in this chapter abrogates the ability of nonprofit organizations or other organizations to educate members of the United States armed forces in accordance with Department of Defense DoD Instruction 1344.07 - PERSONAL COMMERCIAL SOLICITATION ON DOD INSTALLATIONS or successor directive.

Subp. 3. Solicitation exemptions.

For purposes of this chapter, general advertisements, direct mail, and Internet marketing do not constitute "solicitation." Telephone marketing does not constitute "solicitation" provided the caller explicitly and conspicuously discloses that the product concerned is life insurance and makes no statements that avoid a clear and unequivocal statement that life insurance is the subject matter of the solicitation. Nothing in this subpart exempts an insurer or insurance producer from this chapter in any in-person, face-to-face meeting established as a result of the "solicitation" exemptions identified in this subpart.

History

Statutory Authority: MS s 45.023; 79A.19
History: 34 SR 789

Minn. R. 2753.0400 Definitions

Subpart 1. Active duty.

"Active duty" means full-time duty in the active military service of the United States and includes members of the reserve component (National Guard and reserve) while serving under published orders for active duty or full-time training. The term does not include members of the reserve component who are performing active duty or active duty for training under military calls or orders specifying periods of less than 31 calendar days.

Subp. 2. Department of Defense (DoD) personnel.

"Department of Defense (DoD) personnel" means all active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the Department of Defense.

Subp. 3. Door-to-door.

"Door-to-door" means a solicitation or sales method whereby an insurance producer proceeds randomly or selectively from household to household without prior specific appointment.

Subp. 4. General advertisement.

"General advertisement" means an advertisement having as its sole purpose the promotion of the reader's or viewer's interest in the concept of insurance, or the promotion of the insurer or the insurance producer.

Subp. 5. Insurer.

"Insurer" means an insurance company required to be licensed under the laws of this state to provide life insurance products, including annuities.

Subp. 6. Insurance producer.

"Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit, or negotiate life insurance, including annuities.

Subp. 7. Known or knowingly.

"Known" or "knowingly" means, depending on its use in this chapter, the insurance producer or insurer had actual awareness, or in the exercise of ordinary care should have known, at the time of the act or practice complained of, that the person solicited:

A. is a service member; or

B. is a service member with a pay grade of E-4 or below.

Subp. 8. Life insurance.

"Life insurance" means insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident and benefits for disability income and unless otherwise specifically excluded, includes individually issued annuities.

Subp. 9. Military installation.

"Military installation" means any federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which service members are assigned for duty, including barracks, transient housing, and family quarters.

Subp. 10. MyPay.

"MyPay" is a Defense Finance and Accounting Service Web-based system that enables service members to process certain discretionary pay transactions or provide updates to personal information data elements without using paper forms.

Subp. 11. Service member.

"Service member" means any active duty officer (commissioned and warrant) or enlisted member of the United States armed forces.

Subp. 12. Side fund.

"Side fund" means a fund or reserve that is part of or otherwise attached to a life insurance policy, excluding individually issued annuities, by rider, endorsement, or other mechanism which accumulates premium or deposits with interest or by other means. The term does not include:

A. accumulated value cash value or secondary guarantees provided by a universal life policy;

B. cash values provided by a whole life policy which are subject to standard nonforfeiture law for life insurance; or

C. a premium deposit fund which:

Subp. 13. Specific appointment.

"Specific appointment" means a prearranged appointment agreed upon by both parties and definite as to place and time.

Subp. 14. United States armed forces.

"United States armed forces" means all components of the Army, Navy, Air Force, Marine Corps, and Coast Guard.

History

Statutory Authority: MS s 45.023; 79A.19
History: 34 SR 789

Minn. R. 2753.0500 Practices Declared False, Misleading, Deceptive, or Unfair on a Military Installation

Subpart 1. Face-to-face solicitations.

The following acts or practices when committed on a military installation by an insurer or insurance producer with respect to the in-person, face-to-face solicitation of life insurance are declared to be false, misleading, deceptive, or unfair:

A. Knowingly soliciting the purchase of any life insurance product "door-to-door" or without first establishing a specific appointment for each meeting with the prospective purchaser.

B. Soliciting service members in a group or "mass" audience or in a "captive" audience where attendance is not voluntary.

C. Knowingly making appointments with or soliciting service members during their normally scheduled duty hours.

D. Making appointments with or soliciting service members in barracks, day rooms, unit areas, or transient personnel housing or other areas where the installation commander has prohibited solicitation.

E. Soliciting the sale of life insurance without first obtaining permission from the installation commander or the commander's designee.

F. Posting unauthorized bulletins, notices, or advertisements.

G. Failing to present DD Form 2885, Personal Commercial Solicitation Evaluation, to service members solicited or encouraging service members solicited not to complete or submit a DD Form 2885.

H. Knowingly accepting an application for life insurance or issuing a policy of life insurance on the life of an enlisted member of the United States armed forces without first obtaining for the insurer's files a completed copy of any required form which confirms that the applicant has received counseling or fulfilled any other similar requirement for the sale of life insurance established by regulations, directives, or rules of the DoD or any branch of the armed forces.

Subp. 2. Other acts or practices.

The following acts or practices when committed on a military installation by an insurer or insurance producer constitute corrupt practices, improper influences, or inducements and are declared to be false, misleading, deceptive, or unfair:

A. Using DoD personnel, directly or indirectly, as a representative or agent in any official or business capacity with or without compensation with respect to the solicitation or sale of life insurance to service members.

B. Using an insurance producer to participate in any United States armed forces sponsored education or orientation program.

History

Statutory Authority: MS s 45.023; 79A.19
History: 34 SR 789

Minn. R. 2753.0600 Practices Declared False, Misleading, Deceptive, or Unfair Regardless of Location

Subpart 1. Corrupt practices, improper influences, or inducements.

The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences, or inducements and are declared to be false, misleading, deceptive, or unfair:

A. Submitting, processing, or assisting in the submission or processing of any allotment form or similar device used by the United States armed forces to direct a service member's pay to a third party for the purchase of life insurance, including using or assisting in using a service member's "MyPay" account or other similar Internet or electronic medium for these purposes. This subpart does not prohibit assisting a service member by providing insurer or premium information necessary to complete any allotment form.

B. Knowingly receiving funds from a service member for the payment of premium from a depository institution with which the service member has no formal banking relationship. For purposes of this part, a formal banking relationship is established when the depository institution:

C. Employing any device or method or entering into any agreement whereby funds received from a service member by allotment for the payment of insurance premiums are identified on the service member's leave and earnings statement or equivalent or successor form as "savings" or "checking" and where the service member has no formal banking relationship as defined in item B.

D. Entering into any agreement with a depository institution for the purpose of receiving funds from a service member whereby the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship.

E. Using DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial capacity with or without compensation with respect to the solicitation or sale of life insurance to service members who are junior in rank or grade, or to the family members of such personnel.

F. Offering or giving anything of value, directly or indirectly, to DoD personnel to procure their assistance in encouraging, assisting, or facilitating the solicitation or sale of life insurance to another service member.

G. Knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for his or her attendance to any event where an application for life insurance is solicited.

H. Advising a service member with a pay grade of E-4 or below to change his or her income tax withholding or state of legal residence for the sole purpose of increasing disposable income to purchase life insurance.

Subp. 2. Confusion regarding source, sponsorship, approval, or affiliation.

The following acts or practices by an insurer or insurance producer lead to confusion regarding source, sponsorship, approval, or affiliation and are declared to be false, misleading, deceptive, or unfair:

A. Making any representation, or using any device, title, descriptive name, or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance producer, or product offered is affiliated, connected, or associated with, endorsed, sponsored, sanctioned, or recommended by the United States government, the United States armed forces, or any state or federal agency or government entity. Examples of prohibited insurance producer titles include "Battalion Insurance Counselor," "Unit Insurance Advisor," "Servicemen's Group Life Insurance Conversion Consultant," or "Veteran's Benefits Counselor." Nothing in this subpart prohibits a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of higher learning. Such designations include Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science in Financial Services (MSFS), or Master of Science Financial Planning (MS).

B. Soliciting the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States armed forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance producer, or insurance product is affiliated, connected, or associated with, endorsed, sponsored, sanctioned, or recommended by the United States government, or the United States armed forces.

Subp. 3. Confusion regarding premiums, costs, or investment returns.

The following acts or practices by an insurer or insurance producer lead to confusion regarding premiums, costs, or investment returns and are declared to be false, misleading, deceptive, or unfair:

A. Using or describing the credited interest rate on a life insurance policy in a manner that implies that the credited interest rate is a net return on premium paid.

B. Excluding individually issued annuities, misrepresenting the mortality costs of a life insurance product, including stating or implying that the product "costs nothing" or is "free."

Subp. 4. Acts or practices regarding SGLI or VGLI.

The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are declared to be false, misleading, deceptive, or unfair:

A. Making any representation regarding the availability, suitability, amount, cost, exclusions, or limitations to coverage provided to a service member or dependents by SGLI or VGLI, which is false, misleading, or deceptive.

B. Making any representation regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of SGLI or VGLI to private insurers which is false, misleading, or deceptive.

C. Suggesting, recommending, or encouraging a service member to cancel or terminate his or her SGLI policy or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement takes effect upon or after the service member's separation from the United States armed forces.

Subp. 5. Disclosure.

The following acts or practices by an insurer or insurance producer regarding disclosure are declared to be false, misleading, deceptive, or unfair:

A. Deploying, using, or contracting for any lead generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance producer, if that is the case, for the purpose of soliciting the purchase of life insurance.

B. Failing to disclose that a solicitation for the sale of life insurance will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser.

C. Excluding individually issued annuities, failing to clearly and conspicuously disclose the fact that the product being sold is life insurance.

D. Failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by section 10 of the "Military Personnel Financial Services Protection Act," Public Law Number 109-290.

E. Excluding individually issued annuities, when the sale is conducted in-person, face-to-face with an individual known to be a service member, failing to provide the applicant at the time the application is taken:

Subp. 6. Sale of certain life insurance products.

The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products are declared to be false, misleading, deceptive, or unfair:

A. Excluding individually issued annuities, recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable.

B. Offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, is presumed unsuitable unless, after the completion of a needs assessment, the insurer demonstrates that the applicant's SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant's insurable needs for life insurance.

C. Excluding individually issued annuities, offering for sale or selling any life insurance contract which includes a side fund:

D. Excluding individually issued annuities, offering for sale or selling any life insurance contract which after considering all policy benefits, including endowment, return of premium, or persistency, does not comply with standard nonforfeiture law for life insurance.

E. Selling any life insurance product to an individual known to be a service member that excludes coverage if the insured's death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage, e.g., double indemnity, which may be excluded.

History

Statutory Authority: MS s 45.023; 79A.19
History: 34 SR 789

Chapter 2755 GROUP INSURANCE COVERAGE REPLACEMENT

Minn. R. 2755.0100 Definition

For purposes of these rules, "carrier" means any insurance company as defined in Minnesota Statutes, section 60A.02, subdivision 4; any service plan corporation as defined in Minnesota Statutes, section 62C.02, subdivision 6; and any health maintenance organization as defined in Minnesota Statutes, section 62D.02, subdivision 4.

History

Statutory Authority: MS s 60A.082

Minn. R. 2755.0200 Authority and Scope

Parts 2755.0100 to 2755.0500 apply to all policies and subscriber contracts issued or provided by an insurance company, nonprofit service plan corporation, or health maintenance organization on a group basis and are promulgated pursuant to the authority of Minnesota Statutes, section 60A.082.

History

Statutory Authority: MS s 60A.082

Minn. R. 2755.0300 Purpose

The purpose of parts 2755.0100 to 2755.0500 is to indicate which carrier is responsible for coverage in those cases where one carrier's plan of benefits replaces a prior plan which offered similar benefits.

History

Statutory Authority: MS s 60A.082

Minn. R. 2755.0400 Liability of Prior Carrier

The prior carrier remains liable to the extent of its accrued liability and any contractual liability for extension of benefits at the time of replacement. "Accrued liability" includes, but is not limited to, responsibility for covered inpatient expenses, subject to applicable deductibles, copayments, and limitations, incurred by a covered individual who is an inpatient on the date of replacement. The responsibility on the part of the prior carrier continues until the covered individual is discharged from the inpatient facility or contract maximums have been reached, whichever first occurs.

History

Statutory Authority: MS s 45.023; 60A.082
History: 9 SR 1187; 13 SR 2551

Minn. R. 2755.0500 Liability of Succeeding Carrier

Subpart 1. Coverage under succeeding carrier's plan.

Each individual who is eligible under the succeeding carrier's plan, with respect to provisions regarding class eligibility, activity at work, and nonconfinement, shall be covered by the succeeding carrier's plan of benefits as of the effective date of that plan.

Subp. 2. Coverage for individuals not eligible under subpart 1.

Each individual who is not eligible for coverage in accordance with subpart 1 shall nevertheless be covered by the succeeding carrier in accordance with the following rules, provided that such individual (including an individual who has exercised the option for extension of benefits pursuant to Minnesota Statutes, sections 62A.148 and 62A.17) was validly covered under the prior plan on the date it was discontinued and such individual is a member of a class of individuals otherwise eligible for coverage under the succeeding carrier's plan.

A. The minimum level of benefits that shall be provided by the succeeding carrier shall be the lesser of the benefits available under the prior carrier's plan reduced by any benefits payable by the prior carrier, or the benefits available under the succeeding carrier's plan.

B. Coverage shall be provided by the succeeding carrier pursuant to this subpart at least until the earlier of the following dates: the date the individual becomes eligible under the terms of the succeeding carrier's plan; or the date the individual's coverage would otherwise terminate, for each type of coverage, in accordance with the individual termination of coverage provisions of the succeeding carrier's plan.

Subp. 3. Preexisting condition limitations.

Each individual subject to a preexisting condition limitation contained in the succeeding carrier's plan shall nevertheless be covered by the succeeding carrier, provided that such individual was validly covered under the prior plan on the date it was discontinued. The minimum level of benefits which shall be provided by the succeeding carrier for a preexisting condition shall be the lesser of the benefits of the new plan determined without regard to the preexisting condition limitation, or the benefits of the prior plan.

Subp. 4. Deductible or waiting period.

In applying any deductible or waiting period in its plan, the succeeding carrier shall give credit for the full or partial satisfaction of the same or similar provisions under the prior plan. In the case of deductible provisions, the credit shall apply for the same or overlapping benefit periods, to the extent the same expenses are recognized under the terms of the succeeding carrier's plan and are subject to a similar deductible provision.

Subp. 5. Statement of benefits available.

In any situation where a determination of the prior carrier's benefits is required by the succeeding carrier, at the succeeding carrier's request the prior carrier shall furnish a statement of the benefits available and other pertinent information sufficient to permit the succeeding carrier to verify or determine benefits.

Subp. 6. Controlling terms.

Benefits of the prior plan shall be determined in accordance with the definitions, conditions, and covered expense provisions of the prior plan rather than those of the succeeding plan.

History

Statutory Authority: MS s 60A.082
History: 9 SR 1187

Chapter 2760 CREDIT LIFE, ACCIDENT, HEALTH INSURANCE

Minn. R. 2760.0010 Purpose

The purpose of this chapter is to protect the interests of debtors and the public in this state by providing a system of rate, policy form, and operating standards for the transaction of credit life and credit accident and health insurance. This chapter interprets and implements Minnesota Statutes, sections 62B.01 to 62B.14.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0020 Definitions

Subpart 1. Scope.

The terms used in this chapter have the meanings given them in this part.

Subp. 2. Account.

"Account" means the aggregate coverage for a single plan of insurance written under one agreement through one or more creditors by the insurer, whether coverage is written on a group or individual policy basis.

Subp. 3. Average number of life years.

"Average number of life years" means the average number of group certificates or individual policies in force during a period times the number of years in the period.

Subp. 4. Claims.

"Claims" means benefits payable on death or disability, including any accrued interest but excluding loss adjustment expense, claims settlement costs, or other additions of any kind.

Subp. 5. Closed-end credit.

"Closed-end credit" means a credit transaction that does not meet the definition of open-end credit.

Subp. 6. Commissioner.

"Commissioner" means the commissioner of commerce.

Subp. 7. Credibility factor.

"Credibility factor" means the factor calculated by using the credibility table in part 2760.0090.

Subp. 8. Critical period accident and health coverage.

"Critical period accident and health coverage" means credit accident and health coverage that provides a maximum benefit period of a specified number of monthly benefits or to the end of a coverage period, whichever is less.

Subp. 9. Earned premiums.

"Earned premiums" means the total gross premiums received during a period reduced by premiums refunded and adjusted for changes in premium reserves as described in the Credit Insurance Experience Exhibit instructions published by the National Association of Insurance Commissioners.

Subp. 10. Effective date of coverage.

"Effective date of coverage" is the date of initial indebtedness, except that for each part of the insurance attributable to a different advance or a charge to the account it is the date on which the advance or charge occurs.

Subp. 11. Evidence of individual insurability.

"Evidence of individual insurability" means a statement furnished by the debtor, as a condition of insurance becoming effective, that relates specifically to the health status or the health or medical history of the debtor.

Subp. 12. Incurred claims.

"Incurred claims" means claims paid during a period, adjusted for the change in claim reserves from the beginning to the end of that period as described in the Credit Insurance Experience Exhibit instructions published by the National Association of Insurance Commissioners.

Subp. 13. Loss ratio.

"Loss ratio" means incurred claims divided by earned premiums.

Subp. 14. Open-end credit.

"Open-end credit" means credit extended by a creditor under an agreement in which:

A. the creditor reasonably contemplates repeated transactions;

B. the creditor imposes a finance charge from time to time on an outstanding unpaid balance; and

C. the amount of credit that may be extended to the debtor during the term of the agreement up to any limit set by the creditor is generally made available to the extent that any outstanding balance is repaid.

Subp. 15. Plan of insurance.

"Plan of insurance" means any of the following:

A. credit life insurance on a single premium basis, including single and joint life coverage, and including decreasing and level insurance;

B. credit life insurance on a monthly premium basis, including single and joint life coverage;

C. credit accident and health insurance on a single premium basis, including single and joint coverage; or

D. credit accident and health insurance on a monthly premium basis, including single and joint coverage.

Subp. 16. Preexisting condition.

"Preexisting condition" means any condition for which the insured debtor received medical advice, consultation, or treatment within six months before the effective date of the coverage.

Subp. 17. Prima facie rates.

"Prima facie rates" means the starting rates shown in parts 2760.0050 and 2760.0060 and any subsequent rates as adjusted for a later time period pursuant to part 2760.0080.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0030 Rights and Treatment of Debtors

Subpart 1. Multiple plans of insurance.

If a creditor makes available to the debtors more than one plan of credit life insurance or credit accident and health insurance, every debtor must be informed of each plan for which the debtor is eligible and of the premium or insurance charge for each.

Subp. 2. Substitution.

When a creditor requires insurance as additional security for a debt, the debtor shall be given the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by the debtor or of procuring and furnishing the required coverage through any insurer authorized to transact insurance business in this state. If this subpart is applicable, the debtor shall be informed by the creditor of the right to provide alternative coverage before the transaction is completed.

Subp. 3. Termination of group consumer credit insurance policy.

A. If a debtor is covered by a group consumer credit insurance policy providing for the payment of single premiums to the insurer, or any other premium payment method which prepays coverage beyond one month, then provision shall be made by the insurer that in the event of termination of the policy for any reason, insurance coverage with respect to any debtor insured under the policy shall be continued for the entire period for which the premium has been paid or until the debtor's insured loan otherwise ends.

B. If a debtor is covered by a group consumer credit insurance policy providing for the payment of premiums to the insurer on a monthly basis, then the policy shall provide that, in the event of termination of the policy, termination notice shall be given to the insured debtor at least 30 days before the effective date of termination except where replacement of the coverage by the same or another insurer in the same amount, the same benefits, and the same rates takes place without lapse of coverage. The insurer shall provide or cause to be provided this required information to the debtor.

Subp. 4. Remittance of premiums.

If the creditor adds identifiable insurance charges or premiums for consumer credit insurance to the debt, and any direct or indirect finance, carrying, credit, or service charge is made to the debtor on the insurance charges or premiums, the creditor must remit and the insurer shall collect the premium within 60 days after it is added to the debt.

Subp. 5. Refinancing of debt.

If the debt is discharged due to refinancing before the scheduled end of coverage, the insurance in force shall be terminated before any new insurance is issued in connection with the refinanced debt. In all cases of termination before scheduled maturity, a refund of unearned premium or unearned insurance charges paid by the debtor shall be paid or credited to the debtor as provided in part 2760.0070. In any refinancing of the debt, the effective date of the coverage as respects any policy provision shall be deemed to be the first date on which the debtor became insured under the policy with respect to the debt which was refinanced, at least to the extent of the amount and term of the debt outstanding at the time of refinancing of the debt.

Subp. 6. Open-end credit benefit amount.

If a debtor has opened an educational, agricultural, or horticultural open-end credit account for which credit life insurance has been issued on a nondecreasing or level term plan for the amount of the loan commitment, in the event of the death of the debtor the insured amount due is the amount of the loan commitment against which premium was last charged.

Subp. 7. Maximum aggregate provisions.

If an insurer issues multiple certificates of insurance to an insured under the same group policy which together exceed the maximum amount of life insurance shown in any certificate schedule, the insurance shall remain in effect unless the insurer cancels the excess insurance and refunds or credits the associated premium plus any additional finance charges related to the excess insurance.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0040 Determination of Reasonableness of Benefits in Relation to Premium

Premium rates charged for credit insurance shall not be excessive in relation to the benefits. The requirement is satisfied if the premium rate charged develops or is reasonably expected to develop a loss ratio of 50 percent or such different loss ratio as calculated under part 2760.0080. With the exception of deviations approved under part 2760.0090, the rates shown in parts 2760.0050 and 2760.0060, as adjusted pursuant to part 2760.0080, shall be conclusively presumed to be reasonable.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0050 Credit Life Insurance Rates

Subpart 1. Initial prima facie rates.

Subject to the conditions and requirements in subpart 2 and part 2760.0090, the initial prima facie rates in this subpart meet the requirements of part 2760.0040 and are the maximum rates to be used without further proof of reasonableness, until the effective date of any adjustment under part 2760.0080.

A. If the premium is charged on a monthly outstanding balance (MOB) basis, the initial prima facie rate is $0.615 per month per $1,000 of outstanding insured debt on single life.

B. If the premium is charged on a single premium basis, the rate shall be computed according to the following formula or according to a formula approved by the commissioner which produces rates actuarially consistent with the following formula: For purposes of calculating the single premium credit life rate, the initial value of OP is $0.615.

C. If the life coverage is sold on a joint basis involving two debtors, the rate for the joint coverage shall be 167 percent of the applicable single rate.

D. If the insurer provides benefits more restrictive than specified in subpart 2, the insurer must file and use rates that are actuarially equivalent and must receive approval from the commissioner as meeting the requirements of part 2760.0040 before use. If the insurer provides benefits less restrictive than specified in subpart 2, the insurer shall either use the rates specified or rates that are actuarially equivalent, in which case the insurer must receive approval from the commissioner as meeting the requirements of part 2760.0040 before use.

Subp. 2. Application to certain contracts.

The premium rates in subpart 1 shall apply to contracts providing credit life insurance that are offered to all eligible debtors electing to purchase coverage within 30 days of the date the debtor becomes eligible and that conform to the following provisions.

A. Coverage for death by whatever means caused, unless coverage excludes death resulting from:

B. For the purpose of item A, subitem (3), no preexisting condition exclusion shall apply unless death is caused by or substantially contributed to by the preexisting condition and unless death occurs within six months following the effective date of coverage or later advance.

C. The insurer has the option to include in lieu of a preexisting condition exclusion on insurance written in connection with open-ended credit account, a provision to limit the amount of insurance payable on death due to natural causes to the balance as it existed six months before the date of death if there has been one or more increases in the outstanding balance during the six-month period and if evidence of individual insurability has not been required in the six-month period before the date of death. This provision applies only if and to the extent that the amount of coverage to which it would otherwise apply in the absence of this limitation exceeds $1,000.

D. An age restriction providing that no insurance will become effective on debtors on or after the attainment of age 70 and that all insurance will terminate upon attainment by the debtor of age 70.

E. The insurer does not require evidence of individual insurability if the initial amount financed or open-end credit account limit is $15,000 or less and the applicant elects to purchase coverage within 30 days of the effective date of the indebtedness.

Subp. 3. Other reasonable rates.

A. If the insurer uses a form that does not exclude preexisting conditions, a rate equal to 105 percent of the prima facie rate shall be considered reasonable.

B. If the insurer, its agent, or the application form for credit life insurance requests or requires that the debtor provide evidence of individual insurability and the initial amount financed or open-end credit account limit available is above $15,000 or the applicant elects to purchase coverage more than 30 days after the effective date of the indebtedness, then the premium rates considered reasonable will be the prima facie rates in subpart 1. For policies insuring open-end lines of credit, the insurer may require evidence of individual insurability for advances which increase the outstanding debt above $15,000.

Subp. 4. Insurance application forms.

Insurers' use of the same application forms for credit life and credit accident and health insurance is permitted whether or not the underwriting questions are asked pursuant to subpart 3.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0060 Credit Accident and Health Insurance Rates

Subpart 1. Initial prima facie rates.

Subject to the conditions and requirements in subpart 2 and part 2760.0090, the initial prima facie rates in this subpart meet the requirements of part 2760.0040 and are the maximum rates to be used without further proof of reasonableness until the effective date of any adjustment under part 2760.0080.

A. If premiums are payable on the basis of a premium rate per month per thousand of outstanding insured debt, the prima facie rate shall be computed according to one of the following tables:

B. If premiums are payable on a single-premium basis for the duration of the coverage, the prima facie rate shall be computed according to the following table: * To be used for refunding premiums only.

C. If the coverage provided is a constant maximum indemnity for a given period of time, the rate shall be computed according to a formula approved by the commissioner which produces rates actuarially consistent with the rates in item A or B.

D. If the coverage provided is a combination of a constant maximum indemnity for a given period of time after which the maximum indemnity begins to decrease in even amounts per month, the rate shall be computed according to a formula approved by the commissioner that produces rates actuarially consistent with the rates in item A or B.

E. If the accident and health coverage is sold on a joint basis, involving two debtors, the rate for the joint coverage shall be 180 percent of the applicable single rate.

F. If the insurer provides benefits more restrictive than specified in subpart 2, the insurer must file and use rates that are actuarially equivalent, and must receive approval from the commissioner as meeting the requirements of part 2760.0040 before use. If the insurer provides benefits less restrictive than subpart 2, the insurer shall either use the rates specified or rates that are actuarially equivalent, in which case the insurer must receive approval from the commissioner as meeting the requirements of part 2760.0040 before use.

Subp. 2. Application to certain contracts.

Premium rates in subpart 1 apply to contracts providing accident and health insurance that are offered to all eligible debtors and that conform to the following provisions.

A. Coverage for disability by whatever means caused, unless coverage excludes disabilities resulting from:

B. A definition of disability providing that for the first 12 months of a disability, total disability shall be defined as the inability to perform the essential functions of the insured's own occupation. Thereafter, it shall mean the inability of the insured to perform the essential functions of any occupation for which the insured is reasonably suited by virtue of education, training, or experience.

C. An employment requirement that is no more restrictive than one requiring that the debtor be employed full time on the effective date of coverage and for at least 12 consecutive months before the effective date of coverage. "Full time" means a regular work week of not less than 30 hours.

D. An age restriction providing that no insurance will become effective on debtors on or after the attainment of age 70 and that all insurance will terminate upon attainment by the debtor of age 70.

E. A daily benefit of not less than 1/30th of the monthly benefit payable under the policy.

F. The insurer does not require evidence of individual insurability if the initial amount financed or open-end credit account limit available is $15,000 or less and the applicant elects to purchase coverage within 30 days of the effective date of the indebtedness.

Subp. 3. Other reasonable rates.

A. If the insurer uses a form that does not exclude preexisting conditions, a rate equal to 105 percent of the prima facie rate shall be considered reasonable.

B. If the insurer, its agent, or the application form for credit accident and health insurance requests or requires that the debtor provide evidence of individual insurability and the initial amount financed or open-end credit account limit available is above $15,000 or the applicant elects to purchase coverage more than 30 days after the effective date of the indebtedness, then the premium rates considered reasonable will be the prima facie rates in subpart 1. For policies insuring open-end lines of credit, the insurer may require evidence of individual insurability for advances which increase the outstanding debt above $15,000.

Subp. 4. Insurance application forms.

Insurers' use of the same application forms for credit life and credit accident and health insurance is permitted whether or not the underwriting questions are asked pursuant to subpart 3.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0070 Refunds of Unearned Premium

Subpart 1. Charges on single premium consumer credit insurance contract.

In the event of termination of a single premium contract, no charge for consumer credit insurance may be made for the first 15 days of a month and a full month may be charged for 16 days or more of a month.

Subp. 2. Fulfillment of refund formula filing requirement.

The requirements of Minnesota Statutes, section 62B.08, subdivision 2, that refund formulas be filed with the commissioner, shall be considered fulfilled if the refund methods are set forth in the individual policy or group certificate filed with the commissioner. For single premium credit life insurance, the refund shall be the single premium for the remaining term of coverage calculated according to the premium rate schedule in effect on the effective date of coverage, or an alternative method. The refund under the alternative method is the original premium multiplied by a ratio, where the numerator of the ratio is the sum of the scheduled monthly amounts of insurance for the remaining term of the loan, and the denominator of the ratio is the sum of the scheduled monthly amounts of insurance at the time of issue. For single premium credit disability insurance that is not critical period coverage, the refund shall be the single premium for the remaining term of coverage calculated according to the premium rate schedule in effect at the time of the effective date of coverage, or the average of the "Rule of 78" and "pro-rata" methods. For single premium credit disability insurance that is critical period coverage, the refund shall be the single premium for the remaining term of coverage calculated according to the premium rate schedule in effect at the time of the effective date of coverage, or the "pro-rata" method.

Subp. 3. Refund or credit on the termination of certain single premium credit insurance.

When single premium credit insurance terminates as a result of a request of the insured debtor, the creditor or third-party originator receiving the request shall refund or credit the unearned premium due or provide notice to the insurer and upon receipt of the notice the insurer shall refund or credit the unearned premium due. For purposes of this part, the third-party originator is a dealer, merchant, or other person who originated the loan or retail installment sale contract and sold the related credit insurance to the insured debtor.

When single premium credit insurance terminates as a result of the termination of the indebtedness before its scheduled maturity date, other than by performance of the insurer's obligation under the policy or certificate, the creditor shall promptly refund or credit any unearned premium due. If insurance was originated by a third party, the creditor shall promptly provide notice of termination of the indebtedness to the third-party originator as permitted by Minnesota Statutes, section 62B.05. In the event the creditor gives written notice to the third-party originator, upon receipt of the notice the third-party originator shall refund or credit any unearned premium due or provide notice to the insurer who shall refund or credit any unearned premium due to the person entitled to the refund or credit. A creditor satisfies its notice obligation by sending notice directly to the third-party originator or insurer or alternatively by sending notice to the debtor with instructions on how to obtain a refund from the third-party originator or insurer. In any event, upon receipt of proof of payoff of the entire indebtedness, the insurer shall provide a refund or credit of any unearned premium due that has not otherwise been refunded.

An insurer shall include language in the insurer's insurance forms or in a separate notice provided with the forms at time of issue that explains to the debtor how to obtain a refund when insurance is terminated before its scheduled expiration date. The language must be approved by the commissioner.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0080 Experience Reports and Adjustment of Prima Facie Rates

Subpart 1. Experience report filing.

Each insurer doing insurance business in this state shall annually file in electronic form with the National Association of Insurance Commissioners a report of credit insurance written on a calendar year basis. The report shall utilize the Credit Insurance Supplement - Annual Statement Blank as approved by the National Association of Insurance Commissioners, and shall contain data separately for each state, rather than an allocation of the company's countrywide experience. The filing shall be made in accordance with and no later than the due date in the Instructions to the Annual Statement.

Subp. 2. Rate review and adjustment.

The commissioner will, on a triennial basis, for each plan, review the loss ratio in part 2760.0040 and the prima facie rates in parts 2760.0050 and 2760.0060, and determine therefrom the rate of expected claims on a statewide basis, compare the rate of expected claims with the rate of actual claims for the preceding three calendar years determined from the incurred claims reported in the Credit Insurance Supplement - Annual Statement Blank or other available source, and publish the adjusted actual statewide prima facie rates for that plan to be used by insurers until the next revision. For each plan, the rates will reflect the difference between the actual claim cost based on experience and the expected claim cost based on the loss ratio in part 2760.0040, applied to adjust the prima facie rates in parts 2760.0050 and 2760.0060. However, there will be no change to the prima facie rates for any plan if the computed increase or decrease is less than five percent.

Subp. 3. Publication and effective date of adjustments.

The commissioner will publish the adjustments computed in subpart 2 by bulletin no later than September 1 to become effective the following January 1.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0090 Premium Rate Deviation

Subpart 1. Use of deviated rates.

A. If the loss ratio of the insurer is 55 percent or more based on the most recent one to three calendar years' experience using the prima facie rates currently in use for any plan of coverage, the insurer may file for approval and use rates that are higher than those prima facie rates, reflecting the anticipated difference in claim cost.

B. If the loss ratio of the insurer is less than 42.5 percent based on the most recent three calendar years' experience using the prima facie rates currently in use for any plan of coverage, the insurer shall file for approval and use rates for that plan of coverage that are lower than prima facie rates, reflecting the anticipated difference in claim cost.

C. If deviated rates are to be filed under item A or B, the insurer may file rates for approval that will be:

Subp. 2. Use of rates for accounts.

An insurer, by written notice to the commissioner of its election to do so, may file and use premium rates to be used to rate one or more of its accounts in this state.

A. An insurer may use a rate for an account not greater than the account rate as follows.

B. An account rate will be in effect for a period of time not longer than five years. An insurer may file for a new account rate before the end of an account rate period, but not more often than once during any 12-month period.

C. If a creditor changes insurers, the account rate established under this part in effect for the account on the date of the change will continue to be in effect for the account with the succeeding insurer for the remainder of the account rate period or until a new account rate for this account is established.

D. Credibility table based on life years or incurred claim count: The integral numbers in this item represent the lower end of the bracket for each Z factor. The upper end is one less than the lower end for the next higher Z factor.

History

Statutory Authority: MS s 62B.12
History: 33 SR 1107

Minn. R. 2760.0100 [Repealed, 33 SR 1107]

[Repealed, 33 SR 1107]

Minn. R. 2760.0200 [Repealed, 33 SR 1107]

[Repealed, 33 SR 1107]

Minn. R. 2760.0300 Repealed by subpart

Subpart 1.

[Repealed, 33 SR 1107]

Subp. 2.

[Repealed, 33 SR 1107]

Subp. 3.

[Repealed, 33 SR 1107]

Subp. 4.

[Repealed, 33 SR 1107]

Subp. 5.

[Repealed, 33 SR 1107]

Subp. 6.

[Repealed, 33 SR 1107]

Subp. 7.

[Repealed, 33 SR 1107]

Subp. 8.

[Repealed, 33 SR 1107]

Subp. 9.

[Repealed, 33 SR 1107]

Subp. 10.

[Repealed, 12 SR 2393]

Subp. 10a.

[Repealed, 33 SR 1107]

Subp. 11.

[Repealed, 33 SR 1107]

Chapter 2761 CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE

Minn. R. 2761.0100 Purpose and Authority

The purpose of this chapter is to implement the authority to sell and effect the regulation of credit involuntary unemployment insurance pursuant to Minnesota Statutes, section 62B.12, and Minnesota Statutes, chapter 62B, as required by Laws 1993, chapter 343.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.0200 Definitions

Subpart 1. Scope.

The terms used in this chapter have the meanings given them in this part.

Subp. 2. Authorized insurer.

"Authorized insurer" means an insurer authorized to offer coverages specified by Minnesota Statutes, section 60A.06, subdivision 1, clauses (1) and (4).

Subp. 3. Claims.

"Claims" means benefits payable under an involuntary unemployment policy, excluding adjustment expense or expenses or additions of any kind.

Subp. 4. Claims incurred.

"Claims incurred" means claims paid appropriately adjusted for changes in claim reserves, including reserves for reported claims in process of settlement and losses incurred but not yet reported.

Subp. 5. Closed-end credit.

"Closed-end credit" means consumer credit other than "open-end credit" as defined in subpart 8.

Subp. 6. Compensation.

"Compensation" means compensation as defined by Minnesota Statutes, section 62B.08, subdivision 6.

Subp. 7. Credit involuntary unemployment insurance.

"Credit involuntary unemployment insurance" means insurance as defined by Minnesota Statutes, section 62B.02, subdivision 3a.

Subp. 8. Open-end credit.

"Open-end credit" means credit extended by a creditor by an agreement that is a line of credit loan, a revolving charge plan, or any other open-end self-replenishing credit arrangement between the creditor and a customer that may be drawn upon from time to time by the customer without renegotiating the lending agreement. The customer may repay the full outstanding balance at any time, or a specified minimum portion of the indebtedness.

Subp. 9. Premiums earned.

"Premiums earned" means total gross premiums received by the company reduced by premiums refunded or credited for termination before expiration of the policy term, and appropriately adjusted for changes in policy reserves.

Subp. 10. Unemployment.

An individual is considered "unemployed" in any week during which the individual performs no services and with respect to which no wages are payable to the individual. "Unemployment" does not mean voluntary separation from employment, termination from employment for misconduct, or termination from employment for commission of criminal acts.

Subp. 11. Waiting period.

"Waiting period" means the period of time between the effective date of a loan or, in the case of an open-end credit situation, an advance or increase in the amount of the loan, and the effective date of the insurance coverage.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.0300 Policy Forms and Related Materials

Subpart 1. Filing requirements.

All policy forms, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and riders to be delivered or issued for delivery in this state, and the schedules of premium rates pertaining to them must be filed with the commissioner as required by Minnesota Statutes, section 62B.07.

Subp. 2. Loss ratio.

Each insurer filing rates for credit involuntary unemployment insurance benefit plans shall include in its rate filing with the commissioner the appropriate rate formula upon which its rates are based if other than the rates scheduled in this chapter, including provisions for losses, expenses, and profits. The provision for losses included in the rate formula shall not be less than 50 percent of the premium.

Subp. 3. Eligibility statement.

Each individual policy or certificate of group insurance must, in addition to other requirements of Minnesota Statutes, section 62B.06, include a statement prominently displayed setting forth the following or its equivalent: "Your eligibility for coverage may be dependent upon your being eligible to receive state unemployment benefits. A change in your employment may affect your eligibility for benefits. If you have any questions, contact your insurance company." To be considered prominently displayed, this statement must be in a typeface that is distinctive or more bold than the surrounding typeface, or be contained in a separately blocked portion surrounded by a distinctive border.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925; L 1997 c 66 s 80; L 1999 c 107 s 66; L 2000 c 343 s 4

Minn. R. 2761.0400 Standard Benefit Plans

Subpart 1. General standard.

Benefits provided under credit involuntary unemployment insurance policies must be reasonable in relation to premiums charged. Premiums will be considered reasonable if they conform to the prima facie rates shown in part 2761.0700, or if a loss ratio of at least 50 percent is contemplated to be achieved. Loss ratio means incurred claims divided by earned premium.

Subp. 2. Basic prima facie rates for closed-end credit are as reflected in part 2761.0700.

The premiums shown in part 2761.0700, Schedule A, may be used when credit involuntary unemployment insurance is issued in conjunction with any loan which has a specified maturity date whether the premiums are financed or otherwise collected on a monthly basis. To calculate the single premium rate when premiums are financed in a closed-end loan, insurers must multiply the rates shown in part 2761.0700, schedule A, by the term of the coverage in months. The basic plan of insurance to which this prima facie rate applies is as follows:

A. Coverage is provided or offered, with or without underwriting, to all debtors regardless of age or to all debtors not older than a specified age limit, which shall not be less than age 65 at the time the insurance becomes effective or age 66 at the scheduled maturity date of the transaction.

B. Exclusion from qualification for coverage:

C. Coverage for unemployment for any reason, except that coverage may be excluded for:

D. Coverage becomes effective after a waiting period of no more than 60 days after the initiation of the loan or credit agreement, and benefits may be retroactive to the first day of unemployment or after an elimination period of 30 days.

E. Benefits provided for various terms of coverage shall not be less than the schedule below: *includes open-end credit vehicles (e.g. credit cards)

F. The total amount of periodic benefits payable shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness at the time of the loss. The amount of each periodic benefit shall not exceed the original indebtedness divided by the number of periodic installments.

G. If the period of unemployment for which benefits are to be paid is less than 30 days, 1/30th of the scheduled monthly payments for each day of a period within the unemployment period must be paid to the creditor to reduce the debtor's account.

H. In the event of cancellation of the master policy, coverage as provided by the certificates issued under that master policy shall remain in force until expiration, unless sooner canceled according to other terms and conditions.

Subp. 3. Basic prima facie rates for open-end credit.

The basic prima facie rate for credit involuntary unemployment insurance payable on a monthly outstanding balance basis in connection with open-end credit transactions is reflected in part 2761.0700, Schedule B. The basic plan of insurance to which this prima facie rate applies is as follows:

A. Coverage is provided or offered, with or without underwriting to all debtors, except the plan or policy may have an age restriction providing that no insurance will become effective on debtors on or after the attainment of age 66 and that all insurance will terminate upon attainment by the debtor of age 66.

B. Exclusion from qualification for coverage:

C. Coverage for unemployment for any reason, except that coverage may be excluded for:

D. Coverage becomes effective after a waiting period of no more than 60 days after the initiation and use of each loan or credit agreement, and benefits may be retroactive to the first day of unemployment or after an elimination period of 30 days.

Subp. 4. Reeligibility.

A credit involuntary unemployment insurance policy may impose conditions under which an insured debtor becomes reeligible for credit unemployment benefits after a period of receiving benefits. If reeligibility conditions are required for full benefits for a subsequent period of unemployment, the conditions may not be more stringent than the initial eligibility conditions and in no event shall require that the insured be actively at work for more than six consecutive months. If an insured debtor has not satisfied the reeligibility requirement at the time of a subsequent unemployment, the unemployment shall be considered a continuation of the prior unemployment with no waiting period, and with a maximum benefit period equal to the unused portion of the maximum benefit period for the prior unemployment.

Subp. 5. Joint coverage rates.

Joint coverage rates for credit involuntary unemployment insurance shall be 185 percent of the specified single rate of coverage.

Subp. 6. Presumption of reasonableness.

Policy forms providing benefits as set forth in this part at the prima facie rates then in effect will be conclusively presumed to be reasonable in relation to the premium charged.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.0500 Refunds of Premium

A. The refund of an unearned amount paid by or charged to the debtor for credit involuntary unemployment insurance on which the charges to the debtor are payable by other than a single advance premium shall not be less than the pro rata gross unearned amount charged.

B. The refund of an unearned amount paid by or charged to the debtor for credit involuntary unemployment insurance on which the insurance charges to the debtor are paid in a single advance premium shall not be less than the amount computed by the mean of the "sum of the digits" (rule of 78ths) method and the pro rata method.

C. A premium refund or credit need not be made if the amount is less than $5.

D. A refund of premium upon termination for any reason must be made for any portion of premium covering a period beyond any one of the following:

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.0600 Prohibited Practices

Subpart 1. Generally.

No insurer, or a parent, subsidiary, officer, agent, solicitor, or representative of the insurer, shall engage in any of the following practices:

A. deposit of premiums to the account of the insurer in the financial institution for which the insurer provides the credit insurance, when the account is either non-interest-bearing or at a rate of interest less than usual or the account is controlled by the institution;

B. allowing the remittance of premiums to the insurer after the expiry of date due on a regular basis so that the arrearage period is constant;

C. the retention of premiums by an agent or broker to whom the creditor remits premiums for a period of time that is not reasonably related to the time normally expected to be needed for the agent or broker to remit the premiums to the insurer, if such delay is a continuing feature of the premium paying process;

D. any other practice which unduly delays receipt of premiums by the insurer on a regular basis; or

E. any other practices which involve use of the resources of the insurer for the benefit of the creditor.

Subp. 2. Limitation on compensation.

An insurer, subsidiary, or parent of the insurer shall not pay compensation to a creditor or a group policyholder offering credit involuntary unemployment insurance in excess of 30 percent of the net written premium.

Subp. 3. Application.

The criteria in subpart 2 apply regardless of whether premiums are due the insurer on a single premium advance system or any outstanding balance system.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.0700 Premium Rates

No policies of credit involuntary unemployment insurance issued after January 9, 1996, shall be at a rate in excess of that set forth in this part except that benefit plans different from these basic benefit plans are subject to prior approval pursuant to part 2761.1100.

Schedule A - Single Premium Advance System

Monthly Rates per $10 of Monthly Benefit Provided

Single premium rates are determined by multiplying the above rates by the term of the loan in months.

Schedule B - Outstanding Balance System

Monthly Rates per $10 of Monthly Benefit Provided

Rates stated as $0.xx per $100 outstanding balance per month should be consistent with the above rates. For example, if a credit card required a minimum payment of five percent of the balance, a rate of 40 cents per $10 of monthly benefit could also be stated as 20 cents per $100 of outstanding balance because $10 is five percent of $200. As another example, if the minimum required payment is three percent of the outstanding balance, the 40 cents per $10 of monthly benefit rate translates to 12 cents per $100 of outstanding balance. For purposes of this part, the following formula may be used:

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.0800 Standard Premium Rate Changes; Unemployment Rate Variable

Premium rates in part 2761.0700, Schedules A and B, may be adjusted from time to time based on the application of the factors to be applied from variations in the state unemployment rate. Prima facie rates in part 2761.0700, Schedules A and B are based on a state unemployment rate in the 3.5 percent to 4.4 percent band. To the extent that the state unemployment rate falls in bands outside the 3.5 percent to 4.4 percent band, the following table shall be used to adjust part 2761.0700, Schedules A and B rates accordingly:

The source for the official state unemployment rate is the seasonally adjusted rate as published monthly in the United States Department of Labor, Bureau of Labor Statistics, Employment and Earnings, Table C-2, "Labor Force Status by State Seasonally Adjusted."

Rates must be modified by companies within 90 days after the publication date of Table C-2 containing the third consecutive month of changed unemployment in a different one of the above unemployment bands, although companies can choose not to increase rates even when permissible.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.0900 Coordination and Publication of Current Standard Benefit Plan Prima Facie Rates

The rates in part 2761.0700, Schedules A and B, will be determined from time to time by the commissioner under the conditions in and published before the end of the 90-day period in part 2761.0800. The publication will be in the State Register and by Commerce Department Bulletin provided to the companies with policies on file and approved for Credit Involuntary Unemployment Insurance.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.1000 Rate Making Methodology and Determination of Premium Rates

Standard rates in part 2761.0700, Schedules A and B, are given in or derived from the information provided in the statement of need and reasonableness available in connection with this chapter.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.1100 Use of Benefit Plans Different from Standard Benefit Plans

An insurer may file for approval of and use benefit plans that differ from the basic benefit plans in part 2761.0700. Rates for these plans that differ must be actuarially consistent with the prima facie rates then in force and must be filed with a supporting actuarial memorandum as required by part 2761.0300. Different benefit plans and the rates filed with those plans shall not be used until those forms and rates are approved by the commissioner. A benefit plan that permits part-time employees who work up to 30 hours per week to be considered "unemployed" but still charges premiums at prima facie rates shall not be considered to differ from the basic benefit plans in part 2761.0700.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Minn. R. 2761.1200 Application

Certificates, notices of proposed insurance, and premium rates in connection with existing group policies shall conform to the requirements of this chapter no later than the anniversary date of the group policy next following January 9, 1996.

History

Statutory Authority: MS s 45.023; 62B.12
History: 20 SR 1925

Chapter 2765 EMPLOYER JOINT SELF-INSURANCE

Minn. R. 2765.0100 Definitions

Subpart 1. Scope.

For the purposes of this chapter, the terms defined in this part have the meanings given them.

Subp. 2. Board.

"Board" means a plan's board of trustees.

Subp. 3. Bylaws.

"Bylaws" means the statements adopted by a plan that prescribe its purpose, government, and administration.

Subp. 4. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce.

Subp. 5. Coverage.

"Coverage" means the right of a covered person to benefits provided directly or indirectly by a plan, by virtue of the coverage document.

Subp. 6. Coverage document.

"Coverage document" means the document specifying the characteristics and duration of coverage provided through a plan.

Subp. 7. Covered employee.

"Covered employee" means a plan member's employee who is covered through the plan, and a plan member's former employee receiving continued coverage under Minnesota Statutes, section 62A.17, subdivisions 1 to 5. "Covered employee" does not include dependents or other persons included under the coverage extended to a plan member's current or former employee.

Subp. 8. Days.

"Days" means calendar days.

Subp. 9. Financial administrator.

"Financial administrator" means an entity employing persons trained and experienced in money management and investments, and possessing no less than five years experience as an organization with demonstrated competence in money management and investments.

Subp. 10. Fund year.

"Fund year" means a plan's fiscal year, and must be the calendar year.

Subp. 11. Incurred basis stop-loss insurance.

"Incurred basis stop-loss insurance" means the aggregate excess stop-loss insurance required by part 2765.1300, if on an incurred basis. The insurance is on an incurred basis if payments are charged against a fund year's deductible according to when liability for the payment was incurred.

Subp. 12. Insurer.

"Insurer" means an insurance company licensed under Minnesota Statutes, section 60A.07, subdivision 4, and authorized by Minnesota Statutes, section 60A.06 to write sickness and disability insurance, or a service plan corporation licensed under Minnesota Statutes, section 62C.08.

Subp. 13. Member.

"Member" means an employer that belongs to or participates in a plan. Reference to actions of a member includes actions on behalf of the member's covered employees and other covered persons.

Subp. 14. Paid basis stop-loss insurance.

"Paid basis stop-loss insurance" means the aggregate excess stop-loss insurance required by part 2765.1300, if on a paid basis. The insurance is on a paid basis if payments are charged against a fund year's deductible according to when the payment was made.

Subp. 15. Plan.

"Plan" means a joint self-insurance employee benefit plan approved under parts 2765.0100 to 2765.0250. Reference to actions of a plan includes actions by the plan's designated agents.

Subp. 16. Premium.

"Premium" means the amount paid or to be paid for coverage by members. Premium does not include assessments or penalties.

Subp. 17. Runoff plan.

"Runoff plan" means a plan that no longer has authority to self-insure, but that continues to exist for the purpose of paying claims, preparing reports, and administering transactions associated with the period when the plan provided coverage.

Subp. 18. Self-insure.

"Self-insure" means to assume primary liability or responsibility for certain risks or benefits, rather than transferring liability or responsibility to some other entity.

Subp. 19. Separate employer.

"Separate employer," for the purposes of meeting the minimum three-employer requirement, means an employer that is not the parent, subsidiary, or affiliate with a common parent of any other employer in the plan.

Subp. 20. Service company.

"Service company" means an entity licensed under Minnesota Statutes, section 60A.23, subdivision 8 and rules adopted thereunder as a self-insurance plan administrator, or an entity named in Minnesota Statutes, section 60A.23, subdivision 8, paragraph (1), clause (a) or (b).

Subp. 21. Short-term disability benefit.

"Short-term disability benefit" means income replacement payments of not more than one year's duration.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.0200 Purpose

This chapter governs the formation, operation, and dissolution of multiple employer plans for joint self-insurance of employee health, dental, or short-term disability benefits. They are intended to ensure that the financial integrity of these plans is maintained, and that they are administered competently and equitably.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.0300 Scope

The following are subject to the requirements of this chapter:

A. employers authorized to transact business in Minnesota that seek to jointly self-insure employee health, dental, or short-term disability benefits;

B. service companies that provide services to a plan; and

C. insurance companies licensed under Minnesota Statutes, section 60A.07, subdivision 4, or service plan corporations licensed under Minnesota Statutes, section 62C.08, that provide required stop-loss insurance to a plan.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.0400 Bylaws

Subpart 1. Content.

Bylaws may contain any provisions that do not conflict with this chapter. Bylaws must, at a minimum, contain the following provisions:

A. the plan's name, purpose, and initial date of existence;

B. definitions of key terms;

C. a statement of the powers, duties, and responsibilities assigned to the board, the service company, and the financial administrator, and reserved to the membership;

D. the number, term of office, method of selection, and method of replacement of the members of the board;

E. the procedure for calling board meetings;

F. the method of periodic selection and review of the service company and financial administrator;

G. the procedure for amending the bylaws;

H. the procedure for resolving disputes among members, which must not include submitting disputes to the commissioner;

I. the criteria for membership in the plan, including standards of financial integrity and loss experience;

J. the procedure for admitting new members to the plan;

K. the criteria for expelling members from the plan, including nonpayment of premium;

L. the procedure for withdrawal and expulsion of members from the plan, including the minimum required period of membership;

M. a statement of the coverages the plan intends to provide;

N. the procedure for adding and dropping a member's participation in a particular coverage;

O. a schedule for premium payments by members and, if applicable, their employees;

P. the procedure for changing premium rates;

Q. the procedure for levying and collecting an assessment;

R. a statement of who may have access to plan funds and for what purposes;

S. the procedure for distributing dividends, and the eligibility of past members and past covered employees for dividends; and

T. the procedure for distributing assets remaining upon the plan's dissolution.

Subp. 2. Adoption and changes.

The bylaws must be adopted in writing by all initial members. Authority to change the bylaws must reside with the membership or the board, according to the terms of the bylaws. Authority to change the bylaws may not be delegated to a contractor or other outside party. The plan must file bylaw changes with the commissioner not less than 30 days after adoption.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.0500 Board

Subpart 1. Structure.

A plan must have a board of trustees consisting of officials or employees of the members. No member may have more than one representative on the board. No trustee may be an employee, agent, or representative of the plan's service company, financial administrator, insurer, or other person or entity under contract with the plan. Trustees shall be elected by vote of the membership. There shall be an odd number of trustees, with staggered terms to provide continuity. One trustee shall be designated the chairperson. The board shall meet no less than four times annually.

Subp. 2. Duties.

The board is responsible for operation of the plan. The board may delegate some or all of its responsibilities to the chairperson or other trustees between board meetings. All responsibilities of the plan not expressly delegated by the board or this chapter are the responsibility of the board. The board shall, at a minimum, have the following responsibilities:

A. fiduciary responsibility for the plan's operation and financial condition;

B. selection, supervision, and evaluation of the service company, financial administrator, accountant, insurer, and any other contractors;

C. on the basis of the plan's overall financial condition, authorizing changes in premium, reserve, or investment practices; and declaring assessments or dividends as appropriate;

D. approving all reports concerning the plan's operations and status to the commissioner and the members;

E. monitoring delinquent premiums, loss experience, and the financial condition of individual members; and authorizing disciplinary action or expulsion as appropriate;

F. authorizing acceptance or rejection of applications for membership;

G. as permitted by the bylaws, making or recommending changes to the bylaws for the improvement of the plan's operation and financial integrity; and

H. monitoring the plan's compliance with all statutes and rules governing its operation.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.0600 Application

Subpart 1. Initial application.

Three or more separate employers may apply to the commissioner for authority to form a joint self-insurance plan, using forms available from the commissioner. Applications must be submitted not later than 60 days prior to the requested date for authority to self-insure. All reinsurance contracts must be submitted not later than 30 days prior to the requested date. Applications submitted without responses to certain questions, or with responses that are inadequate must be returned to the applicant for resubmission. Applications not returned to the applicant for resubmission within 14 days of receipt must be approved or disapproved within 60 days of receipt.

Subp. 2. Renewal application.

Existing plans may apply for renewal of their self-insurance authority by so indicating on their annual status report preceding expiration of their current authority. Applications must be approved or disapproved within 60 days of receipt of the status report.

Subp. 3. Exemptions.

Joint self-insurance plans that offer a program of coverage qualified under the Employees Retirements Income Security Act (ERISA), United States Code, title 29, sections 1001 et seq., are exempted from this chapter upon filing with the commissioner notice of this qualification from the United States Department of Labor.

Subp. 4. Merger.

Two or more existing plans may apply to merge if the new plan assumes all obligations of the former plans. Merger applications are subject to the same requirements as prospective new plans.

Subp. 5. Approval and disapproval.

Upon approval of an application, the commissioner shall issue an order authorizing the proposed joint self-insurance plan. Initial authorization orders for new plans are effective until the third May 1st after the initial authorization date. Renewal authorization orders are for two-year periods commencing May 1st. Approval of applications for authority to self-insure must be granted if the proposed plan conforms with:

A. all requirements of this chapter;

B. all applicable requirements of Minnesota Statutes, chapters 62A and 62E, and related rules, as described in part 2765.1000, subpart 1;

C. Minnesota Statutes, sections 72A.19 to 72A.32; and

D. other applicable Minnesota statutes and rules.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.0700 Ending Self-Insurance, Runoff Period, and Plan Dissolution

Subpart 1. Ending self-insurance authority.

A plan may decide to end its self-insurance authority and cease to provide coverage, effective at the end of a fund year. The plan must notify the commissioner within 14 days of such a decision. A plan may not elect to end its self-insurance authority less than 45 days prior to the end of the fund year in question. Voluntary ending of self-insurance authority does not constitute plan dissolution under subpart 4.

Subp. 2. Revocation of self-insurance authority.

The commissioner shall, by order, revoke the authority of a plan to self-insure upon ten days written notice if any of the following events occur or conditions develop, and if the commissioner judges them to be material:

A. failure of the plan to comply with this chapter; with all applicable requirements of Minnesota Statutes, chapters 62A, 62D, 62E, and related rules, as described in part 2765.1000, subpart 1; or with other applicable Minnesota statutes or rules;

B. failure of the plan to comply with any lawful order of the commissioner;

C. commission by the plan of an unfair or deceptive practice as defined in Minnesota Statutes, sections 72A.17 to 72A.32, or in related rules; or

D. a deterioration of the plan's financial integrity to the extent that its present or future ability to meet obligations promptly and in full is or will be significantly impaired.

Subp. 3. Runoff period.

A plan shall continue to exist as a runoff plan after its authority to self-insure has ended, for the purpose of paying claims, preparing reports, and administering transactions associated with the period when the plan provided coverage. A runoff plan must continue to comply with all appropriate provisions of this chapter, and with all other applicable Minnesota statutes and rules. Authority to exist as a runoff plan is open-ended, and does not require renewal of authority under part 2765.0600, subpart 2.

Subp. 4. Dissolution.

A plan, including a runoff plan, that desires to cease existence shall apply to the commissioner for authorization to dissolve. Applications must be approved or disapproved within 60 days of receipt. Dissolution without authorization is prohibited and void, and does not absolve a plan or runoff plan from fulfilling its continuing obligations, and does not absolve its members from assessment under part 2765.1400, subpart 6. The plan's assets at the time of dissolution must be distributed to the members and covered employees as provided in the bylaws. Authorization to dissolve must be granted if either of the following conditions are met:

A. the plan demonstrates that it has no outstanding liabilities, including incurred but not reported liabilities; or

B. the plan has obtained an irrevocable commitment from a licensed insurer that provides for payment of all outstanding liabilities, and for providing all related services, including payment of claims, preparation of reports, and administration of transactions associated with the period when the plan provided coverage.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.0800 Administration

Subpart 1. Service company.

A plan must contract with a service company for services necessary to the plan's day-to-day operations, except services and responsibilities reserved to the members, the board, individual trustees, the financial administrator, or other contractors. The service company must have expertise in and be licensed for administering health benefits. Subject to the oversight of the board, the service company shall, directly or through subcontractors, provide all services directly related to the administration of coverage. These services include but are not limited to:

A. accounting and record keeping;

B. billing and collection of premiums and assessments;

C. claims investigation, settlement, and reserving;

D. claims payment, including claims wholly or partially subject to stop-loss insurance or member deductibles;

E. general administration;

F. loss control, safety programs, or both; and

G. underwriting.

Subp. 2. Financial administrator.

A plan must contract with a financial administrator for investment of the plan's assets and other financial or accounting services. No staff members of the financial administrator may be an owner, officer, employee, or agent of the service company, or of a subcontractor of the service company.

Subp. 3. Record keeping.

A plan must maintain within the state of Minnesota all records necessary to verify the accuracy and completeness of all reports submitted to the commissioner under part 2765.1500. The commissioner may examine the plan's records in order to ascertain the plan's compliance with this chapter, and with other applicable statutes and rules. All records concerning claims, reserves, financial transactions, and other matters necessary to the plan's operations are the plan's property.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.0900 Membership

Subpart 1. Availability.

Plan membership is available to employers domiciled and authorized to transact business in Minnesota. Plans may also cover nonresident employers if the portion of the plan covering Minnesota resident employees is treated as a separate plan. A plan may establish other nondiscriminatory criteria for membership. Nothing in this chapter requires a plan to offer membership to an employer that does not meet the plan's underwriting standards.

Subp. 2. Joining.

New members must be admitted according to the standards and procedures specified in the bylaws. Membership is not effective before the applicant has signed a membership agreement affirming its commitment to comply with the bylaws and this chapter. The membership agreement must disclose that under the rules governing this plan, the Minnesota commissioner of commerce may order that an assessment be levied against member employers, if necessary to maintain the plan's sound financial condition.

Subp. 3. Leaving.

The membership agreement must state the procedures for leaving the plan. A member must notify the plan of its desire to withdraw not less than 30 days before the date upon which it desires to withdraw. If the board determines that the withdrawal would cause the plan to be in violation of the minimum number of employers and covered employees requirement of Minnesota Statutes, section 62H.01, or any other requirement of this chapter the plan shall notify the commissioner as required under subpart 5. Withdrawal from a plan is prohibited and void unless:

A. the member will have belonged to the plan continuously:

B. all outstanding premiums and assessments owed by the member have been paid.

Subp. 4. Expulsion.

At least annually the plan shall review the status and experience of each member by comparison with the criteria for expulsion in the bylaws. Expulsion is subject to the procedures and requirements for voluntary withdrawal of a member, except that:

A. a member may be expelled with outstanding premiums or assessments owing; and

B. a member may be expelled notwithstanding that the minimum term of membership has not been satisfied.

Subp. 5. Minimum covered employees and employers.

A plan shall monitor the number of employees it covers. If the number of covered employees is less than 300, the plan shall notify the commissioner at monthly intervals of the number of covered employees, until the number exceeds 300 for two consecutive months. If the number of covered employees becomes less than 250, or the number of members becomes less than three, the plan shall notify the commissioner:

A. of its intent to end its self-insurance authority; or

B. of its proposal for restoring compliance with Minnesota Statutes, section 62H.01. If the proposal is unlikely, in the commissioner's judgment, to restore compliance within 90 days, or if after 90 days the plan continues to have less than 250 covered employees or less than three members, the commissioner shall revoke the plan's self-insurance authority.

Subp. 6. Runoff plan membership.

After revocation of a plan's self-insurance authority, or after a plan notifies the commissioner in writing of its intent to end self-insurance authority voluntarily, no member may join, leave, or be expelled from the plan.

History

Statutory Authority: MS s 45.023; 62H.06
History: 9 SR 989; 12 SR 845

Minn. R. 2765.1000 Coverage

Subpart 1. Coverage administration and related requirements.

Plans are subject to the requirements of Minnesota statutes and rules applicable to insurance companies providing insurance in Minnesota similar to the plan's coverage. These include requirements concerning coverage content, coverage administration, rates, underwriting, and related matters, including but not limited to:

A. the requirements of Minnesota Statutes, section 60A.082, and related rules, as applicable to group medical expense insurance and group disability income insurance;

B. the requirements of Minnesota Statutes, chapter 62A, and related rules, as applicable to group accident and health insurance as defined in Minnesota Statutes, section 62A.10, including but not limited to:

C. the requirements of Minnesota Statutes, sections 62A.23 and 62A.24, and related rules, as applicable to group disability income insurance;

D. the requirements of Minnesota Statutes, sections 62A.31 to 62A.42, and related rules, as applicable to insurance covering persons covered by Medicare; and

E. the requirements of Minnesota Statutes, chapter 62E, and related rules, as applicable to plans of health coverage as defined in Minnesota Statutes, section 62E.02, subdivision 9.

Subp. 2. Coverage to individuals.

Joint self-insurance plans shall not offer coverage to individuals other than members' employees and their dependents, except as required following termination of employment under Minnesota Statutes, section 62A.17, subdivisions 1 to 5. Plans must comply with the conversion coverage requirements of Minnesota Statutes, sections 62A.17, subdivision 6, and 62E.16, by arrangements with licensed insurers or health maintenance organizations.

Subp. 3. Health maintenance organization coverage.

A plan may arrange for covered persons to have an option of health maintenance organization coverage, including employees of employers required to provide such an option by Minnesota Statutes, section 62E.16. Such an arrangement must be through a licensed health maintenance organization.

Subp. 4. Uniform underwriting.

All coverages offered by a plan must be available according to the same underwriting standards to all employees of all members.

Subp. 5. Term of coverage.

A plan shall not commit itself to providing coverage for any period which extends beyond the term of any stop-loss insurance policies required under part 2765.1300.

Subp. 6. Continuing responsibility.

Notwithstanding cancellation or termination of coverage to a particular member, ceasing to offer a particular coverage, or ending or revocation of authority to self-insure, a plan retains indefinitely all responsibilities to covered employees and other covered persons associated with the period while coverage was in force. This responsibility ceases only after a plan dissolves under part 2765.0700, subpart 4.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989; L 1987 c 384 art 2 s 1

Minn. R. 2765.1100 Premiums and Dividends

Subpart 1. Premium payments.

The fund year must be the basis for calculating members' premiums. A plan may permit installment payments if payment is always due before premium is to be earned. Any delinquencies in payments by employees must be paid on their behalf by the employer, with the employer having the right to seek reimbursement from the employee. A plan shall promptly take appropriate action to collect any members' premiums or assessments that are past due. Collection costs are the obligation of the delinquent member. Payments determined to be uncollectible must be presented to the stop-loss insurer for reimbursement, as required by part 2765.1300, subpart 4.

Subp. 2. Dividends.

A plan may declare and pay a dividend or distribution from its surplus only if:

A. the dividend would not cause the plan's surplus to be negative;

B. the plan does not have a stop-loss aggregate advancement liability; and

C. the dividend is apportioned on the basis of the relative amounts of premium paid by members and covered employees, and provides for proportional payments to members and covered employees.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.1200 Reserves

Subpart 1. Loss and premium reserves.

A plan must establish reserves for all incurred losses, both reported and unreported, and for unearned premiums. To the extent that the amount of a loss is uncertain, reserves must be set conservatively. As the degree of uncertainty concerning a loss is changed by new events or information, the amount of the reserve must be changed appropriately. Accounting for reserves must be as required by the financial statement forms and instructions, under part 2765.1500, subpart 1.

Subp. 2. Full funding reserves.

To comply with the full funding requirement of Minnesota Statutes, section 62H.02, a plan must establish full funding reserves corresponding to its aggregate excess stop-loss insurance for each fund year.

A. The amount of the reserves must be calculated as required by the financial statement forms and instructions, under part 2765.1500, subpart 1. The forms and instructions must provide that the base amount of the full funding reserves is equal to the plan's maximum possible liability under the aggregate excess stop-loss insurance, with credits for:

B. Separate full funding reserves must be maintained for each fund year, beginning at the fund year's inception. Plans with paid basis stop-loss insurance must maintain each year's full funding reserve until 90 days after the fund year's end. Plans with incurred basis stop-loss insurance must maintain each year's full funding reserve until one year after the fund year's end.

C. Plans with paid basis stop-loss insurance must also maintain a separate runoff full funding reserve. The runoff reserve's purpose is to fully fund the plan's liability in the event of stop-loss insurance nonrenewal. The runoff full funding reserve must be maintained until plan dissolution.

Subp. 3. Surplus or aggregate advancement.

A plan must protect itself from cash flow difficulties by either of the following two methods.

A. Establishing and maintaining a surplus equal to the greater of:

B. Obtaining language in the plan's aggregate excess stop-loss insurance policy requiring the insurer to advance funds to the plan under the conditions prescribed by this item. Any funds so advanced must be included in the fund-year settle up calculation under the stop-loss insurance terms, if not previously repaid. No limit may be set on the amount of funds that the plan may require to be advanced. The policy language must include these sentences: "If, in good faith, the plan judges that it is suffering, or will soon suffer cash flow difficulties, to the extent that its ability to meet its obligations promptly and in full is or will be significantly impaired, the plan may borrow from the insurer funds sufficient in the plan's good faith judgment to correct the difficulties. Such funds shall be considered an advance against the insurer's potential aggregate excess insurance liability for the current fund year. If, as of the final reporting for that fund year, the insurer's liability is determined to be less than the amount of the aggregate advancement, the difference shall then be considered a debt of the plan to the insurer, and reasonable interest may be charged commencing at that time. Until the final reporting, no interest may be charged. The plan shall, in good faith, repay the advance or debt as rapidly as its financial resources permit, without incurring further cash flow difficulties." The policy must not alter or qualify these terms to harm the plan's rights materially.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989

Minn. R. 2765.1300 Stop-Loss Insurance

Subpart 1. Purchase and alteration.

The plan must inform the commissioner at least 180 days prior to expiration of any required stop-loss insurance policy whether it intends to renew the policy, and whether the insurer is willing to renew the policy. Alteration of a required stop-loss insurance policy midterm with the effect of reducing coverage, and cancellation by the plan midterm, are prohibited. If more than one stop-loss insurance policy is obtained in fulfillment of this part's requirements, their expiration dates must be the same.

Subp. 2. Individual excess.

A plan must have and maintain individual excess stop-loss insurance, that provides for the insurer to assume all liability in excess of the per person limit per year under all coverages the plan offers. The reporting period under this coverage must be no less than one year after the fund year's conclusion. A plan must apply to the commissioner for a determination of the individual excess stop-loss insurance limit. The commissioner must approve the application if the limit would not be detrimental to the solvency and stability of the plan, considering the plan's experience, size, surplus, and other factors affecting financial integrity.

Subp. 3. Aggregate excess.

A plan must have and maintain aggregate excess stop-loss insurance that provides for the insurer to assume all liability in excess of a specified amount of losses for each fund year. The aggregate excess coverage may be in the form of incurred basis stop-loss insurance or paid basis stop-loss insurance. Plans using paid basis stop-loss insurance must have and maintain extended or runoff aggregate excess stop-loss insurance on an incurred basis. The extended or runoff coverage must provide for the insurer to assume all liability in excess of a specified amount of losses incurred while the paid basis stop-loss insurance was in force, but paid after its termination or nonrenewal. The reporting period under paid basis insurance must be no less than three months after the fund year's conclusion. The reporting period under incurred basis insurance, including extended or runoff insurance, must be no less than one year after the fund year's conclusion.

Subp. 4.

[Repealed, 12 SR 845]

Subp. 5. Surety coverage.

A plan must have and maintain the following language in its required aggregate excess stop-loss insurance policy, unless the commissioner determines that a policy with that language is not available in the market for stop-loss coverage, in which case, the commissioner may determine the requirements needed to obtain stop-loss coverage and meet solvency requirements: "The insurer shall, at the commissioner's request, assume direct responsibility for the plan's coverage and all other responsibilities under this chapter and related statutes, if the plan becomes insolvent, ceases operations without authorization, or otherwise fails to fulfill its responsibilities under this chapter and related statutes. The insurer may attempt to collect reimbursement from the plan or a member on whose behalf the insurer is called upon to pay premium, pay claims, or incur other extraordinary expenses. However, the insurer must fulfill its responsibilities under this section while any collection attempts are pending. The insurer's responsibilities extend to all matters arising during or attributable to the policy period, and do not terminate with the end of the policy period." The policy must not alter or qualify these terms to harm the plan's rights materially.

Subp. 6. Return of liability.

No liability or other responsibilities transferred to an insurer under this part may, directly or indirectly, be returned to a plan, a member, or a member's parent, subsidiary, or affiliate. This does not prohibit the insurer from seeking reimbursement from the plan or a member, as permitted under subparts 4 and 5.

History

Statutory Authority: MS s 45.023; 62H.06
History: 9 SR 989; 12 SR 845; L 2002 c 387 s 20,21

Minn. R. 2765.1400 Financial Integrity

Subpart 1. Fidelity bond.

All contractors and individuals who handle plan funds or who will have authority to gain access to plan funds, including trustees, must be covered by a fidelity bond. The bond must cover losses from dishonesty, robbery, forgery or alteration, misplacement, and mysterious and unexplainable disappearance. The amount of coverage for each occurrence must be $300,000 or more. The plan must purchase a fidelity bond covering the required contractors and individuals, or submit separate proof of coverage for all required contractors and individuals not covered under the plan's bond.

Subp. 2. Integrity of assets.

A plan's assets:

A. must not be commingled with the assets of any member;

B. must not be loaned to anyone for any purpose, or used as security for a loan, except as permitted under subpart 5 for investments;

C. must be employed solely for the purposes stated in the bylaws, and in compliance with this chapter and related statutes; and

D. must not be considered the property or right of any member, covered employee, or other covered person, except:

Subp. 3. Sources and uses of funds.

A plan may expend funds for payment of losses and expenses, and for other costs customarily borne by insurers under conventional insurance policies in Minnesota. Except as provided in part 2765.1200, subpart 3, item B, a plan must not borrow money or issue debt instruments. A plan may bring legal suits to collect delinquent debts. A plan must not obtain funds through subrogation of the rights of covered employees or other covered persons. A plan may receive funds only from:

A. its members as premiums, assessments, or penalties;

B. its insurers or indemnitors pursuant to insurance or indemnification agreements;

C. dividends, interest, or the proceeds of sale of investments;

D. refunds of excess payments;

E. coordination of benefits with automobile coverage, workers' compensation coverage, and other employee health benefit coverage; or

F. collection of money owed to the plan.

Subp. 4. Separate accounts.

A plan may establish separate accounts for the payment of claims or certain types of expenses. These accounts must be used only by the service company, its authorized subcontractors, or the financial administrator, as appropriate to the account's purpose. The amount in these special accounts must not exceed an amount reasonably sufficient to pay the claims or expenses for which it is established. All monetary and investment assets not in these accounts must be under the control of the financial administrator.

Subp. 5. Investments.

A plan's investments are subject to the requirements of Minnesota Statutes, section 118A.04, as regards both permitted types of investments, maturities, and depositories. In addition, a plan must not invest in securities or debt of a member, or a member's parent, subsidiary, or affiliate; or any person or entity under contract with the plan.

Subp. 6. Monitoring financial condition.

The board must regularly monitor the plan's revenues, expenses, and loss development, and evaluate its current and expected financial condition. The board must attempt in good faith to maintain or restore the plan's sound financial condition, using any means at its disposal. These means include but are not limited to adjusting premium rates, underwriting standards, dividend rates, expulsion standards, and other powers granted in this chapter and the bylaws. If the commissioner judges that the board's actions are inadequate to maintain or restore the plan's sound financial condition, the commissioner shall, as appropriate: order an increase in the premium rates; revoke the plan's self-insurance authority; or order that an assessment be levied against the members.

Members must not require covered employees to pay a portion of an assessment, nor must covered employees be required to pay any amount for premium increases on coverage in force. The amount of assessments must not be more than the amount of members' most recent annual premium, including the portion paid by covered employees.

History

Statutory Authority: MS s 62H.06
History: 9 SR 989; L 1996 c 399 art 2 s 12

Minn. R. 2765.1500 Reporting

Subpart 1. Financial statements.

A plan must prepare annual financial statements containing a balance sheet; a full funding reserves calculation worksheet; a statement of revenues, expenses, and surplus; a statement of changes in financial position; and a schedule of investments. The statements must be prepared on forms and according to instructions prescribed by the commissioner. The financial statements must be filed with the commissioner no later than 30 days after the fund year's conclusion. The financial statements must be audited by an independent certified public accountant, and an audit report must be filed with the commissioner no later than 180 days after the fund year's conclusion. A plan's first annual financial statement, and every second annual financial statement thereafter must be accompanied by a statement from a qualified actuary concerning the balance sheet items that are based on actuarial assumptions and methods. The form of the actuary's statement and the scope of the actuarial review must be according to instructions prescribed by the commissioner.

Subp. 2. Quarterly reports.

A plan must file quarterly reports with the commissioner no later than 30 days after the end of the first, second, and third quarters of each fund year. Quarterly reports must contain statements of the plan's:

A. current total cash on hand and on deposit, and total investments;

B. current total reserve for unearned and advance premiums, total reserve for outstanding losses reported and unreported, total operating full funding reserve, and total runoff full funding reserve;

C. dividends declared during the quarter;

D. gross premiums written during the quarter;

E. losses paid during the quarter;

F. proximity to the aggregate excess stop-loss insurance attachment point for the current fund year and, if applicable, the past fund year;

G. current total members and covered employees; and

H. any other matters the commissioner requests that the board address.

Subp. 3. Extraordinary audits.

Upon sufficient cause, the commissioner shall require a plan to investigate the accuracy of one or more entries on its financial statements or quarterly reports, and to report its findings. If necessary for the investigation's purposes, the commissioner shall require a plan to contract with a qualified actuary, claims specialist, auditor, or other specialists as appropriate to the type of entry being investigated. If warranted by investigation's findings, the commissioner shall require changes in the plan's reserving, accounting, or record keeping practices. These extraordinary audits are in addition to the commissioner's rights to examine self-insurance plans under Minnesota Statutes, section 60A.03, subdivisions 3, 5, and 6, and section 60A.031. Sufficient cause includes:

A. losses that appear significantly different than losses experienced by other self-insurance plans or insurance companies for similar coverage;

B. unusual changes in the amount of entries from period to period that are not sufficiently explained by the financial statements, quarterly reports, or footnotes; or

C. other indications that a plan's financial statements or quarterly reports may not accurately reflect the plan's status and transactions.

Subp. 4. Annual status report.

No later than 30 days after the fund year's conclusion, a plan must file with the commissioner a statement describing any changes that have occurred in the information filed with its initial application for authority to self-insure, or with the plan's most recent status report. The status report must be filed in a form and according to instructions prescribed by the commissioner.

Subp. 5. Penalty.

The financial statements and status report required under subparts 1 and 4 are considered together to be a plan's annual statement. This filing and other filings required by this chapter and related statutes are subject to Minnesota Statutes, section 72A.061, as applicable to licensed insurance companies for comparable filings.

Subp. 6.

[Repealed, L 2000 c 394 art 2 s 28]

History

Statutory Authority: MS s 62H.06
History: 9 SR 989; L 2000 c 394 art 2 s 28

Chapter 2767 INSURANCE PLAN ADMINISTRATORS

Minn. R. 2767.0100 Definitions

Subpart 1. Scope.

The following definitions apply to parts 2767.0100 to 2767.0900 unless the context clearly indicates a different meaning.

Subp. 2. Administrator.

"Administrator" means vendors of risk management services and entities administering self-insurance plans or insurance plans as defined in Minnesota Statutes, section 60A.23, subdivision 8, clause (2), that provide coverage to residents of and risks located in Minnesota.

Subp. 3. Affiliated company.

"Affiliated company" means any company that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the applicant company.

Subp. 4. Key employees.

"Key employees" means those persons who, notwithstanding their titles, are of substantial importance to the operation of the plan administrator. Persons who have substantial discretionary, supervisory, or decision making authority which has a significant impact on the operation of the plan administration are key employees. Officers and managers are presumptively included within this definition.

Subp. 5. Financial statements.

"Financial statements" means an income statement and a balance sheet prepared in conformity with generally accepted accounting principles.

Subp. 6. Area or areas of risk management.

"Area" or "areas of risk management" means the following lines of insurance: life; accident and health; workers' compensation; other liability; and property or casualty.

Subp. 7. Services or risk management services.

"Services" or "risk management services" includes accounting and record retention, actuarial in conjunction with other services, claims administration, general administration, insurance, legal, loss control and safety, rehabilitation, risk management and analysis, and other services related to the establishment and maintenance of a program of self-insurance or a program of insurance.

History

Statutory Authority: MS s 45.023; 60A.23
History: 9 SR 2580; 12 SR 846

Minn. R. 2767.0200 Purpose and Scope

Parts 2767.0100 to 2767.0900 are designed to assure that administrators are capable of providing risk management services, financially solvent, and able to process claims in a prompt and equitable manner; and to allow the commissioner to authorize qualified entities to engage in the business in a manner which is fair, equitable, and consistent with all applicable Minnesota statutes.

History

Statutory Authority: MS s 45.023; 60A.23
History: 9 SR 2580; 12 SR 846

Minn. R. 2767.0300 [Repealed, 12 SR 846]

[Repealed, 12 SR 846]

Minn. R. 2767.0400 Requirements for Licensing

Subpart 1. Application procedure.

Any person or entity desiring to be licensed as an administrator pursuant to Minnesota Statutes, section 60A.23, subdivision 8, shall apply to the commissioner in writing and on forms available from the commissioner. The licensee shall designate areas of risk management services which the administrator may perform. Any license granted is effective for a period of two years unless surrendered by the licensee, or unless the license is revoked or suspended by order of the commissioner. The license is transferable only upon prior written approval by the commissioner as to new ownership or new management of the administrator.

Subp. 2. Application contents.

Each application for a license as an administrator must:

A. Be signed and sworn to by the applicant, or its owners, and be accompanied by the license fee required by Minnesota Statutes, section 60A.23. If the applicant is a corporate applicant, it must be verified by the president and secretary of the corporation. All fees must be paid by check, draft, or other negotiable instrument. Cash will not be accepted.

B. Describe the specific areas of risk management services intended to be provided.

C. Identify the owners of the company, including all partners of a partnership and all officers of a corporation.

D. Describe the organization and staff, with specific information concerning their expertise to provide service in the areas stated. This information must include detailed resumes of the applicant's key employees and all officers of any subcontractor. Resumes must state each person's name, age, resident address, licensing history, and qualifications and experience relating to the work they are to perform. The information must include:

E. Fully describe violations or investigations by any governmental agency which are known to the applicant concerning any person who is or may be affiliated with the applicant as an owner, shareholder, officer, employee, subcontractor, or employee of a subcontractor.

F. Submit proof of coverage under a fidelity bond for all persons involved in collecting money and making claims payments, and all officers of the company. The bond must cover losses from dishonesty, theft, forgery or alteration, and misplacement or mysterious and unexplainable disappearance. The bond must cover the actions of the persons subject to the bond as to their handling of clients' money as well as the administrator's money.

G. State the name and address of a resident agent who is authorized to act on behalf of the administrator and to accept service of process.

H. Include financial statements for the previous three years, or for as many years as the administrator has been in business up to three years. Financial statements for a period ending more than six months prior to the date of the application must be accompanied by an affidavit signed by a company officer under oath describing any material change in the net worth or the financial condition of the applicant since the date of the last financial statement.

I. Contain a statement that the applicant and its officers and supervising managers shall be responsible for the supervision of the actions of any and all personnel and subcontractors acting on behalf of the applicant.

History

Statutory Authority: MS s 45.023; 60A.23
History: 9 SR 2580; 12 SR 846

Minn. R. 2767.0500 [Repealed, 12 SR 846]

[Repealed, 12 SR 846]

Minn. R. 2767.0600 License Renewals

Subpart 1. Time of filing.

Application for renewal of a license must be filed with the commissioner at least 60 days prior to the expiration date of that license.

Subp. 2. Required information.

In support of the application for license renewal, an administrator shall submit:

A. Any changes in the description of the administrative services intended to be provided.

B. Any changes in ownership of the company, including detailed information about the new owners.

C. Any changes in key staff or an employee's responsibilities, including resumes of all new key staff members or additional information to show qualifications of current staff to take on new responsibilities.

D. An explanation of any changes of the responsibilities of any subcontractor, including changes in firms contracted with, services provided, or individuals providing services contracted for.

E. Financial statements for the previous two years, including a certified financial statement for the most recent fiscal year of the administrator or the parent guarantor, if applicable. Certified financial statements for a period ending more than six months prior to the date of the renewal application must be accompanied by an affidavit signed by a company officer under oath describing any material change in the net worth or financial condition of the applicant since the date of the certified financial statement. If the administrator has a gross income from sources within the state of Minnesota of less than $100,000 per year so that the completion of the certified financial statement proves to be an undue financial burden, the applicant may have this requirement waived if:

F. Proof of coverage under a fidelity bond for all persons involved in making claims payments, and all officers of the company.

G. Information relating to any changes in personnel acting as resident agent for the administrator.

History

Statutory Authority: MS s 45.023; 60A.23
History: 9 SR 2580; 12 SR 846; 19 SR 2004

Minn. R. 2767.0700 License Reporting Requirements

Subpart 1. Time limit.

Within 30 days after signing an administrator contract, a licensee shall inform the department in writing of the name or names of the client under contract and the areas for which the client is self-insured or insured.

Subp. 2. Examinations.

The commissioner may make examinations within or outside of the state of each licensee's records at a reasonable time and in the scope necessary to enforce the provisions of Minnesota Statutes and rules of the Department of Commerce.

Subp. 3. Report compliance.

Each licensee shall file or ensure that the clients it services file all required reports relating to those services which the administrator provides within the times established by statute, rule, or order of the commissioner. Required reports include:

A. an annual activity report, filed within 60 days of the end of the calendar year, stating:

B. loss information reports required by part 2780.0500;

C. any reports required by the Workers' Compensation Reinsurance Association, if applicable;

D. any report required by the Minnesota Department of Labor and Industry, if applicable; and

E. any other report required by the Department of Commerce.

Subp. 4. Notification of contract termination.

If the contract between a licensee and a client is terminated, the licensee shall notify the commissioner in writing within 30 days after termination. The licensee shall maintain copies of all records relating to the client for six years after the termination date of each contract, if the records are not returned to the client.

Subp. 5. Notification of cessation of business activities.

If a licensee ceases doing business as an administrator, the license must be surrendered and the commissioner must be informed in writing of the name and address of the custodian and the location of any files of clients formerly administered by the licensee.

Subp. 6. Notification of material changes.

The administrator shall notify the commissioner in writing of any change in supervisory personnel, management, or any other material change within 30 days after the change and shall include a detailed explanation of the change.

History

Statutory Authority: MS s 45.023; 60A.23
History: 9 SR 2580; 12 SR 846

Minn. R. 2767.0800 [Repealed, 12 SR 846]

[Repealed, 12 SR 846]

Minn. R. 2767.0900 Bond Amounts

Subpart 1. Administrator not commingling funds.

The amount of the fidelity bond required under part 2767.0400, subpart 2, item F for an administrator that does not commingle funds of either its fiduciary account or claims-paying account must be in the amount of the average daily balance of all trust accounts, or $100,000, whichever is greater, up to a maximum of $1,000,000.

Subp. 2. Administrator commingling funds.

The amount of the fidelity bond required under part 2767.0400, subpart 2, item F for an administrator that commingles funds of either its fiduciary account or claims-paying account must be in the amount of the average daily balance of all trust accounts, or $250,000, whichever is greater, up to a maximum of $2,000,000.

History

Statutory Authority: MS s 60A.23
History: 9 SR 2580

Minn. R. 2767.0950 [Repealed, 12 SR 846]

[Repealed, 12 SR 846]

Chapter 2770 AUTOMOBILE INSURANCE

Minn. R. 2770.0200 Certificates of Insurance and Contents

Insurance companies writing insurance in connection with automobile finance accounts shall instruct their agents that each purchaser of automobiles or accessories insured under finance accounts shall be furnished with certificates of insurance, which certificates shall show the name of the insured, a proper description of the car or accessories, the coverage afforded by the insurance, and the premium charged. The statement of premium should be divided as to type of coverage.

History

Statutory Authority: MS s 62B.12

Minn. R. 2770.1100 Definitions

Subpart 1. Scope.

For the purposes of parts 2770.1100 to 2770.1800 and 2770.1900, the terms defined in this part have the meanings given them.

Subp. 2. Auto plan.

"Auto plan" means the Minnesota Automobile Insurance Plan.

Subp. 3. Chargeable accident.

"Chargeable accident" is as defined in Minnesota Statutes, section 65B.133, subdivision 1, clause (b).

Subp. 4. Chargeable traffic violation.

"Chargeable traffic violation" is as defined in Minnesota Statutes, section 65B.133, subdivision 1, clause (c).

Subp. 5. Major chargeable traffic violation.

"Major chargeable traffic violation" means only those chargeable traffic violations listed in items A to E:

A. driving while in an intoxicated condition or under the influence of drugs, and also includes a driver's license record entry of "implied consent";

B. failure to stop and report when involved in an accident;

C. a felony involving the use of a motor vehicle;

D. driving a motor vehicle in a reckless manner which results in an injury to a person; and

E. driving a motor vehicle during the period of time the driver's license is suspended or revoked.

Subp. 6. Statement.

"Statement" means the surcharge disclosure statement as defined in Minnesota Statutes, section 65B.133, subdivision 1, clause (f).

Subp. 7. Surcharge.

"Surcharge" is as defined in Minnesota Statutes, section 65B.133, subdivision 1, clause (e).

Subp. 8. Surcharge plan.

"Surcharge plan" is as defined in Minnesota Statutes, section 65B.133, subdivision 1, clause (g).

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.1200 Authority

Parts 2770.1100 to 2770.1800 apply to all companies writing policies of private passenger automobile insurance. They are adopted pursuant to the authority of Minnesota Statutes, section 65B.133, subdivision 7.

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.1300 Purpose

Parts 2770.1100 to 2770.1800 are designed to assure that surcharge disclosure statements contain minimum basic information which allows insureds to make sound decisions when comparison shopping for automobile insurance.

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.1400 Readability

All statements must meet the following standards of readability and legibility:

A. Statements must be written in simple, commonly used language so as to be easily readable and understandable by a person of average intelligence, experience, and education.

B. Statements must be arranged in a logical and clear order.

C. Statements must be printed in typeface at least as large as ten point modern type, one point leaded.

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.1500 Highlighted Provisions

All surcharge plans containing one or more of the following provisions, must have the provisions highlighted in bold print or contrasting color print on the surcharge disclosure statement:

A. surcharges that are based on estimated damage instead of the payment made by the insurer after physical damage deductibles are applied;

B. surcharges that are applied to a vehicle other than the one involved in an accident;

C. surcharges that apply to chargeable traffic violations other than major chargeable traffic violations;

D. surcharge plans that involve both the loss of a discount and the application of a surcharge for the same chargeable accident or chargeable traffic violation; and

E. surcharges that are not the same for all classes (for example, youthful operator classes surcharged more than adult operator classes).

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.1600 Review

Statements must be submitted to the commissioner as an informational filing at least 30 days prior to use. Although not subject to affirmative approval by the commissioner, the statements must comply with Minnesota Statutes, section 65B.133 and parts 2770.1100 to 2770.1800.

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.1700 Auto Plan Procedures

The auto plan shall submit a statement to the commissioner which is subject to prior approval. The participating members of the auto plan are responsible for providing a copy of the statement to auto plan insureds, and to their agents for use when an auto plan application is written.

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.1800 Examples of Surcharge Plan

Each company must display on the statement two examples of how their surcharge plan works. One example must show a one-vehicle insured with a $200 premium. The second example must show a two-vehicle insured, with a $200 premium on one vehicle and a $300 premium on the second vehicle. The required format of these examples is contained in part 2770.1900.

If the amount of the surcharge varies between territories, use the highest rated territory and furnish that information on the example.

If the premium includes expenses which are not surcharged, follow this procedure: If there is an $80 bodily injury, property damage premium, expenses of $7, and a 20 percent surcharge, the premium for one chargeable accident would be $94.60. ($80 - $7 = $73; $73 x .20 = $14.60; $14.60 + $80 = $94.60.) This procedure must be explained on the example.

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.1900 Surcharge Plan Formats

The formats contained in this part must be used, but additional information may be included.

A. One vehicle insured.

B. Two vehicles insured. Accidents chargeable to the principal operator of vehicle number one, while operating vehicle number one.

History

Statutory Authority: MS s 65B.133

Minn. R. 2770.3100 Authority

The rules set forth in parts 2770.3100 to 2770.5200 are promulgated under the authority of Minnesota Statutes, section 65B.53, subdivision 4.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.3200 Purpose and Scope

These rules are designed to promote efficient settlement of claims involving economic loss between reparation obligors. As a condition precedent to arbitration, however, local representatives of the involved reparation obligors must make a sincere effort to settle controversies by direct negotiation.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.3300 Application

These rules shall be considered applicable to controversies arising out of accidents, insured events, or losses involving a commercial vehicle under the jurisdiction of the Minnesota No-Fault Automobile Insurance Act, Minnesota Statutes, section 65B.53 giving subrogation or direct action recovery rights to reparation obligors for payments or benefits paid to insureds or third parties under such statute.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.3400 Construction

These rules shall not be construed to create any causes of action or liabilities not existing in law or equity.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.3500 Limitation on Jurisdiction

These rules are applicable to controversies involving reparation obligors as that term is defined in Minnesota Statutes, section 65B.43, subdivision 9. The interest of other parties may not be arbitrated under these rules. The fact that such parties may be insureds of reparation obligors does not alter this prohibition.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.3600 Limitations on Claims

The monetary limits and extent of a reparation obligor's claim shall be governed by Minnesota Statutes, section 65B.53, subdivision 1.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.3700 Primary Jurisdiction

Where a claim under these rules is also under the compulsory jurisdiction of other industry agreements sponsored by the Committee on Insurance Arbitration, the jurisdiction of these rules is primary.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.3800 Authority to Determine

Any determination as to whether a reparation obligor is legally entitled to recovery from another reparation obligor shall be made by an arbitration panel appointed under the authority of these rules.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.3900 Out-of-State Recovery Exclusion

Compulsory arbitration under these rules does not apply to a controversy arising from an out-of-state accident where the party receiving benefits has a right to proceed at law for full recovery of tort loss.

History

Statutory Authority: MS s 65B.53
History: 17 SR 1279

Minn. R. 2770.4000 Authority of Committee on Insurance Arbitration

Under these rules, the Committee on Insurance Arbitration is authorized to select places where arbitration facilities are to be available, and to make appropriate rules to apportion equitably among reparation obligors the operating expenses of the arbitration program set out under these rules.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.4100 Arbitration Committees

Arbitration committees shall be appointed by the committee on insurance arbitration from full-time salaried representatives of reparation obligors and shall function in the following manner:

A. Members of arbitration committees shall be selected on the basis of their experience and qualifications and they shall serve without compensation.

B. No arbitrator shall serve on a panel hearing case in which the arbitrator's company is directly or indirectly interested.

C. The decision of the majority or an arbitration panel is final and binding upon the parties to the controversy without the right of rehearing.

History

Statutory Authority: MS s 65B.53
History: 17 SR 1279

Minn. R. 2770.4200 Applicant and Respondent

In arbitration proceedings and practice, the reparation obligor that initiates the proceeding by filing a request for arbitration shall be known as the "applicant"; and the reparation obligor or reparation obligors against which such controverted claim or issue was asserted shall be known as "respondent."

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.4300 Effect on Statutes of Limitation

Submission of a case to arbitration under these rules shall have the same force and effect as to reparation obligors with regard to the applicable statute of limitations as if litigation has been instituted. Further, if a matter within the compulsory provisions of these rules is inadvertently placed in litigation, the discontinuance of such litigation for the purpose of arbitration will be considered as a submission to arbitration with regard to the applicable statute of limitations as of the date such litigation was instituted.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.4400 Other Industry Arbitration Programs

Where reparation obligors are also signatory to other industry arbitration programs sponsored by the Committee on Insurance Arbitration and the claim is within the compulsory jurisdiction of these other agreements, the signatory companies waive their rights to proceed separately under the other programs.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.4500 Pending Claims from Same Insured Event

Subpart 1. Deferment.

Reparation obligors may, by mutual agreement, include all claims arising out of the same accident or insured event for disposition by an arbitration panel under these rules, provided, however, that hearing of a matter pending before an arbitration panel under these rules will be deferred because of pending claims or suits arising out of the same accident, occurrence, or insured event unless the involved companies waive such deferment in writing.

Subp. 2. Responsibilities of parties.

Deferment of a hearing under subpart 1 does not relieve a respondent reparation obligor from the obligation to file its written answer asserting therein any affirmative defense to the jurisdiction of the panel to proceed with a hearing once the subject case has been removed from a deferred status. If the jurisdiction issue is raised by the written answer, the committee will forthwith pass upon the merits of the jurisdictional question even though the hearing on the issues of liability and damages will be deferred because of pending companion claims or suits not subject to arbitration. However, for the rule to apply, an arbitration committee must receive the applicant's filing 120 days prior to the running of the statute of limitations and receive the respondent's answer within 60 days thereof. If the respondent's answer is not received within the stated period, any affirmative defense running to the jurisdiction of the committee to proceed with a hearing is waived.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.4600 Companion Claims

Where there are companion claims arising out of the same accident arbitrated together pursuant to part 2770.4500, subpart 1, only one filing is necessary to determine the issue of liability as to the drivers of the respective vehicles. A panel's decision on this issue is res judicata on the liability issue in all companion matters involving the same companies within the jurisdiction of these rules, except as to special defenses arising in the companion claim or suit.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.4700 Organization

Reparation obligors of commercial vehicles shall, on request, furnish the Committee on Insurance Arbitration a list of names, titles, and local addresses of all employees who are qualified to act as arbitrators.

The chair of the arbitration committee shall designate one disinterested member of said committee to serve as a panel of arbitration in each case. However, three members will constitute a panel if requested by a controverting party in a specific case.

History

Statutory Authority: MS s 65B.53
History: 17 SR 1279

Minn. R. 2770.4800 Commercial Vehicles and Out-of-State Accidents

Compulsory arbitration under these rules applies to controversies arising out of accidents, insured events, or occurrences within this state involving commercial vehicles. Controversies arising from accidents, insured events, or occurrences involving commercial vehicles outside this state can be submitted with the consent of the controverting reparation obligors.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.4900 Filing Assessments

Filing assessments:

A. The Committee on Insurance Arbitration by resolution will prescribe the filing assessment for the use of local arbitration facilities.

B. The obligation for the prescribed filing assessment is incurred upon filing, but payment by the applicant reparation obligor to the Committee on Insurance Arbitration is deferred until the case is closed, either through hearing, settlement, or withdrawal prior to hearing. The prescribed filing assessment shall also be paid in the same manner by a respondent reparation obligor that files a counterclaim. There is no exception to a reparation obligor's obligation to pay the filing assessment.

C. The secretary of the Committee on Insurance Arbitration is the custodian of the assessment charges collected and shall make expenditures therefrom to defray such arbitration expenses as may be authorized by the Committee on Insurance Arbitration.

D. The secretary of the Committee on Insurance Arbitration will submit reports on assessments collected and disbursed during such period as may be considered desirable by the Committee on Insurance Arbitration.

History

Statutory Authority: MS s 65B.53
History: 17 SR 1279

Minn. R. 2770.5000 Arbitration Procedure

Subpart 1. Commencement.

An arbitration proceeding is commenced by the local representative of a reparation obligor filing an arbitration notice (three copies) with the secretary of the local arbitration committee. At the same time, three copies of the arbitration notice are to be submitted by the applicant directly to the local representative of the other involved reparation obligor. If there is more than one respondent reparation obligor in a case, the applicant shall so indicate on the original and all copies of the arbitration notice and send three copies thereof to each respondent reparation obligor.

Subp. 2. Nature of notice.

Notice by applicants shall set forth the following information:

A. names of applicant and respondent reparation obligor together with names and addresses of local representatives having supervision over the case in controversy;

B. name and address of respondent reparation obligor's insured;

C. claim file numbers of applicant and respondent, if known;

D. date and place of alleged accident, loss, or other insured event;

E. amount of reparation obligor's claim payment and amount of any other expenses for which indemnity is requested;

F. certification that settlement efforts have been unsuccessful;

G. brief statement of allegation solely as to the issue in controversy; and

H. signature of applicant's representative and date signed.

Subp. 3. Answers.

Answers filed by respondent shall set forth the following information:

A. supplement, if and as necessary, the information furnished by applicant as to respondent reparation obligor's name, local representative, address, name of insured, file number, or kind of policy coverage;

B. whether there is an objection to arbitration; if so, the grounds on which the objection is based should be fully stated;

C. brief statement of allegation as to the issue in controversy; and

D. signature of respondent's representative and date signed.

Subp. 4. Filing periods.

The respondent has 30 days after the applicant's filing in which to file a written answer. If a respondent fails to submit its answer within 30 days after an applicant reparation obligor files with a committee, it is presumed that the applicant's claim has been denied and the case is ready for hearing on the issues. Failure to file an answer will not operate to delay the arbitration hearing. However, if affirmative defenses are available to the respondent, and are not asserted by answer prior to notice of hearing, the applicant, on request, will be entitled to an adjournment to investigate such affirmative defenses.

Subp. 5. Counterclaims.

The procedure set out in subparts 1 to 4 is also applicable to counterclaims for damages that may be submitted for arbitration pursuant to part 2770.4400 or 2770.4500. The arbitration notice should clearly indicate that it is submitted as a counterclaim and the original arbitration case to which it pertains shall be plainly identified.

History

Statutory Authority: MS s 65B.53

Minn. R. 2770.5100 Hearings

Hearings:

A. When the secretary has received the essential facts and contentions from the controverting reparation obligors, the issue in the case shall be scheduled for a hearing by the arbitration panel at the earliest practicable date.

B. Hearing date shall be determined by the chair of the arbitration panel, and one or more cases may be considered at any scheduled hearing.

C. Representatives of controverting parties shall be notified by the secretary of the time and place of a scheduled hearing at least two weeks in advance of the hearing date. Notice of hearing shall be sent by certified mail, return receipt requested, to any respondent which has not filed a written answer.

D. Adjournments may be granted for cause by the chair of the arbitration committee or a designee.

E. Evidence which controverting parties desire to submit in support of their allegations shall be made available for examination by the arbitrators at the hearing. Such evidence may also be examined by the opposing parties at the hearing. If one of the controverting parties fails to produce evidence at a scheduled arbitration hearing, after due notice thereof, the arbitrators may at their discretion consider the information in the arbitration notice of such party and render a decision accordingly.

F. Procedure at arbitration panel hearings shall be informal. Controverting parties are expected to present the facts of their respective cases in a brief, frank, and direct manner.

G. The controverting parties shall submit for consideration to the arbitrators, briefs of the law involved when requested by the arbitration panel hearing the case.

H. Controverting parties may present witnesses at an arbitration hearing, if considered necessary, after notice to the other interested party or parties sufficiently in advance of the hearing date to permit such other party or parties also to present witnesses if desired.

I. Controverting parties may, if they so desire, be represented at arbitration hearings by members of their staff or by anyone employed or retained by them.

J. Documentary evidence submitted by controverting parties shall be left with the arbitrators for their scrutiny and consideration while reaching a decision.

K. If representatives of controverting parties attend an arbitration hearing, they must withdraw after presentation of their cases and may not be present while the arbitrators are considering their decision.

History

Statutory Authority: MS s 65B.53
History: 17 SR 1279

Minn. R. 2770.5200 Decisions

Decisions:

A. Arbitration panels may, upon their own initiative, render a decision in favor of a respondent company without production of evidence by such respondent, if the panel unanimously agrees following presentation of the applicant's evidence that such applicant has not made out a prima facie case.

B. A decision of an arbitration panel on issues of fact or law is final and binding. However, a local committee's chair is not precluded from correcting a clerical, typographical, or jurisdictional error on the part of a local committee's staff, provided it is called to the local committee's attention in writing by one of the arbitrating reparation obligors within 30 days after publication of the decision; or if recognized by the local committee without notice from the arbitrating reparation obligors within 30 days after publication of the decision; provided further, that the correction be made in either event within 60 days after publication of the decision.

C. The law of the locality in which the accident, insured event, or loss occurred will control the decision on questions of liability. A finding as to the amount of damages in issue shall be based upon the facts presented to the arbitrators.

D. The amount paid shall not be at issue unless pleaded specifically.

E. Decisions of the arbitrators shall be promptly rendered after consideration of the case, and the evidence submitted by the controverting parties shall be returned promptly.

F. The arbitrators shall prepare a written decision in each case, copies of which shall be distributed by the secretary as follows: one copy will be retained by the arbitration panel secretary; one copy shall be furnished to each party involved in the arbitration; and the original shall be furnished to the Committee on Insurance Arbitration.

G. The decisions of the arbitration panel shall include the following minimum information:

H. Decisions of an arbitration panel shall be complied with as soon as practicable. Any unwarranted delay on the part of the parties concerned should be reported to the Committee on Insurance Arbitration by the prevailing party.

History

Statutory Authority: MS s 65B.53
History: 17 SR 1279

Minn. R. 2770.6100 Purpose

The purpose of parts 2770.6100 to 2770.7300 is to ensure that self-insurers under the Minnesota No-Fault Automobile Insurance Act have the financial and administrative resources needed to satisfy all obligations and responsibilities under the act.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764; L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2

Minn. R. 2770.6200 Definitions

Subpart 1. Scope.

For the purpose of parts 2770.6100 to 2770.7300 the terms defined in this part have the meanings given them.

Subp. 2. Applicant.

"Applicant" means a person or entity applying to the commissioner for authorization to self-insure under the no-fault act.

Subp. 3. Certified financial statement.

"Certified financial statement" means a statement of the operating results and financial position of an applicant, authorized self-insurer, or parent company. A statement includes a balance sheet, income statement, statement of changes in financial position, or the equivalent in the case of nonprofit organizations and political subdivisions, and associated notes. A statement must include the professional opinion of an independent certified public accountant. A parent company's certified financial statement must be a consolidated statement combining the operating results and financial position of the parent company and its subsidiaries.

Subp. 4. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce.

Subp. 5. Licensed vendor of risk management services.

"Licensed vendor of risk management services" means an entity authorized under Minnesota Statutes, section 60A.23, subdivision 8, to contract with self-insurers for the purpose of administering self-insurance programs.

Subp. 6. No-fault act.

"No-fault act" means the automobile insurance system defined in Minnesota Statutes, sections 65B.41 to 65B.71.

Subp. 7. Parent company.

"Parent company" means a company or organization that directly, or indirectly through one or more intermediaries, controls an applicant or authorized self-insurer, and that is not also controlled by another company or organization.

Subp. 8. Political subdivision.

"Political subdivision" means a statutory or home rule charter city or county, the state of Minnesota, or any instrumentality of a statutory or home rule charter city or county or the state of Minnesota.

Subp. 9. Subsidiary.

"Subsidiary" means a company or organization that is directly, or indirectly through one or more intermediaries, controlled by a parent company.

Subp. 10. Working capital.

"Working capital" means current assets minus current liabilities as stated in the balance sheet of the applicant's certified financial statements.

History

Statutory Authority: MS s 65B.48; L 2023 c 57 art 2 s 64
History: 9 SR 734; 9 SR 764; L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2; 48 SR 841

Minn. R. 2770.6300 Application Requirement

No person or entity may self-insure for no-fault act liabilities without the commissioner's authorization. The commissioner may only grant self-insurance authority to applicants that have followed the application procedures and that meet the authorization standards described in parts 2770.6100 to 2770.7300.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764; L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2

Minn. R. 2770.6400 Application Procedures

Subpart 1. Application forms.

An application for self-insurance authority must be made on forms prescribed and made available by the commissioner.

Subp. 2. Financial statements.

Certified financial statements for an applicant's most recently ended fiscal year and for each of the three prior years must be included with an application. If an applicant is a subsidiary, then an application must also include certified financial statements for the parent company's most recently ended fiscal year and for each of the prior three years.

Subp. 3. Application fee.

A $500 application fee must be included with each application.

Subp. 4. Assumption of liability agreement.

The parent company of an applicant must agree to assume the applicant's liabilities under the no-fault act if the applicant alone fails to satisfy part 2770.6500, subpart 2, item B, subitems (1) to (5). This agreement must be in a form prescribed by the commissioner. If required, a completed assumption of liability agreement form must be provided before an application can be considered complete.

Subp. 5. Resolution of governing body.

If an applicant is a political subdivision, then a certified copy of a resolution from its governing body authorizing the political subdivision to seek self-insurance authority must be included with an application.

Subp. 6. Commissioner's action.

The commissioner shall grant or deny authorization to self-insure within 60 days of receiving all application materials.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764

Minn. R. 2770.6500 Authorization Standards

Subpart 1. Political subdivisions.

The commissioner shall grant self-insurance authority to an applicant that is a political subdivision if it satisfies these conditions:

A. at least 25 motor vehicles are registered in its name; and

B. it has, or has contracted with a licensed vendor of risk management services to provide, the administrative resources needed to:

Subp. 2. All other applicants.

The commissioner shall grant self-insurance authority to an applicant that is not a political subdivision if the following conditions are satisfied:

A. the applicant satisfies subpart 1, item B;

B. either the applicant alone or the parent company alone:

C. neither the applicant nor its parent company, if one exists, has sought protection under the United States Bankruptcy Code during the last three years. Notwithstanding the conditions under items A to C, the commissioner may grant self-insurance authority to an applicant that is not a political subdivision and that has not had positive working capital in at least three years of the last five-year period if the working capital, debt structure, profitability, and overall financial integrity of the applicant and its parent company, if one exists, demonstrate a continuing ability of the applicant to satisfy any financial obligations that have been and might be incurred under the no-fault act.

History

Statutory Authority: MS s 65B.48; L 2023 c 57 art 2 s 64
History: 9 SR 734; 9 SR 764; 10 SR 1265; 48 SR 841

Minn. R. 2770.6600 Commissioner's Decision

Subpart 1. Approval.

The commissioner shall authorize an applicant to self-insure by issuing a self-insurance certificate to the applicant. The certificate must include the dates when self-insurance authority begins and ends.

Subp. 2. Denial.

The commissioner may deny self-insurance authority by informing the applicant by mail of the decision.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764

Minn. R. 2770.6700 Renewal

Authorization to self-insure ends 150 days after the end of a self-insurer's fiscal year. Authorization may be renewed for one year if a self-insurer informs the commissioner no later than 120 days after the end of its fiscal year that it wishes to continue to self-insure. The commissioner shall issue a new certificate of authority to each self-insurer whose self-insurance authority is renewed.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764

Minn. R. 2770.6800 Security Requirement

Subpart 1. Surety bond required.

An authorized self-insurer, except political subdivisions that have satisfied the requirements of part 2770.6500, subpart 1, items A and B, shall maintain a surety bond written by a corporate surety authorized to do business in Minnesota. The bond must be filed with the commissioner and name the "Commissioner of Commerce - State of Minnesota" as its obligee.

Subp. 2. Bond form.

The surety bond must be executed on forms prescribed and made available by the commissioner, or on other forms not materially different from the forms prescribed by the commissioner. The commissioner shall refuse to accept surety bonds executed on forms that are not consistent with the requirements of this part or the purpose of parts 2770.6100 to 2770.7300.

Subp. 3. Condition, cancellation.

The condition of the surety bond must be the execution of the self-insurer's legal obligations as a self-insurer. The bond cannot be canceled unless 30 days' notice is provided by the surety to the commissioner. After cancellation, the bond must remain in force for those liabilities incurred by the self-insurer from the time the bond first became effective until its cancellation, regardless of when compensation was or may be claimed, awarded, or paid.

Subp. 4. Penalty sum.

The bond must provide a penalty sum of $100,000 or 125 percent of the self-insurer's total outstanding liabilities, whichever is greater. The penalty sum must be consistent with the latest report of outstanding loss liabilities as required in part 2770.6900.

Subp. 5. Use of bond by commissioner.

In the event the commissioner determines that the self-insurer has violated the condition of the bond, the commissioner may draw upon the penalty sum to pay any unpaid claim obligations incurred by the self-insurer and to recover any costs or expenses incurred by the Department of Commerce that are directly attributed to administering the self-insurer's claims.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764; 10 SR 1265; L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2

Minn. R. 2770.6900 Reporting Requirements

Subpart 1. Financial statements.

Authorized self-insurers shall provide these items to the commissioner no later than 120 days after the end of each fiscal year:

A. a certified financial statement for the self-insurer's most recently ended fiscal year, and a copy of the self-insurer's most recent form 10K filed with the Securities and Exchange Commission, if applicable;

B. a certified financial statement for the parent company's most recently ended fiscal year, if applicable, and a copy of the parent company's most recent form 10K filed with the Securities and Exchange Commission, if applicable; and

C. any quarterly financial statements for the applicant and the parent company, if applicable, issued since the end of the latest fiscal year for which a certified financial statement has been provided to the commissioner.

Subp. 2. Status report.

Authorized self-insurers shall provide to the commissioner, on forms prescribed and made available by the commissioner, information needed to maintain accurate records of the self-insurers' address, relevant personnel, scope of self-insurance under the no-fault act, and other administrative matters. The status report shall be provided at the same time as the self-insurer notifies the commissioner of its intention to seek renewal of self-insurance authority, as required in part 2770.6700.

Subp. 3. Loss liabilities report.

Authorized self-insurers shall provide, by March 1 of every year, a report of paid and outstanding loss liabilities incurred under the no-fault act evaluated as of December 31 of the prior year. The loss liabilities report must be on forms prescribed and made available by the commissioner.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764

Minn. R. 2770.7000 Quarterly Financial Statements

If the commissioner determines that a deterioration in the funds flow, net worth, debt structure, profitability, or general financial integrity of the self-insurer or its parent company, if a parent company exists, adversely affects the self-insurer's ability to satisfy its financial obligations under the no-fault act, then the commissioner shall require an authorized self-insurer to submit quarterly financial statements for the self-insurer and its parent company.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764

Minn. R. 2770.7100 Assigned Claims Plan, Unfair Practices

Self-insurers authorized under this chapter are reparation obligors under Minnesota Statutes, section 65B.43, subdivision 9, and shall participate in the assigned claims plan in Minnesota Statutes, section 65B.63. Self-insurers authorized under this chapter are also subject to Minnesota Statutes, sections 72A.17 to 72A.32, regulating trade and claim service practices.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764

Minn. R. 2770.7200 Termination of Self-Insurance Status

An authorized self-insurer shall inform the commissioner at least 30 days after becoming insured. Self-insurance authority terminates immediately upon becoming insured.

History

Statutory Authority: MS s 65B.48
History: 9 SR 734; 9 SR 764

Minn. R. 2770.7300 Revocation of Self-Insurance Authority

The commissioner may revoke a self-insurer's authorization to self-insure:

A. if the commissioner determines that a self-insurer:

B. if the commissioner determines that the self-insurer has failed, or is unable, to remedy circumstances that will, in the future, prevent the self-insurer from complying with standards or requirements of this chapter.

History

Statutory Authority: MS s 65B.48; L 2023 c 57 art 2 s 64
History: 9 SR 734; 9 SR 764; 48 SR 841

Minn. R. 2770.7400 [Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

[Repealed, L 1995 c 233 art 3 s 2; L 1995 c 248 art 3 s 2]

Minn. R. 2770.7500 Statutory Authority

Parts 2770.7500 to 2770.8500 apply to all companies writing policies of private passenger vehicle insurance. They are adopted under Minnesota Statutes, section 65B.17, subdivision 2.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.7600 Purpose

Parts 2770.7500 to 2770.8500 are designed to limit the reasons a policy of private passenger vehicle insurance may not be renewed.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.7700 Definitions

Subpart 1. Scope.

For the purposes of parts 2770.7500 to 2770.8500, the terms defined in this part have the meanings given them.

Subp. 2. Chargeable accident.

"Chargeable accident" means an accident in which the insurer nonrenewing the policy makes a payment under bodily injury, property damage, or collision coverages, except under the following conditions:

A. In a collision loss, where the insurer recovers 80 percent or more of the insurers loss through subrogation.

B. The automobile was damaged through being struck while being lawfully parked. An automobile rolling from a parked position, or a door opened into traffic causing an accident, is not considered being lawfully parked.

C. The insured or other driver of the automobile has been paid by the other party, or has a judgment against the other party in the accident.

D. The accident was one in which the damage was caused by the vehicle being rear-ended by another vehicle, unless the driver of the struck vehicle has been convicted of a moving traffic violation in conjunction with the accident.

E. The driver of the other vehicle in the accident has been convicted of a moving violation in conjunction with the accident, and the driver of the insured vehicle has not been convicted of a moving violation in conjunction with the accident.

F. The insured automobile was damaged by contact with a "hit-and-run" vehicle, if this contact is reported to the police, highway patrol, or sheriff within 24 hours after discovery. "Chargeable accident" also includes any accident for which payment is made under the comprehensive portion of the physical damage coverage of a policy under the following conditions:

Subp. 3. Commercial vehicle.

"Commercial vehicle" is as defined in Minnesota Statutes, section 65B.43, subdivision 12.

Subp. 4. Emergency vehicle.

"Emergency vehicle" means an automobile used in response to an emergency if the operator is responding to a call of duty as a paid or volunteer member of any police or fire department, first aid squad, or any law enforcement agency.

Subp. 5. Experience period.

"Experience period" means three years from the date of a chargeable accident or incident referred to in part 2770.7800, subpart 2, to the renewal date of the policy and in the case of a moving traffic violation, three years from the date of occurrence to the renewal date of the policy.

Subp. 6. Hit and run vehicle.

"Hit and run vehicle" means a vehicle that leaves the scene of an accident in violation of Minnesota Statutes, section 169.09, subdivisions 1, 2, 4, and 5, or the comparable provisions of the laws of another jurisdiction where the accident occurred.

Subp. 7. Multiline contract.

"Multiline contract" means an insurance contract that insures more than one line of insurance under one contract, such as homeowners and automobile coverages within one contract.

Subp. 8. Nonrenewal.

"Nonrenewal" includes any nonrenewal notice sent to a named insured informing the named insured that the insurer is terminating or intends to terminate a policy as of a certain date. In order to be valid, the notice must comply with all other applicable laws and rules, including Minnesota Statutes, section 65B.17, and part 2770.8100.

Nonrenewal also includes:

A. any reduction in the limits of liability of coverage, except a termination or modification of towing coverage;

B. an increase of a physical damage deductible unless all the existing policies and those policies to be accepted as new business by the insurer in this state will have the same higher deductibles applied; and

C. the transfer of a named insured from one rating plan to another within the same company, or the transfer of a named insured from one company to another within a group of insurance companies, if the transfer results in a higher premium. This does not apply to a surcharge on an existing policy.

Subp. 9. Points.

"Points" means the grading system by which each chargeable accident and violation is assigned a certain number of points to determine if a policy is subject to nonrenewal.

Subp. 10. Policy.

"Policy" means a policy of automobile insurance as defined in Minnesota Statutes, section 65B.14, subdivision 2. The term also includes motorcycles and commercially rated policies of less than five vehicles.

Subp. 11. Private passenger vehicle.

"Private passenger vehicle" is as defined in Minnesota Statutes, section 65B.001, subdivision 3.

Subp. 12. Private passenger vehicle insurance.

"Private passenger vehicle insurance" is as defined in Minnesota Statutes, section 65B.001, subdivision 2. The term includes commercially rated policies of less than five vehicles.

Subp. 13. Violations.

"Violations" means all moving traffic violations that are recorded by the Department of Public Safety on a household member's motor vehicle record, and violations reported by a similar authority in another state, or reported by the insured, except for equipment violations, driving an unregistered vehicle, driving with an expired driver's license, or driving without a valid driver's license in possession.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.7800 Reasons for Nonrenewal

Subpart 1. Entire policy.

The grounds for nonrenewal of an entire policy are limited to one or more of the following reasons:

A. The reasons stated in Minnesota Statutes, section 65B.15, subdivision 1.

B. An insured equals or exceeds the relevant number of points specified in part 2770.8000.

C. Termination of the agency contract, provided that if a named insured is 65 years of age or older, the insurer shall notify the named insured of his or her right to continue the policy in force if the named insured makes the request in writing prior to the termination date. This item does not apply if the insurer assigns the terminated agent's book of business to another agent.

D. An insurer ceases to write auto insurance in Minnesota. An insurer writing both commercial vehicle insurance and private passenger auto insurance can cease to write either line and continue to offer coverage in the other line.

E. A commercial auto policy governed by these parts may be nonrenewed if the insurer ceases writing a selected classification and all insureds in the classification are nonrenewed. It may do so by nonrenewing all risks in the classification, and by not rewriting any business in that class for a period of one year after the last risk is nonrenewed.

F. Failure of the insured to provide necessary underwriting information upon written request from the insurer. Before a nonrenewal notice can be issued under this part, two written requests asking for the information must be sent to the insured stating the reasons why the information is necessary. The second notice must inform the insured of the intent to nonrenew the policy if the information is not received. Medical reports and examinations required by the insurer must be paid for by the insurer.

G. An insured has two or more total theft of vehicle claims during the experience period and the vehicles are not recovered.

H. If an insurer encounters a situation in which the insurer believes that the nonrenewal would not be arbitrary and capricious but the situation is not addressed by these parts, the following procedure may be taken:

Subp. 2. Physical damage portion of policy.

The grounds for nonrenewal of the physical damage portion of a policy are limited to the following:

A. If three or more comprehensive claim payments have been made during the experience period, or two or more comprehensive payments have been made during the most recent 12-month period, a policy that does not have a comprehensive deductible may be changed to a deductible not greater than $100, or a policy that has a comprehensive deductible may be increased to the next highest deductible level offered by the insurer or up to $100, whichever is greater. Only one increase of deductibles is allowed during the experience period unless additional payments are made after the increase of a deductible. A change in a deductible requires a nonrenewal notice.

B. The physical damage portion of a policy may be nonrenewed if there has been a total of three payments for a single vehicle insured or four payments for a multiple vehicle insured during the experience period for any combination of the following:

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.7900 Schedule of Points for Violation or Chargeable Accident

Subpart 1. In general.

Subparts 2 to 7 show the points assigned to each violation and chargeable accident during the experience period.

Subp. 2. Four points.

Four points will be assigned for each of the following:

A. leaving the scene of an accident without stopping to report;

B. a felony involving the use of a motor vehicle, including manslaughter, criminal negligence, or assault originating out of the use of a motor vehicle;

C. theft of, or unlawful taking of, a motor vehicle;

D. any violation that results in the suspension or revocation of an operators' license, such as an implied consent or a DWI; and

E. unlawful driving after suspension or revocation of an operators' license.

Subp. 3. Two and one-half points.

Two and one-half points will be assigned for reckless driving.

Subp. 4. One and one-half points.

One and one-half points will be assigned for careless driving.

Subp. 5. One point.

One point will be assigned for:

A. a chargeable accident where total payment exceeds $500, not including payments made under uninsured motorist, underinsured motorist coverage, or personal injury protection, unless defined as a chargeable accident; and

B. an open bottle violation.

Subp. 6. Three-fourths point.

Three-fourths of a point will be assigned for the second and each subsequent violation for speeding during the experience period per individual operator.

Subp. 7. One-half point.

One-half point will be assigned for:

A. the first violation for speeding during the experience period per individual operator;

B. a chargeable accident where total payment is $500 or less, not including payments made under uninsured motorist, underinsured motorist coverage, or personal injury protection, unless defined as a chargeable accident;

C. allow open bottle violation; and

D. all other violations.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.8000 Points for Nonrenewal

Subpart 1. Schedule.

The following schedule shows the number of points that must be accumulated before a policy can be nonrenewed:

Subp. 2. Exceptions.

If one operator accumulates three points or more, a policy or policies may be nonrenewed regardless of the number of insured vehicles in the household. If at the time the nonrenewal was sent, a household member owns an automobile and a policy of his or her own, then that household member's driving record cannot be used to determine a basis for nonrenewal of policies of other household members.

Accidents or violations occurring while operating a commercial vehicle or an emergency vehicle cannot be used to accumulate points for nonrenewing a private passenger vehicle policy, except for violations in the four-point category.

History

Statutory Authority: MS s 45.023; 65B.17
History: 9 SR 764; 12 SR 845

Minn. R. 2770.8100 Nonrenewal Notices

A nonrenewal notice must be on a form approved by the Department of Commerce and it must contain on the front of the notice specific reasons for the nonrenewal and the information required by Minnesota Statutes, section 65B.19 regarding the right of complaint and the availability of the Minnesota Automobile Insurance Plan. The make and year of the vehicle being nonrenewed must be shown on the notice. The specific reason given for the nonrenewal must include the following information:

A. in the case of violations: the name of the driver, the type of violation, the date of the violation, and the point value of each violation;

B. in the case of chargeable accidents: the name of the driver, whether the payment is in excess of or under $500, the date of the accident, and the point value of each accident; and

C. in the case of physical damage nonrenewals under part 2770.7800, subpart 2, items A and B: the date of the loss and the type of the loss. The printing of these items on the back of the notice or on a separate sheet will not comply with this part. The named insured cannot waive his or her right to receive a nonrenewal notice unless advised fully, in writing, as to his or her rights under the nonrenewal statutes and these parts.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.8200 Record Keeping

Each insurance company shall keep a register of all cancellations, as defined in Minnesota Statutes, section 65B.15, and nonrenewals, as defined in Minnesota Statutes, section 65B.17 and part 2770.7700, subpart 8. This register must be available to the commissioner of commerce, or a designee, at any time. The termination register must be retained for three years and need not include terminations for nonpayment of premium.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764; 17 SR 1279

Minn. R. 2770.8300 Automatic Coverage on Newly Acquired and Replacement Vehicles

Parts 2770.7500 to 2770.8500 also apply to newly acquired vehicles and replacement vehicles which qualify for the automatic coverage provisions of a policy.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.8400 Nonrenewal of Multiline Contracts

Nothing in parts 2770.7500 to 2770.8500 prohibits an insurance company from nonrenewing a multiline insurance contract. However, if these parts prevent nonrenewal of the automobile insurance portion of the contract, then the insurance company shall issue to the named insured a policy of automobile insurance providing coverage as included in the multiline contract.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.8500 Penalties

Subpart 1. Generally.

Failure to comply with parts 2770.7500 to 2770.8500 subjects the insurers to the following penalties during each calendar year period:

A. first violation, $100;

B. second violation, $300; and

C. third and subsequent violation, $500. Monetary penalties must be waived if the commissioner determines that the nonrenewal notice was based on a good faith judgment supported by evidence that was in the possession of the insurer at the time of the sending of the nonrenewal notice, or if the nonrenewal was subject to the waiver of penalty provisions in part 2770.7800, subpart 1, item H.

Subp. 2. Disapproval by commissioner.

Any nonrenewal of a policy in violation of parts 2770.7500 to 2770.8500 must be disapproved by the commissioner of commerce under Minnesota Statutes, section 65B.21.

Subp. 3. Additional penalties.

Nothing contained in this part prohibits the commissioner of commerce from applying additional penalties or remedies as may be imposed under Minnesota Statutes, chapter 72A.

Subp. 4. Application and effective date.

Monetary penalties become effective for any nonrenewal in violation of parts 2770.7500 to 2770.8500 sent on or after January 1, 1984.

History

Statutory Authority: MS s 65B.17
History: 9 SR 764

Minn. R. 2770.9010 Administration

The administration of arbitration under Minnesota Statutes, section 72A.327 shall be by the American Arbitration Association or other agency as designated by the commissioner. The administration is subject to the continuing supervision of the commissioner.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9020 Appointment of Arbitration Panel

Subpart 1. List of arbitrators.

The commissioner shall establish three lists of qualified individuals who are eligible to serve on the three-member arbitration panel, under Minnesota Statutes, section 72A.327, paragraph (c). One list shall include names and address of individuals with medical expertise as identified by contributing members under Minnesota Statutes, section 65B.01, subdivision 2. The second list shall include names and addresses of persons with medical expertise as identified by professional societies. The third list shall include names and addresses of other members of the public designated by the commissioner as eligible to serve on the three-member arbitration panel. The commissioner may, from time to time, add or delete names of individuals from any of the three lists.

Subp. 2. Three-member panel.

The commissioner shall deliver the three lists described in subpart 1 to the American Arbitration Association. Upon initiation of an arbitration, the American Arbitration Association shall administer the establishment of the three-member arbitration panel according to Minnesota Statutes, section 72A.327, paragraph (c), by making a recommendation to the commissioner as to the nine potential arbitrators. Unless the commissioner disapproves the recommendations within three business days, the recommendations shall be deemed approved. Under procedures established by the American Arbitration Association and immediately following nomination by the American Arbitration Association for consideration as a member of the arbitration panel, each potential arbitrator shall be required to disclose any circumstances likely to create a presumption or possibility of bias or conflict which may disqualify the person as a potential arbitrator. Each nominee shall supplement the disclosures as circumstances require. A party to an arbitration may advise the American Arbitration Association of any reason why the arbitrator should withdraw or be disqualified from serving before exercising strikes. An objection to a potential arbitrator shall be determined initially by the American Arbitration Association, subject to appeal to the commissioner. If an arbitrator should resign, be disqualified, or unable to perform the duties of the office, the American Arbitration Association shall arrange for the appointment of another arbitrator in accordance with parts 2770.9010 to 2770.9170.

Subp. 3. Oaths.

Arbitrators, upon accepting appointment to the panel, shall take an oath or affirmation of office. The arbitrators may require witnesses to testify under oath or affirmation.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9030 Initiation of Arbitration

Subpart 1. Notice of right to appeal.

At the time an insurer denies a claim to which the claimant has a right to appeal under Minnesota Statutes, section 72A.327, the insurer shall advise the claimant, in writing, of the claimant's right to appeal the denial to the commissioner. The insurer shall also advise the claimant that information on the appeal and arbitration procedures may be obtained from the American Arbitration Association.

Subp. 2. Filing of appeal.

Upon request, the American Arbitration Association will provide a claimant with a petition form for initiating arbitration, together with a copy of parts 2770.9010 to 2770.9170. Arbitration is initiated by the claimant filing the signed, executed form together with the required filing fee, with the American Arbitration Association.

Subp. 3. Denial of claim.

If an insurer fails to respond within 30 days after a claim is duly presented to the insurer, the claim is considered denied for the purpose of parts 2770.9010 to 2770.9170.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9040 Filing Fee

The filing fee to be paid under parts 2770.9030, subpart 2 and 2770.9050 is the fee set in Rule 8 of the Rules of Procedure for No-fault Arbitration adopted by the Minnesota Supreme Court under Minnesota Statutes, section 65B.525.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9050 Notice

On the filing of the petition form by the claimant, the American Arbitration Association shall send a copy of the petition to the insurer together with a request for payment of the filing fee. In addition, the American Arbitration Association shall send a copy of the petition to the commissioner within ten business days of the claimant's filing with the American Arbitration Association.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9060 Conciliation and Prehearing Procedures

Through prehearing conference or other joint communication to the parties, the arbitration panel may conciliate the claim. The arbitration panel shall encourage the parties to narrow the issues so far as possible in an effort to shorten the hearing. At least ten days before the hearing, the arbitration panel shall ask the parties to stipulate to facts not in dispute, and may ask each party to furnish the other parties with copies of each document or exhibit which that party intends to offer in evidence.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9070 Communication with Arbitration Panel

All communication, oral or written, from a party to the arbitration panel, must be through the American Arbitration Association for transmittal to the arbitrators. In any and all cases, oral communication with the arbitration panel must be done jointly and with the knowledge of the opposing party.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9080 Time and Place of Arbitration

If conciliation is not successful, an informal arbitration hearing will be held in the office of the American Arbitration Association or some other appropriate place in the general locale of the claimant's residence, or other place agreed upon by the parties. The arbitration panel shall fix the time and place for the hearing. At least 14 days before the hearing, the American Arbitration Association shall mail notice to each party or to a party's designated representative. Notice of hearing may be waived by any party. A party requesting postponement shall make their request to the arbitration panel, through the American Arbitration Association, who shall rule on all such requests. A postponement fee shall be charged against the party causing the postponement as set forth in the rules adopted by the Minnesota Supreme Court, under Minnesota Statutes, section 65B.525.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9090 Witnesses, Subpoenas, Deposition

The arbitration panel may, upon its own initiative or at the request of any party, issue subpoenas for the attendance of witnesses and the production of books, records, documents, and other evidence. The subpoenas issued shall be served, and upon application to the district court by either party or the arbitrators, enforced in the manner provided by law for the service and enforcement of subpoenas for a civil action. Provisions of law compelling a person under subpoena to testify are applicable. Fees for attendance as a witness shall be the same as for a witness in the district courts.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9100 Discovery

All parties may exchange information on a voluntary basis. Formal discovery of any kind beyond exchange of medical reports and other exhibits to be offered at the hearing is discouraged. However, upon application and a showing of good cause that the information sought is material to a party's presentation at hearing, the arbitration panel may permit any discovery allowable under the Minnesota Rules of Civil Procedure for the district courts. Any medical examination considered necessary by the insurer shall be completed within 30 days following commencement of the case unless extended by the arbitration panel.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9110 Evidence

The parties may offer evidence as they desire and shall produce additional evidence as the arbitration panel considers necessary to an understanding and determination of the issues. The arbitration panel shall be the judge of the relevancy and materiality of any evidence offered, and conformity to legal rules of evidence shall not be necessary. The parties are encouraged to offer, and the arbitration panel is encouraged to receive and consider, evidence by affidavit or other document, including medical reports, statements of witnesses, officers, accident reports, medical texts, and other similar written documents which would not ordinarily be admissible as evidence in the courts of this state. In receiving this evidence, the arbitration panel shall consider any objections to its admission in determining the weight to which it considers it is entitled.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9120 Arbitrator's Fees

An arbitrator shall be compensated for services and for any use of office facilities in the amount set in Rule 16 of the Rules of Procedure for No-fault Arbitration adopted by the Minnesota Supreme Court under Minnesota Statutes, section 65B.525.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9130 Close of Hearing

The arbitration panel shall specifically inquire of all parties as to whether they have any further evidence. If they do not, the arbitration panel shall declare the hearing closed. If briefs or documents are to be filed, the hearing shall be declared closed as of the final date set by the arbitration panel for the receipt of briefs or documents. The time limit within which the arbitration panel is required to make its recommendation to the commissioner shall begin to run on the close of the hearing.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9140 Reopening Hearing

At any time before the recommendation is made, a hearing may be reopened by the arbitration panel upon own motion, or upon application of a party.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9150 Recommendation and Report to Commissioner

The arbitration panel shall promptly render a written report to the commissioner, in which it recommends a resolution to the claim at issue. The report shall include the panel's findings of fact and conclusions on all material issues, and shall be dated and signed by all members of the arbitration panel. Unless otherwise agreed to by the parties, the report shall be delivered to the commissioner no later than 30 days after the close of the hearing or the reopened hearings. In making its recommendation to the commissioner, the arbitration panel may assign actual costs and disbursements incurred, or any parts thereof, to one or both parties.

A copy of the arbitration panel's report shall be served upon each party or the party's representative by first class mail within five days of delivery of the report to the commissioner. Personal service of the report upon a party or in any other manner which may be prescribed by law shall also constitute legal delivery.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9160 Action by Commissioner

Subpart 1. Filing of exceptions.

Within ten days from the date the arbitration panel's report is delivered to the commissioner, a party to the arbitration proceedings may file with the commissioner written exceptions and written arguments to the report.

Subp. 2. Decision or order.

The commissioner shall render a decision within 30 days after the submission of the arbitration panel's report and subsequent exceptions and arguments under part 2770.9150. A copy of the decision and any applicable order shall be served upon each party or the party's representative, and the American Arbitration Association, by first class mail.

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Minn. R. 2770.9170 Appeal

A person aggrieved by an order under parts 2770.9010 to 2770.9170 shall have the right to appeal the order as provided in Minnesota Statutes, section 72A.327, paragraph (d).

History

Statutory Authority: MS s 45.023; 72A.327
History: 15 SR 1264

Chapter 2780 WORKERS' COMPENSATION SELF-INSURANCE

Minn. R. 2780.0100 Definitions

Subpart 1.

[Repealed, 12 SR 846]

Subp. 2.

[Repealed, 12 SR 846]

Subp. 3. Classification.

"Classification" means the manual classification as determined by the Workers' Compensation Insurers Rating Association's manual of rules, rates, and classifications approved for use in Minnesota by the commissioner, pursuant to Minnesota Statutes, section 79.071.

Subp. 4. Commissioner.

"Commissioner" means the commissioner of commerce.

Subp. 5.

[Repealed, 12 SR 846]

Subp. 6. Current ratio.

"Current ratio" means the ratio of current assets to current liabilities in the most recent financial statement.

Subp. 7. Deficit.

"Deficit" as regards the group self-insurer's fund means the excess of the amount necessary to fulfill all obligations under the Workers' Compensation Act for all fund years that the group has been in operation over all fund moneys.

Subp. 8. Fund.

"Fund" means self-insurer's fund.

Subp. 9. Fund year.

"Fund year" for group self-insurers means that period of time which the group self-insurer shall designate for the purposes of collecting premiums from its members and for determining any deficit or surplus. Such period of time shall correspond with the fiscal year of the group. Any claim arising within the accident year upon which the fund year is based shall be included in that fund year.

Subp. 10. Modified premium.

"Modified premium" means the total manual premium as defined in the Workers' Compensation Insurers Rating Association's manual of rules, classification, and rates approved for use in Minnesota, modified by an experience rating plan approved by the commissioner, pursuant to Minnesota Statutes, section 79.071.

Subp. 11. Self-insurer.

"Self-insurer" means both individual and group self-insurers unless the context clearly indicates a more restrictive definition.

Subp. 12. Self-insurer's fund.

"Self-insurer's fund" means any monetary fund or account created by a group self-insurer to pay workers' compensation claims due under the Workers' Compensation Act.

Subp. 13. Surplus.

"Surplus," as regards the group self-insurer's fund, means the excess of all fund moneys over the amount necessary to fulfill all obligations under the Workers' Compensation Act for all fund years that the group has been in operation.

Subp. 14. Workers' Compensation Act.

"Workers' Compensation Act" means Minnesota Statutes, chapter 176.

Subp. 15. Workers' Compensation Reinsurance Association; WCRA.

"Workers' Compensation Reinsurance Association" means that association governed by Minnesota Statutes, sections 79.34 to 79.40.

Subp. 16. Workers' compensation service company.

"Workers' compensation service company" means an entity which has obtained a license from the commissioner pursuant to parts 2780.6100 to 2780.6900 to contract with self-insurers for the purpose of providing services necessary to plan and maintain an approved self-insurance program. An employer that has been granted the authority to self-insure pursuant to parts 2780.1100 to 2780.1700 and administers its own self-insurance program shall be deemed a duly licensed workers' compensation service company for the purposes of servicing a self-insurance program of any affiliated company.

History

Statutory Authority: MS s 45.023; 176.181
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; 12 SR 846

Minn. R. 2780.0200 [Repealed, 12 SR 846]

[Repealed, 12 SR 846]

Minn. R. 2780.0300 [Repealed, 12 SR 846]

[Repealed, 12 SR 846]

Minn. R. 2780.0400 Interest on Securities

Subpart 1.

[Repealed, 18 SR 1472]

Subp. 2.

[Repealed, L 1992 c 510 art 5 s 10]

Subp. 3.

[Repealed, L 1992 c 510 art 5 s 10]

Subp. 4. Interest.

Interest accruing on any negotiable securities deposited shall be collected and transmitted to the depositor, provided that the depositor is not in default in payment of compensation, premiums due to WCRA, or any assessments levied by the Department of Labor and Industry under Minnesota Statutes, section 176.131.

Subp. 5.

[Repealed, 12 SR 846]

Subp. 6.

[Repealed, L 1992 c 510 art 5 s 10]

Subp. 7.

[Repealed, L 1992 c 510 art 5 s 10]

Subp. 8.

[Repealed, L 1992 c 510 art 5 s 10]

History

Statutory Authority: MS s 45.023; 176.181
History: L 1992 c 510 art 5 s 10; 18 SR 1472

Minn. R. 2780.0500 Filing Reports

Filing reports:

A. Incurred losses, paid and unpaid, specifying indemnity and medical losses by classification, payroll by classification, and current estimated outstanding liability for workers' compensation shall be reported to the commissioner by each self-insurer on a calendar year basis, in a manner and on forms available from the commissioner. Payroll information must be filed by April 1 of the following year, and loss information and total workers' compensation liability must be filed by August 1 of the following year.

B. Each self-insurer shall, under oath, attest to the accuracy of each report submitted pursuant to item A. Upon sufficient cause, the commissioner shall require the self-insurer to submit a certified audit of payroll and claim records conducted by an independent auditor approved by the commissioner, based on generally accepted accounting principles and generally accepted auditing standards, and supported by an actuarial review and opinion of the future contingent liabilities. The basis for sufficient cause shall include the following factors: where the losses reported appear significantly different from similar type businesses; where major changes in the reports exist from year to year, which are not solely attributable to economic factors; or where the commissioner has reason to believe that the losses and payroll in the report do not accurately reflect the losses and payroll of that employer. If any discrepancy is found, the commissioner shall require changes in the self-insurer's or workers' compensation service company record keeping practices.

C. [Repealed, L 1999 c 177 s 88]

D. Each individual self-insurer shall, within four months after the end of its fiscal year, annually file with the commissioner its latest 10K report required by the Securities and Exchange Commission. If an individual self-insurer does not prepare a 10K report, it shall file an annual certified financial statement, together with such other financial information as the commissioner may require to substantiate data in the financial statement.

E. Each group self-insurer shall, within four months after the end of the fiscal year for that group, annually file a statement showing the combined net worth of its members based upon an accounting review performed by a certified public accountant, together with such other financial information the commissioner may require to substantiate data in the group's summary statement. This item shall not apply if the applicable financial requirements have been waived pursuant to part 2780.2300.

F. In addition to the financial statements required by items D and E, interim financial statements or 10Q reports required by the Securities and Exchange Commission may be required by the commissioner upon an indication that there has been deterioration in the self-insurer's financial condition, including a worsening of current ratio, lessening of net worth, net loss of income, the downgrading of the company's bond rating, or any other significant change that may adversely affect the self-insurer's ability to pay expected losses. Any self-insurer that files an 8K report with the Securities and Exchange Commission shall also file a copy of the report with the commissioner within 30 days of the filing with the Securities and Exchange Commission.

History

Statutory Authority: MS s 176.181
History: L 1999 c 177 s 88

Minn. R. 2780.0600 Grounds for Revocation of Self-Insurance Authority

The following shall constitute grounds for revocation of the authority to self-insure:

A. failure to comply with parts 2780.0100 to 2780.5000;

B. failure to comply with any lawful order of the commissioner;

C. failure to comply with any provision of the Workers' Compensation Act;

D. a deterioration of financial condition adversely affecting the self-insurer's ability to pay expected losses, including a worsening of the current ratio, a lessening of net worth, a net loss of income, or the failure of the self-insurer to meet the net worth standards of part 2780.1200, subpart 1, or 2780.2200;

E. committing an unfair or deceptive act or practice as defined in Minnesota Statutes, section 72A.20; or

F. failure to abide by the plan of operation of the WCRA.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.1100 Application for Self-Insurer Status

Subpart 1. Procedure.

Each employer desiring to self-insure individually shall apply to the commissioner on forms available from the commissioner. The commissioner shall grant or deny the application within 30 days after a complete application is filed. Such time limit may be extended for another 30 days upon 15 days' prior notice to the applicant. Any grant of authority to self-insure shall continue in effect until revoked by order of the commissioner or until such time as the employer becomes insured.

Subp. 2. Certified financial statement.

Each application for self-insurance shall be accompanied by a certified financial statement. Certified financial statements for a period ending more than six months prior to the date of the application must be accompanied by an affidavit, signed by a company officer under oath, stating that there has been no material lessening of the net worth nor other adverse changes in its financial condition since the end of the period.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.1200 Financial Standards

Subpart 1. Net worth.

Each individual self-insurer shall have and maintain a net worth at least equal to the greater of ten times the retention limit selected with the WCRA or one-third the amount of the self-insurer's current annual modified premium. The requirements of this subpart shall be modified if the self-insurer can demonstrate through a reinsurance program, other than coverage provided by the WCRA, that it can pay expected losses without endangering the financial stability of the company.

Subp. 2. Assets, net worth, and liquidity.

Each individual self-insurer shall have and maintain sufficient assets, net worth, and liquidity to promptly and completely meet all of its obligations that may arise under the Workers' Compensation Act. In determining whether a self-insurer meets this requirement, the commissioner shall consider the self-insurer's current ratio; its long-term and short-term debt to equity ratios; its net worth; financial characteristics of the particular industry in which the self-insurer is involved; any recent changes in the management and ownership of the company; any excess insurance purchased by the self-insurer from a licensed company or an authorized surplus line carrier, other than excess insurance from the WCRA; any other financial data submitted to the commissioner by the company; and the company's workers' compensation experience for the last four years.

Subp. 3. Guarantee by affiliates.

Where an employer seeking to self-insure fails to meet the financial requirements set forth in subparts 1 and 2, the commissioner shall grant authority to self-insure provided that an affiliated company, whose financial statement is filed with the commissioner and meets the requirements set forth in subparts 1 and 2, provides a written guarantee adopted by resolution of its board of directors that it will pay all workers' compensation claims incurred by its affiliate, and that it will not terminate the guarantee under any circumstances without first giving the commissioner and its affiliate 30 days' written notice. If said guarantee is withdrawn or if the guarantor ceases being an affiliate, the affiliate shall give written notice to the commissioner and the self-insured. The self-insured's authority to self-insure shall automatically terminate upon expiration of the 30-day notice period.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.1300 Agreement to Pay Benefits

Each individual self-insurer shall agree to fully discharge by cash payment, or other form of benefit approved by the Department of Labor and Industry, all amounts required to be paid by the provisions of the Workers' Compensation Act.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.1400 Deposit of Securities or Bonds

Subpart 1.

[Repealed, 12 SR 846]

Subp. 2. Exemption.

No deposit shall be required of a self-insurer that has had its workers' compensation liability guaranteed pursuant to part 2780.1200, subpart 3, provided that the affiliated company is required to make a deposit and the self-insurer's outstanding workers' compensation liability is included in the determination of the affiliate's deposit.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.1500 Administration of Claims

Subpart 1. Equitable.

Each individual self-insurer shall administer insurance claims in a fair and equitable manner.

Subp. 2. Qualifications of administrators.

Each individual self-insurer shall designate those employees who will administer their self-insurance program, and shall specify their qualifications to engage in the administration of the self-insurance program. If a self-insurer contracts with another entity for the administration of its program, including adjustments of claims or administration of loss control or safety engineering programs, the self-insurer shall only contract with a workers' compensation service company duly licensed for those specific areas of program administration.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.1600 Sale or Merger of Self-Insurer

When a self-insurer is sold to or merged with another entity, the self-insurer shall give notice to the commissioner within 30 days of the sale or merger. At that time, the new owner shall file a consolidated financial statement, and the commissioner shall have the discretion to revoke the employer's authority to self-insure if the consolidated financial statement does not meet the requirements of part 2780.1200, subparts 1 and 2. The burden shall be on the new owner to qualify pursuant to parts 2780.1100 to 2780.1800.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.1700 Federal Guarantee; Exemption

Any employer whose workers' compensation liability has been guaranteed by the federal government shall not be required to file a certified financial statement pursuant to part 2780.1200, subpart 2, provided that on termination of any such guarantee, the employer's authority to self-insure shall be void.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.1800 Notice of Voluntary Termination

Any individual self-insurer that voluntarily terminates its self-insurance authority shall give notice to the commissioner not less than 30 days before the termination is to occur.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.2100 Applications for Group Self-Insurance

Applications for group self-insurance:

A. Two or more employers in the same industry may apply to the commissioner for the authority to self-insure as a group on forms available from the commissioner. This initial application shall be accompanied by a copy of the bylaws or plan of operation adopted by the group. Such bylaws or plan of operation shall conform to the conditions prescribed by parts 2780.2100 to 2780.5000. The commissioner shall approve or disapprove the bylaws within 30 days unless a question as to the legality of a specific bylaw or plan provision has been referred to the Attorney General's Office. The commissioner shall make a determination as to the application within 15 days after receipt of the requested response from the Attorney General's Office.

B. After the initial application and the bylaws or plan of operation have been approved by the commissioner or at the time of the initial application, the group shall submit the names of employers that will be members of the group; an indemnity agreement providing for joint and several liability for all group members for any and all workers' compensation claims incurred by any member of the group, as set forth in part 2780.9920, signed by an officer of each member; and an accounting review performed by a certified public accountant. A certified financial audit may be filed in lieu of an accounting review.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.2200 Financial Standards

A group proposing to self-insure shall have and maintain:

A. A combined net worth of all of the members of at least equal to the greater of ten times the retention selected with the WCRA or one-third of the current annual modified premium of the members. The requirements of this item shall be modified if the self-insurer can demonstrate that through excess insurance, other than coverage provided by the WCRA, that it can pay expected losses.

B. Sufficient assets, net worth, and liquidity to promptly and completely meet all obligations of its members under the Workers' Compensation Act. In determining whether a group is in sound financial condition, consideration shall be given to the combined net worth of the member companies; the consolidated long-term and short-term debt to equity ratios of the member companies; the particular industry that the member companies are engaged in; any excess insurance other than reinsurance with the WCRA, purchased by the group from an insurer licensed in Minnesota or from an authorized surplus line carrier; other financial data requested by the commissioner or submitted by the group; and the combined workers' compensation experience of the group for the last four years.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.2300 Waiver of Financial Requirements

The financial requirements of parts 2780.2100, item B, and 2780.2200 shall be waived if the group self-insurer has purchased aggregate excess insurance from an insurer licensed to do business in the state of Minnesota, and that excess insurance indemnifies all losses of the group self-insurer, other than those reimbursable by the Workers' Compensation Reinsurance Association, in excess of the annual premiums collected by the group less the sum of annual administrative costs, premiums payable to the Workers' Compensation Reinsurance Association, and premiums payable to the excess insurer. If aggregate excess insurance is terminated, the service company shall inform the commissioner within two days after receipt of notice of cancellation.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.2400 Processing Application

The commissioner shall grant or deny the group's application to self-insure within 30 days after a complete application has been filed, provided that such time may be extended for an additional 30 days upon 15 days prior notice to the applicant. The commissioner shall grant approval for self-insurance upon a determination that the financial ability of the self-insurer's group is sufficient to fulfill all joint and several obligations of the member companies that may arise under the Workers' Compensation Act; the gross annual premium of the group members is at least $300,000; the group has established a fund pursuant to parts 2780.4100 to 2780.5000; the group has contracted with a licensed workers' compensation service company to administer its program; the required securities or surety bond shall be on deposit prior to the effective date of coverage for any member; and all of the member companies are engaged in the same industry. Such approval shall be effective until revoked by order of the commissioner or until the employer members of the group become insured.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.2500 Administration of Program

Each group self-insurer shall contract with a workers' compensation service company licensed pursuant to parts 2780.6100 to 2780.6900 to administer its program, or employ such personnel that will qualify the group as a licensed workers' compensation service company. The service company shall have the sole authority to make claim and reserve determinations regarding injured workers of the member employers.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.2600 Group Self-Insurer's Fund

Each group self-insurer shall establish a group self-insurer's fund pursuant to parts 2780.4100 to 2780.5000, which shall be administered by the board of directors of the group.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.2700 [Repealed, 12 SR 846; L 1989 c 260 s 25]

[Repealed, 12 SR 846; L 1989 c 260 s 25]

Minn. R. 2780.2800 Group Membership

Subpart 1. Period.

An employer must belong to the group for at least one year. If a member voluntarily terminates its membership in a group during the second or third year of membership, the group self-insurer shall assess the following member at least the following penalties: 25 percent of the premium due from that member for that year if termination occurs within the second year of membership, and 15 percent of the premium due from that member for that year if termination occurs within the third year. No penalty shall be required if an employer's withdrawal is due to merger, dissolution, sale of the company, or change in the type of business so that it is no longer engaged in the same industry as the rest of the employers of the group. Following the completion of three consecutive years of membership in the group, withdrawal from the group shall be allowed without penalty, provided that 90 days' advance written notice is given to the board of directors of the group, and the group's plan of operation or bylaws allow such withdrawal without a penalty. Any penalty assessed pursuant to this subpart shall be paid to the group's self-insurer's fund.

Subp. 2. Withdrawal or expulsion.

Upon receipt of any notice of a member to withdraw or a decision by the board of directors to expel a member, the group self-insurer shall give immediate notice to the commissioner and then, as soon as practicable, reevaluate its net worth and financial condition. If the consolidated net worth or financial condition of the group, excluding the terminating or expelled member, fails to meet the requirements specified in part 2780.2200, the group shall so notify the commissioner within 15 days and advise the commissioner of its plan for bringing the group into compliance with part 2780.2200.

Subp. 3. Filing of membership.

The group self-insurer shall file with the commissioner the name of all employer members accepted into the group. The group shall not accept any liability for a new member until a signed indemnity agreement in the form set forth in part 2780.9920 has been completed by that new member and filed with the commissioner.

Subp. 4. Prohibited members.

Each group self-insurer shall be prohibited from accepting as a member any employer that owes an outstanding debt to a previous group self-insurer. A judgment obtained under the laws of Minnesota shall be required as proof of such debt. If a group has such an employer member, upon receipt of the required proof the fund administrator shall issue 30 days' notice of cancellation to the member.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.2900 Bylaws and Plans of Operation

Subpart 1. Adopting.

The directors of each group self-insurer shall cause to be adopted a set of bylaws or plan of operation that shall govern the operation of the group. All bylaws or plans of operation or amendments thereto shall be subject to prior approval by the commissioner, pursuant to part 2780.2100, item A.

Subp. 2. Content.

These bylaws or plans of operation shall contain the following subjects:

A. qualifications for group self-insurer membership, including underwriting considerations;

B. the method for selecting the board of directors, including the directors' terms of office;

C. the procedure for amending the bylaws or plan of operation;

D. investment of all assets of the fund;

E. frequency and extent of loss control or safety engineering services provided to members;

F. a schedule for payment and collection of premiums;

G. expulsion procedures, including expulsion for nonpayment of premiums and expulsion for excessive losses;

H. delineation of authority granted to the administrator;

I. delineation of authority granted to the service company;

J. basis for determining premium contributions by members, including any experience rating program;

K. procedures for resolving disputes between members of the group, which shall not include submitting them to the commissioner; and

L. basis for determining distribution of any surplus to the members, or assessing the membership to make up any deficit.

Subp. 3. Annual review.

The directors shall review at least annually the following items for the purpose of determining whether these areas of concern are being adequately provided for:

A. service company performance;

B. loss control and safety engineering;

C. investment policies;

D. collection of delinquent debts;

E. expulsion procedures;

F. initial member review;

G. administrator performance; and

H. claims handling and claims reporting.

Subp. 4. Mandatory filing.

All group self-insurers shall file copies of its current bylaws or plan of operation with the commissioner. Any changes in the bylaws or plan of operation shall be filed with the commissioner no later than 30 days prior to their taking effect. The commissioner reserves the right to order the group self-insurers to rescind or revoke any bylaw or plan of operation if it is in violation of parts 2780.0100 to 2780.9920.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.3000 Records

All group self-insurers shall maintain at a location within the state of Minnesota such records as are necessary to verify the accuracy and completeness of all reports submitted to the commissioner pursuant to this chapter. However, the group self-insurers shall be authorized to transfer their financial records to the offices of the certified public accountant for the group self-insurers upon the written permission of the commissioner. In addition, if the group self-insurer has contracted with a service company for claims handling, then the claims files and related records may be located at the offices of the service company. The location of these records shall be designated with the application for self-insurance authority and thereafter shall be provided to the commissioner through written notice of any change in its location within 30 days of any such change.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.3100 Noncompliance

Failure of any employer to maintain membership in any group while not otherwise procuring insurance for its workers' compensation liability may subject the employer to the penalties provided in Minnesota Statutes, sections 176.181 and 176.183.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.3200 Wcra Membership

The group self-insurer shall be considered a single entity for the purposes of membership in the WCRA and for the purposes of any assessment levied upon self-insurers pursuant to the Workers' Compensation Act.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.3300 Business Trust or Incorporation Prohibited

The group self-insurer shall not incorporate or form a business trust pursuant to Minnesota Statutes, chapter 318.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.3400 Notice of Voluntary Termination

Any group self-insurer that voluntarily terminates its self-insurance authority shall give notice to the commissioner not less than 30 days before the termination is to occur.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.4100 Payment to Fund

Each group self-insurer shall, not less than ten days prior to the proposed effective date of the group, submit evidence that cash premiums equal to not less than 20 percent of the current year's modified workers' compensation insurance premium reduced by an appropriate premium discount for each employer has been paid into a common claims fund, maintained by the group in a designated depository. The remaining balance of the member's premium, which shall be at least the current year's modified workers' compensation insurance premium reduced by any appropriate premium discount less the initial cash premium, shall be paid to the group in a reasonable manner over the remainder of the year. Payments in subsequent years shall be made according to the schedule in the manual of rules, classifications, and rates approved for use in Minnesota; provided that a reduction in the manual premium shall be allowed if based on bona fide savings in the expenses of the group, or an actuary who is a member of the Casualty Actuarial Society certifies that a reduction should be permitted based on the losses of the group and that a deficit has not occurred in any of the last three years. Each group self-insurer shall initiate proceedings against a member when that member becomes more than 15 days delinquent in any payment of premium to the fund.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.4200 Commingling of Assets

There shall be no commingling of any assets of the group self-insurer's fund with the assets of any individual member employer or with any other account of the group unrelated to payment of workers' compensation liability incurred by the group.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.4300 Administrators, Directors, and Fiscal Agents

Subpart 1. Designation.

The group self-insurer shall designate a fiscal agent and/or administrator to administer the financial affairs of the fund. Such fiscal agent or administrator shall furnish a fidelity bond with the self-insurer as obligee, in an amount sufficient to protect the fund against the misappropriation or misuse of any money or securities. Such fiscal agent or administrator shall not be an owner, officer, or employee of the service company or any affiliate of the service company.

Subp. 2. Control of funds.

All funds shall remain in the control of the group self-insurer or its authorized administrator. One or more revolving funds for payment of compensation benefits due may be established for the use of the authorized service company. The service company shall furnish a fidelity bond covering its employees, with the self-insurer as obligee, in an amount sufficient to protect all money placed in such revolving fund. Should the fidelity bond of the fiscal agent and/or administrator also cover the money in the revolving fund, the service company shall not be required to furnish a fidelity bond.

Subp. 3. Use of funds.

No director, fiscal agent, or administrator of a group self-insurer shall utilize any of the money collected as premiums for any purpose unrelated to workers' compensation insurance. No director, fiscal agent, or administrator shall borrow any money from the self-insurer's fund or in the name of the self-insurer's fund.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.4400 Annual Audit

The accounts and records of the group self-insurer's fund shall be audited annually. Audits shall be made by certified public accountants, based on generally accepted accounting principles and generally accepted auditing standards, and supported by actuarial review and opinion of the future contingent liabilities, in order to determine the solvency of the self-insurer's fund. All audits required by this part shall be filed with the commissioner 90 days after the close of the fiscal year for the group self-insurer. The commissioner may require a special audit to be made at other times if the financial stability of the fund or the adequacy of its monetary reserves is in question.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.4500 Investments

Cash assets of the self-insurer's fund may be invested as provided in Minnesota Statutes, section 60A.11 for a casualty insurance company, provided that investment in common stock, real estate, or indebtedness from any member company is prohibited. In addition, investment in the following is allowed:

A. savings accounts or certificates of deposit in a duly chartered commercial bank located within the state of Minnesota and insured through the Federal Deposit Insurance Corporation;

B. share accounts or savings certificates in a duly chartered savings association located within the state of Minnesota and insured through the Federal Savings and Loan Insurance Corporation;

C. direct obligations of the United States Treasury, such as notes, bonds, or bills;

D. any bond or security issued by the state of Minnesota and backed by the full faith and credit of the state; or

E. any credit union where the employees of the self-insurer are members, provided that such credit union is located in Minnesota, licensed by the state of Minnesota, and insured through the Federal Deposit Insurance Corporation.

History

Statutory Authority: MS s 176.181
History: L 1995 c 202 art 1 s 25

Minn. R. 2780.4600 Purchase of Securities

Any securities purchased by the group self-insurer's fund shall be in such denominations and with dates of maturity to insure that securities may be redeemable at sufficient time and in sufficient amounts to meet the fund's current and long-term liabilities.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.4700 Annual Report

The self-insurer shall report annually, as part of its financial statement, a schedule showing the disposition of all investment income earned during the immediately preceding year.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.4800 [Repealed, L 1994 c 485 s 66]

[Repealed, L 1994 c 485 s 66]

Minn. R. 2780.4900 Notice of Refund

The group self-insurer shall give notice to the commissioner of any refund. Said notice shall be accompanied by a statement from the self-insurer's certified public accountant certifying that the proposed refund is in compliance with part 2780.4800.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.5000 Deficits

Subpart 1. Payment.

In the event of a deficit in any fund year, such deficit shall be paid up immediately, either from surplus from a fund year other than the current fund year or by assessment of the membership. The commissioner shall be notified within ten days of any transfer of surplus funds.

Subp. 2. Assessment.

If the commissioner finds that any deficit has not been paid up, the commissioner shall order an assessment to be levied against the members of a group self-insurer sufficient to make up any deficit.

History

Statutory Authority: MS s 176.181
History: 17 SR 1279

Minn. R. 2780.6100 License Application

Subpart 1. Scope of license.

Any person or entity desiring to be licensed as a workers' compensation service company shall apply to the commissioner on forms available from the commissioner. The license shall designate areas of administrative services that the service company shall be authorized to perform. Any license granted shall be effective for a period of two years unless revoked by order of the commissioner.

Subp. 2. Content.

In support of the application, a workers' compensation service company shall submit:

A. summary information concerning its organization and staff;

B. detailed resumes of all employees, or employees of any subcontractor, with administrative or professional capacity; such resumes shall indicate the areas of administration in which each employee shall work and the qualifications and experience of the employee relating to that area;

C. a description of the administrative services intended to be provided; and

D. the identity of the owners of the service company, including all members of a partnership and all officers of a corporation.

Subp. 3. Certification.

The application shall be accompanied by a certification that the applicant has employed or has contracted with competent individuals to provide those services intended to be provided to self-insurers.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.6200 Supervisory Personnel

If the workers' compensation service company intends to provide claims adjusting, the service company or its subcontractor shall have supervisory personnel who possess at least three years' experience adjusting workers' compensation claims. Further, the workers' compensation service company or subcontractor shall have at least one adjuster who holds a license under Minnesota Statutes, chapter 72B, and shall be situated within the state of Minnesota.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.6300 Residential Agent

The workers' compensation service company shall have within the state of Minnesota an employee who is able to act as a resident agent, authorized to act in all matters concerning the service company.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.6400 Accountants

The workers' compensation service company shall have employed or retained experienced accountants when necessary to the providing of the administrative services to a self-insurer, when the prospective self-insurer does not provide such expertise.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.6500 Processing of Application

The commissioner shall grant or deny the license within 30 days after a complete application has been filed showing compliance with parts 2780.6100 to 2780.6400. However, if any applicant, an affiliated company of the applicant, or owner or officer of the applicant has committed an act or practice in connection with the administration of claims that is defined as unfair or deceptive in Minnesota Statutes, section 72A.20, the applicant shall be denied a license under this part. Any applicant who is denied a license pursuant to this part may, within 30 days after denial by the commissioner, demand a hearing pursuant to Minnesota Statutes, chapter 14. The commissioner shall have the burden of proof at any such hearing to prove that the applicant has committed such a practice.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.6600 Inspection of Records

Any records of a workers' compensation service company relating to any of the services offered or provided to any self-insurer shall be open to inspection by the commissioner during normal business hours.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.6700 Investigation

Each workers' compensation service company may be investigated by the commissioner upon reasonable belief that the service company is not in compliance with this chapter or is improperly administering workers' compensation claims pursuant to the Workers' Compensation Act. If the commissioner determines that the service company is not in compliance with this chapter or the Workers' Compensation Act, the service company shall be liable for the cost of the investigation.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.6800 Revocation

Subpart 1. Contested case.

Revocation of any workers' compensation service company license shall be pursuant to the contested case procedure in Minnesota Statutes, chapter 14.

Subp. 2. Grounds.

Grounds for revocation of the workers' compensation service company license shall be maintenance of inadequate loss reserves; violation of any of the foregoing rules; violation of any provision of the Workers' Compensation Act; or committing an unfair or deceptive act or practice as defined in Minnesota Statutes, section 72A.20.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.6900 Reports

Subpart 1. Responsibility.

Each workers' compensation service company shall be expected to file, or attempt to ensure that the self-insurers it services file, all required reports relating to those services that they provide by the dates established by statute or by these rules. Such reports shall include the following: loss information reports required by part 2780.0500; reports required by the WCRA; and any report required by the Minnesota Department of Labor and Industry.

Subp. 2. Termination of contract.

Each workers' compensation service company shall report to the commissioner the termination of any service contract entered into with a self-insurer within ten days of such termination.

History

Statutory Authority: MS s 176.181

Minn. R. 2780.9910 [Repealed, 12 SR 846]

[Repealed, 12 SR 846]

Minn. R. 2780.9920 Indemnity Agreement

INDEMNITY AGREEMENT

Whereas, (name of company) has agreed to be and has been accepted as a member of (name of Group Self-Insurer).
Whereas, (name of company) has agreed to be bound by all of the provisions of the Minnesota Workers' Compensation Act and all Rules promulgated thereunder.
Whereas, that (name of company) has agreed to be bound by the bylaws or plan of operation and all amendments thereto of (name of Group Self-Insurer).
Whereas, that (name of company) has agreed to be jointly and severally liable for all claims and expenses of all the members of (name of Group Self-Insurer) arising in any fund year in which (name of company) is a member of the group. Provided that if (name of company) is not a member for the full year, it shall be only liable for a pro rata share of that liability.

IN WITNESS WHEREOF, the (name of company) and (name of group self-insurer) have caused this indemnity agreement to be executed by its authorized officers:

History

Statutory Authority: MS s 176.181

Chapter 2781 WORKERS' COMPENSATION ASSIGNED RISK PLAN

Chapter 2782 LIQUOR LIABILITY INSURANCE; ASSIGNED RISK

Minn. R. 2782.0100 [Repealed, L 2019 c 50 art 1 s 130 subd 10]

[Repealed, L 2019 c 50 art 1 s 130 subd 10]

Minn. R. 2782.0200 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2782.0300 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2782.0400 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2782.0500 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2782.0600 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2782.0700 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2782.0800 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Chapter 2783 LIQUOR LIABILITY ASSIGNED RISK PLAN

Chapter 2785 POLITICAL SUBDIVISION SELF-INSURANCE POOLS

Minn. R. 2785.0100 Definitions

Subpart 1. Scope.

For the purposes of parts 2785.0100 to 2785.1600, the terms defined in this part have the meanings given them.

Subp. 2. Board.

"Board" means a pool's board of trustees.

Subp. 3. Bylaws.

"Bylaws" means the statements and organizational documents adopted by a plan that prescribe its purpose, government, and administration.

Subp. 4. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce.

Subp. 5. Coverage.

"Coverage" means the right of a covered person or entity to benefits or indemnification provided directly or indirectly by a pool, by virtue of the coverage document.

Subp. 6. Coverage document.

"Coverage document" means the document specifying the characteristics and duration of coverage provided through a pool. Characteristics of coverage include the kind of loss or benefit that the pool will reimburse, subject to specific exclusions, limitations, or deductibles.

Subp. 7. Days.

"Days" means calendar days.

Subp. 8. Employee health benefit pool.

"Employee health benefit pool" means a pool that covers employee health benefits, disability benefits, or both.

Subp. 9. Financial administrator.

"Financial administrator" means an entity employing persons trained and experienced in money management and investments, and possessing no less than five years' experience as an organization in money management and investments with demonstrated competence.

Subp. 10. Fund year.

"Fund year" means a pool's 12-month fiscal year.

Subp. 11. Member.

"Member" means a political subdivision or private employer member of a pool. Reference to actions of a member include actions on behalf of the member's covered employees or other covered persons.

Subp. 12. Political subdivision.

"Political subdivision," in reference to employee health benefit pools, means the same as defined in Minnesota Statutes, section 471.617, subdivision 2, and in reference to all other pools means the same as defined in Minnesota Statutes, section 471.98, subdivision 2.

Subp. 13. Pool.

"Pool" means any self-insurance fund or agreement for the reciprocal assumption of risk established by or among two or more political subdivisions for coverage of their respective risks, but also includes private employers for the purpose of a public/private pool. Reference to actions of a pool include actions by the pool's designated agents.

Subp. 14. Premium.

"Premium" means the amount paid or to be paid for coverage by members. Premium does not include assessments or penalties.

Subp. 15. Public/private pool.

"Public/private pool" means a workers' compensation pool including as members a political subdivision and one or more private employers.

Subp. 16. Runoff pool.

"Runoff pool" means a pool that no longer has authority to self-insure, but that continues to exist for the purpose of paying claims, preparing reports, and administering transactions associated with the period when the pool provided coverage.

Subp. 17. Self-insure.

"Self-insure" means to assume primary liability or responsibility for certain risks or benefits, rather than transferring liability or responsibility to some other entity.

Subp. 18. Service company.

"Service company" means an entity licensed under Minnesota Statutes, section 60A.23, subdivision 8, and rules adopted thereunder, as a self-insurance plan administrator, or an entity named in Minnesota Statutes, section 60A.23, subdivision 8, paragraph (1), clause (a) or (b).

Subp. 19. Sponsoring association.

"Sponsoring association" means a statewide nonprofit organization of political subdivisions that sponsors or organizes a pool, and which has as its primary purpose providing services to Minnesota political subdivisions that are not related to insurance or self-insurance.

Subp. 20. Surplus.

"Surplus" means a pool's total assets minus total liabilities. Surplus includes paid-in capital and retained earnings. The amount of a pool's surplus is determined according to the instructions provided for a pool's financial statements.

Subp. 21. Workers' compensation pool.

"Workers' compensation pool" means a pool that covers workers' compensation liability, employer's liability, or both.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.0200 Purpose

Parts 2785.0100 to 2785.1600 govern the formation, operation, and dissolution of political subdivision self-insurance pools. They are intended to ensure that the financial integrity of these pools is maintained, and that they are administered competently and equitably.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.0300 Scope

The following are subject to the requirements of parts 2785.0100 to 2785.1600:

A. political subdivision self-insurance pools;

B. political subdivisions of Minnesota that form, join, or leave a self-insurance pool;

C. private Minnesota employers that form, join, or leave a self-insurance pool including a political subdivision; and

D. service companies that provide services to a pool.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.0400 Bylaws

Subpart 1. Content.

Bylaws may contain any provisions that do not conflict with parts 2785.0100 to 2785.1600. Bylaws must, at a minimum, contain the following provisions:

A. the pool's name, purpose, fiscal year, and initial date of existence;

B. definitions of key terms;

C. a statement of the powers, duties, and responsibilities assigned to the board, the service company, the financial administrator, and reserved by the membership;

D. the number, term of office, and method of selection and replacement of the members of the board;

E. the procedure for calling board meetings;

F. the method of periodic selection and review of the service company and financial administrator;

G. the procedure for amending the bylaws;

H. the procedure for resolving disputes among members, which must not include submitting disputes to the commissioner;

I. the criteria for membership in the pool, including standards of financial integrity and loss experience;

J. the procedure for admitting new members to the pool;

K. the criteria for expelling members from the pool, including nonpayment of premium;

L. the procedure for withdrawal and expulsion of members from the pool, including the minimum required period of membership;

M. a statement of the coverages the pool intends to provide;

N. the procedure for adding and dropping a member's participation in a particular coverage;

O. a schedule for premium payments by members and, if applicable, their employees;

P. the procedure for changing premium rates;

Q. the procedure for levying and collecting an assessment;

R. a statement of who may have access to pool funds and for what purposes;

S. the procedure for distributing dividends, and the eligibility of past members and past covered employees for dividends; and

T. the procedure for distributing any assets remaining upon the pool's dissolution.

Subp. 2. Adoption and changes.

The bylaws must be adopted in writing by all initial members. Authority to change the bylaws must reside with the membership or the board, according to the terms of the bylaws. Authority to change the bylaws may not be delegated to a contractor or other outside party. The pool must file bylaw changes with the commissioner not less than 30 days after adoption.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.0500 Board

Subpart 1. Structure.

A pool must have a board of trustees consisting of at least three persons, who must be officials or employees of the members or of the sponsoring association, if any. No member may have more than one representative on the board, unless the pool has only two members, in which case each member must have at least one representative on the board. The sponsoring association must not have majority representation on the board. No trustee may be an employee, agent, or representative of the pool's service company, financial administrator, insurer, or other person or entity under contract with the pool, except that a trustee may be an employee, agent, or representative of the sponsoring association. Trustees shall be elected by the membership, or appointed by the sponsoring association. One trustee shall be designated the chairperson. The board shall meet no less than four times annually.

Subp. 2. Duties.

The board is responsible for operation of the pool. The board may delegate some or all of its responsibilities to the chairperson or other trustees between board meetings. All responsibilities of the pool not expressly delegated by the board or parts 2785.0100 to 2785.1600 are the responsibility of the board. The board shall, at a minimum, have the following responsibilities:

A. fiduciary responsibility for the pool's operation and financial condition;

B. selection, supervision, and evaluation of the service company, financial administrator, accountant, insurer, and any other contractors;

C. on the basis of the pool's overall financial condition, authorizing changes in premium, reserve, or investment practices; and declaring assessments or dividends as appropriate;

D. approving all reports concerning the pool's operations and status to the commissioner;

E. monitoring delinquent premiums, loss experience, and the financial condition of individual members; and authorizing disciplinary action or expulsion as appropriate;

F. authorizing acceptance or rejection of applications for membership;

G. as permitted by the bylaws, making or recommending changes to the bylaws for the improvement of the pool's operation and financial integrity; and

H. monitoring the pool's compliance with all statutes and rules governing its operation.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.0600 Application

Subpart 1. Initial application.

Two or more political subdivisions may apply to the commissioner for authority to form a self-insurance pool. One or more private employers and a political division may apply for authority to form a public/private pool, if statutorily authorized. Applications must be submitted on forms prescribed by the commissioner. Applications must be submitted not later than 60 days prior to the requested date for authority to self-insure. Applications submitted without responses to certain questions, or with responses that are inadequate, must be returned to the applicant for resubmission. Applications not returned to the applicant for resubmission within 14 days of receipt must be approved or disapproved within 60 days of receipt.

Subp. 2. Prior existing pools.

Pools in existence at the time parts 2785.0100 to 2785.1600 are effective must submit their initial application for self-insurance authority no later than December 1, 1985.

Subp. 3. Renewal application.

Subp. 4. Merger.

Two or more existing pools may apply to merge, provided the merged pool assumes all financial and regulatory obligations of the former pools. Merger applications are subject to the same requirements as prospective new pools.

Subp. 5. Approval or disapproval.

Upon approval of an application, the commissioner shall issue an order authorizing the proposed self-insurance pool. Initial authorization orders for new pools shall be effective for 27 months after the initial authorization date. Renewal authorization orders shall be for two-year periods. Approval of applications for authority to self-insure must be granted if the proposed pool conforms with:

A. all requirements of parts 2785.0100 to 2785.1600;

B. all applicable requirements of Minnesota insurance statutes and rules, as described in part 2785.1000, subpart 2;

C. Minnesota Statutes, sections 72A.19 to 72A.32; and

D. all applicable requirements of other Minnesota statutes and rules.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.0700 Ending Self-Insurance, Runoff Period, and Plan Dissolution

Subpart 1. Ending self-insurance authority.

A pool may decide to end its self-insurance authority and cease to provide coverage effective at the end of a fund year. The pool must notify the commissioner within 14 days of such a decision. A pool may not elect to end its self-insurance authority less than 45 days prior to the end of the fund year in question. Voluntary ending of self-insurance authority does not constitute pool dissolution under subpart 4.

Subp. 2. Revocation of self-insurance authority.

The commissioner shall, by order, revoke the authority of a pool to self-insure upon no less than ten days' written notice if any of the following events occur or conditions develop, and if the commissioner judges them to be material:

A. failure of the pool to comply with parts 2785.0100 to 2785.1600, or with other applicable Minnesota statutes or rules;

B. failure of the pool to comply with any lawful order of the commissioner;

C. commission by the pool of an unfair or deceptive practice as defined in Minnesota Statutes, sections 72A.17 to 72A.32, or in related rules; or

D. a deterioration of the pool's financial integrity to the extent that its present or future ability to meet obligations promptly and in full is or will be significantly impaired.

Subp. 3. Runoff period.

A pool shall continue to exist as a runoff pool after its authority to self-insure has ended, for the purpose of paying claims, preparing reports, and administering transactions associated with the period when the pool provided coverage. A runoff pool must continue to comply with parts 2785.0100 to 2785.1600, and with other applicable Minnesota statutes and rules. Authority to exist as a runoff plan is open-ended, and does not require renewal of authority under part 2785.0600, subpart 3.

Subp. 4. Dissolution.

A pool, including a runoff pool, that desires to cease existence shall apply to the commissioner for authorization to dissolve. Applications must be approved or disapproved within 60 days of receipt. Dissolution without authorization is prohibited and void, and does not absolve a pool or runoff pool from fulfilling its continuing obligations, and does not absolve its members from assessments under part 2785.1400, subpart 3. The pool's assets at dissolution must be distributed to the members and covered persons as provided in the bylaws. Authorization to dissolve must be granted if either of the following conditions are met:

A. the pool demonstrates that it has no outstanding liabilities, including incurred but not reported liabilities; or

B. the pool has obtained an irrevocable commitment from a licensed insurer that provides for payment of all outstanding liabilities, and for providing all related services, including payment of claims, preparation of reports, and administration of transactions associated with the period when the pool provided coverage.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.0800 Administration

Subpart 1. Service company.

A pool must contract with a service company for services necessary to the pool's day-to-day operations, except services and responsibilities reserved to the members, the board, individual trustees, the financial administrator, the accountant, or other contractors. The service company must have expertise in and be licensed for the coverages the pool provides. Subject to the oversight of the board, the service company shall, directly or through subcontractors, provide all services directly related to the administration of coverage. These services include but are not limited to:

A. accounting and record keeping;

B. billing and collection of premiums and assessments;

C. claims investigation, settlement, and reserving;

D. claims payment, including claims wholly or partially subject to stop-loss insurance or member deductibles;

E. general administration;

F. loss control, safety programs, or both; and

G. underwriting.

Subp. 2. Financial administrator.

A pool must contract with a financial administrator for investment of the pool's assets and other financial or accounting services. No staff member of the financial administrator may be an owner, officer, employee, or agent of the service company, or of a subcontractor of the service company.

Subp. 3. Record keeping.

A pool must maintain within Minnesota all records necessary to verify the accuracy and completeness of all reports submitted to the commissioner under part 2785.1600. The commissioner may examine the pool's records in order to ascertain the pool's compliance with parts 2785.0100 to 2785.1600, and with other applicable statutes and rules. All records concerning claims, reserves, financial transactions, and other matters necessary for the pool's operations are the pool's property.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.0900 Membership

Subpart 1. Availability.

Pool membership is open only to political subdivisions of Minnesota, except that private employers may join a public/private pool. A pool may establish other nondiscriminatory criteria for membership. Nothing in parts 2785.0100 to 2785.1600 requires a pool to accept members that do not meet the pool's underwriting standards.

Subp. 2. Joining.

New members must be admitted according to the standards and procedures specified in the bylaws. Membership is not effective before the applicant has signed a membership agreement affirming its commitment to comply with the bylaws and parts 2785.0100 to 2785.1600, including joint and several liability. The membership agreement must disclose that under the rules governing the pool, the board of trustees, or the Minnesota commissioner of commerce may order that an assessment be levied against the members, if necessary to maintain the pool's sound financial condition.

Subp. 3. Public/private pool membership.

Only Minnesota domiciled employers whose primary places of employment are within 40 miles of a political subdivision pool member are eligible for membership in a public/private pool. If all political subdivisions elect to withdraw from a public/private pool, the pool's authority to self-insure is terminated simultaneously with the date of the last political division's withdrawal. As a condition of a private employer's membership in a public/private pool, the employer must furnish a surety bond in a form prescribed by the commissioner. The pool shall be the bond's obligee, conditioned on the employer's paying all premiums, penalties, and assessments when due. The bond must be maintained on file with the commissioner until the end of the period of continuing liability, or until the pool terminates, whichever occurs first. The period of continuing liability is as defined in part 2785.1400, subpart 1. The bond must provide a penalty amount no less than:

A. the greatest one-year premium paid by the member for the coverage through the pool during the past three years;

B. if the member has not belonged to the pool for one full fund year, the annual premium to be paid by the member for the first year's coverage; or

C. if the member no longer belongs to the pool, the greatest one-year premium paid by the past member during the final three years in the pool.

Subp. 4. Leaving.

The membership agreement must state the procedures for leaving the pool. A member must notify the pool of its desire to withdraw not less than 30 days before the date upon which it desires to withdraw. If the board determines that the withdrawal would cause the pool to be in violation of the minimum annual premium requirement or would compromise the pool's financial integrity, the pool must notify the commissioner as required under part 2785.1100, subpart 2. Withdrawal is prohibited and void unless:

A. the member has belonged to the pool continuously for the period required by the bylaws, which shall provide for:

B. all outstanding premiums and assessments owed by the member have been paid.

Subp. 5. Expulsion.

No less often than annually a pool must compare the status and experience of each member with the criteria for expulsion in the bylaws. Expulsion is subject to the procedures and requirements for voluntary withdrawal of a member, except that:

A. a member may be expelled with outstanding premiums or assessments owing; and

B. a member may be expelled notwithstanding that the minimum term of membership has not been satisfied.

Subp. 6. Runoff pool membership.

After revocation of a pool's self-insurance authority or after a pool notifies the commissioner in writing of its intent to end self-insurance authority voluntarily, no member may join, leave, or be expelled from the pool.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.1000 Coverage

Subpart 1. Distinct pool types.

Employee health benefit pools and workers' compensation pools may provide only the coverages specified in the definitions for that pool type. Other pools may not provide any of the coverages permitted for employee health benefit pools and workers' compensation pools.

Subp. 2. Coverage administration and related requirements.

Pools are subject to the requirements of Minnesota statutes and rules applicable to insurance companies providing insurance in Minnesota similar to the pool's coverage. These include requirements contained in Minnesota Statutes, chapters 60A, 62A, 62E, 65A, 65B, 70A, 72A, 72C, 79, and 176, and rules adopted under these chapters, concerning:

A. filing and requesting approval for coverage documents and rates;

B. coverage document content and language;

C. mandated benefits, including coverage conversion and continuation requirements;

D. coverage administration, including notices to covered parties;

E. underwriting;

F. claim administration; and

G. other practices affecting coverage.

Subp. 3. Uniform underwriting.

All coverages offered by a pool must be available according to the same underwriting standards to all members and, if applicable, to all members' employees.

Subp. 4. Continuing responsibility.

Notwithstanding cancellation or termination of coverage to a particular member, ceasing to offer a particular coverage, or ending or revocation of authority to self-insure, a pool retains indefinitely all responsibilities to members and other covered persons associated with the period while coverage was in force. This responsibility ceases only after a pool dissolves under part 2785.0700, subpart 4.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.1100 Premiums, Cash Flow, and Dividends

Subpart 1. Minimum annual premium.

All pools must have and maintain an annual premium volume of no less that $300,000. A pool or prospective pool may apply to the commissioner for reduction of the minimum annual premium requirement, stating the amount of reduction requested and the supporting rationale and data. The commissioner must approve the applications within 60 days after receipt if the pool has demonstrated that the lesser premium volume would not compromise its financial integrity and stability.

Subp. 2. Monitoring premium volume.

A pool must monitor its premium volume. If premium decreases to an annualized volume of less than $400,000, or less than 133 percent of the amount approved pursuant to subpart 1, the pool must notify the commissioner at monthly intervals of the then-current annualized premium volume, until the annualized volume exceeds $400,000. "Annualized premium volume" means the gross premiums written for the previous 12 months. If premium decreases to an annualized volume of less than $300,000, or a lesser amount if approved pursuant to subpart 1, the pool must notify the commissioner:

A. of its intent to end its self-insurance authority; or

B. of its proposal for restoring compliance with subpart 1. If the proposal is unlikely, in the commissioner's judgment, to restore compliance with subpart 1 within 90 days, or if after 90 days the pool continues to be out of compliance, the commissioner shall revoke the pool's self-insurance authority.

Subp. 3. Surplus or stop-loss advancement.

A pool may protect itself from cash flow difficulties by methods including but not limited to the following:

A. establishing and maintaining a surplus consisting of funds contributed by members and the pool's retained earnings; or

B. obtaining language in the pool's stop-loss insurance policy requiring the insurer to advance funds to the pool if the policy limits have been or are likely to be exceeded. The funds may be considered an advance against the insurer's potential liability for the policy period.

Subp. 4. New pool deposit premium.

As a condition for authorization to self-insure a prospective pool must submit evidence that an initial premium payment has been made. The following requirements also apply to premium payments in a pool's first year of operation:

A. For all pools except employee health benefit pools, the initial payment must equal no less than 50 percent of the initial members' first year premium. If the initial payment is less than 100 percent of the initial members' first year premium, the remainder of the initial members' first year premium must be paid in three or more equal installments at equal intervals throughout the year.

B. For employee health benefit pools, the initial premium payment must be no less than 25 percent of the initial members' first year premium. If the initial payment is less than 100 percent of the initial members' first year premium, the remainder of the initial members' first year premium must be paid in six or more equal installments at equal intervals throughout the year.

C. A prospective pool may apply to the commissioner for reduction of the new pool deposit premium requirement, stating the payment schedule requested and the supporting rationale and data. The commissioner must approve the applications within 60 days after receipt if the pool has demonstrated that a less restrictive payment schedule would not compromise its ability to pay large claims promptly during its first year of operation. The commissioner must consider arrangements the pool has made under subpart 3 in evaluating the application.

Subp. 5. Premium payments.

A pool may permit installment payments if payment is always due before premium is to be earned. A pool shall promptly take appropriate action to collect premiums, assessments, or penalties that are past due. Collection costs are the obligation of the delinquent member.

Subp. 6. Dividend procedures.

A pool may declare and pay a dividend or distribution from its surplus only if:

A. the dividend would not cause the pool's surplus to be negative;

B. the pool does not have a stop-loss advancement liability or other borrowed money; and

C. for workers' compensation pools, the dividend will not be paid sooner than one year after it is declared, and at the time of payment the conditions of items A and B are fulfilled.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.1200 Reserves

A pool must establish reserves for all incurred losses, both reported and unreported, and for unearned premiums. To the extent that the amount of a loss is uncertain, the reserve must be set conservatively. As the degree of uncertainty concerning a loss is changed by new events or information, the amount of the reserve must be changed appropriately. Accounting for reserves must be as required by the financial statement forms and instructions, under part 2785.1600, subpart 2.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.1300 Stop-Loss Insurance

Subpart 1. Purchase and change.

A pool may purchase stop-loss insurance for indemnification of a portion of its losses. If the pool determines that a stop-loss insurance policy will be terminated or modified causing a violation of subpart 2, or otherwise compromising the pool's financial integrity, the pool must notify the commissioner prior to the termination or modification taking effect. The pool must indicate what corrective action will be taken.

Subp. 2. Required stop-loss coverage.

All pools except employee health benefit pools are restricted in the amount of potential liability they may retain on any one incident to ten percent of its annual premium volume during the most recent fund year, plus 20 percent of its surplus. The restriction for pools without a year's experience is based on the pool's estimated premium volume during the first full fund year. All liability in excess of the restricted amount must be assumed by a stop-loss insurer under contract with the pool and licensed to do business in Minnesota. For employee health benefit pools required to maintain individual excess stop-loss insurance under Minnesota Statutes, section 471.617, subdivision 3, the self-insured retention per person per year shall not exceed $50,000.

Subp. 3. Return of liability.

No liability transferred to an insurer under subpart 2 may, directly or indirectly, be returned to a pool or a member.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.1400 Deficit and Assessments

Subpart 1. Joint and several liability.

Each current member is jointly and severally liable for all liabilities and expenses of the pool. Each past member is jointly and severally liable for all liabilities and expenses of the pool during the period of continuing liability. After the period of continuing liability, past members are no longer jointly and severally liable for the pool's liabilities and expenses, except as provided in subpart 2. The period of continuing liability for past members varies according to the type of pool, as follows:

A. for employee health benefit pools, past members continue to be jointly and severally liable for three complete fund years after leaving the pool;

B. for workers' compensation pools, past members continue to be jointly and severally liable for ten complete fund years after leaving the pool; and

C. for all other pools, past members continue to be jointly and severally liable for five complete fund years after leaving the pool.

Subp. 2. Runoff pool liability.

If a pool's self-insurance authority is ended under part 2785.0700, subpart 1 or 2, members and past members continue to be jointly and severally liable for the pool's liabilities and expenses until final pool dissolution, as follows:

A. all members at the time self-insurance authority is ended continue to be jointly and severally liable until the pool is dissolved; and

B. all past members that were jointly and severally liable under the standards of subpart 1 at the time self-insurance authority is ended continue to be jointly and severally liable until the pool is dissolved.

Subp. 3. Correction of a deficit.

If the board determines that the pool's total liabilities exceed its total assets, the board must restore a positive surplus within 90 days after the determination. A deficit may be corrected using one or more of the following types of assessments. A pool may, in a particular case, elect to assess some but not all jointly and severally liable members and past members. Methods of assessment must not exclude liable members or past members arbitrarily, or impose arbitrary amounts in relation to the amounts imposed on other members and past members. The bylaws may state what methods of assessment are preferred. The commissioner must order an assessment to correct a deficit using the procedure described in item A, if the board fails to do so when required.

A. All jointly and severally liable members and past members may be assessed proportionately to their share of the total premiums paid and owed during the assessment base period. The assessment base period at the time of a pool's self-insurance authority ending under part 2785.0700, subpart 1 or 2, shall remain the basis of assessments under this item until final pool dissolution. The assessment base period includes all completed quarters of the current fund year, and includes the following periods depending on the type of pool:

B. Jointly and severally liable members and past members may be assessed according to a formula stated in the bylaws, whereby members and past members with worse than average losses pay more than those with better loss experience.

C. Jointly and severally liable members and past members may be assessed according to a formula stated in the bylaws, whereby current members pay more than past members.

D. Jointly and severally liable members and past members may be assessed accordingly to a formula stated in the bylaws, whereby members belonging to the pool in poor loss years pay more than members belonging to the pool in better loss years.

E. Jointly and severally liable members and past members may be assessed according to any formula stated in the bylaws, including combinations of items A to D, if the formula is consistent with the requirements of this part.

Subp. 4. Assessment to increase surplus.

The board may assess current members in order to increase the surplus. The assessment may be made without the existence of a deficit in order to forestall a deficit, or otherwise to improve the pool's financial strength. The assessment may be calculated using any reasonable procedure, consistent with the pool's bylaws.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Minn. R. 2785.1500 Financial Integrity

Subpart 1. Fidelity bond.

All contractors and individuals who handle pool funds or who will have authority to gain access to pool funds, including board members, must be covered by a fidelity bond. The bond must cover losses from dishonesty, robbery, forgery or alteration, misplacement, or mysterious and unexplainable disappearance. The amount of coverage for each occurrence must be $300,000 or more. The pool must purchase a fidelity bond covering the required contractors and individuals, or submit separate proof of coverage for all required contractors and individuals not covered under the plan's bond.

Subp. 2. Integrity of assets.

A pool's assets:

A. must not be commingled with the assets of any member;

B. must not be loaned to anyone for any purpose or used as security for a loan, except as permitted under subpart 5 for investments;

C. must be employed solely for the purposes stated in the bylaws, and in compliance with parts 2785.0100 to 2785.1600 and related statutes; and

D. must not be considered the property or right of any member or covered person, except:

Subp. 3. Sources and uses of funds.

A pool may expend funds for payment of losses and expenses, and for other costs customarily borne by insurers under conventional insurance policies in Minnesota. Except as provided in part 2785.1100, subpart 3, item B, a pool must not borrow money or issue debt instruments. A pool may bring legal suits to collect delinquent debts. A pool must not obtain funds through subrogation of the rights of covered persons. A pool may receive funds only from:

A. its members as premiums, assessments, or penalties;

B. its insurers or indemnitors pursuant to insurance or indemnification agreements;

C. dividends, interest, or the proceeds of sale of investments;

D. refunds of excess payments;

E. coordination of benefits with other insurance or group self-insurance coverages;

F. collection of money owed to the pool;

G. the special compensation fund under Minnesota Statutes, chapter 176, for workers' compensation pools only; or

H. indemnification under Minnesota Statutes, section 176.181, subdivision 5, for workers' compensation pools only. Public/private pools are eligible for indemnification under this part only in the amount of the public members' liability to the pool.

Subp. 4. Separate accounts.

A pool may establish separate accounts for the payment of claims or certain types of expenses. These accounts must be used only by the service company, its authorized subcontractors, or the financial administrator, as appropriate to the account's purpose. The amount in these special accounts must not exceed an amount reasonably sufficient to pay the claims or expenses for which it is established. All monetary and investment assets not in such accounts must be under the control of the pool's financial administrator.

Subp. 5. Investments.

A pool's investments are subject to Minnesota Statutes, section 118A.04, as regards both permitted types of investments, maturities, and depositories. In addition, a pool must not invest in securities or debt of a member, or a member's parent, subsidiary, or affiliate; or any person or entity under contract with the pool. For this purpose, the state of Minnesota is not considered a political subdivision's parent or affiliate.

Subp. 6. Monitoring financial condition.

The board must regularly monitor the pool's revenues, expenses, and loss development, and evaluate its current and expected financial condition. The board must attempt in good faith to maintain or restore the pool's sound financial condition, using any means at its disposal. These means include but are not limited to adjusting premium rates, underwriting standards, dividend rates, expulsion standards, and other powers granted in parts 2785.0100 to 2785.1600 and the bylaws. If the commissioner judges that the board's actions are inadequate to maintain or restore the pool's sound financial condition, the commissioner shall, as appropriate: order an increase in the premium rates; revoke the pool's self-insurance authority; or order that an assessment be levied against the members.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274; L 1996 c 399 art 2 s 12

Minn. R. 2785.1600 Reporting

Subpart 1. Financial statements.

A pool must prepare annual financial statements containing a balance sheet; a statement of revenues, expenses, and surplus; a statement of changes in financial position; and a schedule of investments. The statements must be prepared on forms and according to instructions prescribed by the commissioner. The financial statements must be filed with the commissioner no later than March 1 of each year, or if the pool's fund year is other than the calendar year, no later than 60 days after the end of the pool's fund year. The financial statements must be audited by an independent certified public accountant, and the auditor's report must be submitted no later than 180 days after the end of the pool's fund year. For employee health benefit pools, the first annual financial statement and every second annual financial statement thereafter must be accompanied by a statement from a qualified actuary concerning the balance sheet items that are based on actuarial assumptions and methods. The form of the actuary's statement and the scope of the actuarial review must be according to instructions prescribed by the commissioner.

Subp. 2. Quarterly reports.

If the commissioner determines that a pool's financial integrity is deteriorating, to the extent that if then-current trends continue for two years or less, the pool's ability to meet obligations promptly and in full will be significantly impaired, the commissioner shall require the pool to file quarterly reports with the commissioner no later than 30 days after the end of the first, second, and third quarters of each fund year. The commissioner shall remove the requirement to file quarterly reports if the conditions warranting the requirement no longer exist. Quarterly reports must contain statements of the pool's:

A. current total cash on hand and on deposit, and total investment;

B. current total reserve for unearned and advance premiums, and total reserve for outstanding losses reported and unreported;

C. dividends declared and dividends paid during the quarter;

D. gross premiums written during the quarter;

E. losses paid during the quarter;

F. current total members; and

G. any other matters the commissioner requests that the board address.

Subp. 3. Extraordinary audits.

Upon sufficient cause, the commissioner shall require a pool to investigate the accuracy of one or more entries on its financial statements or quarterly reports, and to report its findings. If necessary for the investigation's purposes, the commissioner shall require a pool to hire a qualified actuary, claims specialist, auditor, or other specialist as appropriate to the type of entry being investigated. If warranted by the investigation's findings, the commissioner shall require changes in the pool's reserving, accounting, or record keeping practices. These extraordinary audits are in addition to the commissioner's rights to examine self-insurance pools directly, as applicable to insurance companies under Minnesota Statutes, sections 60A.03, subdivisions 3, 5, and 6, and 60A.031. Sufficient cause includes:

A. losses that appear significantly different than losses experienced by other self-insurance pools or insurance companies for similar coverage;

B. unusual changes in the amount of entries from period to period that are not sufficiently explained by the financial statements or footnotes; or

C. other indications that a pool's financial statements may not accurately reflect the pool's status and transactions.

Subp. 4. Annual status report.

No later than 60 days after the end of a pool's fund year, a pool must file with the commissioner a statement describing any changes that have occurred in the information filed with its initial application for authority to self-insure, or with the pool's most recent status report. The status report must be filed in a form and according to instructions prescribed by the commissioner.

Subp. 5. Penalty.

The financial statements and status report required under subparts 1 and 4 are considered together to be a pool's annual statement. This filing and other filings required by parts 2785.0100 to 2785.1600 and related statutes are subject to Minnesota Statutes, section 72A.061, as applicable to licensed insurance companies for comparable filings.

History

Statutory Authority: MS s 471.617; 471.982
History: 10 SR 274

Chapter 2790 INSURANCE MARKETING STANDARDS

Minn. R. 2790.0100 Definitions

Subpart 1. Scope.

For the purposes of this chapter the terms in this part have the meanings given them.

Subp. 2. Advertisement.

"Advertisement" includes:

A. printed and published material, audio visual material, and descriptive literature of an insurer or agent used in direct mail, newspapers, magazines, other periodicals, radio scripts, television scripts, billboards and other similar displays, excluding advertisements prepared for the sole purpose of obtaining employees, agents, or agencies;

B. descriptive literature and sales ads of all kinds issued by an insurer or agent for presentation to members of the public, including but not limited to circulars, leaflets, booklets, depictions, illustrations, and form letters;

C. prepared sales talks, presentations, and material for use by agents and representations made by agents in accordance with these talks, presentations, and materials;

D. statements, written or oral, by an agent.

Subp. 3. Agent, agents, or agencies.

"Agent," "agents," or "agencies" includes insurance agents and agencies licensed pursuant to Minnesota Statutes, chapter 60K, insurance agencies, and designated representatives of these agents or agencies.

Subp. 4. Exception.

"Exception" includes any provision in a policy whereby coverage for a specified hazard is entirely eliminated; it is a statement of risk not assumed under the policy.

Subp. 5. Insurer.

"Insurer" includes any individual, corporation, association, partnership, reciprocal exchange, Lloyd's, fraternal benefits society, self-insurer, surplus line insurer, pooled or joint self-insurance group, or self-insurance administrator, nonprofit service plan, and any other legal entity engaged in the advertisement of a policy. An insurer includes an affiliate of a group of insurers under common management and control.

Subp. 6. Limitation.

"Limitation" means any provision which restricts coverage under the policy other than an exception or a reduction.

Subp. 7. Policy.

"Policy" includes any policy, plan, certificate, contract, agreement, statement of coverage, rider or endorsement, binder, or other evidence of coverage which provides insurance or self-insurance, whether on an indemnity, reimbursement, service, or prepaid basis. "Policy" includes any subscriber contract issuing coverage under a self-insurance plan, annuity, group self-insurance, or pooled or joint self-insurance employee plan.

Subp. 8. Reduction.

"Reduction" includes any provision which reduces the amount of a benefit; a risk of loss is assumed but payment upon the occurrence of the loss is limited to some amount or period less than would be otherwise payable had the reduction not been used.

Subp. 9. Self-insurer.

"Self-insurer" includes any entity authorized pursuant to Minnesota Statutes, sections 65B.48 and 176.181, Minnesota Statutes, chapter 62H, Laws of Minnesota 1983, chapter 290, section 171, or Minnesota Statutes, section 471.981 and includes any entity which, for compensation employs the services of vendors of risk management services in the administration of a self-insurance plan as defined by Minnesota Statutes, section 60A.23, subdivision 8.

Subp. 10. Similar policies.

"Similar policies" include policies which provide similar benefits even though there may be differences in benefit amounts, elimination periods, renewal terms, or ancillary benefits.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.0200 [Repealed, 13 SR 1378]

[Repealed, 13 SR 1378]

Minn. R. 2790.0300 Applicability

This chapter applies to any insurance advertisement or representation, written or oral, as defined in this chapter, which is intended for presentation, distribution, or dissemination in the state of Minnesota, directly or indirectly, by or on behalf of any insurer or agent.

This chapter is not all inclusive. The fact that a practice is not specifically prohibited in this chapter does not imply acceptance of the practice. This chapter is to be construed in a manner so as to carry out the stated and implied purpose of Minnesota Statutes, chapters 60A and 72A.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.0400 Construction

Subpart 1. Advertising or representations.

Whether an advertisement or representation, written or oral, has a capacity or tendency to mislead or deceive is determined by the commissioner of commerce from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence, unique to the particular type of audience to which the advertisement is directed, and whether it may be reasonably comprehended by the segment of the public to which it is directed.

Subp. 2. Department policy.

The policy of the Department of Commerce, in interpreting the meaning of this chapter when applied to a specific advertisement, will be to take into consideration the content, detail, character, purpose, and use of the advertisement, and specifically, whether the advertisement is the direct or principal sales inducement, or whether its function is to invite inquiry for details of the insurance advertised, either by follow-up literature or by personal interview.

Subp. 3. Method of disclosure of required information.

All information required to be disclosed by this chapter must be set out clearly, conspicuously, and in close conjunction with the statements to which the information relates or under appropriate captions of such prominence that it is readily noticed and not minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the contents of the advertisement or representation, whether written or oral, so as to be confusing or misleading.

Subp. 4. Advertisements.

Advertisements and representations must be sufficiently complete and clear, under the circumstances in which they are made, to avoid deception or the capacity or tendency to mislead or deceive. Words or phrases, the meaning of which is clear only by implication or by familiarity with insurance terminology, must not be used.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.0500 Deceptive Words, Phrases, or Illustrations

Subpart 1. General prohibition.

No advertisement or representation, written or oral, may omit information or use words, phrases, statements, references, or illustrations if the omission of the information or use of the words, phrases, statements, references, or illustrations has the capacity, tendency, or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered, or premium payable. The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale or an offer is made to refund the premium if the purchaser is not satisfied does not remedy misleading statements.

Subp. 2. Coverage terms.

No advertisement may contain or use words or phrases such as "all," "full," "complete," "comprehensive," "unlimited," "up to," "as high as," "this policy will help pay your hospital and surgical bills," "this policy will help fill some of the gaps that Medicare and your present insurance leave out," "this policy will help to replace your income," when used to express loss of time benefits or similar words and phrases, in a deceptive or misleading manner so as to exaggerate any benefits beyond the terms of the policy.

Subp. 3. Statements regarding tax benefits.

An advertisement must not state a policy's benefits are tax-free unless an explanation of the rules applicable to the taxation of these types of policy benefits are clearly shown with equal prominence and in close conjunction with the statement. An advertisement of a benefit for which payment is conditioned upon confinement in a hospital or similar facility must not state that the benefit is tax-free.

Subp. 4. Benefit terms.

An advertisement may not use the expressions "extra cash," "cash income," "income," "cash," or similar words or phrases in such a way as to imply that the insured will receive benefits in excess of the expenses incurred while being sick, injured, or hospitalized.

Subp. 5. Payment terms.

The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," "without additional cost," or words of similar import, may not be used with respect to any benefit or service being made available with the policy unless true and accurate. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the premium, or use other similar language.

Subp. 6. Dividends.

Dividends are a return of premium and it is misleading and deceptive to refer to them as being tax-free, or to use words of similar import, unless they are used within an instructive context and the nature of dividend as a return of premium is clearly indicated.

Subp. 7. Dread disease policies.

A policy covering only one disease or a list of specified diseases must not be advertised so as to imply coverage beyond the terms of the policy. A particular disease shall not be referred to in more than one term so as to imply broader coverage than is the fact.

Subp. 8. Policy limitations.

The benefits of a policy which pays varying amounts for the same loss occurring under different conditions or which pays benefits only when a loss occurs under certain conditions, must not be advertised without disclosing the limitations or reductions under which the benefits referred to are provided by the policy.

Subp. 9. Maximum benefits.

The maximum benefit available under a policy must not be emphasized in a manner which exaggerates its relationship to any internal limits or other conditions of the policy. Phrases such as "this policy pays $1,800 for hospital room and board expenses" are incomplete without indicating the maximum daily benefit and the maximum time limit for hospital room and board expenses.

Subp. 10. Aggregate benefits.

The aggregate amounts or the monthly or weekly benefits payable under coverage such as hospital or similar facility confinement indemnity or home care nursing must not be emphasized unless the actual amounts payable per day are disclosed with substantially equal prominence and in close conjunction with the statement. Any limitation or reduction in the policy and the number of days of coverage provided must be disclosed.

Subp. 11. False statements regarding coverage.

An advertisement must not state or imply that each member under a family policy is covered as to the maximum benefits advertised when such is not the case.

Subp. 12. Exaggeration of certain diseases.

The importance of diseases rarely or never found in the class of persons to whom the policy is offered shall not be exaggerated in an advertisement.

Subp. 13. Benefit examples.

Examples of what benefits may be paid under a policy must be shown only for losses from common illnesses or injuries rather than exceptional or rare illnesses or injuries.

Subp. 14. Benefit clarification.

When a range of hospital room expense benefits is set forth in an advertisement, it must be made clear that the insured will receive only the benefit indicated in the policy purchased. It must not be implied that the insured may select a room expense benefit at the time of hospitalization.

Subp. 15. Benefit increases at time of disability.

An advertisement must not imply that the amount of benefits payable under a loss-of-time policy may be increased at time of disability according to the needs of the insured.

Subp. 16. Misleading payment claims.

An advertisement must not state that the insurer "pays hospital, surgical, medical bills," "pays dollars to offset the cost of medical care," "safeguards your standard of living," "pays full coverage," "pays complete coverage," "pays for financial needs," "provides for replacement of your lost paycheck," "guarantees your paycheck," "guarantees your income," "continues your income," "provides a guaranteed paycheck," "provides a guaranteed income," or "fills the gaps in Medicare," or use similar words or phrases unless the statement is literally true.

Subp. 17. Premium levels.

An advertisement shall not state that premiums will not be changed in the future unless such is the fact.

Subp. 18. Deductibles.

An advertisement which states dollar amounts of benefits payable and premiums must clearly indicate the provisions of any deductible under a policy.

Subp. 19. Other insurance.

If a policy contains any of the following or similar provisions, an advertisement referring to the policy must not state that benefits are payable in addition to other insurance unless the statement contains an appropriate reference to the coverage excepted:

A. an "other insurance" exception, reduction, limitation, or deductible;

B. a "coordination of benefits" or "nonduplication" provision;

C. an "other insurance in this company" provision;

D. an "insurance in another insurer's" provision;

E. a "relation of earnings to insurance" provision;

F. a workers' compensation, employer's liability, occupational disease law, or automobile no-fault exception, reduction, or limitation;

G. a reduction based on social security benefits or other disability benefits; or

H. a Medicare exception, reduction, or limitation.

Subp. 20. Immediate coverage or guaranteed issuance.

An advertisement may refer to immediate coverage or guaranteed issuance of a policy only if suitable administrative procedures exist so that the policy is issued within a reasonable time after the application is received.

Subp. 21. Premium increases or premium reductions.

If an advertisement indicates an initial premium which differs from the renewal premium on the same mode, the renewal premium shall be disclosed with equal prominence and in close conjunction with any statement of the initial premium. Any increase in premium or reduction in coverage because of age shall be clearly disclosed.

Subp. 22. Preexisting conditions.

An advertisement must not state that the policy contains no waiting period unless preexisting conditions are covered immediately or unless the effect of preexisting conditions is disclosed with equal prominence and in close conjunction with the statement.

Subp. 23. Age limits.

An advertisement must not state that no age limit applies to an insured or applicant unless application from applicants of any age are considered in good faith, and the statement clearly indicates the date or age to which the policy may be renewed or that the company may refuse renewal.

Subp. 24. Health provisions.

An advertisement shall not state that no medical, doctor's, or physical examination is required or that no health, medical, or doctor's statements or questions are required or that the examination, statements, or questions are waived or otherwise state or imply that the applicant's physical condition or medical history will not affect the policy unless:

A. the statement indicates with equal prominence that it applies only to the issuance of the policy or to both the issuance of the policy and the payment of claims; and

B. preexisting conditions are covered immediately under the policy or the period of time following the effective date of the policy during which preexisting conditions are not covered is disclosed with equal prominence and in close conjunction with the statement.

Subp. 25. Limited accident and health policies.

An advertisement of a limited accident and health policy must prominently indicate that the policy provides limited coverage with an appropriate statement such as "this is a cancer only policy" or "this is an automobile accident only policy," "this is an accident policy only -- this policy does not allow coverage for sickness," "this policy provides dental insurance only."

Subp. 26. Exceptions, reductions, or limitations.

An advertisement must not set out exceptions, reductions, or limitations from a policy worded in a positive manner to imply that they are beneficial features such as describing a waiting period as a benefit builder. Words and phrases used to disclose exceptions, reductions, or limitations shall fairly and accurately describe their negative features. The words "only," "minimum," "just," "merely," or similar words or phrases must not be used to refer to exceptions, reductions, or limitations.

Subp. 27. Misleading cost statements.

An advertisement must not state or imply, or use similar words or phrases to the effect that because no insurance agent will call and no commissions will be paid to agents, the policy is a low cost plan, unless literally true.

Subp. 28. Awards.

Devices such as a safe driver's award and other such awards must not be used in connection with an advertisement, except advertisements for property and casualty insurance.

Subp. 29. Applications.

An advertisement must not use an application which is deceptively similar to paper currency, bonds, or stock certificates.

Subp. 30. Mandated benefits.

An advertisement must not exaggerate the effect of statutorily mandated benefits or required policy provisions or imply that these provisions are unique to the advertised policy.

Subp. 31. Statements of coverage.

An advertisement must state clearly the insurance coverage being offered.

Subp. 32. Medicare supplement policies.

An advertisement which refers to a policy as being a "Medicare supplement" policy must, in addition to the other disclosure requirements required by law, comply with the following requirements:

A. contain a prominent statement indicating which Medicare benefits the policy is intended to supplement, for example, hospital benefits; and which Medicare benefits the policy will not supplement, for example, nursing home benefits; and must clearly disclose any gaps in Medicare coverage for which the policy does not provide benefits;

B. clearly indicate the extent and amount of the benefits if the policy benefits are on an expenses-incurred basis beyond what Medicare covers;

C. clearly indicate the classification of the Medicare supplement coverage being offered by the policy as defined by Minnesota Statutes, section 62A.31;

D. must not imply or state that the policy is in any manner related to the federal Medicare program or any other governmental program.

Subp. 33. Federal program information.

An advertisement which offers to provide information concerning the federal Medicare program or any related government program or changes in the program must:

A. include no reference to the program on the envelope, the reply envelope, or on the address side of the reply postal card, if any;

B. include on any page containing a reference to the program an equally prominent statement to the effect that in providing supplemental coverage the insurer and agent involved in the solicitation are not in any manner connected with the program;

C. contain a statement that it is an advertisement for insurance or is intended to obtain insurance prospects;

D. prominently identify the insurer or insurers which will issue the coverage; and

E. prominently state that any material or information offered will be delivered in person by a representative of the insurer, if that is the case.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175; 17 SR 1279; L 2014 c 291 art 9 s 5

Minn. R. 2790.0550 Regulation of Business of Financial Planning

Subpart 1. Definition.

"Business of financial planning" means providing, or offering to provide, financial planning services or financial counseling or advice, on a group or individual basis. An agent or insurer who, on advertisements, cards, signs, circulars, letterheads, or in any other manner, indicates that he or she is a "financial planner," "financial counselor," "financial adviser," "investment counselor," "estate planner," "investment adviser," "financial consultant," or any other similar designation or title or combination thereof, is considered to be representing himself or herself to be engaged in the business of financial planning.

Subp. 2. Prohibition.

No agent or insurer may represent on advertisements, cards, signs, circulars, letterheads, or in any other manner, that he or she is engaged in the business of financial planning unless he or she provides a disclosure document to the client. The document must be signed by the client, and a copy must be left with the client. The disclosure document must contain the following:

A. the basis of any fees, commissions, or other compensation received by him or her in connection with the rendering of financial planning services or financial counseling or advice in the following language: "My compensation may be based on the following: (a) ... commissions generated from the products I sell you, (b) ... fees, or (c) ... a combination of (a) and (b). [Comments.]";

B. the name and address of any company or firm that supplies the financial services or products offered or sold by him or her in the following language: "I am authorized to offer or sell products and/or services issued by or through the following firm(s): [List] The products will be traded, distributed, or placed through the clearing/trading firm(s) of: [List]";

C. the license(s) held by the person under Minnesota Statutes, chapter 60A, 80A, or 82 in the following language: "I am licensed in Minnesota as a(n): (a) ... insurance agent, (b) ... securities agent or broker/dealer, (c) ... real estate broker or salesperson, (d) ... investment adviser"; and

D. the specific identity of any financial products or services (by category, for example mutual funds, stocks, or limited partnerships) the person is authorized to offer or sell in the following language: "The license(s) entitles me to offer and sell the following products and/or services: (a) ... securities, specifically the following: [List], (b) ... real property, (c) ... insurance, (d) ... other: [List]."

History

Statutory Authority: MS s 45.023; 60A.17; 80A.25; 82.28; 82.47; 82.89
History: 10 SR 274; L 2004 c 203 art 2 s 61

Minn. R. 2790.0600 Exceptions, Reductions, and Limitations

Subpart 1. Disclosure.

When an advertisement for health or accident insurance refers to any dollar amount of benefits payable, period of time for which any benefit is payable, cost of a policy, specific policy benefit, or the loss for which the benefit is payable, it must also disclose those exceptions, reductions, and limitations, including waiting, elimination, probationary, or similar periods, and preexisting condition exceptions, affecting the basic provisions of the policy without which the advertisement would have the capacity and tendency to mislead or deceive.

Subp. 2. Preexisting conditions summary.

If the policy advertised does not provide immediate coverage for preexisting conditions, an application or enrollment form contained in or included with an advertisement to be completed by the applicant and returned to the insurer must contain a question or statement immediately preceding the applicant's signature line which summarizes the preexisting condition provisions of the policy.

Subp. 3. Preexisting conditions disclosure.

An advertisement must in negative terms disclose the extent to which any loss is not covered if the cause of the loss is a condition which exists prior to the effective date of the policy. The expression "preexisting conditions" shall not be used unless appropriately defined.

Subp. 4. Medical exam disclosure.

If a medical examination is required for a policy, an advertisement for that policy must disclose this requirement.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.0700 Renewability, Cancelability, and Termination

An advertisement which refers to renewability, cancelability, or termination of a policy, or which refers to a policy benefit, or which states or illustrates time or age in connection with eligibility of applicants or continuation of the policy, must disclose the provisions relating to renewability, cancelability, and termination and any modification of benefits, losses covered, or premiums because of age or for other reasons, in a manner which would not have the capacity or tendency to mislead, deceive, minimize, or render obscure the qualifying conditions. An advertisement of a group or blanket policy which would otherwise be subject to the disclosure requirements of this part need not disclose the policy's provisions relating to renewability, cancelability, and termination. The advertisement must provide, however, as a minimum, that an insured's coverage is contingent upon his or her continued membership in the group and the continuation of the plan.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.0800 Identity

Subpart 1. Disclosure.

The identity of the insurer, agents, or agency must be made clear in all advertisements or representations, whether written or oral.

Subp. 2. Names.

An advertisement or representation, whether written or oral, must not use a trade name, an insurance group designation, the name of the parent company of the insurer, the name of a government agency or program, the name of a department or division of an insurer, the name of an agency, the name of any other organization, a service mark, a slogan, a symbol, or any other device which has the capacity or tendency to mislead or deceive as to the identify of the insurer, agents, or agency.

Subp. 3. Connection with government agency.

An advertisement or representation, whether written or oral, must not use any combination of words, symbols, or materials which, by its content, phraseology, shape, color, nature, or other characteristics, is so similar to combinations of words, symbols, or materials used by federal, state, or local government agencies that it tends to confuse or mislead prospective buyers into believing that the solicitation is in some manner connected with the government agency.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.0900 Testimonials, Endorsements, or Commendations by Third Parties

Subpart 1. Disclosure of interests.

If a person, group, or association making a testimonial, endorsement, or a commendatory statement concerning the insurer has a financial interest in the insurer or a related entity as a stockholder, director, officer, employee, or otherwise, the facts must be disclosed in the advertisement or representation, whether written or oral. If the person, organization, or association is compensated for making a testimonial, endorsement, or commendatory statement, the facts must be disclosed in the advertisement or representation, whether written or oral, by language fully disclosing that compensation was paid. This part does not require disclosure of union "scale" wages required by union rules if the payment is actually for the "scale" for television or radio performances. The payment of substantial amounts, directly or indirectly, for "travel and entertainment," for filming or recording of television or radio advertisements remove the filming and recording from the category of an unsolicited testimonial and require disclosure of the compensation.

Subp. 2. Approvals or endorsements.

An advertisement or representation, whether written or oral, must not state or imply that an insurer or a policy has been approved or endorsed by any individual, group of individuals, society, association, or other organizations, unless that is the fact, and only if any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial has been formed by the insurer or is owned or controlled by the insurer or by a person or persons who are in control of the insurer, the facts must be disclosed in the advertisement.

Subp. 3. Genuineness.

A testimonial, endorsement, or commendatory statement used in an advertisement or representation, whether written or oral, must be genuine, represent the current opinion of the author, be applicable to the policy advertised, and be accurately reproduced.

Subp. 4. General restrictions.

An insurer, agent, or agency shall not use a testimonial, endorsement, or commendatory statement in any advertisement or representation, whether written or oral:

A. which is fictional;

B. where the insurer, agent, or agency has some information indicating a substantial change of view on the part of the author;

C. where more than two years have elapsed from the date of the testimonial or the last confirmation of the statement without obtaining a confirmation that the statement represents the author's current opinion;

D. which does not accurately reflect the present practice of the insurer, agent, or agency;

E. which refers to a policy other than the one for which such statement was given, unless the statement clearly has some reasonable application to the other policy;

F. in which a change or omission has been effected which alters or distorts its meaning or intent as originally written; or

G. if it contains a description of benefit payments which does not disclose the true nature of the insurance coverage under which the benefits were paid.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1000 Jurisdictional Licensing

Subpart 1. Misrepresentation.

An advertisement which may be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed must not imply licensing beyond those limits.

Subp. 2. Disclosure.

Advertisements by direct mail insurers must indicate that the insurer is licensed in a specified state or states, or is not licensed in a specified state or states, by use of some language such as "This company is licensed in state A" or "This company is not licensed in state B."

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1100 Approval by Government Agency

Subpart 1. Misleading advertisements.

An advertisement or representation, whether written or oral, must not state or imply, or otherwise create the impression directly or indirectly, that the insurer, its financial condition or status, the payment of its claims, its policy forms or the merits or desirability of its policy forms or kinds or plans of insurance are approved, endorsed, or accredited by any agency of this state or the federal government, unless that is the fact.

Subp. 2. Licensing as endorsement disclaimed.

In any advertisement or representation, whether written or oral, any reference to licensing must contain an appropriate disclaimer that the reference is not to be construed as an endorsement or implied endorsement of the insurer, agent, or agencies by the Department of Commerce or any other agency of this state.

Subp. 3. Reproduction of report of examination prohibited.

No advertisement or representation, whether written or oral, may reproduce any portion of a Department of Commerce report of examination.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1200 Introductory, Initial, or Special Offers in Limited Enrollment Periods

Subpart 1. Regulation.

An advertisement or representation, whether written or oral, must not state or imply that a policy or combination of policies is an introductory, initial, or special offer and that the applicant will receive advantages not available at a later date by accepting the offer, that only a limited number of policies will be sold, that a time is fixed for the discontinuance of the sale of the policy advertised because of special advantages available in the policies, or that an applicant will receive special advantages by enrolling within an open enrollment period or by a deadline date, unless that is fact.

Subp. 2. Disclosure of enrollment period.

A written advertisement shall not state or imply that enrollment under a policy is limited to a specific period unless the period of time permitted to enroll is disclosed.

Subp. 3. Disclosure of similar offers.

If the insurer making a special offer has previously offered the same or similar policy on the same basis or intends to repeat the current offer for the same or similar policy, the advertisement or representation, whether written or oral, must so indicate.

Subp. 4. Limits of timing of enrollment periods.

An insurer must not establish for residents of this state a limited enrollment period within which an individual policy or certificate may be purchased less than six months after the close of an earlier limited enrollment period for the same or similar policy or certificate. This restriction also applies to all advertisements or representations, whether written or oral, soliciting enrollment under mass marketed or direct response solicitations for life or health insurance coverage.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1300 Group, Quasi-Group, or Special Class Implications

An advertisement or representation, whether written or oral, must not state or imply that prospective policyholders or members of a particular class of individuals become group or quasi-group members or are uniquely eligible for a special policy or coverage and as such will be subject to special rates or underwriting privileges or that a particular coverage or policy is exclusively for preferred risk, a particular segment of people, or a particular age group or groups, unless that is the fact.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1400 Identification of Plan or Numbers of Policies

Subpart 1. Benefits to depend on plan selected.

When an advertisement or representation, whether written or oral, refers to a choice regarding benefit amounts, it must disclose that the benefit amounts provided will depend upon the plan selected and that the premium will vary with the amount of the benefits.

Subp. 2. Benefits requiring combination of policies.

When an advertisement refers to various benefits which may be contained in two or more policies, other than group policies, it must disclose that the benefits are provided only through a combination of the policies.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1500 Use of Statistics

Subpart 1. Relevant facts.

An advertisement or representation, whether written or oral, relating to the dollar amounts of claims paid, the number of persons insured, or similar statistical information relating to any insurer or policy must not be used unless it accurately reflects all of the relevant facts. Irrelevant statistical data shall not be used. The sources of all statistical information must be disclosed in the advertisement or representation.

Subp. 2. Applicable statistics.

An advertisement or representation, whether written or oral, must not imply that any statistics used are derived from the policy advertised unless those statistics are derived from the policy.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1600 Inspection of Policy

Subpart 1. Effect.

An offer in an advertisement or representation, whether written or oral, of free inspection of a policy or offer of a premium refund is not a cure for misleading or deceptive statements contained in the advertisement or representation.

Subp. 2. Return disclosure.

An advertisement or representation, whether written or oral, which refers to the provision in the policy advertised or represented regarding the right to return the policy must disclose the time limitation applicable to this right.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1700 Disparaging Comparisons and Statements

An advertisement must not directly or indirectly make unfair or incomplete comparisons of policies or benefits or otherwise falsely or unfairly disparage, discredit, or criticize competitors, their policies, services, or business methods or competing marketing methods.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1750 [Repealed, L 2007 c 104 sec 23]

[Repealed, L 2007 c 104 sec 23]

Minn. R. 2790.1751 [Repealed, L 2007 c 104 sec 23]

[Repealed, L 2007 c 104 sec 23]

Minn. R. 2790.1800 Statement About an Insurer

An advertisement must not contain statements which are untrue in fact or by implication misleading with respect to the insurer's assets, corporate structure, financial standing, age, experience, or relative position in the insurance business.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.1900 Service Facilities

An advertisement or representation, whether written or oral, must not contain untrue statements with respect to the time within which claims are paid or statements which imply that claim settlements will be liberal or generous beyond the terms of the policy, or contain a description of a claim which involves unique or highly unusual circumstances.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.2000 Insurer's Advertising File

Subpart 1. Retention of copies.

Each insurer shall maintain at its home or principal office a complete file containing every printed, published, or prepared advertisement of individual policies and typical printed, published, or prepared advertisements of blanket, franchise, or group policies hereafter disseminated in this or any other state whether or not licensed in the other state. A notation must be attached to each advertisement in the file indicating the manner and extent of distribution and the form number of any policy, amendment, rider, or endorsement form advertised. The company must be able to identify and provide a copy of the policy advertised, together with any amendment, rider, or endorsement applicable thereto. All advertisements must be maintained for a period of not less than three years. The file is subject to regular and periodic inspection by the Department of Commerce.

Subp. 2. Affidavit with annual statement.

Each insurer required to file an annual statement which is now or which hereafter becomes subject to the provisions of this chapter must file with the Department of Commerce together with its annual statement, a certificate executed by an authorized officer of the insurer wherein it is stated that to the best of their knowledge, information, and belief, that the advertisements which were disseminated by the insurer during the preceding statement year complied or were made to comply in all respects with the provisions of the insurance laws of this state as implemented and interpreted by this chapter.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.2100 Responsibility of Insurer, Agent, or Agency

Subpart 1. System of control required.

Every insurer, agent, or agency shall establish and at all times maintain a system of control over the content, form, and method of advertisements and representations, oral and written, concerning its policies. All advertisements and representations, whether written or oral, regardless of by whom written, created, designed, or presented, shall be the responsibility of the insurer whose policies are so advertised or represented.

Subp. 2. Prior approval by insurer.

An insurer shall require its agents or agencies and any other person or agency preparing advertisements naming the insurer or its products to submit proposed advertisements to it for approval prior to use.

History

Statutory Authority: MS c 60A; 72A
History: 9 SR 175

Minn. R. 2790.2200 Penalty

Violations of this chapter subject the violator to the penalties described in Minnesota Statutes, chapters 45, 60A, and 62A.

History

Statutory Authority: MS s 45.023; 45.025
History: 9 SR 175; 13 SR 1378

Chapter 2791 MEDICAL MALPRACTICE INSURANCE

Minn. R. 2791.0100 [Repealed, L 2017 c 34 s 14 subd 2]

[Repealed, L 2017 c 34 s 14 subd 2]

Chapter 2795 INSURANCE AGENTS

Minn. R. 2795.0100 Definitions

Subpart 1. Scope.

As used in this chapter, the terms defined in this part shall have the meanings given them.

Subp. 2. Agent.

"Agent" means an insurance agent licensed under Minnesota Statutes, chapter 60K.

Subp. 3. Brokerage business.

"Brokerage business" means business transacted as provided in Minnesota Statutes, section 60K.08.

Subp. 4. Commissioner.

"Commissioner" means the commissioner of the Minnesota Department of Commerce.

Subp. 5. Licensee.

"Licensee" means an individual or an agency licensed under Minnesota Statutes, chapter 60K.

Subp. 6. Placing agent.

"Placing agent" means a licensed and appointed agent of an insurer through whom an application for insurance is submitted to the insurer on behalf of a soliciting agent who was not appointed by that insurer at the time the application was solicited.

Subp. 7. Soliciting agent.

"Soliciting agent" means an agent who sells or attempts to sell insurance to a person.

Subp. 8. Supervising agent.

"Supervising agent" means an agent or general agent who contracts with, employs or engages one or more other agents to solicit applications for insurance, or to otherwise act as insurance agents on the supervising agent's behalf. In the case of an agency required to be licensed under Minnesota Statutes, chapter 60K, the supervising agents, if not specifically designated, shall be the licensed officers of the corporate agency, or the partners of a partnership agency.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.0200 Authority and Scope

This chapter is promulgated pursuant to the authority of Minnesota Statutes, chapter 60K, and is intended to govern the interest of all licensed insurance agents in this state.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.0300 Loans from Clients

Subpart 1. Requirements.

No agent shall solicit or accept a loan from an individual with whom the agent came into contact in the course of the agent's business, unless the loan agreement or note is in writing, the lender is provided with a fully executed copy of the agreement or note at the time the loan is made, and the terms of the loan are lawful.

Subp. 2. Unfair, dishonest, and unconscionable loans.

Notwithstanding subpart 1, no agent shall solicit or accept a loan under dishonest, unfair, or unconscionable circumstances from an individual with whom the agent came into contact in the course of the agent's business. In determining whether a particular loan was solicited or accepted under dishonest, unfair, or unconscionable circumstances, the commissioner must consider the following:

A. the prior relationship between the agent and the lender;

B. the lender's age, mental state, and capacity;

C. the terms of the loan, including the amount, duration, and rate of interest, and the agent's compliance with those terms;

D. provisions for collateral or security;

E. the lender's income and net worth;

F. the involvement or lack of involvement of a family member of the lender, or some other neutral third party, in the negotiation of the loan;

G. any prior history of unfair treatment of the lender which the agent knew or should have known about;

H. indications of high pressure solicitation, coercion, intimidation, or undue influence by the agent in securing the loan;

I. the agent's representations regarding the need for or intended use of the loan; and

J. any other factors which reflect on whether the loan was dishonest, unfair, or unconscionable.

Subp. 3. Records required of agent.

An agent who accepts or has an outstanding loan from an individual with whom the agent came into contact in the course of the agent's business, must immediately compile and maintain for at least six years after the loan has been fully repaid, a list of the individuals from whom the agent has borrowed money, together with all documentation relating to the loans and the circumstances under which each was made.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.0400 Delivery of Policies

Policies, certificates, or other evidence of insurance which are received by an agent from an insurer for delivery to an insured must be delivered or mailed to the insured by the agent within 30 working days of the agent's receipt, unless the insured agrees in writing that the agent may retain them.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.0500 Receipts for Materials

An agent who takes possession of an insured's or a potential insured's insurance policies, certificates, or other documents pertaining to existing or pending insurance, must leave a written receipt for those materials at the time the agent receives the materials. The receipt must contain an itemized list of the materials received, the agent's name, and the address and telephone number of the agency or other place where the agent can be contacted. The receipt must be dated and signed by the agent.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.0600 Other Licenses

It is an untrustworthy practice within the meaning of Minnesota Statutes, section 60K.11, subdivision 1, for an insurance agent to engage in any unfair, deceptive, dishonest, untrustworthy, or fraudulent conduct which leads to the revocation of a license which the agent holds under Minnesota Statutes, chapter 80A or 82.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.0700 Criminal Convictions; Disciplinary Actions in Other States

Subpart 1. Report of conviction.

An agent who is convicted of a felony, gross misdemeanor, or a misdemeanor involving moral turpitude must report the conviction to the commissioner within ten working days of the conviction.

Subp. 2. Report of disciplinary action.

An agent whose insurance, securities, or real estate license is suspended or revoked in another state, or who has been ordered to pay a civil penalty because of conduct in the insurance, securities, or real estate industries in another state, must report the disciplinary action to the commissioner within ten working days of the effective date of the action.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.0800 Duties of Supervising Agents

Subpart 1. Agents' behavior and licensing.

A supervising agent shall have the duty to ensure that contracted, employed, or engaged agents:

A. are properly licensed in the lines of insurance in which they do business;

B. promptly remit all premiums and return premiums, refunds, claim settlements, or other money or things of value in the agents' possession obtained as a result of an insurance transaction and due and payable to any person, firm, or insurer; and

C. comply with laws and rules of the Department of Commerce.

Subp. 2. Establish written procedures.

A supervising agent must establish, maintain, and enforce written procedures which will ensure proper supervision of the activities of each agent and compliance with insurance laws and rules.

Subp. 3. Account examination.

Every supervising agent must conduct an examination for each agent of those client accounts which are within the scope of the supervisor's responsibility. The examinations must be conducted as often as is necessary for the supervising agent to discharge supervisory responsibilities.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175; 17 SR 1279

Minn. R. 2795.0900 [Repealed, L 1989 c 258 s 14]

[Repealed, L 1989 c 258 s 14]

Minn. R. 2795.1000 High Standards of Commercial Honor

Every agent must observe high standards of commercial honor and just and equitable principles of trade in the conduct of the agent's insurance business.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1100 Registered Office for Resident Agents

Every agent who is licensed as a resident agent must maintain a registered office for service of process in this state. The address of the office must be specified on all license applications and renewal applications.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1200 License Display and Use

A license must be displayed in the licensee's office in a place where it can readily be viewed and inspected.

Any written or oral advertisement or representation which refers to licensing, used by a licensee, must contain a disclaimer that the reference to licensing is not an endorsement, sponsorship, or implied endorsement or sponsorship of the licensee or its products, by the state of Minnesota, the Department of Commerce, or any other state agency.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1300 Receipt of Client Funds

An agent who receives funds from a client in connection with an insurance transaction receives and holds those funds in a fiduciary capacity.

An agent holding funds of a client must, each month, provide to the client an itemized statement showing the amount of money held.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1400 Mandatory Financial Records

Subpart 1. Type of records.

Every agent and agency must keep a record of all funds received for or from clients, including cash, notes, savings certificates, uncashed or uncollected checks, or other similar instruments. Insurers represented by exclusive agents may compile and maintain the financial records required by this part on their agents' behalf. The records must set forth the date funds were received, from whom received, the amount received, the date of deposit of the funds into the business account of the agent or agency, and the monthly balance of the account in which the funds are deposited. Each agent and agency must maintain a cash receipts journal and a cash disbursements journal, or similar records, in accordance with generally accepted accounting principles.

Subp. 2. Separate records.

Each agent and agency must keep a separate record for each client or transaction, accounting for all funds which have been deposited in the agent's business account. These records must set forth the information sufficient to identify the transaction and the parties thereto. At a minimum, each record must set forth:

A. the date funds are deposited;

B. the amount deposited;

C. the date of each related disbursement;

D. the check number of each related disbursement;

E. the amount of each related disbursement; and

F. a description of each disbursement.

Subp. 3. Examination of records.

All records must be maintained for at least six years, and must be available for examination by the commissioner or a designee in accordance with Minnesota Statutes, section 60A.031.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1500 Mandatory Complaint Records

Every agent and agency must compile and maintain a separate complaint file for each agent against whom a complaint, grievance, or allegation is made. The file must contain all written notes, reports, correspondence, or other documents made or received by an agent or agency, relating to customer grievances or allegations that an agent, agency, or person associated with an agent or agency has engaged in any unfair, false, misleading, dishonest, fraudulent, untrustworthy, coercive, or financially irresponsible practice, or has violated any insurance law or rule. The agent or agency must maintain the records for at least six years after the date of the complaint.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1600 Termination of Appointments or Contracts

An insurer or agency which terminates an agent's appointment, or its contract or association with an agent based entirely or in part on a complaint or alleged violation of law, or with knowledge of an alleged violation of law, including, but not limited to, the failure to remit premiums, must, within ten working days of the termination, forward to the commissioner a written statement of the reason for the termination. The statement must include the names, addresses, and, if available, telephone numbers of all persons having knowledge of the matter; copies of any applications, checks, or other documents relating to the complaint or alleged violation which are in the insurer's or agency's possession or control; copies of all statements or affidavits taken from any person in connection with the complaint or allegations; and a current statement of the agent's account with the insurer or agency.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1700 Refunds

An agent who receives a request for cancellation of a policy must make the refund or initiate the refund procedures with the insurer, within ten days of the agent's receipt of the request. An agent who receives a refund from an insurer for the account of, or for delivery to, an insured or former insured, must deliver or mail the refund, or cause it to be delivered or mailed to the insured or former insured within five days of receipt.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1800 Insurance in Connection with Loan

No agent shall misrepresent the necessity for obtaining insurance in connection with a loan, nor the terms of such insurance.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.1900 Penalties

Violations of this chapter subject the violator to the penalties described in Minnesota Statutes, sections 72A.22 to 72A.29.

History

Statutory Authority: MS s 60A.17
History: 9 SR 175

Minn. R. 2795.2000 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Chapter 2800 REAL ESTATE BROKER LICENSING

Minn. R. 2800.0100 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2800.0200 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2800.0300 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2800.1100 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2800.1200 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2800.1300 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2800.1400 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2800.1500 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2800.1600 Repealed by subpart

Subpart 1.

[Repealed, 11 SR 394; L 2004 c 203 art 2 s 62]

Subp. 2.

[Repealed, L 2004 c 203 art 2 s 62]

Subp. 3.

[Repealed, 11 SR 394; L 2004 c 203 art 2 s 62]

Subp. 4.

[Repealed, 21 SR 88]

Minn. R. 2800.6800 Repealed by subpart

Subpart 1.

[Repealed, 21 SR 88]

Subp. 2.

[Repealed, 11 SR 394]

Subp. 3.

[Repealed, 11 SR 394]

Subp. 4.

[Repealed, 21 SR 88]

Subp. 5.

[Repealed, 21 SR 88]

Subp. 6.

[Repealed, 21 SR 88]

Subp. 7.

[Repealed, 21 SR 88]

Subp. 8.

[Repealed, 21 SR 88]

Subp. 9.

[Repealed, 21 SR 88]

Subp. 10.

[Repealed, 21 SR 88]

Minn. R. 2800.7100 [Repealed, 21 SR 88]

[Repealed, 21 SR 88]

Minn. R. 2800.7150 [Repealed, 21 SR 88]

[Repealed, 21 SR 88]

Minn. R. 2800.7175 [Repealed, 21 SR 88]

[Repealed, 21 SR 88]

Minn. R. 2800.7200 Repealed by subpart

Subpart 1.

[Repealed, 21 SR 88]

Subp. 2.

[Repealed, 21 SR 88]

Subp. 3.

[Repealed, 11 SR 394]

Subp. 4.

[Repealed, 21 SR 88]

Subp. 5.

Minn. R. 2805.0100 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.0200 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.0300 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.0400 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.0500 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.0600 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.0700 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.0800 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.0900 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1000 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1100 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1200 [Repealed, L 1993 c 309 s 32]

[Repealed, L 1993 c 309 s 32]

Minn. R. 2805.1300 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1400 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1500 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1600 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1700 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1800 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.1900 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Minn. R. 2805.2000 [Repealed, L 2004 c 203 art 2 s 62]

[Repealed, L 2004 c 203 art 2 s 62]

Chapter 2808 REAL ESTATE APPRAISERS

[Repealed, 21 SR 88]

Subp. 3.

[Repealed, 21 SR 88]

Subp. 3a.

[Repealed, 17 SR 1790]

Subp. 4.

[Repealed, 21 SR 88]

Subp. 5.

[Repealed, 21 SR 88]

Subp. 6.

[Repealed, 21 SR 88]

Subp. 7.

[Repealed, 17 SR 1790]

Subp. 8.

[Repealed, 21 SR 88]

Subp. 9.

[Repealed, 21 SR 88]

Subp. 10.

[Repealed, 21 SR 88]

Subp. 11.

[Repealed, 21 SR 88]

Subp. 12.

[Repealed, 21 SR 88]

Subp. 13.

[Repealed, 21 SR 88]

Subp. 14.

Computation of time:

A. Where the performance or doing of any act, duty, matter, payment, or thing is ordered or directed, and the period of time or duration for the performance or doing thereof is prescribed and fixed by law, rule, or order, such time, except as otherwise provided in item B, shall be computed so as to exclude the first and include the last day of any such prescribed or fixed period or duration of time. When the last day of such period falls on Sunday, or on any day made a legal holiday by the laws of this state or of the United States, such day shall be omitted from the computation.

B. When the lapse of a number of months before or after a certain day is required by the law, rule, or order, such number of months shall be computed by counting the months from such day, excluding the calendar month in which such day occurs, and including the day of the month in the last month so counted having the same numerical order as the day of the month from which the computation is made, unless there be not so many days in the last month so counted, in which case the period computed shall expire with the last day of the month so counted.

History

Statutory Authority: MS s 83.23; 83.38

Minn. R. 2810.1100 Definitions

Subpart 1. Scope.

For the purposes of advertising, the terms defined in this part shall have the following meanings.

Subp. 2. Fully improved lots.

Lots may be described as "fully improved" only if the subdivision has paved roads, including concrete or asphalt, community or public water and sewer systems, gas, electricity, and telephone.

Subp. 3. Improved lots.

"Improved lots" means lots that are not fully improved because of lack of one or more of the requisite improvements as provided in subpart 2.

Subp. 4. Unimproved lots.

Lots shall be described as "unimproved" when they have not been provided with any requisite improvements as provided in subpart 2.

History

Statutory Authority: MS s 83.23

Minn. R. 2810.1200 Standards for Advertising

Subpart 1. Prior filing.

All advertising as defined in Minnesota Statutes 1973, section 83.20, subdivision 1 shall be filed with the commissioner prior to its use. All advertising shall satisfy the requirements specified in this part and such additional requirements as the commissioner may impose to assure full and fair disclosure for the protection of purchasers. The subdivider or applicant shall submit a true copy of any advertisement to be used in connection with the offering as an exhibit or amendment to the public offering statement.

Subp. 2. Claims.

All claims or representations contained in any advertising shall be accurate and provable.

Subp. 3. Fraudulent or misleading.

It shall be fraudulent or misleading for any person in connection with the offer, sale, or purchase of any subdivided lands, directly or indirectly, to:

A. employ any device, scheme, or artifice to defraud;

B. make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or

C. engage in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person.

History

Statutory Authority: MS s 83.23

Minn. R. 2810.1300 Subdivision Advertising Criteria

The use of any advertisement, including but not limited to print, radio broadcast, or telecast concerning subdivided lands that contains any of the following, shall be presumed to be fraudulent, deceptive, or misleading as provided in Minnesota Statutes 1973, section 83.29, subdivision 2, clause (2).

A. the use of a name or trade style that implies that the subdivider, or the subdivider's agent or affiliate, is a bona fide research organization, public bureau, nonprofit group, or other similar establishment, when such is not the case;

B. reference to any improvement, facility, or utility in the subdivision that does not actually exist or is not yet completed, unless completion is assured within a reasonable time by bonding or other means acceptable to the commissioner;

C. reference to streets, roads, sewers, drainage, or other utilities or conveniences that have not been accepted for maintenance by the subdivider or any other entity, unless such fact is fully disclosed;

D. reference to the availability of financing for on-site construction, unless written evidence thereof is in the possession of the subdivider and is available for inspection by prospective purchasers;

E. reference to unimproved subdivided lands as "developments" or "homesites" or other similar expressions, without reciting the improvements, if any, provided or to be provided by the subdivider; if no improvements are to be provided by the subdivider, the advertisement shall so state;

F. reference to roads that fail to disclose the true nature thereof, and reference to such roads as improved unless they conform to applicable county or planned development specifications and have concrete, asphalt, or other surfaces acceptable to the commissioner;

G. reference to points of interest, to cities or towns, to facilities or features located more than one mile from the nearest point in the subdivision, unless the distance in road miles along existing roads and the nature thereof is included;

H. the use of "artists' conceptions" or renderings of the property and/or facilities, unless they are captioned as such and the subject matter of the conception or rendering has been bonded pursuant to part 2810.2300;

I. the use of maps to show proximity to other communities or points of interest, unless such maps are drawn to scale and the scale appears on the map together with a statement of the distance in miles;

J. for subdivisions proposing the purchaser supply his or her own water, reference to the water supply by the use of such superlatives or phrases as "abundant water," "plenty of water," or terms of similar import;

K. unqualified reference to any utility services as "available," unless such utility services are installed and ready for use, or adequate financial arrangements have been made for their installation;

L. reference to any facilities not a part of the subdivision that are to be constructed by the subdivider, which do not actually exist or are not completed, unless adequate financial arrangements have been made for such facilities;

M. reference to any clubs, clubhouses, or recreational facilities, unless a reasonable estimate of the cost and any limitations or restrictions on use are fully disclosed in the public offering statement;

N. use of the words "exclusive" or "private" or words connoting the same when the general public has the right to access of any kind to any portion of the subdivision, unless the public rights to access are fully disclosed;

O. reference to property as "waterfront," unless the property being offered actually fronts on a canal or other body of water;

P. the use of forecasts of future events or population trends, unless such forecast was prepared on a current basis by a valid government regulatory or information agency;

Q. the use of reprints of published material, unless the information contained in the reprint is representative, truthful, relevant, and pertinent to the subdivision being offered;

R. the advertising of a lot as "free" if the purchaser is required to give any consideration whatsoever; and lots shall not be advertised for "closing costs only" when the closing costs are substantially more than normal, or when an additional lot or lots must be purchased at a higher price or to render the "free" lot usable;

S. reference to predevelopment sales at a lower price because the land has not yet been developed, unless there are plans of development, and a subdivision plat has been recorded;

T. reference that the property being offered for sale may be subdivided or resubdivided, unless it includes all necessary and relevant information regarding the cost and feasibility of future subdividing;

U. reference that the subdivider or an affiliate will resell or repurchase the property being offered at some future time, unless the subdivider has made such a representation in writing to the commissioner and the prospective purchasers, and it reasonably appears to the commissioner that the subdivider or the affiliate has the ability to resell or repurchase;

V. the use of the lot price, unless such price includes all assessments or charges that must be paid by the purchaser or, in the alternative, all assessments and charges are identified, including the dollar amount, and stated with the lot price;

W. the use of lot prices when such lots constitute less than ten percent of the total unsold inventory available for purchase;

X. reference to a discount in the lot price, unless the subdivider shall furnish to the prospective purchaser a price list, a statement that the offer represents a special limited offer, and the length of time the offer will be available;

Y. reference to any increase in price, unless the increase is valid and a copy of the proposed new price schedule and the date of the price increase is furnished to the prospective purchaser;

Z. reference to the subdivider by any name other than that appearing on the public offering statement; reference to any other entity shall state the relationship of that entity to the subdivider;

AA. the use of any advertising that fails to prominently disclose that the property or any portion of the property is subject to regular or periodic flooding, or covered by standing water for extended periods of time during the year if such is the case;

BB. reference to anything otherwise prohibited by Minnesota Statutes 1973, chapters 82 and 83 and the rules promulgated thereunder.

History

Statutory Authority: MS s 83.23
History: 17 SR 1279

Minn. R. 2810.1400 Commissioner's Authority

Nothing contained herein shall limit the authority of the commissioner to take formal action against an owner, subdivider, or agent of the owner or subdivider for the use of fraudulent, deceptive, or misleading advertising of a type not specifically described herein.

History

Statutory Authority: MS s 83.23
History: 17 SR 1279

Minn. R. 2810.2100 Preparing Applications for Registration by Qualification

The guidelines set forth hereafter are intended to indicate the form and informational content of an application for registration required by the commissioner of commerce. These guidelines shall be applicable to applications filed for registration by qualification pursuant to Minnesota Statutes, section 83.23. The primary purpose of the application for registration is to provide compliance with the requirements of Minnesota Statutes, chapter 83 and the rules promulgated thereunder. The information to be included in the application for registration is set out in detail in this section. The information requested is not to be viewed as determinative of the entire obligation of disclosure. Disclosure and the manner of disclosure will depend upon the particular facts and circumstances involved. Disclosure means more than merely compiling the information requested by the application form or supplying the information suggested by the guidelines. This obligation is the independent obligation of the subdivider, its counsel, its accountant, and others contributing to the disclosure to the extent of their contribution. Applications for registration which are inadequately prepared and seriously deficient in terms of compliance with the statute and rules will be summarily denied.

History

Statutory Authority: MS s 83.38
History: 9 SR 1575

Minn. R. 2810.2150 Form of Application for Registering Subdivided Land by Qualification

An application for registration of subdivided land by qualification shall be typewritten and submitted on 8-1/2 inch by 14 inch white bonded paper. The application shall state verbatim the questions in this part, with the appropriate answers underneath each question or attached as an addendum. Such application shall be in the form in part 2810.9910.

This form is to be prepared and filed pursuant to Minnesota Statutes, section 83.23, and mailed to: State of Minnesota, Department of Commerce, 5th Floor, Metro Square Building, Saint Paul, Minnesota 55101.

History

Statutory Authority: MS s 83.38
History: 9 SR 1575

Minn. R. 2810.2170 Changes Subsequent to Registration

Subpart 1. Amendment procedure.

An application to amend the registration shall be made by submitting a revised application for registration or a revised public offering statement with all alterations of the text previously filed underscored and shall be accompanied by a verification sheet manually signed and notarized.

Subp. 2. Exhibit.

If required, a new exhibit must be included.

Subp. 3. Fee.

A $25 fee must be filed with the amendment. Make check payable to the commissioner of management and budget.

History

Statutory Authority: MS s 83.38
History: 9 SR 1575; L 2003 c 112 art 2 s 50; L 2009 c 101 art 2 s 109

Minn. R. 2810.2200 Operating and Maintenance Funds During Start-Up

When the offering involves a development and/or maintenance of common areas by the subdivider, an owners association, or other entity, the subdivider shall be required to comply with one or more of the following to assure the availability of funds for the ownership, operation, and maintenance of such common areas:

A. posting of a surety bond or other adequate security in an amount and subject to such terms, conditions, and coverage as the commissioner may require;

B. postponement of closing of any escrow until 60 percent of all lots, parcels, or units have been sold and are simultaneously closed;

C. deposit with an escrow acceptable to the commissioner of funds equal to estimated ownership, operation, and maintenance expenses for common areas as determined by the commissioner; an escrow acceptable to the commissioner shall be one in which the funds are held within this jurisdiction and will be released only with the written consent of the commissioner;

D. an alternative plan acceptable to the commissioner.

History

Statutory Authority: MS s 83.23

Minn. R. 2810.2300 Uncompleted Proposed Improvements

When certain improvements are designated in the application for the registration or the application for the exemption but are not totally completed by the effective date, the subdivider shall comply with one or more of the following to assure that the improvements will be completed:

A. posting of a surety bond or other adequate security in an amount and subject to such terms, conditions, and coverage as the commissioner may require;

B. deposit with an escrow acceptable to the commissioner of funds equal to the estimated cost of completion of the improvements as determined by the commissioner; an escrow acceptable to the commissioner shall be one in which the funds are held within this jurisdiction and may be released only with the written consent of the commissioner;

C. irrevocable letters of credit from a lending institution acceptable to the commissioner in an amount and subject to the terms and conditions as the commissioner may require;

D. an alternative plan acceptable to the commissioner.

History

Statutory Authority: MS s 83.23

Minn. R. 2810.2400 Service of Process

When a surety bond is required and is filed in another jurisdiction in satisfaction of requirements similar to parts 2810.2200 to 2810.2500, and such bond is acceptable to the commissioner, the surety company shall appoint the commissioner as agent for service of process in this jurisdiction.

History

Statutory Authority: MS s 83.23

Minn. R. 2810.2500 Disclosures When Purchaser Must Supply Own Water

For a subdivision proposing the purchaser supply his or her own water, the public offering statement shall disclose the following:

A. the average, maximum, and minimum depths to ground water within the subdivision;

B. the recommended total depths of wells;

C. the estimated yield from such wells;

D. the life expectancy of the water supply under full development of the subdivision;

E. the lithologic character of formations through which the well is to be completed;

F. the source and yield of surface water supply, if any; and

G. the use of the land prior to development, with emphasis on whether or not the soils and ground waters may be contaminated in some way.

History

Statutory Authority: MS s 83.23
History: 17 SR 1279

Minn. R. 2810.2600 Mandatory License, Permit, or Written Approval

Subpart 1. Some approvals required.

The following is a list of licenses, permits, or other written approvals required by the state of Minnesota and local governing bodies. The list is intended as a guide for the procurement of the proper license, permit, or written approval for subdivisions located within the state of Minnesota. Those subdivisions located outside of Minnesota will be required to conform to the state and local requirements of that jurisdiction. This list should not be construed as complete. Each subdivider will be required to obtain all state and local licenses, permits, or written approval where applicable, whether or not contained herein.

Subp. 2. Department of Natural Resources.

A license, permit, or other written approval from the Department of Natural Resources must be obtained prior to the commencement of the activities contained herein:

A. appropriation of any public water, surface or underground;

B. removal by cutting of aquatic vegetation;

C. placement of any fill material (temporary or permanent) that will change the course, current, or cross-section of any public water;

D. water level control structures;

E. dam construction or abandonment;

F. fish or wildlife impoundments;

G. revetments and other shore protection;

H. breakwater, wharves, or jetties;

I. boathouse and permanent dock construction or replacement;

J. channel or shoreline excavation;

K. stream or channel enlargement or relocation;

L. extensions of public water;

M. harbors and marinas;

N. underwater sewer and water lines;

O. navigational improvements or obstructions;

P. bridges and piers;

Q. beach sand blankets;

R. any other alteration of public waters not mentioned herein;

S. utility crossings;

T. cluster developments in shoreland areas.

Subp. 3. Department of Health.

A license, permit, or other written approval from the Department of Health must be obtained prior to the commencement of the activities contained herein:

A. the operation of a hotel-motel, resort lodging house, boarding house, restaurant, or place of refreshment as defined in Minnesota Statutes 1971, chapter 157;

B. the operation of mobile home park or recreation camping area as defined in Minnesota Statutes 1971, chapter 327;

C. approval of the plans for all buildings and facilities that are publicly owned or are for use by the public; or

D. licenses pertaining to wells and soil absorption sewage disposal.

Subp. 4. Department of Transportation.

If a trunk highway runs through or is adjacent to a subdivision, a permit from the Department of Transportation is required to construct entrances connecting with such trunk highway.

Subp. 5. Pollution Control Agency.

A permit must be obtained from the Pollution Control Agency to construct, install, or operate a disposal system pursuant to Minnesota Statutes 1971, chapter 115.

Subp. 6. Local governing bodies.

A license, permit, or other written approval from the local governing body must be obtained prior to the commencement of the activities contained herein:

A. a building permit for the construction of, or addition to, a building, road, or other improvement;

B. an electrical permit;

C. a plumbing permit;

D. a permit to install heating, air conditioning, or ventilation system in a building or other improvement;

E. a permit to install an elevator;

F. a permit for the construction of advertising signs; or

G. any other license, permit, or written approval as required by the local governing body.

History

Statutory Authority: MS s 83.38

Minn. R. 2810.2610 Guidelines for Public Offering Statement

Subpart 1. Form and content.

The guidelines set forth hereafter are intended to indicate the form and informational content of an offering statement acceptable to the commissioner of commerce. The primary purpose of the public offering statement is to inform a prospective purchaser of the terms upon which said purchaser may acquire the property offered, the risks inherent in the purchase, material facts respecting the history, business, management, and capitalization of the subdivider offering said property for sale, and such other information necessary and material to briefly and accurately advise a prospective purchaser of the nature and character of the property purchased.

Subp. 2. Disclosure.

What must be disclosed and the manner of disclosure in any offering statement will depend upon the particular facts involved. Disclosure means more than merely compiling the information required by the application form or supplying the information suggested by these guidelines. Since substantial criminal and/or civil penalties may result from incomplete or misleading disclosure, it is the independent obligation of the subdivider, its counsel, its accountant, and others contributing to said disclosure to determine what information is relevant to full and fair disclosure and to supply that information whether or not it is also required by the application form or suggested by these guidelines.

Subp. 3. Duty of subdivider.

It is the obligation of the subdivider in every case to add to the information required such further information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

Subp. 4. Verbatim questions.

The public offering statement shall state the verbatim questions in this subpart. The subdivider shall answer the questions directly and completely in accordance with the instructions in subparts 1 to 3 and employ the following language on the face of the offering statement, which may appear either in printed form or attached to the property report filed with the Office of Interstate Land Sales, United States Department of Housing and Urban Development:

A. The properties offered for sale have not been approved or disapproved by the commissioner of commerce, State of Minnesota, nor has the Department of Commerce passed upon the accuracy or adequacy of this offering statement. Any representation to the contrary would be a criminal offense.

B. No act of a purchaser shall be effective to waive the right to rescind.

C. Minnesota law provides that a purchaser has an unconditional right to rescind any contract, agreement, or other evidence of indebtedness, or to revoke any offer, at any time prior to or within five days after the date the purchaser actually receives a legible copy of the binding contract, agreement, or other evidence of indebtedness or offer and the public offering statement.

Subp. 5. Other offering statements.

The commissioner may accept, pursuant to application for registration under Minnesota Statutes, chapter 83, any currently effective public offering statement prepared for compliance with the registration provisions of the subdivided land laws of other jurisdictions as the commissioner may from time to time designate. The commissioner reserves the right to require alterations in these statements considered necessary to fulfill the requirements of Minnesota Statutes, chapter 83.

History

Statutory Authority: MS s 83.38
History: 9 SR 1575; 17 SR 1279

Minn. R. 2810.2650 Public Offering Statement

A proposed public offering statement submitted to the commissioner shall be in the form and shall include information required in part 2810.9930.

History

Statutory Authority: MS s 83.38

Minn. R. 2810.2700 Application for Registration by Notification

An application for registration by notification shall be typewritten and submitted on 8-1/2 inch by 14 inch white bonded paper. This statement shall state verbatim the questions, with the appropriate answers underneath each question, or attached as an addendum. Such statement shall be in the format in part 2810.9940.

History

Statutory Authority: MS s 83.38
History: 9 SR 1575

Minn. R. 2810.2800 Annual Report

An annual report shall be typewritten and submitted on 8-1/2 inch by 14 inch white bonded paper. Such report shall be prepared in the exact form as in part 2810.9950.

History

Statutory Authority: MS s 83.38

Minn. R. 2810.3100 Fraudulent, Deceptive, Misleading, or Unfair and Inequitable Acts

Subpart 1. Presumption; penalty.

The methods, acts, and practices contained herein or similar thereto shall be presumed fraudulent, deceptive, misleading, or unfair and inequitable if engaged in by the subdivider or an agent of the subdivider and shall constitute grounds for denial, suspension, or revocation of the license of the subdivider or agent.

Subp. 2. Approvals and memberships.

It is presumed fraudulent, deceptive, misleading, or unfair and inequitable to:

A. represent that the subdivider, or agents, servants, employees, or others acting on behalf of the subdivider, have sponsorship, approval, or certification they do not have;

B. represent that land has been inspected by the commissioner and/or received approval;

C. represent the necessity, desirability, or the advantage of dealing with a subdivider, such as false or alleged connection with or endorsement by the government, nationally known organization, or membership in a professional association.

Subp. 3. Availability of land and utilities.

It is presumed fraudulent, deceptive, misleading, or unfair and inequitable to:

A. represent the availability of land without clearly and conspicuously disclosing in immediate conjunction therewith any limitation on location, including location in relationship to amenities, and quantity;

B. represent or give the impression that a prospective purchaser has to act quickly to purchase specific or choice lots, units, parcels, or interests in land because of purported scarcity of such land or reasons similar thereto;

C. represent a utility service as "available" or a similar representation, unless such utility service is installed and ready for use, or use is assured under financial arrangements made for installation and approved by the commissioner, and such arrangements are disclosed.

Subp. 4. Access to subdivisions.

It is presumed fraudulent, deceptive, misleading, or unfair and inequitable to:

A. represent or suggest that a subdivision is restricted to owners, purchasers, or their families by means of guards or private roads or facilities unless it is true;

B. represent that a prospective purchaser must pay a refundable or nonrefundable temporary membership fee in order to visit, tour, or inspect a subdivision for the reasons that such is restricted to members only, when in fact such offer is made systematically and on a regular basis to all persons solicited for purchase.

Subp. 5. Visits and free goods and services.

It is presumed fraudulent, deceptive, misleading, or unfair and inequitable to:

A. fail to reveal in an offer to induce a person to visit, inspect, or tour a subdivision all terms, conditions, or prerequisites that must be met by any person;

B. offer or represent that goods or services are "free" without clearly or conspicuously disclosing in immediate conjunction with the offer or representation all terms, conditions, or prerequisites to the receipt, retention, or use of the goods or services.

Subp. 6. Price, value, and credit.

It is presumed fraudulent, deceptive, misleading, or unfair and inequitable to:

A. represent or imply that a prospective purchaser has to act quickly to purchase land at a savings by reason of an imminent price increase, unless the increase is valid and a copy of the proposed new price schedule and the date of the price increase is furnished to the prospective purchaser;

B. represent the price of land has been discounted or reduced unless in fact the original price was the customary price for a reasonable period of time;

C. represent or suggest that the price of land is less when compared to other land sold by competitors unless such other land has the same characteristics, attributes, and qualities of the offered or advertised land and such prices are not fictitious;

D. represent or suggest that credit is readily available when in fact it is not;

E. represent or suggest that the terms of such credit are liberal or lenient when in fact they are not.

Subp. 7. Repurchases, refunds, consideration for referrals.

It is presumed fraudulent, deceptive, misleading, or unfair and inequitable to:

A. represent that the subdivider will buy back, resell, list, or otherwise dispose of purchased property unless the terms are set forth in the contract, purchase agreement, or other similar instrument, and the commissioner has been furnished a copy of the buyback or resale agreement;

B. induce a person to buy land, execute a contract, agreement, option for consideration, or other evidence of indebtedness for the purchase of land upon the representation to the person that a refund will be made if not satisfied, unless such representation is set forth in the contract, purchase agreement, or other similar instruments.

Subp. 8. Promotion schemes, documents.

It is presumed fraudulent, deceptive, misleading, or unfair and inequitable to:

A. represent that a subdivider, salesperson, agent, servant, employee, or other person acting on behalf of a subdivider is conducting a survey, contest, poll, or other similar inquiry, when such representation is a systematic marketing approach to sell property;

B. represent to a person that they have been specially selected;

C. obtain the execution of a contract or similar instrument by representing that it is only a reservation, receipt, temporary membership certificate, or other nonbinding agreement;

D. fail to clearly and conspicuously inform a purchaser that a contract, promissory note, evidence of indebtedness, or other similar instrument is assignable.

Subp. 9. Contracts, agreements, deeds, options, and dispositions.

It shall be presumed to be unfair for a person to use a contract, agreement, deed, option, or other evidence of disposition of lands under the act that contains provisions whereby a purchaser or prospective purchaser agrees, without knowing, intelligent, and voluntary consent thereto:

A. to waive a right or privilege afforded by the act; the Interstate Land Sales Full Disclosure Act (82 Stat. 590; United States Code, title 15, sections 1701 et seq.); or the Consumer Credit Protection Act commonly known as the Federal Truth-in-Lending Act, and any rules or federal regulations promulgated thereunder, or any laws governing the transaction;

B. to assume all risk of loss to the property without title passing to the purchaser or actual possession being in the purchaser;

C. to a subsequent sale of the optioned or purchased property;

D. to waive as against an assignee of the subdivider, a mortgagee, or subsequent holder a claim or defense arising out of the transaction that the purchaser would have against the subdivider;

E. to lose possession of the property without notice of and a prior hearing in a court of competent jurisdiction;

F. to waive a right to redeem the property after default;

G. that an assignee, mortgagee, or subsequent holder of the subdivider is not obligated to convey title as to the purchaser.

Subp. 10. Execution and alteration.

It is unfair for a subdivider, or agents, servants, employees, or others acting on behalf of the subdivider:

A. to offer to or induce a purchaser to execute a document, paper, or other instrument without all spaces filled in or inapplicable spaces clearly stricken;

B. to alter or deface a document, paper, or other instrument without the consent of the parties thereto.

Subp. 11. Rebates.

It is unfair for a person to use a method of rebate of interest, or finance charge which requires or results in a purchaser paying a greater amount of interest or finance charge upon prepayment than would have been paid if the purchaser had financed for that shorter period up to the time of prepayment.

Subp. 12. Promises, revelations, and substitutions.

It is unfair for a subdivider, or agents, servants, employees, or others acting on behalf of the subdivider:

A. to make a promise with no present intent to perform it;

B. to fail to reveal to a purchaser or prospective purchaser all terms, conditions, notices, and amounts of any contract, agreement, option, deed, property report, evidence of indebtedness, or other similar instrument; or

C. to substitute another lot, unit, parcel, or interest in land for that purchased or optioned without the consent of the purchaser.

Subp. 13. Rights; privileges.

It is unfair for a subdivider to fail to afford to a purchaser all rights, privileges, or advantages that are represented or implied as being available to a purchaser as the result of the purchase.

Subp. 14. Offers; comparisons; bait and switch.

It is presumed fraudulent, deceptive, misleading, or unfair and inequitable to:

A. represent the necessity, desirability, or advantage to a prospective purchaser of dealing with a subdivider such as representing a subdivider's alleged advantages of size;

B. offer or represent to sell or lease lots, units, parcels, or interests in land that in truth the subdivider does not intend or desire to sell or lease;

C. engage in activities commonly referred to as "bait and switch" activities;

D. fail to clearly and conspicuously disclose the use, if any, to which surrounding land has been put where the disclosure is material;

E. make false, misleading, or irrelevant comparisons of land values; or

F. engage in any other method, act, or practice that has or may have the tendency to deceive.

History

Statutory Authority: MS s 83.38
History: 17 SR 1279

Minn. R. 2810.3200 Blanket Encumbrances

The subdivider shall not sell lots, units, parcels, or interests within a subdivision subject to a blanket encumbrance unless one or more of the following conditions are met:

A. All sums paid or advanced by purchasers are placed in an escrow or other depository acceptable to the commissioner until:

B. The fee title to the subdivision is placed in trust under an agreement or trust acceptable to the commissioner until a proper release from each blanket encumbrance, including all taxes, is obtained and title contracted for is delivered to such purchaser.

C. A bond, cash, or certified check is furnished to the commissioner in the name of the state for the benefit and protection of purchasers of the lots, units, parcels, or interest, in such amount and subject to terms as approved by the commissioner. The bond shall be executed by a surety company authorized to do business in this state and which has given consent to be sued in this state. The bond or agreement accompanying the cash or certified check shall provide for the return of money paid or advanced by any purchaser, on account of purchase of any lot, unit, parcel, or interest if the title contracted for is not delivered and a full release from each blanket encumbrance is not obtained. If it is determined that the purchaser by reason of default or otherwise, is not entitled to the return of the money, or any portion thereof, then the bond, cash, or certified check may be released by the commissioner in the amount of money to which the purchaser of a lot, unit, parcel, or interest is not entitled.

D. The blanket encumbrance shall contain a provision evidencing the subordination of the rights of the subdivider to the rights of those persons purchasing from the subdivider and further evidencing that the subdivider is able to secure releases from the blanket encumbrance with respect to the property.

E. An alternative plan acceptable to the commissioner.

History

Statutory Authority: MS s 83.38
History: 10 SR 276

Minn. R. 2810.3300 Soil Preparation

In a subdivision proposed to be sold with structural improvements where the soil condition is such as to require preparation in some manner so that structural damage is not likely to result, the commissioner will not approve an application until the subdivider has submitted a certification from a civil engineer that the soil has been properly prepared, unless one or more of the following plans have been met:

A. furnish bonds in an amount and subject to such terms, conditions, and coverage as the commissioner may approve;

B. impoundment of purchasers funds in an escrow acceptable to the commissioner, until such time as written evidence of adequate soil preparation has been submitted to and approved by the commissioner;

C. deposit in an escrow acceptable to the commissioner of a sum sufficient to adequately prepare the soil with underwritten agreements providing for progress payments as the work is completed;

D. an alternative plan acceptable to the commissioner.

History

Statutory Authority: MS s 83.38

Minn. R. 2810.3400 Owners' Association

In subdivisions that involve a planned development or similar arrangement, the covenants, conditions, restrictions, articles of incorporation, bylaws, and other instruments for the management, regulation, and control of these types of subdivisions shall ordinarily provide, but need not be limited to:

A. creation of an association of lot, parcel, unit, or undivided interest owners;

B. a description of the areas or interests to be owned or controlled by owners in common;

C. transfer of title and/or control of common areas, common facilities, and/or mutual and reciprocal rights of use to the owners in common or to an association thereof;

D. procedures for calculating and collecting regular assessments to defray expenses attributable to the ownership, use, and operation of common areas and facilities with said assessments to be levied against each owner, including the subdivider, according to the ratio of the number of lots or units owned by each owner to the total of lots or units subject to the assessment, or on some other reasonable and equitable basis such as the selling price of the unit to the aggregate selling prices of all units subject to the assessment;

E. procedures for establishing and collecting special assessments for capital improvements or other purposes on the same basis as for regular assessments with suitable monetary limitations on special assessments or expenditures without the prior approval of a majority of the owners affected;

F. where appropriate, liens against privately owned subdivision properties and the foreclosure thereof on account of the nonpayment of assessments duly levied;

G. where appropriate, annexation of additional land to the existing development with suitable substantive and procedural safeguards against increased per capital assessments on account of such annexation;

H. monetary penalties and/or use privilege and voting suspensions of members for breaches of the restrictions, bylaws or other instruments for management and control of the subdivision with procedures for hearings for disciplined members;

I. creation of a board of directors or other governing body for the owners' association with the members of said body to be elected by a vote of members of the association at an annual or special meeting to be held not later than six months after the sale of the first lot, unit, or undivided interest of the subdivision;

J. procedures for the election and removal of members of the governing body which shall include concurrent terms for members and cumulative voting features in the election and removal of such members;

K. enumeration of the powers of the governing body which shall normally include at least the following:

L. allocation of voting rights to members of the owners' association on the basis of lot or unit ownership or on some other reasonable and equitable basis;

M. preparation of an annual operating statement reflecting income and expenditures of the association for its fiscal year with provision for distribution of a copy of said report to each member within 90 days after the end of the fiscal year;

N. annual and special meetings of members within the subdivision or as close thereto as practicable;

O. reasonable, and in no case less than ten days, written notice to members of annual and special meetings specifying the place, day, and hour, and in the case of special meetings, the nature of the business to be undertaken;

P. quorum requirements for members' meetings ranging from 25 percent to 50 percent of the total membership depending upon the nature of the subdivision and other relevant factors;

Q. voting proxies for members' meetings;

R. amendment of those provisions of the restrictions, bylaws, or rules that relate to the management, operation, and control of the owners' association and/or the common areas, common facilities or interests; depending upon the nature of the right or obligation to be affected by the amendment, the commissioner will ordinarily consider as reasonable amendments enacted as follows:

S. prohibition or restrictions upon the severability of commonly owned interests through partition or otherwise;

T. action to be taken and procedures to be followed in the event of destruction or extensive damage to the common areas or facilities including provisions respecting the use and disposition of insurance proceeds payable to the association on account of such destruction or damage.

History

Statutory Authority: MS s 83.38

Minn. R. 2810.3500 Unreasonable Provisions

Unless unusual and compelling considerations are presented, the commissioner will ordinarily be guided by the following general policies, and will not consider as reasonable:

A. provisions which deny, limit, or abridge, directly or indirectly, the right of any owner to sell, lease, or rent that owner's unit in a condominium, community apartment project, planned development, or stock cooperative; except that a reasonable plan may be utilized which sets forth uniform and objective standards and qualifications for the sale or lease. Should the unit owner be unable to find a purchaser or lessee meeting such uniform and objective standards, the owner may be required to give the governing body an option to purchase or lease said unit before selling or leasing to a person who does not meet such standards provided, however, that any such provisions providing for a right to repurchase by the governing body must be exercised within 15 days of receipt of written notice from the unit owner to the subdivider, governing body, or authorized representative thereof;

B. provisions pursuant to which the failure by an owner to comply with any requirements, conditions, or covenants contained in any declaration of restrictions, organizational rules, or bylaws results in forfeiture, loss, limitation, or abridgement of the owner's rights in a condominium, community apartment project, planned development, or stock cooperative, or of membership and participation in a management or owners' organization. The foregoing does not preclude reasonable management rules authorizing discipline or temporary suspension of a member's rights, wherein appropriate procedures are afforded, including an opportunity to be heard; nor does it preclude foreclosure of an assessment lien;

C. provisions authorizing annexation of other property to the subdivision, which may substantially increase assessments or substantially increase the burden upon community property and/or facilities, unless:

D. provisions authorizing lien assessments unless reasonable provision for transfer of control of the assessment power to unit owners or association of unit owners is also provided;

E. provisions authorizing establishment of an architectural control committee or a similar entity, unless they provide that unit owners shall have the right to elect the committee membership when 90 percent or more of the units have been sold. The foregoing does not preclude reasonable arrangements approved by the commissioner for retention of control over such committee by the subdivider, in the event other increments are to be added or annexed to said subdivision; and

F. any other provisions which arbitrarily deny, limit, or abridge the right of unit owners with respect to the management, maintenance, preservation, operation, or control of their interests.

History

Statutory Authority: MS s 83.38
History: 17 SR 1279

Minn. R. 2810.3600 Conveyance of Property

In undivided interests, subdivisions that do not involve a right of exclusive occupancy or use of a lot, parcel, or unit, provision shall ordinarily be made in the public offering statement whereby owners and their successors in interest, absolutely waive the right to partition to real property in kind and waive the right to seek partition for the purpose of a sale of the real property, or any portion of it, unless the bringing of a suit for partition has been approved by the vote or written agreement of a majority of the ownership interests in the subdivision that are not owned or controlled by the subdivider.

History

Statutory Authority: MS s 83.38

Minn. R. 2810.3700 Recordable Instruments

An instrument evidencing sale or disposition of an interest in a subdivision shall be executed in a recordable form in accordance with the laws of the state where the land is located. The subdivider or applicant has the burden of showing compliance with this provision.

History

Statutory Authority: MS s 83.38

Minn. R. 2810.3800 Apportionment of Taxes

Subpart 1. Subdivider's duties.

A. In a transaction for the sale of land under the act in which taxes are to be paid by either party, a subdivider shall:

B. In order that a purchaser will receive the interest in lands contracted for, a subdivider shall place in an escrow satisfactory to the commissioner sufficient funds to pay reasonably anticipated tax bills on the property of a subdivision. If the subdivider apportions real property taxes and requires a purchaser to pay such taxes in a lump sum or on a periodic basis, the subdivider shall place in the escrow 100 percent of the sum due.

Subp. 2. Responsibilities not to be imposed on purchaser.

A purchaser is not responsible for payment of taxes or assessments levied before the effective date of the purchaser's agreement with a subdivider or agent, and the instruments evidencing the sale or disposition of an interest in a land shall so state.

A purchaser shall not be assessed a service fee or be required to pay a consideration for the assessment or allocation of taxes on the land involved in the transaction.

History

Statutory Authority: MS s 83.38
History: 17 SR 1279

Minn. R. 2810.9910 Format for Registration of Subdivided Lands by Qualification

REGISTRATION OF SUBDIVIDED LANDS BY QUALIFICATION

This form is to be prepared and filed pursuant to Minnesota Statutes 1973, section 83.26 and mailed to:

State of Minnesota

Department of Commerce

Registration and Licensing Division

5th Floor, Metro Square Building

Saint Paul, Minnesota 55101

(a) State the name of the subdivision.

(b) State the exact location of the property identifying the closest community and the distance thereto.

(a) State the name and address of the subdivider.

(b) State the form, date of organization and jurisdiction of the organization filing this registration.

(d) State the names and addresses of the organization's agents in this state.

(a) State the name, address and principal occupation for the past five years of each director, officer and partner of the subdivider and every person occupying a similar status performing similar functions.

(b) State the name and address of each owner of ten percent or more of the subdivider in the event that the subdivider is a corporation or partnership.

(c) If the response to subparagraph (b) above is in the affirmative, state the extent and nature of the interest identified in the subdivider or in the lands to be subdivided as a date 30 days prior to the filing of this application.

State the condition of title to the land to be subdivided, including but not limited to, a statement reflecting all encumbrances, deed restrictions, and covenants applicable to such title and state the condition of the title as recorded as of a date 30 days prior to the filing of this application. THE STATEMENTS REQUIRED BY THIS PARAGRAPH MUST BE AUTHORED BY A LICENSED PRACTICING ATTORNEY WHO IS NOT A SALARIED EMPLOYEE, PARTNER, OFFICER, OR DIRECTOR OF THE SUBDIVIDER OR AN AGENT OF THE SUBDIVIDER, AND SUCH ATTORNEY SHALL CERTIFY AS PART OF THE STATEMENT THAT SAID ATTORNEY ENJOYS SUCH A STATUS; OR BY A TITLE INSURANCE COMPANY ACCEPTABLE TO THE COMMISSIONER.
(a) Append hereto copies of instruments which will be delivered to a purchaser evidencing the interest to be acquired in the subdivided lands.

(b) Append hereto copies of contracts and other agreements which a purchaser would be required to agree to or sign.

(c) State the range of selling prices, rates, or rentals at which it is proposed the subdivided lands, including lots, units, parcels, or other interests in said subdivided lands, will be disposed of, together with a list of mandatory fees the purchaser may be required to pay for membership in groups such as home owners' associations, country clubs, golf courses, and other community organizations.

Append thereto copies of the instruments by which the interest in the subdivided land was acquired by the applicant or the subdivider.
In the event that there is a lien or encumbrance affecting the subdivided land or any portion thereof as disclosed in paragraph 3 above append hereto a legal description of the lien or encumbrance. Further, if said lien or encumbrance exists, what efforts if any, the subdivider has taken to protect the purchaser in the case of failure to discharge the lien or encumbrance.
Append hereto copies of instruments creating, altering or removing easements, restrictions, or other similar encumbrances affecting the subdivided lands.
Append hereto, if applicable, a legal description of the lands to be subdivided verified by affidavit of an independent professional land surveyor which shall include a statement of the topography and a topographical map together with a map showing the division to be proposed or made, the dimension of the lots, parcels, units, or interests and the relation of the subdivided lands to existing streets, roads, and other off-site stakes have been placed in accordance with the land surveyed.
If such markers, monuments, or stakes have not been placed, state the estimated cost of accomplishing this result, if applicable.
Name the states or other jurisdictions in which an application for registration has been filed and whether any adverse order, judgment, or decree has been entered in connection with the sale of subdivided land by any regulatory authority, by any jurisdiction or by any court.
(a) State whether local zoning and other governmental laws, ordinances, and regulations affecting the use of these subdivided lands and adjacent properties have been complied with.

(b) State the dates of the most recent zoning changes indicating the nature of such changes, any additional proposed changes now pending which may affect the use of the lands to be subdivided.

(c) State whether there are any existing tax and existing or proposed special taxes or assessments which may affect land to be subdivided.

(a) State what provisions have been made for access to the subdivision.

(b) State the availability of sewage disposal facilities and other public utilities, including but not limited to, water, electricity, gas, and telephone facilities in the subdivision.

(d) State the availability and scope of existing community fire and police protection.

(e) State the location of primary and secondary schools, if applicable.

(f) State the improvements to be installed, including off-site and on-site community and recreational facilities, including a statement identifying by whom such facilities are to be installed, maintained, and paid for and an estimated schedule for completion.

(g) Append hereto copies of performance and completion bonds covering all lots or parcels within the subdivision on which money is paid or advanced by a purchaser to assure that the planned improvements will be completed.

Append hereto a narrative description of the promotional plan for the sale, lease, option, assignment, or other disposition of the subdivided lands together with copies of all advertising material which will be employed in the public disposition of the subdivided lands.
Append hereto a copy of the proposed public offering statement.
Append hereto a financial statement of the subdivider, if required, as of the end of the subdivider's most recent fiscal year bearing a certification reflecting an audit by an independent certified public accountant. If the fiscal year end of the subdivider is in excess of 90 days prior to the date of filing the application, a financial statement, which may be unaudited, is to be appended reflecting the financial condition of the subdivider as of a date within 90 days of the date of the application.
State the condition of the land to be subdivided as it existed in its natural state, prior to development, and state in narrative fashion any changes that have occurred through the subdivider's efforts current to the date of this application.
A statement asserting that the subdivision is in compliance with federal, state, and local environmental quality standards; if the subdivision is not in compliance, a listing of the steps to be taken, if any, to insure compliance.
State what permits are required to be obtained from federal, state, and local agencies having jurisdiction over the development or subdivision of the land to be subdivided. Indicate which permits have been obtained, which have been applied for and state whether any permit has been refused, including a statement of the reasons for the refusal and the effect such refusal will have on subsequent development of the subdivision.
State whether the subdivider or any of its officers, directors, partners, principals, or agents have been convicted of a crime involving land disposition or any aspect of the land sales business in this state, any other state, under the laws of the United States of America, or in any foreign country within the last ten years or has been subject to any injunction or administrative order entered within the past ten years enjoining or restraining any promotional plan or sales activity involving land disposition. If the response is in the affirmative, state the name of the person or company involved, the jurisdiction, and provide a complete statement of the offense and the dates on which the offense occurred.
Append hereto a statement subscribed to by the subdivider attesting to the capacity of the subdivider to convey or cause to be conveyed the interest in the subdivided lands offered for sale, lease, option, assignment, or other disposition when the purchaser has complied with and fulfilled the terms of the offer where applicable. The statement should include a description of release clauses, conveyances in trust, or other safeguards which the subdivider has provided for the protection of the purchaser.

THE SUBDIVIDER CONSENTS TO PERMIT INSPECTION OF THE LOTS, PARCELS, UNITS, OR INTERESTS TO BE OFFERED AND FURTHER TO PERMIT INSPECTION OF ITS BOOKS, RECORDS, ACCOUNTS, AND FILES BY THE COMMISSIONER OF COMMERCE OR A DESIGNEE OF THE COMMISSIONER WITH REFERENCE TO THE SALE OF THE SUBDIVIDED LANDS DESCRIBED HEREIN, AND AGREES TO PROVIDE THE COMMISSIONER WITH SUCH ADDITIONAL INFORMATION WITH RESPECT TO THE SALE OF THESE SUBDIVIDED LANDS AS THE COMMISSIONER MAY REQUIRE.

The undersigned certifies that ..he has read the contents of the above form and the exhibits appended hereto and certifies that ..he has personal knowledge of the contents hereof and knows the responses set forth are true and accurate.

History

Statutory Authority: MS s 83.23; 83.38
History: 9 SR 1575; 17 SR 1279

Minn. R. 2810.9920 Format of Consent to Service of Process

KNOW ALL BY THESE PRESENTS:

That the undersigned, _____________________ (a corporation organized under the laws of the State of _____________) for the purpose of complying with the laws of the State of Minnesota relating to either the registration or sale of subdivided land, hereby irrevocably appoints the Commissioner of Commerce, and the successors in such office, its attorney in the State of Minnesota upon whom may be served any notice, process or pleading in any action or proceeding against it arising out of or in connection with the sale of subdivided land or out of violation of the aforesaid laws of said State; and the undersigned does hereby consent that any such action or proceeding against it may be commenced in any court of competent jurisdiction and proper venue within said State by service of process upon said officer with the same effect as if the undersigned was organized or created under the laws of said State and had lawfully been served with process in said State.

It is requested that a copy of any notice, process or pleading served hereunder be mailed to:

Name and Address

Dated: _____________________, ____

CORPORATE ACKNOWLEDGMENT

On this ____________ day of __________, ____, before me ______________________________, the undersigned officer, personally appeared ____________________________ and ____________________________, known personally to me to be the ______ President and _______ Secretary, respectively, of the above named corporation, and that they, as such officers, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by themselves as such officers.

IN WITNESS WHEREOF I have hereunto set my hand and official seal.

INDIVIDUAL OR PARTNERSHIP ACKNOWLEDGMENT

On this _____________ day of _____________, ____, before me _____________________, the undersigned officer, personally appeared _____________________________, to me personally known and known to be the same person(s) whose name(s) is(are) signed to the foregoing instrument, and acknowledged the execution thereof for the uses and purposes therein set forth.

IN WITNESS WHEREOF I have hereunto set my mind and official seal.

CORPORATE RESOLUTION

(Name of Corporation)

RESOLVED, that it is desirable and in the best interest of this Corporation that its subdivided land be qualified or registered for sale in various states; that the President or any Vice President and the Secretary or an Assistant Secretary hereby are authorized to determine the states in which appropriate action shall be taken to quality or register for sale all or such part of the subdivided lands of this Corporation as said officers may deem advisable: that said officers are hereby authorized to perform on behalf of this Corporation any and all such acts as they may deem necessary or advisable in order to comply with the applicable laws of any such states, and in connection therewith to execute and file all requisite papers and documents, including, but not limited to, applications, reports, performance or completion bonds irrevocable consents and appointments of attorneys for service of process; and the execution by such officers of any such paper or document or the doing by them of any act in connection with the foregoing matters shall conclusively establish their authority therefor from this Corporation and the approval and ratification by this Corporation of the papers and documents so executed and the action so taken.

CERTIFICATE

The undersigned hereby certifies that ..he is the ____ Secretary of ______________________, a corporation organized and existing under the laws of the State of __________; that the foregoing is a true and correct copy of a resolution duly adopted at a meeting of the Board of Directors of said corporation held on the _______ day of __________, ____, at which meeting a quorum was at all times present and acting; that the passage of said resolution was in all respects legal; and that said resolution is in full force and effect.

Dated this __________ day of ____________, ____.

History

Statutory Authority: MS s 83.23
History: 17 SR 1279; L 1998 c 254 art 1 s 107

Minn. R. 2810.9930 Format of Public Offering Statement

Name(s) of subdivider _

Address _

Name of subdivision _

Location ___________ County, State of ______________

a. Effective date of Public Offering Statement _

b. This offering consists of _

List names and populations of surrounding communities and list distances over paved and unpaved roads to the subdivision.

a. _

b. _

c. _

d. _

e. _

If periodic payments are to be made by a purchaser (as in the case of installment sales contracts) complete all items under this paragraph 4. If not, enter "Not Applicable."

a. Will the sales contract be recordable? Yes or No?

b. In the absence of an immediate recording of the contract or deed, could third parties or creditors of any person having an interest in the land acquire title to the property free of any obligation to deliver a deed? Yes or No? ______

Explain _

c. State when the contract or deed will be recorded, and who will record it. State who will bear the costs of recordation, and the amount if those costs are to be borne by the purchaser.

d. What provision, if any, has been made for refunds if purchaser defaults? If none, and the purchaser payments are to be retained, state whether the purchaser's loss will be limited to the amount of the payments to date, or whether the purchaser will be responsible to the subdivider or assignees of the subdivider for additional damages or for the balance of the contract.

Is there a blanket mortgage or other lien on the subdivision or portion thereof in which the subject property is located? Yes or No? If yes, list below and describe arrangements, if any, for protecting interests of the buyer or lessee if the subdivider defaults in payment of the lien obligation. If there is such a blanket lien, describe arrangements for release to a purchaser of individual lots when the full purchase price is paid.
Does the offering contemplate leases of the property in addition to, or as distinguished from, sales? Yes or No? If yes, a lease addendum must be completed, attached, and made a part of the Public Offering Statement.
Is purchaser or lessee to pay taxes, special assessments, or to make payments of any kind for the maintenance of common facilities in the subdivision (a) before taking title or signing of lease or (b) after taking title or signing of lease? If yes, complete the schedule below:
(a) Will purchaser's down payment and installment payments be placed in escrow or otherwise set aside? Yes or No? If yes, with whom? If not, will title be held in trust or in escrow?

(b) Except for those property reservations which land subdividers commonly convey or dedicate to local bodies or public utilities for the purpose of bringing public services to the land being subdivided will purchaser receive a deed free of exceptions? Yes or No? If no, list all restrictions, easements, covenants, reservations and their effect upon buyer.

(c) List the permissible uses of the property based upon the restrictive covenants, and which are consistent with local zoning ordinances.

(d) list all existing or proposed unusual conditions relating to the location of the subdivision and to noise, safety or other nuisances which affect or might affect the subdivision.

(a) List all recreational facilities currently available (e.g., swimming pools, golf courses, ski slopes, etc.). State who owns or will own the facility and any costs or assessments to the purchaser or lessee.

(b) If facilities are proposed or partly completed, state promised completion date, provisions to assure completion, and all estimated costs or assessments to purchaser or lessee. If there are no provisions to assure completion, so state.

State whether or not the following are available in the subdivision:

(a) Roads:

Access to the subdivision: Paved ______, unpaved ______, percentage of completion ________, estimated completion date ___________________.
Road system within the subdivision: Paved ______, unpaved ______, percentage of completion ______, estimated completion date _________________.

(b) Utilities:

Water.
Electricity.
Gas.
Telephone.
Sewage disposal.
Drainage and Flood Control.
Television.

Fire protection.
Police protection.
Garbage and trash collection.
Public schools:

A. Elementary schools.

B. Junior high schools.

C. High school.

Medical and dental facilities:

A. Hospital facilities.

B. Physicians and dentists.

Public transportation.
U.S. Postal Service.
Will the water supply be adequate to serve the anticipated population of the area?
Is any drainage of surface water, or use of fill necessary to make lots suitable for construction of a one-story residential structure? Yes or No? If yes, state whether any provision has been made for drainage or fill and give estimate of any costs purchaser would incur.
State whether shopping facilities are available in the subdivision; if not, state the distance in miles to such facilities and whether public transportation is available.
Approximately how many homes were occupied as of ______________ (insert date of filing)?
(a) State elevation of the highest and lowest lots in the subdivision and briefly describe topography and physical characteristics of the property.

(b) State in inches the average annual rainfall and, if applicable, the average annual snowfall for the subdivision or the area in which it is located.

Will any subsurface improvement, or special foundation work be necessary to construct one story residential or commercial structures on the land? Yes or No? If yes, state if any provision has been made and estimate any costs purchaser would incur.
State whether there is physical access (by conventional automobile) over legal rights-of-way to all lots and common facilities in the subdivision. State whether the access will be by public or private roads and streets and whether they will be maintained by public or private funds.
Has land in the subdivision been platted of record? Yes or No? If not, has it been surveyed? Yes or No? If not, state estimated cost to purchaser to obtain a survey.
Has each individual lot been staked or marked so that the purchaser can identify the boundary lines of the lot? If not, state estimated cost to purchaser or lessee to obtain a survey and to have boundary lines staked or marked.
State whether a comprehensive program is in effect to control soil erosion, sedimentation, and flooding throughout the entire subdivision? Yes or No. If yes, has the plan been approved by officials responsible for the regulation of land development? Yes or No.
Will the subdivider represent as a part of the sales program that the lot has investment potential? Yes or No. ________.

If you as a prospective purchaser are considering the purchase of a lot as an investment for future resale you should consider the following potentially adverse factors.

(a) A significant percentage of the sales price may have been committed to promotional advertising and sales commission.

(b) Significant costs may be incurred in the resale of the lot.

(d) Substantial population growth within the subdivision cannot be assured.

(e) Promotional sales stimulus such as that used by the subdivider will not be available to you.

(f) No assurance can be given that a real estate broker will agree to list your lot or to show it to prospective purchasers. This is especially important if your lot is located in a remote subdivision.

State whether the subdivider offers a resale program for those purchasers who wish to resell their lot. Yes or No ______. State how the purchaser will resell the lot in the absence of such a program. List any factors which may limit or affect the purchaser's ability to resell the lot.

Signatures of the Senior Executive Officer of the Subdivider:

Minnesota addendum.

In addition to the information required above, Public Offering Statements authorized for use in the State of Minnesota shall include the following:

A statement whether the subdivider holds any options to purchase adjacent properties, and if so, a description of such options and the location and zoning of the adjacent properties.
A statement indicating whether there is as of the date of registration an existing market for resale of any properties sold pursuant to this offering.
The material terms of any encumbrances, easements, liens, and restrictions, including zoning and other regulations affecting the subdivided lands and each unit or lot, a statement of the subdivider's efforts to remove such lien or encumbrance, and a statement of all existing taxes and existing or proposed special taxes or assessments which affect the subdivided lands.
ALL SIGNATURES REQUIRED BY THESE RULES MUST BE MANUAL SIGNATURES.
The name, principal address and telephone number of the subdivider and of its offices and agents in this state.
A statement asserting that the subdivision is in compliance with federal, state and local environmental quality standards. If the subdivision is not in compliance, a listing of the steps to be taken, if any, to insure compliance.

History

Statutory Authority: MS s 83.38
History: 10 SR 276; 17 SR 1279

Minn. R. 2810.9940 Format for Registration of Subdivided Lands by Notification

REGISTRATION OF SUBDIVIDED LANDS BY NOTIFICATION

Minnesota Statutes, section 83.23

This form is to be prepared and filed pursuant to Minnesota Statutes, section 83.23 and mailed to:

State of Minnesota

Department of Commerce

Registration and Licensing Division

5th Floor, Metro Square Building

Saint Paul, Minnesota 55101

State the name of the subdivision.
State the name and address of the subdivider.
State the form, date of organization, and jurisdiction of the organization filing this registration.
State the name and address of each of the organization's offices in this state.
State the names and addresses of each of the organization's agents in this state.
If the subdivision consists of land, attach a general description of the subdivided lands which shall include, but not be limited to, the following:

a. The exact location of the property identifying the closest community and the distance thereto;

b. A topographical description;

c. The purpose for which sales are being made (i.e., residential, commercial, industrial, recreational, or investment);

d. The total number of lots, parcels, units, or interests to be offered in this offering;

e. Whether or not other units in this development have been sold during the past 12 months, and if so how many and where located.

If the subdivision is composed of units other than land, attach a general description of the units to be sold which shall include, but not be limited to, the following:

a. Exact location of the units identifying the closest community and distance thereto;

b. The purpose for which sales are being made (i.e., residential, commercial, industrial, recreational, or investment);

c. The total number of lots, parcels, units, or interests to be offered in this offering;

d. Identify exactly what is being offered;

e. Whether or not any other units in this development have been sold during the past 12 months and if so, how many and where located.

State the condition of title to the land to be subdivided, including, but not limited to, a statement reflecting all encumbrances, deed restrictions, and covenants applicable to the title and state the condition of the title as recorded as of a date 30 days prior to the filing of this application. THE STATEMENTS REQUIRED BY THIS PARAGRAPH MUST BE AUTHORED BY AN ATTORNEY WHO IS LICENSED TO PRACTICE IN THE STATE IN WHICH THE LAND TO BE SUBDIVIDED IS LOCATED OR BY A TITLE INSURANCE COMPANY ACCEPTABLE TO THE COMMISSIONER.
Attach copies of instruments which will be delivered to a purchaser to evidence the purchaser's interest in subdivided lands and of the contracts or other agreements which the purchaser will be required to agree to or sign, together with the range of selling prices, rates or rentals at which it is proposed to dispose of the lots, units, parcels, or interests in the subdivisions and the list of mandatory fees the purchaser may be required to pay for membership in groups, including but not limited to, home owners' associations, country clubs, golf courses, and other community organizations.
A statement showing compliance with zoning and other governmental laws, ordinances, and regulations affecting the use of the subdivided lands and adjacent properties.
A statement asserting that the subdivision is in compliance with federal, state, and local environmental quality standards, if the subdivision is not in compliance, a listing of the steps to be taken, if any, to insure compliance.
State what permits are required to be obtained from federal, state, and local agencies having jurisdiction over the development or subdivision of the land to be subdivided. Indicate which permits have been obtained, which have been applied for and state whether any permit has been refused, including a statement of the reasons for the refusal and the effect such refusal will have on subsequent development of the subdivision.
The statement of existing provisions of access to the subdivision, the availability of sewage disposal facilities and other public utilities included but not limited to, water, electricity, gas, and telephone facilities in the subdivision, proximity in miles of the subdivision to nearby municipalities, availability and scope of community fire and police protection, the location of primary and secondary schools; a statement of the improvements to be installed, including off-site and on-site community and recreational facilities, by whom they are to be installed, maintained, and paid and an estimated schedule for completion.
Attach copies of all advertising to be used in the promotional planning for disposition.
A statement as to whether or not the lots have been permanently "staked", monuments erected, or other commonly approved methods of survey physically designating the individual units and, if not, what steps are to be taken to complete same.
Attach an irrevocable appointment of the commissioner to receive service of any lawful process, any civil proceeding arising under this act against the subdivider, or a personal representative, in accordance with part 2810.9920.

THE SUBDIVIDER CONSENTS TO PERMIT INSPECTION OF THE LOTS, PARCELS, UNITS OR INTERESTS TO BE OFFERED AND FURTHER TO PERMIT INSPECTION OF ITS BOOKS, RECORDS, ACCOUNTS, AND FILES BY THE COMMISSIONER OF COMMERCE OR A DESIGNEE OF THE COMMISSIONER WITH REFERENCE TO THE SALE OF THE SUBDIVIDED LANDS DESCRIBED HEREIN, AND AGREES TO PROVIDE THE COMMISSIONER WITH SUCH ADDITIONAL INFORMATION WITH RESPECT TO THE SALE OF THESE SUBDIVIDED LANDS AS THE COMMISSIONER MAY REQUIRE.

A $100 fee must be filed with this application. Make check payable to the commissioner of management and budget.

History

Statutory Authority: MS s 83.38
History: 9 SR 1575; 10 SR 276; 17 SR 1279; L 2003 c 112 art 2 s 50; L 2009 c 101 art 2 s 109

Minn. R. 2810.9950 Format of Annual Report

STATE OF MINNESOTA

DEPARTMENT OF COMMERCE, REGISTRATION AND LICENSING DIVISION

5th Floor Metro Square Building

ANNUAL REPORT -- SUBDIVIDED LAND

THIS REPORT MUST BE FILED NOT LATER THAN 120 DAYS AFTER THE FISCAL YEAR END OF THE SUBDIVIDER.

Name of subdivider __________________________________
Business Address ____________________________________
Name of Subdivision _________________________________
Description of Units ________________________________
Number of Units Registered __________________________
Date of Registration ________________________________
Registration Number _________________________________
Please check one of the following boxes:

Continued registration is desired.

Cancellation of registration is desired.

State the aggregate number of units sold pursuant to the above described registration or any amendment thereof to residents of the state of Minnesota. ______________________
State the aggregate number of units outstanding at the date of the last annual report filed with the Registration and Licensing Division, Department of Commerce, State of Minnesota.
Specify by date of transaction, number of units, and aggregate dollar amount, all sales of any subdivided land by the subdivider or an agent to Minnesota residents since the date of the last annual report filed with the Registration and Licensing Division, Department of Commerce, State of Minnesota.
Specify any exemption from registration claimed for any sale described in 11 above.
State the aggregate number of units outstanding at the date of this report.
Attach the following exhibits.

(1) A list of the issuer's officers, directors, and direct or beneficial owners of ten percent or more of any class of equity security or security convertible into equity securities.

(2) A general description of the business of the issuer; a list of its wholly or majority owned subsidiaries, specifying their businesses; and a list of officers and directors of each subsidiary.

(3) Financial statements consisting of a balance sheet, if required, certified by an independent Certified Public Accountant for the subdivider's last fiscal year end and an income statement, if required, similarly certified for the 12 months next preceding the date of the balance sheet; and a balance sheet dated within 90 days of the date of filing this annual report together with an income statement for the period from the subdivider's fiscal year end to the date of said balance sheet.

APPLICANT'S VERIFICATION

On this ______ day of _______, ____, _______________________, appeared before me, a Notary Public, and being first duly sworn, says that it is the applicant; that it has read the foregoing application and accompanying exhibits, and that the contents thereof are true of its own knowledge.

INDIVIDUAL VERIFICATION

On this ________ day of __________, ____, ______________________, appeared before me, a Notary Public, and being first duly sworn, says that ..he is the __________________________ of __________________________ and that ..he is duly authorized and empowered to execute this application on its behalf.

History

Statutory Authority: MS s 83.38
History: 9 SR 1575; 17 SR 1279; L 1998 c 254 art 1 s 107

Minn. R. 2810.9960 Format of Request for Exemption from Registration

STATE OF MINNESOTA

DEPARTMENT OF COMMERCE, REGISTRATION AND LICENSING DIVISION

5th Floor Metro Square Building

REQUEST FOR EXEMPTION FROM REGISTRATION

SUBMIT NO LATER THAN TEN DAYS PRIOR TO THE FIRST OFFER, A COVER LETTER STATING THE REASONS FOR THE REQUEST ALONG WITH AN INFORMATION SHEET WHICH CONTAINS THE FOLLOWING:

Name of the subdivision.
Name, address, and telephone number of the subdivider.
Name, address, and telephone number of the escrow agent.
Attach as exhibits:

(a) Sales contract.

(b) In accordance with part 2810.2610, an offering statement or fact sheet.

A $50 fee must be filed with this request. Make check payable to the commissioner of management and budget.

History

Statutory Authority: MS s 83.38
History: 9 SR 1575; L 2003 c 112 art 2 s 50; L 2009 c 101 art 2 s 109

Chapter 2820 FORMS FOR CONVEYANCES OF REAL ESTATE

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0020 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0030 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0040 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0050 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0060 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0070 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0080 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0090 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2830.0100 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Chapter 2860 FRANCHISES

Minn. R. 2860.0100 Definitions

Subpart 1. Scope.

For the purposes of Minnesota Statutes 1973 Supplement, chapter 80C and these rules, these terms shall have the following meanings.

Subp. 2. Affiliate.

"Affiliate" of another person means any person directly or indirectly controlling, controlled by, or under common control with such other person.

Subp. 3. Approved source.

"Approved source" means any source that meets the specifications or standards prescribed by the franchisor for the purchase or lease of goods by the franchisee as distinguished from a "designated source."

Subp. 4. Cancellation; termination.

"Cancellation" and "termination" shall be synonymous and include the abolition of, ending of, or invalidation of a franchise agreement.

Subp. 5. Designated sources.

"Designated sources" shall include any sources that the franchisor specifies as the only or exclusive suppliers from whom the franchisee may purchase or lease goods as distinguished from an "approved source."

Subp. 6. Franchise.

"Franchise" shall not include any contract or agreement whereby a person is granted the right to transport freight and perform household goods moving services by motor vehicles, provided such activity is subject to the jurisdiction and federal regulation of the Interstate Commerce Commission.

Subp. 7. Grant.

"Grant" means to give, bestow, or confer a franchise upon a franchisee.

Subp. 8. Motor vehicle.

"Motor vehicle" means any automobile, truck, truck tractor, motorcycle, or self-propelled motor home or camper if the foregoing is designed primarily for the transportation of persons or property on the public highways.

Subp. 9. Sale; sell; offer; offer to sell.

"Sale," "sell," "offer," and "offer to sell" shall include the renewal or extension of an existing franchise for value for the purposes of Minnesota Statutes 1973 Supplement, sections 80C.10 to 80C.22, and parts 2860.4300 to 2860.8300.

Subp. 10. Value; for value.

"Value" and "for value" shall include any consideration sufficient to support a simple contract.

History

Statutory Authority: MS s 80C.18
History: 17 SR 1279

Minn. R. 2860.0200 Exemptions

Subpart 1. Isolated sales.

The provisions of Minnesota Statutes 1973 Supplement, section 80C.03, clause (a), shall be available to franchisees only. The provisions of this part shall not be interpreted as to require registration of the franchise prior to its transfer under these circumstances. However, no person, in connection with such a transfer, may require a substituted franchisee to sign a franchise contract or agreement that violates the "unfair and inequitable" provisions of parts 2860.4500 to 2860.8300, whichever is applicable.

Subp. 2. Securities.

The provisions of Minnesota Statutes 1973 Supplement, section 80C.03, clause (d), shall be available only when the franchise is in fact registered as a security in Minnesota. All reference to Minnesota Statutes, chapter 80 shall include Minnesota Statutes 1973 Supplement, chapter 80A, and provisions amendatory thereto.

History

Statutory Authority: MS s 45.023; 80C.18
History: 14 SR 2631

Minn. R. 2860.0300 Interpretive Opinions

Interpretive opinions issued by the commissioner pursuant to Minnesota Statutes 1973 Supplement, section 80C.18 shall be applicable only to the transaction identified in the request thereafter, and may not be relied upon in connection with any other transaction. The burden of proving an exemption or exception to any definition is upon the person claiming it. Therefore, the request shall clearly set forth the basis upon which nonapplicability of the act is contended and shall be accompanied by all pertinent documentation.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.0400 Service of Process

Every consent to service of process shall be made in the form set forth in part 2860.9930.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.0500 Administration

The following charges shall be made for copies of documents furnished by the commissioner and for certification thereof:

A. 50 cents for each certificate under seal affixed thereto, plus 50 cents for each page or fraction thereof to be certified, whether the copies to be certified are furnished by the person requesting the certification or by the commissioner; and

B. 50 cents for each page or fraction thereof when the copies are not to be certified.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.1100 Registration Requirement

Subpart 1. Order of registration.

An effective order of registration shall authorize the offer, grant, or sale of one or more franchises provided that the initial contracts or agreements under which they are offered are substantially identical in their terms or provisions. Whenever the franchisor offers, grants, or sells more than one franchise and the resulting contracts or agreements vary substantially in their terms or provisions, separate franchises shall be deemed to have been offered, granted, or sold and separate registrations shall be required.

Subp. 2. Substantial variations.

For the purpose of this part, substantial variation in the contract or agreement shall relate to different products, services, fees charged, duties imposed, obligations incurred, or investments required to be made by the contract or agreement.

However, variation of terms or provisions within a contract or agreement designed to recognize individual differences in time, geography, market, volume, size, or costs for goods, materials, and supplies incurred by the franchisor shall not be considered as substantially varying the contract or agreement so as to constitute a new franchise offering.

Subp. 3. Duty to register.

When a franchisor offers area franchises in the state of Minnesota, it shall be the primary responsibility of the franchisor to register the area franchise to be offered. It shall further be the primary responsibility of the franchisor to register the franchise or subfranchise to be offered whenever any obligations or duties exist or fees are transmitted, directly or indirectly, between the franchisor and the franchisee or subfranchisee.

Subp. 4. Extension or renewal of franchise.

There need be no registration in effect prior to the extension or renewal of an existing franchise or the grant of an additional franchise to an existing franchisee unless the extended, renewed, or additional franchise varies substantially from the franchise that is presently possessed by the franchisee. However, no person, as a condition of the extension or renewal or the grant of such additional franchises, may require a franchisee to conform to any franchise contract or agreement the provisions of which are "unfair and inequitable" as those terms are defined within these rules.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.1200 Guidelines for Preparation of Applications for Registration

Subpart 1. Purpose and content.

The guidelines set forth in these rules are intended to indicate the form and informational content of an application for registration required by the commissioner of commerce. These guidelines shall be applicable to applications filed pursuant to Minnesota Statutes 1973 Supplement, chapter 80C. The primary purpose of the application for registration is to provide compliance with the requirements of Minnesota Statutes 1973 Supplement, chapter 80C and the rules promulgated thereunder. The information to be included in the application for registration and public offering statement is set out in detail in parts 2860.1300 to 2860.1600, 2860.3100 to 2860.3800, and 2860.4500 to 2860.8300.

Subp. 2. Disclosure.

The information requested is not to be viewed as determinative of the entire obligation of disclosure. Disclosure means more than merely compiling the information requested by the application form or supplying the information suggested by the guidelines. The extent of the required disclosure will depend upon the materiality of the particular facts and circumstances involved. This obligation is the independent obligation of all persons contributing to the disclosure including the franchisor and its counsel and accountant, to the extent of their professional involvement therein.

Subp. 3. Denial.

Applications for registration that are inadequately prepared and seriously deficient in terms of compliance with the statute and rules will be summarily denied.

Subp. 4. Filing.

An application for registration of a franchise shall be made by filing a facing page in the form required by part 2860.1300, accompanied by a proposed public offering statement required by parts 2860.3100 to 2860.3800, the $400 fee, and a consent to service of process required by part 2860.0400, if applicable.

History

Statutory Authority: MS s 80A.82; 80C.18
History: 48 SR 1127

Minn. R. 2860.1300 Form of Annual Report, Registration, and Registration Amendment

All applications for registration, annual report, or registration amendment shall have as the first page thereof a facing page in the form set forth in part 2860.9910, containing the information therein specified.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.1400 Financial Statements

Subpart 1. Preparation.

All financial statements required by these rules shall be prepared in accordance with generally accepted accounting principles. Financial statements shall be audited by an independent certified public accountant who shall express an opinion thereon, except where these rules permit the use of unaudited statements for interim periods or otherwise. Any financial statement prepared in accordance with the rules and requirements of the Securities and Exchange Commission shall satisfy the requirements of this part; provided, however, that the statements are audited by an independent certified public accountant who expresses an opinion thereon.

Subp. 2. Type of statement required.

Whenever in these rules financial statements of a franchisor or other person are required without further description, such requirement refers to a balance sheet as of the end of the franchisor's most recent fiscal year, as well as an income statement and a statement of changes in financial position for the 12-month period preceding the date of the balance sheet. If the fiscal year end of the franchisor is in excess of 90 days prior to the date of filing the application, the financial statements shall also contain a balance sheet, income statement, and statement of changes in financial position as of a date within 90 days of the date of filing the application; provided, however, that such interim statements need not be audited.

Subp. 3. Out of date.

If amendments or other delays cause the financial statements described in subparts 1 and 2 to become more than four months old as of the effective date of the registration statement, then updated financial statements as of a date within four months of the effective date shall be filed if the franchisor has no established record of earnings or is currently showing losses or a weak financial condition. If the franchisor has an established record of earnings and is in sound financial condition, a paragraph containing later information as to sales, net income, and financial condition may be added in lieu of updating the financial statements, in the discretion of the commissioner. However, in no case shall the financial statements be more than six months old as of the effective date of the registration statement. If a delay carries the effective date beyond the end of the franchisor's fiscal year, and by applying due diligence the registrant and accountant can have the audit completed prior to the effective date, certified statements should be filed as of the end of the fiscal year.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.1500 Accounting

Subpart 1. Auditors' report.

The auditors' report required herein shall comply with the following requirements:

A. The report shall be dated, manually signed, and shall identify the financial statements covered by the report.

B. The report shall state whether the audit was made in accordance with generally accepted auditing standards and shall disclose any auditing procedures generally recognized as normal or deemed necessary under the circumstances of the particular case, which have been omitted, and the reasons for such omission.

C. The report shall state clearly:

D. Any matters to which the accountant takes exception shall be clearly identified, the exception thereto specifically and clearly stated and, to the extent practicable, the effect of each such exception on the related financial statements given, either in the auditor's report or in a footnote to the financial statements.

Subp. 2. Signed and dated.

All financial statements filed with the commissioner shall include a manually signed and dated consent of the accountant to the use of the accountant's name and report in the public offering statement and registration statement.

Subp. 3. Independent accountant for audit.

If the independent accountant who has been engaged as the principal accountant to audit the franchisor's financial statements was not the principal accountant for the franchisor's most recently filed certified financial statements, the franchisor shall furnish the commissioner with a statement of the date when such independent accountant was engaged; and whether, in the 18 months preceding such engagements, there were any disagreements with the former principal accountant on any manner of accounting principles or practices, financial statement disclosure, or auditing procedure, which disagreements if not resolved to the satisfaction of the former accountant would have caused that accountant to make reference in connection with an opinion to the subject matter of the disagreement. The franchisor shall also request the former accountant to furnish the franchisor with a letter stating whether the former accountant agrees with the statements contained in the letter of the franchisor and, if not, stating the respects in which that accountant does not agree; and the franchisor shall furnish such letter to the commissioner together with its own.

History

Statutory Authority: MS s 80C.18
History: 17 SR 1279

Minn. R. 2860.1600 Consolidated Statements

Financial statements filed in accordance with the provisions of this chapter shall generally be prepared on a consolidated basis when the franchisor has a "controlling financial interest" in its subsidiary or subsidiaries as those terms are understood under generally accepted accounting principles.

The consolidated financial statements of a franchisor's parent company shall be accepted only when either the parent company guarantees to assume the duties and obligations of the franchisor under the franchise agreement should the franchisor become unable to perform the duties and obligations; or, the parent company posts a surety bond in the amount of the initial franchise fee charged each franchisee conditioned upon the fulfillment of the franchisor's duties and obligations under the franchise agreement.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.1700 Verification of Forms

Every application for registration, amendments thereto, and annual report shall be signed and verified by the applicant and by the franchisor and subfranchisor on whose behalf the offering is to be made in the form in part 2860.9920.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.1800 Impoundments

Impoundments:

A. The commissioner shall be a party to any impoundment agreement imposed as a condition of registration under Minnesota Statutes 1973 Supplement, section 80C.05.

B. When an impoundment is imposed under Minnesota Statutes 1973 Supplement, section 80C.05, 100 percent of franchise fees and all other funds paid by the franchisees or subfranchisors located in Minnesota for any purpose shall, within two business days of the receipt of such funds, be placed with the depository until the commissioner takes further action pursuant to Minnesota Statutes 1973 Supplement, section 80C.05. All checks shall be made payable to the depository.

C. When an impoundment is imposed under Minnesota Statutes 1973 Supplement, section 80C.05, the franchisor shall deliver to each franchisee or subfranchisor a purchase receipt, in a form approved by the commissioner. Such purchase receipts shall be consecutively numbered and prepared in triplicate with the original being given to the franchisee or subfranchisor, the first copy to the depository together with the payment received, and the second copy retained by the franchisor.

D. Funds subject to any impoundment imposed under Minnesota Statutes 1973 Supplement, section 80C.05, shall be placed in a separate trust account with a bank located in Minnesota. A written consent of the depository to act in such capacity shall be filed with the commissioner.

E. Prior to complete performance the commissioner shall authorize in writing the depository to release to the franchisor such amounts of the impounded funds applicable to a specified franchisee (or subfranchisor) upon a showing that the franchisor has fulfilled its obligations under the franchise agreement or that for other reasons the impoundment is no longer required for the protection of the franchisee.

F. An application to the commissioner authorizing the release of impounded funds to the franchisor shall be verified and shall contain:

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.1900 Surety Bond in Lieu of Impoundment

In lieu of the imposition of an impoundment under Minnesota Statutes 1973 Supplement, section 80C.05, a franchisor may post a surety bond in such amount as shall be required by the commissioner. The commissioner shall take into consideration the amount of franchise fees and other fees to be charged and the number of franchises to be offered, granted, or sold. Such bond shall be issued by a corporate surety authorized to transact business in the state of Minnesota, conditioned upon the completion by the franchisor of its obligations under the franchise contract to provide real estate, improvements, equipment, inventory, training, or other items included in the offering. The state of Minnesota shall be named as an obligee by the terms of the surety bond.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.2100 When Amendment Required

The occurrence of any of the events mentioned in part 2860.2400 shall necessitate the filing of a revised public offering statement.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.2200 How Amendment Accomplished

An application to amend the registration shall be made by submitting a facing page in the form described in part 2860.1300, accompanied by a revised public offering statement, as indicated in part 2860.2300 and the $100 fee.

History

Statutory Authority: MS s 80A.82; 80C.18
History: 48 SR 1127

Minn. R. 2860.2300 Indicating Alterations

The amended public offering statement filed in connection with an application to amend registration shall indicate by means of underscoring all alterations of the text of the public offering statement previously filed as a part of registration.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.2400 Material Event or Change

"Material event" or "material change" shall include, but not be limited to, the following:

A. the termination, closing, or failure to renew by the franchisor during any consecutive three-month period after registration of ten percent of all franchises of the franchisor, regardless of location, or ten percent of the franchises of the franchisor located in the state of Minnesota;

B. any change in control, corporate name, or state of incorporation, or reorganization of the franchisor;

C. the purchase by the franchisor during any consecutive three-month period after registration of ten percent of its existing franchises, regardless of location, or ten percent of its existing franchises in the state of Minnesota;

D. the commencement of any new product, service, or model line involving, directly or indirectly, an additional investment in excess of 20 percent of the current average investment made by all franchises or the discontinuation or modification of the marketing plan or marketing system of any product or service of the franchisor where the average total sales from such product or service exceed 20 percent of the average gross sales of the existing franchisees on an annual basis;

E. any change in the franchise fees charged by the franchisor; or

F. any significant change in:

History

Statutory Authority: MS s 80C.18
History: 17 SR 1279

Minn. R. 2860.2500 Annual Report

Subpart 1. Filing.

The registrant shall file an annual report by submitting a facing page in the form described in part 2860.1300, a public offering statement as indicated in subpart 2 and the $200 fee.

Subp. 2. Public offering statement.

The proposed public offering statement filed in connection with the annual report shall contain all data current as of the end of the franchisor's fiscal year including audited financial statements in accordance with parts 2860.1200 to 2860.1600. All alterations in the text of the public offering statement previously filed as a part of registration shall be indicated by means of underscoring.

Subp. 3. Time.

No later than the 120th day following the end of the franchisor's fiscal year, the franchisor shall file financial statements in accordance with parts 2860.1200 to 2860.1600. The newly filed financial statements are to be included in all public offering statements used by the franchisor after such filing date.

Subp. 4. Payment of fee.

"Payment of fee" shall mean the payment of the fee due for every year for which the registrant is delinquent in filing an annual report.

History

Statutory Authority: MS s 45.023; 80A.82; 80C.18
History: 14 SR 2631; 48 SR 1127

Minn. R. 2860.3100 Filed Copy of Statement

There shall be on file with the commissioner at all times a complete copy of the public offering statement amended to reflect the current status of the franchisor and in use in connection with the offer, grant, or sale of the franchise registered.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.3200 Readable; No Advertising

Each public offering statement shall be typed or printed with standard sized black type or an adequate substitute rendering the document easily readable. No advertisement or photographs shall be permitted therein unless specifically permitted by the commissioner.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.3300 Outside Front Cover

The outside front cover of the public offering statement, unless otherwise permitted by the commissioner, shall contain the following information:

A. the name, telephone number, and principal business address of franchisor and its type of organization;

B. a brief description of the franchise to be offered including the trade name under which the franchisee will operate;

C. a sample of the primary business trademark, patent, brand, logotype, name, or commercial label or symbol utilized by the franchisor under which the products or services are marketed and under which the franchisee will conduct business (place in upper left-hand corner of the cover page);

D. the initial franchise fee, or explanation for the absence thereof; state that further information regarding the franchisee's anticipated investment can be found on the appropriate page in the body of the public offering statement (this provision shall not be applicable in the case of franchises subject to the provisions of parts 2860.5100 to 2860.5600);

E. the name, telephone number, and address of the franchise sales organization if other than the franchisor;

F. the following statement in boldface type: THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE MINNESOTA FRANCHISE ACT. REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE COMMISSIONER OF COMMERCE OF MINNESOTA OR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING. THE MINNESOTA FRANCHISE ACT MAKES IT UNLAWFUL TO OFFER OR SELL ANY FRANCHISE IN THIS STATE WHICH IS SUBJECT TO REGISTRATION WITHOUT FIRST PROVIDING TO THE PROSPECTIVE FRANCHISEE, AT LEAST 7 DAYS PRIOR TO THE EXECUTION BY THE PROSPECTIVE FRANCHISEE OF ANY BINDING FRANCHISE OR OTHER AGREEMENT, OR AT LEAST 7 DAYS PRIOR TO THE PAYMENT OF ANY CONSIDERATION, BY THE FRANCHISEE, WHICHEVER OCCURS FIRST, A COPY OF THIS PUBLIC OFFERING STATEMENT, TOGETHER WITH A COPY OF ALL PROPOSED AGREEMENTS RELATING TO THE FRANCHISE. THIS PUBLIC OFFERING STATEMENT CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL PROVISIONS OF THE FRANCHISE AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE REFERRED TO FOR AN UNDERSTANDING OF ALL RIGHTS AND OBLIGATIONS OF BOTH THE FRANCHISOR AND THE FRANCHISEE.

G. the date of the public offering statement, which shall be the date upon which the registration is ordered effective by the commissioner.

History

Statutory Authority: MS s 80C.18
History: 17 SR 1279

Minn. R. 2860.3400 Document Format

Subpart 1. Information required.

The body of the public offering statement shall contain the information required by part 2860.3500, set forth under appropriate caption or headings reasonably indicative of the principal subject matter set forth thereunder.

Subp. 2.

[Repealed, 14 SR 2631]

Subp. 3. Narrative.

With the exception of financial statements and other tabular data, information set forth in the public offering statement shall be divided into concise paragraphs or sections and shall be in narrative form. Each disclosure item shall be either positively or negatively commented upon by use of a statement that fully incorporates the information required by the item.

Subp. 4. Table of contents.

Each public offering statement shall contain a concise table of contents showing the subject matter of the various sections or subdivisions of the public offering statement and the page number on which each section or subdivision begins.

Subp. 5. Incorporations by reference.

When the requirement calls for a statement or description, the description shall be made without incorporating by reference or reproducing sections from the franchise agreement or other documents. However, the documents should be referred to for a more thorough understanding.

History

Statutory Authority: MS s 45.023; 80C.18

Minn. R. 2860.3500 Information Required

Subpart 1. Sequential order.

The letters, numbers, and titles used herein merely outline the disclosure information in an orderly fashion and are not a required part of the public offering statement. However, the following sequential order should be followed.

Subp. 2. Franchisor.

The public offering statement shall include:

A. the name of the franchisor, the name under which the franchisor is doing or intends to do business, and the name of any parent or affiliate that may engage in business transactions with the franchisees;

B. the franchisor's principal business address and the address of its agent in this state authorized to receive service of process;

C. the business form of the franchisor, whether corporate, partnership, or otherwise, and the state or other jurisdiction under which the franchisor is organized;

D. the business experience of the franchisor, including the length of time the franchisor has conducted a business of the type to be operated by the franchisee, the length of time the franchisor has granted franchises for such business, and the length of time the franchisor has granted franchises in other lines of business and, if so, a description of these other lines of business.

Subp. 3. Identity and business experience of persons affiliated with franchisor.

The public offering statement shall list by name and office held the officers, directors, trustees, general partners, or other persons who will have management responsibility in connection with the franchisor's business operations that relate to the franchises being offered. With respect to each person listed, state their principal occupations during the past five years. List the subfranchisors for this state, if any.

Subp. 4. Litigation.

State whether the franchisor or any person identified in the public offering statement:

A. Has, during the ten-year period immediately preceding the date of the public offering statement, been convicted of a felony, pleaded nolo contendere to a felony charge, or been held liable in a civil action by final judgment if such felony or civil action involved fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, violation of any franchise law, or misappropriation of property. If so, set forth the name of the person convicted, the court and date of conviction or judgment, and any penalty or damages assessed.

B. Is subject to any currently effective order, decree, consent judgment, or other assurance relating to the business which is the subject of the franchise offered under any federal or state securities, antitrust, monopoly, franchise, trade practice, or trade regulation law. If so, set forth:

C. Has any material administrative, civil, or criminal actions pending against him or her concerning the business that is the subject of the franchise offered, alleging fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, violation of any franchise law, or misappropriation of property. If so, set forth the name of the person, the court, nature and current status of any such pending actions, and an opinion of defendant's counsel regarding defendant's position on issues in any such pending actions.

D. State whether the franchisor has been, during the 15-year period immediately preceding the date of the public offering statement, adjudicated a bankrupt, or reorganized due to insolvency. As to any other person identified in the public offering statement, state whether the person is or has been a principal officer of a corporation or general partner in any partnership involved in any of the foregoing proceedings. If so, set forth the name of the person or corporation and the court, date, nature, and current status of the proceedings.

Subp. 5. Investment of franchisee.

Set forth in detailed tabular form the total initial investment that will be required of the franchisee. This statement should include, but is not limited to, a description of the following items:

A. State the franchise fee or initial payment, if any, charged upon the signing of the franchise agreement, whether payable in lump sum or installments.

B. If an identical franchise fee or initial payment is not charged in connection with each franchise agreement, state the method or formula by which the amount is determined.

C. State whether any of the fees set forth in items B and C are refundable and, if so, under what conditions.

D. Include a statement indicating the proposed use of the proceeds to be raised from such fees.

E. State any other fees or payments or charges required by the franchisor in connection with the franchisee's preparation for entrance into the franchise.

F. State the fees or payments other than the initial franchise fee that the franchisee or subfranchisor is required to pay to the franchisor, including royalties, and payments or fees which the franchisor collects in whole or in part on behalf of a third party.

G. State to whom the above payments are due, when the payments are due, and the method by which the payments are to be made.

H. Include a statement estimating the following expenditures that prospective franchisees should anticipate making in connection with the franchised business (a low-high range may be stated, if applicable):

I. Describe the real property requirements for the business that is the subject of the franchise offered. This should include the approximate size of the property and building involved, the probable location (shopping center, downtown, suburban, rural, highway, etc.), and a general statement concerning the purchase or lease costs, if estimable.

Subp. 6. Financing arrangements.

State the terms and conditions of any financing arrangements offered directly or indirectly by the franchisor or the franchisor's agent or affiliate.

State any past or present practice of or any intent of the franchisor to sell, assign, or discount, in whole or in part, to a third party any note, contract, or other obligation of the franchisee or subfranchisor.

Describe any waiver of defenses or similar provisions in any financing note, contract, or other instrument to be executed by the franchisee or subfranchisor.

Subp. 7. Obligations of franchisee to purchase items.

State whether, by the terms of the franchise agreement or by other intentional device or practice, the franchisee or subfranchisor is required to purchase or lease from the franchisor or its designated sources any goods, services, supplies, products, fixtures, equipment, inventory, or real estate relating to the establishment or operation of the franchise business, together with a general description thereof.

State the means by which the franchisor may derive income, if any, as a result of such required purchases or leases. To the extent known or estimable by the franchisor, state the magnitude of such required purchases or leases in relation to all purchases or leases that the franchisee will make or enter into in the establishment and the operation of the franchised business.

Subp. 8. Terms of franchise.

State the following with respect to the franchise and any related agreements:

A. the term and whether the term is affected by the term of any other agreement;

B. the conditions under which the franchisee may renew or extend;

C. the conditions under which the franchisor may refuse to renew or extend;

D. the conditions under which the franchisor may terminate;

E. the conditions under which the franchise may terminate;

F. the obligations of the franchisee after termination of the franchise, whether such termination be by the franchisor, the franchisee, or the expiration of the franchise;

G. the conditions under which the franchisee or its owners may sell or assign, in whole or in part;

H. the conditions under which the franchisor may sell or assign, in whole or in part;

I. the conditions under which the franchisor may repurchase, in whole or in part (if the franchisor has the right or option to repurchase the franchise, state whether there will be an independent appraisal of the franchise and recognition of goodwill or other intangibles associated therewith in the repurchase price to be given to the franchisee);

J. describe the provisions regarding the franchisee's equity upon sale, termination, or refusal to renew or repurchase;

K. the conditions under which the franchisee may modify;

L. the conditions under which the franchisor may modify;

M. the contractual rights of the heirs or personal representative of the franchisee to the franchise upon the death or incapacity of said franchisee; and

N. the conditions of any covenant not to compete.

Subp. 9. Limitation on goods and services offered by franchisee.

State any restriction or condition imposed by the franchisor, whether by the terms of the franchise agreement or by other device or practice of the franchisor, whereby the franchisee is limited in the goods or services offered to customers.

State fully the obligation of the franchisee, whether by the terms of the franchise agreement or any other device or practice, to participate personally in the direct operation of the franchised business.

Subp. 10. Obligations of franchisor.

State the obligations that the franchisor agrees, by contract or otherwise, to perform, both prior to the opening of the franchise business and during the operation of the franchise business.

When the obligations are to be completed by a certain date or within a specified time period, state the date or period. If the obligations previously mentioned are not performed, state the rights of the franchisee to any refund of money paid or to rescission of the franchise contract or other transaction related thereto.

Describe the method, if any, used by the franchisor to select the location for the franchisee's business.

Describe the training program, supervision, and assistance the franchisor will provide the franchisee, including:

A. the location, duration, and content of the promised training program;

B. when the training program is to be conducted;

C. the amount of experience the instructors have had with the franchisor;

D. who shall bear the expenses, including travel and living expenses, incurred in connection with the training program; and

E. the number of and average length of training programs and refresher courses made available to the franchisee after the initial training period and whether the franchisee will be required to attend the same.

Subp. 11. Arrangements with public figures.

State any compensation or other benefit given or promised to a public figure arising, in whole or in part, from the use of the public figure in the name or symbol of the franchise or the endorsement or recommendation of the franchise by the public figure in advertisements, and the extent to which such public figure is involved in the actual management of the franchisor.

State whether the franchisee has the ability to use the name of a public figure or celebrity in promotional efforts and advertising and any charges to be made to the franchisee in connection with such usage.

For the purposes of this disclosure, "public figure" shall include any cartoon or fictionalized character.

Subp. 12. Exclusive area or territory.

State whether the franchisee or subfranchisor receives an exclusive area or territory. State whether the franchisor may establish another franchisee or a company owned operation within that area or territory.

State whether the franchisor specifies a defined area or territory within which it can conduct, or grant franchises for the conduct of, a limited number of franchised businesses.

State whether the franchisor or its parent or affiliate may establish other franchises or company owned operations selling or leasing similar products or services under a different commercial symbol within that area or territory.

State whether the continuation of the exclusivity of the grant is dependent upon the volume of sale generated or penetration of the potential market by the franchisee. State whether, and under what circumstances, the area or territory can be reduced.

If applicable, attach a map of the area or territory drawn to scale.

Subp. 13. Other franchises.

State, as of the filing date of this statement, the following:

A. the total number of franchises presently operating in the United States, and of that number, the total number of franchises presently operating in the state of Minnesota (if the franchisor owns or operates any of the outlets, the number of such operations shall be stated independently);

B. the number of franchises in the United States and the state of Minnesota for which a business is not yet operational although a franchise agreement has been signed;

C. estimate the total number of franchises to be sold or granted in the United States for the 12-month period following the date of this statement; of that number, estimate the total number of franchises to be sold or granted in the state of Minnesota for the 12-month period following the date of this statement;

D. state that a list of the names, addresses, and business telephone numbers of all franchisees in the state of Minnesota will be given to the prospective franchisee immediately upon request and that the prospective franchisee will be permitted to retain the list. The list of all franchisees in the state of Minnesota, as of the date of application, together with the date upon which the franchise agreement was signed by each, shall be filed with the commissioner as a condition of registration.

Subp. 14. Estimated or projected operations.

The public offering statement shall include a copy of any estimated or projected franchisee earnings, proforma statements, or break even statements prepared for presentation to prospective franchisees or subfranchisors. Include a statement setting forth the assumptions or data upon which the estimations or projections are based. This statement should clearly indicate such information as the number of operations involved, the length of time the operations were in business, the period covered by the data, and the ownership status of the operations (purely franchised versus owned, operated, or controlled by the franchisor). All such estimations or projections shall indicate the percentage of the franchises not owned, controlled, or operated by the franchisor which were in operation during the entire preceding 12-month period which have, to the franchisor's knowledge, actually attained or surpassed that estimated or projected level.

Subp. 15. Franchise contract.

The public offering statement shall include a copy of the entire franchise contract or agreement proposed for use, including all amendments thereto.

Subp. 16. Financial statements.

The public offering statement shall include a copy of the financial statements that meet the requirements of parts 2860.1200 to 2860.1600. These statements are to be an actual part of the public offering statement rather than contained in a separate document.

History

Statutory Authority: MS s 80C.18
History: 17 SR 1279

Minn. R. 2860.3600 Last Page of Document

The last page of each public offering statement shall contain a detachable document acknowledging receipt of the public offering statement by the prospective franchisee.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.3700 Offer by Subfranchisor

When the franchises to be registered are proposed to be offered or sold by a subfranchisor or that person's agents, the application shall also include the same information in parts 2860.3100 to 2860.3600 concerning the subfranchisor as is required concerning the franchisor.

History

Statutory Authority: MS s 80C.18
History: 17 SR 1279

Minn. R. 2860.3800 Alternative Applications

The commissioner may accept as application for registration under Minnesota Statutes 1973 Supplement, chapter 80C, any currently effective public offering statement prepared for compliance with the registration provisions of the franchise laws of other jurisdictions as the commissioner may, from time to time, designate. The commissioner reserves the right to require alterations in such statements as necessary to fulfill the requirements of Minnesota Statutes 1973 Supplement, chapter 80C.

The commissioner may accept as application for registration the Uniform Franchise Registration Application adopted by the North American Securities Administrators Association; however, the commissioner reserves the right to require alterations in the Uniform Franchise Offering Circular as necessary.

History

Statutory Authority: MS s 45.023; 80C.18
History: 14 SR 2631

Minn. R. 2860.4100 Standards for Advertisements Offering a Franchise Subject to Registration

Subpart 1. Prohibitions.

No advertisement shall make reference to:

A. the acquiring of a franchise as an assurance of earnings or profits, as a safe investment, or as free from loss, default, or failure or that such is impossible or unlikely;

B. projections or statements of operations of or income from the operation of any franchise; or

C. any opinion of counsel without stating the name and address of such counsel.

Subp. 2. Content.

All advertisements must contain the name and address of the person using the advertisement or making the offer, including the name or the primary commercial symbol of the franchisor, and the registration number assigned to the offering by the commissioner.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.4200 Filing of Advertisements

One copy of each advertisement intended for use shall be filed with the commissioner at least five business days prior to its first publication.

If not disallowed by the commissioner by written notice or otherwise within three business days from the date filed, the advertisement may be published.

No formal approval of the advertisement shall be issued by the commissioner.

The person placing the advertisement shall be responsible for the accuracy and reliability of the advertisement and its conformity with the act and this part.

History

Statutory Authority: MS s 45.023; 80C.18
History: 14 SR 2631

Minn. R. 2860.4300 Prohibited Practices

Subpart 1. Pyramid or chain.

No person may promote, offer, or grant participation in a chain distributor scheme, multilevel distribution scheme, or pyramid sales scheme as defined by Minnesota law.

Subp. 2. Prohibited statements.

No person may make or cause to be made any statement or representation that:

A. other individuals are willing to enter into a franchise agreement substantially similar to that being offered, granted, or sold without, at the same time, disclosing in writing the source of such information and the names, addresses, and telephone numbers of such individuals;

B. the state of Minnesota or its agents or employees have approved or endorsed the franchise or the franchisor, found the contents of any advertising is true and not misleading, or determined that the promotion, advertisement, offer, grant, or sale of the franchise complies with the applicable laws unless such is accomplished by a showing of an official record, to wit: an order of registration; or

C. execution of any document in connection with the offer, grant, or sale of a franchise constitutes only an application for such franchise when, in fact, execution of the subject document or documents creates a binding obligation.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.4400 Unfair and Inequitable Practices

All franchise contracts or agreements and any other device or practice of a franchisor, shall conform to the following provisions. It shall be unfair and inequitable for any person to:

A. restrict or inhibit, directly or indirectly, the free association among franchisees for any lawful purpose;

B. discriminate between franchisees in the charges offered or made for royalties, goods, services, equipment, rentals, advertising services, or in any business dealing, unless any classification of or discrimination between franchisees is based on franchises granted at different times, geographic, market, volume, or size differences, costs incurred by the franchisor, or other reasonable grounds considering the purposes of Minnesota Statutes 1973 Supplement, sections 80C.01 to 80C.22;

C. compete with the franchisee in an exclusive territory or grant competitive franchises in the exclusive territory previously granted to another franchisee if the terms of the franchise agreement provide that an exclusive territory has been specifically granted to a franchisee;

D. require a franchisee to assent to a release, assignment, novation, or waiver that would relieve any person from liability imposed by Minnesota Statutes 1973 Supplement, sections 80C.01 to 80C.22; provided, that this part shall not bar the voluntary settlement of disputes;

E. terminate or cancel a franchise unless:

F. terminate or cancel a franchise except for "good cause," which shall be defined as failure by the franchisee substantially to comply with those reasonable requirements imposed by the franchise, including but not limited to:

G. impose on a franchisee by contract or rule, whether written or oral, any standard of conduct that is unreasonable;

H. unreasonably withhold consent to any assignment, transfer, or sale of the franchise whenever the franchisee to be substituted meets the present qualifications and standards required of the franchisees of the particular franchisor;

I. enforce any unreasonable covenant not to compete after the franchise relationship ceases to exist;

J. require a franchisee to waive his or her rights to a jury trial or to waive rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction, or to consent to liquidated damages, termination penalties, or judgment notes; provided that this part shall not bar an exclusive arbitration clause;

K. require a security deposit except for the purpose of securing against damage to property, equipment, inventory, or leaseholds;

L. require or prohibit any change in management or personnel of any franchisee unless the current or potential management or personnel fails to meet the present qualifications and standards required by the particular franchisor; or

M. fail to renew a franchise unless the franchisee has been given written notice of the intention not to renew at least 180 days in advance thereof and has been given a opportunity to operate the franchise over a sufficient period of time to enable the franchisee to recover the fair market value of the franchise as a going concern as determined and measured from the date of the failure to renew. This item does not apply if the failure to renew a franchise is for good cause and the franchisee has failed to correct the reasons for termination.

History

Statutory Authority: MS s 45.023; 80C.14; 80C.18; L 1986 c 444
History: 14 SR 2631; 15 SR 2104; 17 SR 1279

Minn. R. 2860.4500 False, Fraudulent, and Deceptive Practices

In connection with an offer, grant, or sale of a franchise in this state, any person authorizing, aiding in, or causing such offer, grant, or sale of franchises shall be deemed to be engaging in a "false, fraudulent, or deceptive practice" within the meaning of Minnesota Statutes 1973 Supplement, sections 80C.12 and 80C.13, without limiting the authority of the commissioner under Minnesota Statutes 1973 Supplement, section 80C.12, if such person:

A. applies, authorizes, or causes to be applied any material part of the proceeds from the grant or sale of such franchises in any way contrary to the purpose specified in advertising or oral representations utilized in connection with the offer, grant, or sale of such franchise or in the public offering statement required to be utilized in connection with the offer, grant, or sale of the franchises;

B. makes or causes to be made any statement or representation:

C. fails to make the following representations:

D. misrepresents:

History

Statutory Authority: MS s 45.023; 80C.18
History: 14 SR 2631

Minn. R. 2860.5100 Special Classification

The commissioner specifically recognizes the classification of motor vehicle fuel franchises and prescribes that the rules set forth hereafter shall apply only to that class.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.5200 Public Offering Statement

The provisions of part 2860.3500 shall not apply. The body of the public offering statement shall contain the following information:

A. a copy of the entire motor vehicle fuel franchise contract or agreement proposed for use, including all amendments thereto;

B. a summary of the obligations of the franchisor (hereafter referred to as supplier) and the franchisee (hereafter referred to as dealer) together with a summary of the agreement referred to in item A;

C. any existing offer for the sale or other disposition of the location subject to the franchise agreement or negotiations that might result in an offer, sale, or other disposition of the location;

D. any existing agreement that would result in the demolition of or a major alteration of the condition of the location, or negotiations that would proceed an agreement to demolish or otherwise materially alter the condition of the location;

E. a statement disclosing the interest, and the nature thereof, enjoyed by the supplier in the location and, further, a disclosure of any other interest, and the nature thereof, enjoyed by any other person in said location;

F. full disclosure of the total amount of any security deposits required, plus the amount of interest that shall be paid on any cash security deposit, and the conditions for the return of any security deposit;

G. the training program, if any, and the specific goods and services the supplier will provide for and to the dealer;

H. the gallonage volume history, if any, of the location under negotiation for and during the three-year period immediately past or for the entire period for which the location has been supplied by the supplier, whichever is shorter;

I. the name and last known address of the previous dealer or dealers for the last five years, or for and during the entire period for which the location has been supplied by the supplier, whichever is shorter, and the reason or reasons of the supplier where an aforedescribed relationship has ended by cancellation under part 2860.4400.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.5300 Registration

The following information shall be filed with the commissioner in connection with the registration:

A. financial statements that comply with the provisions of parts 2860.1200 to 2860.1600; and

B. the names, addresses, and business telephone numbers of all the franchisees of the franchisor located in the state of Minnesota.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.5400 Unfair Practices

The provisions of part 2860.4400 shall not apply. All motor vehicle fuel franchise agreements shall conform to the following provisions. A violation of any of these provisions shall be considered "unfair and inequitable."

A. The dealer shall have the unconditional right to cancel the franchise agreement until midnight of the seventh business day after the day on which the agreement was signed, by giving the supplier in person or by certified mail written notice of cancellation; provided, that any money, equipment, or merchandise loaned, sold, or delivered to the dealer is returned to the supplier for full credit, or cash equivalent, together with delivery of full possession of the service station location, if leased from the supplier, to the supplier within ten days after delivery of notice.

B. The price at which the dealer sells products shall not be fixed or maintained by the supplier.

C. No dealer shall be required to use or utilize any promotion, premium, coupon, giveaway, or rebate in the operation of the business. Except as otherwise provided by law, nothing herein shall be construed to prohibit the dealer from voluntarily participating financially in a promotion, premium, coupon, giveaway, or rebate sponsored by the supplier.

D. In the event of any termination or cancellation, whether by mutual agreement or otherwise, the supplier shall be required to purchase from the dealer within 30 days from the date of termination at the then current wholesale prices any and all merchantable products purchased by the dealer from the supplier; provided, however, that in the event of purchase, the supplier shall have the right to apply the proceeds against any existing indebtedness owed to the supplier by the dealer and that the repurchase obligation is enforceable to the extent that there are not other valid claims or liens against the products by or on behalf of other creditors of the dealer.

E. No supplier shall unreasonably withhold its consent to any assignment, transfer, or sale of a franchise agreement.

F. No supplier shall restrict or inhibit, directly or indirectly, the right of free association among dealers for any lawful purpose.

G. No supplier shall require a dealer to assent to a release or waiver of the dealer's rights hereunder. The right of either party to trial by jury or the interposition of counterclaims or crossclaims, shall not be waived by agreement of the parties. Any agreement to the contrary is void.

H. The supplier may set forth in the franchise agreement the required number of hours per day and days per week that the dealer must maintain the retail outlet open for business. However, the supplier shall not unreasonably withhold consent to a modification of such requirements where dictated by changes of circumstances.

I. The supplier may set forth in the franchise agreement prohibitions and limitations on the conduct of any other business at the service station site by the dealer, including a charge for additional rent where another business is permitted and conducted. However, the supplier shall not:

J. A security deposit shall not be required except for the purpose of securing against loss of or damage to real or personal property. Any security deposit required of the dealer may be satisfied by the deposit of cash or a pledge of a savings account or its equivalent in a Minnesota banking institution.

K. No supplier shall require a dealer to waive any of the dealer's rights under Minnesota Statutes, chapter 80C and the rules adopted under it or United States Code, title 15, sections 2801 to 2806 (1978). Any such waiver is void.

L. No supplier shall include in its franchise agreements a release of any claims that the dealer may have against the supplier. Any such release is void.

M. No supplier shall require or encourage its dealer to violate or conspire to violate any law of the state of Minnesota.

History

Statutory Authority: MS s 45.023; 80C.18
History: 10 SR 276; 17 SR 1279

Minn. R. 2860.5500 Cancellation of Franchise

Any provisions regarding cancellation of the franchise agreement shall be governed by items A to C.

A. A supplier shall not cancel a franchise agreement except for one or more of the following grounds:

B. The grounds in item A shall not apply to declines that materially result from extrinsic physical changes, including but not limited to those resulting from highway construction, construction on the premises, or changes in highway routes.

C. No person may cancel a franchise unless:

History

Statutory Authority: MS s 45.023; 80C.18
History: 14 SR 2631; 17 SR 1279

Minn. R. 2860.5600 Renewal of Franchise

Any provisions regarding the renewal of a franchise agreement shall be governed by items A and B.

A. Either party to a franchise agreement may refuse to renew the franchise agreement upon giving the other party written notice of his or her intent not to renew at least 180 days prior to the expiration of the franchise agreement.

B. Where the supplier and the dealer have been parties to one or more franchise agreements extending for three consecutive years, or where the dealer has been supplied the same brand name motor vehicle fuel for such period, or where the dealer has been in business as a motor vehicle fuel dealer in the same location for such period and the supplier has obtained the interest of the prior supplier to that location, the supplier shall either automatically renew the existing franchise agreement, or in good faith offer another franchise agreement, different either in its terms or location. For the purposes of this item, the three-year period shall be measured from the original date of commencement of any of the relationships mentioned above. However, this obligation of the supplier shall not apply where the supplier would have a right to cancel its relationship with the dealer under any of the provisions of part 2860.5400.

History

Statutory Authority: MS s 45.023; 80C.18
History: 14 SR 2631

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.7200 Public Offering Statement

Subpart 1. Exclusion.

The provisions of part 2860.3500, subparts 5 and 14 shall not apply. In lieu thereof, the public offering statement shall contain the items in subpart 2.

Subp. 2. Investment by franchisee.

State any fees, payments, or charges associated with preparation for entrance into the franchise. State to whom the payments are due, when the payments are due, and the method by which the payments are to be made.

Estimate the minimum expenditures, if any, for the following items that prospective franchisees should make in order to maintain the franchise relationship:

A. fixed assets, whether or not financed by contract, installment purchase, leasing, or otherwise;

B. working capital, deposits, and prepaid expenses; and

C. all other goods or services, including inventory, which the franchisee shall purchase or lease.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.7300 Other Statements and Projections

Any estimation or projection of franchisee earnings, proforma statement, or break even statement prepared for presentation to prospective franchisees or subfranchisors shall include a statement setting forth the assumptions or data upon which the estimations or projections are based. This statement should clearly indicate such information as the number of operations involved, the length of time the operations were in business, the period covered by the data, and the ownership status of the operations (purely franchised versus owned, operated, or controlled by the franchisor). All such estimations or projections shall indicate the percentage of the franchises not owned, controlled, or operated by the franchisor that were in operation during the entire preceding 12-month period that have, to the franchisor's knowledge, actually attained or surpassed that estimated or projected level.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.8100 Special Classification

The commissioner specifically recognizes the classification of franchises, other than those specifically classified elsewhere in parts 2860.4500 to 2860.7300, which require that the franchisee make an initial, unfinanced investment in excess of $200,000, and prescribes that the rules set forth hereafter shall apply only to that class.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.8200 Public Offering Statement

The provisions of part 2860.3500, subparts 7 to 14 and 16, shall not apply.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.8300 Registration

The following information shall be filed with the commissioner in connection with the registration:

A. financial statements that comply with the provisions of parts 2860.1200 to 2860.1600; and

B. the names, addresses, and business telephone numbers of all the franchisees of the franchisor located in the state of Minnesota.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.9910 Form for Application for Registration, Annual Report, or Amendment of Registration

STATE OF MINNESOTA

DEPARTMENT OF COMMERCE

REGISTRATION AND LICENSING DIVISION

This is submitted for (check one only):

(For use by the Department of Commerce)

Name, telephone number, and address of person to whom questions concerning this statement should be directed.

History

Statutory Authority: MS s 80C.18

Minn. R. 2860.9920 Form for Verification

CORPORATE VERIFICATION

___________________________, being first duly sworn, says that ..he is the __________________________________________ of ________________________________________ above-named applicant, and executes this instrument for and in its behalf, by authority of its board of directors; that ..he has read the foregoing application, including all exhibits submitted therewith, and states that the contents thereof are true to the best of h.. knowledge and belief.

INDIVIDUAL VERIFICATION

_________________________________, being first duly sworn, says that ..he is ________________________________________________ applicant; that ..he has read the foregoing application, including all exhibits submitted therewith, and states that the contents thereof are true to the best of h.. knowledge and belief.

History

Statutory Authority: MS s 80C.18
History: 17 SR 1279; L 1998 c 254 art 1 s 107

Minn. R. 2860.9930 Form for Consent to Service of Process

CONSENT TO SERVICE OF PROCESS

KNOW ALL BY THESE PRESENTS:

That the undersigned, _____________________________________, (a corporation organized under the laws of the state of _______________________) (a partnership) (an individual) (other ______________________________) for the purpose of complying with Minnesota Statutes, 1973 Supplement, chapter 80C, relating to franchises hereby irrevocably appoints the commissioner of commerce, and the successors in such office, its attorney in the state of Minnesota upon whom may be served any notice, process or pleading in any civil action or proceeding against it, its successor, executor or administrator which arises under the aforesaid laws of said state or any rule or order thereunder; and the undersigned does hereby consent that any such action or proceeding against it may be commenced in any court of competent jurisdiction and proper venue within said state by service of process upon said officer with the same effect as if the undersigned, its successor, executor or administrator had personally been served with process in said state.

It is requested that a copy of any notice, process or pleading served hereunder be mailed to:

History

Statutory Authority: MS s 80C.18
History: 17 SR 1279: L 1998 c 254 art 1 s 107

Chapter 2870 COLLECTION AGENCIES

Minn. R. 2870.0100 Repealed by subpart

Subpart 1.

[Repealed, L 2001 c 23 s 1; L 2014 c 222 art 1 s 58]

Subp. 2.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 3.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 4.

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.0200 [Repealed, L 2001 c 23 s 1]

[Repealed, L 2001 c 23 s 1]

Minn. R. 2870.1100 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.1200 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.1300 [Repealed, L 1993 c 295 s 8]

[Repealed, L 1993 c 295 s 8]

Minn. R. 2870.1400 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.1500 [Repealed, L 2013 c 135 art 1 s 10]

[Repealed, L 2013 c 135 art 1 s 10]

Minn. R. 2870.1600 [Repealed, L 1993 c 295 s 8]

[Repealed, L 1993 c 295 s 8]

Minn. R. 2870.1700 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.1800 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.1900 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.2000 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.2100 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.2200 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.2300 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3100 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3200 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3300 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3400 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3500 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3600 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3700 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3800 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.3900 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.4000 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.4100 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 2870.5100 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Chapter 2872 CURRENCY EXCHANGE FEES

Minn. R. 2872.0100 Currency Exchange Fees

Subpart 1. Presumption.

It shall be presumed that fees and amendments of fees filed with the commissioner of commerce under Minnesota Statutes, section 53A.07, are fair and reasonable if they do not exceed the following amounts:

A. for cashing checks issued by a government entity in an amount up to $500, the greater of (1) 2-1/2 percent of the face amount of the instrument, or (2) $1, except that it is permissible to charge a first-time customer up to five percent of the face amount of the instrument; and

B. for cashing all other government checks and for cashing payroll checks, the greater of (1) three percent of the face amount of the instrument, or (2) $1, except that it is permissible to charge a first-time customer up to six percent of the face amount of the instrument.

Subp. 2. Disapproval.

Fees and amendments of fees filed with the commissioner under Minnesota Statutes, section 53A.07, that exceed the maximum amounts in subpart 1 may be disapproved by the commissioner as not fair and reasonable based on a consideration of the standards in Minnesota Statutes, section 53A.07, subdivision 3.

History

Statutory Authority: MS s 45.023; 53A.12
History: 15 SR 1924

Chapter 2875 REGULATION OF SECURITIES

[Repealed, 34 SR 593]

Subp. 2.

[Repealed, 10 SR 275]

Subp. 2a.

[Repealed, 34 SR 593]

Subp. 3.

[Repealed, 34 SR 593]

Subp. 4.

[Repealed, 34 SR 593]

Subp. 5.

Subp. 2.

[Repealed, 34 SR 593]

Subp. 3.

[Repealed, 34 SR 593]

Subp. 4.

[Repealed, 13 SR 1379]

Subp. 5.

[Repealed, 34 SR 593]

Chapter 2876 REGULATING SECURITIES

Minn. R. 2876.1000 Definitions

Subpart 1. General terms and scope.

The terms used in this chapter that are not defined in this part have the meanings given them in Minnesota Statutes, chapter 80A.

Subp. 2. Control person.

For purposes of this chapter, "control person" means a partner, officer, director, manager, majority holder of securities, or anyone else having the power to direct the management of the entity, but does not include a person whose primary duties are ministerial or clerical.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.1020 Depository Institutions

The term "broker-dealer" does not include a depository institution that engages in the conditioned activities described in sections 3(a)(4) and 3(a)(5) of the Securities Exchange Act of 1934, United States Code, title 15, section 78c(a)(4)(B)-(C).

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.1021 Regulation D

"Regulation D" as used in the Minnesota Securities Act, Minnesota Statutes, chapter 80A, and the rules adopted under the act means Regulation D as promulgated by the Securities and Exchange Commission, Code of Federal Regulations, title 17, sections 230.501 to 230.508, as amended.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.1030 Effective Date of Incorporations by Reference

Unless otherwise indicated, whenever a reference is made in this chapter to a federal, state, or self-regulatory organization's statute, rule, decision, or opinion, the reference is deemed to refer to the version of the statute, rule, decision, or opinion as of August 1, 2007, or as later amended.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.2020 Recognized Manuals Approved by Commissioner

"Nationally recognized securities manuals," as that term is used in Minnesota Statutes, section 80A.46 (2)(D), are limited to the following:

A. Standard & Poor's Corporation Records;

B. Mergent Industrial Manual and News Reports;

C. Mergent Bank and Finance Manual and News Reports;

D. Mergent Transportation Manual and News Reports;

E. Mergent Public Utility Manual and News Reports;

F. Mergent OTC Industrial Manual and News Reports; and

G. Mergent International Manual and News Reports.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.2021 Single Issue; Integration

The following factors should be considered in determining whether offers and sales are part of a "single issue" for purposes of the exemption contained in Minnesota Statutes, section 80A.46 (14):

A. whether the offers and sales are part of a single plan of financing;

B. whether the offers and sales involve issuance of the same class of securities;

C. whether the offers and sales have been made at or about the same time;

D. whether the same type of consideration is being received; and

E. whether the offers and sales are made for the same general purpose.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.3020 Federal Covered Securities; Notice Filings

Subpart 1. Section 18(b)(2) securities.

With respect to a federal covered security, as defined in section 18(b)(2) of the Securities Act of 1933, United States Code, title 15, section 77r(b)(2), that is not otherwise exempt under Minnesota Statutes, sections 80A.45 to 80A.47:

A. An initial notice filing by or on behalf of an issuer must be filed with the administrator, and the notice filing must contain:

B. On or before expiration of a notice filing, the issuer may amend or renew a notice filing by filing Form NF and a fee, if applicable.

C. All notice filings expire at midnight on June 30.

Subp. 2. Section 18(b)(4)(D) securities.

With respect to a security that is a federal covered security under section 18(b)(4)(D) of the Securities Act of 1933, United States Code, title 15, section 77r(b)(4)(D), a notice filing by or on behalf of an issuer must be filed with the administrator, and the notice filing must contain:

A. a copy of Form D as promulgated by the Securities and Exchange Commission;

B. a report of the aggregate value of securities included in this offering already sold or offered to be sold to persons located in this state;

C. a consent to service of process complying with Minnesota Statutes, section 80A.88, signed by the issuer not later than 15 days after the first sale of the federal covered security in Minnesota; and

D. a filing fee to be determined in accordance with Minnesota Statutes, section 80A.65, subdivision 1, paragraph (a).

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.3021 Small Corporate Offering Registration Statement

Subpart 1. Alternative to Form U-7.

Applicants may file a small corporate offering registration statement in a format other than Form U-7 so long as the alternative registration statement contains all of the information required by all items of Form U-7 as adopted by the North American Securities Administrators Association and all of the attachments required by the instructions for Form U-7, or specifically states that any omitted information or attachments are not applicable. All information contained in an alternative registration statement must be set forth under appropriate captions or headings reasonably indicative of the principal subject matter set forth. Each small corporate offering registration statement submitted under this section must include:

A. in its forepart a reasonably detailed table of contents showing the subject matter of the various sections or subdivisions and the page number on which each section or subdivision begins; and

B. an index indicating where the information required by each item of Form U-7 is located in the small corporate offering registration statement.

Subp. 2. Unaudited financial statements.

Interim financial statements may be unaudited. All other financial statements may be unaudited if reviewed by independent certified public accountants in accordance with the Accounting and Review Service Standards promulgated by the American Institute of Certified Public Accountants and:

A. the applicant has not previously sold securities through an offering involving the general solicitation of prospective investors by means of advertising, mass mailings, public meetings, cold call telephone solicitation, or any other method directed toward the public; and

B. the applicant has not been previously required under federal or state securities laws to provide audited financial statements in connection with any sale of its securities.

Subp. 3. Posteffective amendments.

After the small corporate offering registration statement has been declared effective, and while the offering is still in progress, the registrant shall amend or supplement the small corporate offering registration statement to contain such further material information, if any, as may be necessary to make the information in the small corporate offering registration statement not misleading. A copy of the registration statement as changed, revised, or supplemented and clearly marked to show changes from the previously filed version shall be filed with the administrator and distributed to all offerees.

History

Statutory Authority: MS s 14.388; 45.023; 80A.82; L 2023 c 57 art 3 s 74
History: 34 SR 593; 48 SR 797

Minn. R. 2876.3040 Registration Statement; Required Records

Subpart 1. Information required in registration statement.

A registration statement under Minnesota Statutes, section 80A.52, must contain the information and records specified in Minnesota Statutes, section 80A.52, paragraph (b), clauses (1) to (18).

Subp. 2. Additional information required.

A registration statement under Minnesota Statutes, section 80A.52, must also contain:

A. such further material information, if any, as may be necessary to make the required information and records, in the light of the circumstances under which they are made, not misleading; and

B. a statement by the issuer that it has complied with the requirements in Minnesota Statutes, chapter 345, relating to unclaimed property.

Subp. 3. Periodic reports.

While a registration statement is effective, the person that filed the registration statement must update it to keep it reasonably current by filing with the administrator a report explaining any material changes to the information contained in the registration statement.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.3041 Securities Not Approved

Every registration statement and prospectus for a security that is registered as required under Minnesota Statutes, chapter 80A, and is exempt from registration by section 3(a)(11) of the Securities Act of 1933, as amended, or any rule promulgated thereunder shall bear on the front page of the registration statement or prospectus the following language in capital letters and boldface type:

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE MINNESOTA DEPARTMENT OF COMMERCE NOR HAS THE DIVISION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.3042 Prospectus Distribution May Be Required

As a condition of registration under Minnesota Statutes, section 80A.52, a prospectus containing the information specified in part 2876.3040 must be sent or given to each person to which an offer is made, before or concurrently, with the earliest of:

A. the first offer made in a record to the person otherwise than by means of a public advertisement, by or for the account of the issuer or another person on whose behalf the offering is being made or by an underwriter or broker-dealer that is offering part of an unsold allotment or subscription taken by the person as a participant in the distribution;

B. the confirmation of a sale made by or for the account of the person;

C. payment pursuant to such a sale; or

D. delivery of the security pursuant to such a sale.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.3050 Mnvest Notice Filing

Subpart 1. Form and submission.

A notice filing made pursuant to Minnesota Statutes, section 80A.461, subdivision 3, clause (11), must be filed on the MNvest notice form, available on the Department of Commerce website or upon request from the administrator, not less than ten days before the beginning of the MNvest offering. The MNvest notice form must be mailed or delivered electronically to the administrator, along with the appropriate fee, at the address listed on the MNvest notice form. Information provided on or with the MNvest notice form must include the following:

A. the name and contact information of the MNvest issuer making the filing;

B. identifying information for the MNvest portal through which the MNvest issuer's securities are to be offered, including an indication as to whether the MNvest issuer has registered, or intends to register, as a portal operator;

C. the minimum offering amount to be raised through the MNvest offering, and a written explanation of how the minimum offering amount will be used to implement the MNvest issuer's business plan;

D. the name and contact information of the escrow agent holding purchasers' payments pursuant to Minnesota Statutes, section 80A.461, subdivision 3, clause (8);

E. a written affirmation that the MNvest issuer has:

F. a copy of a disclosure document including all information required under Minnesota Statutes, section 80A.461, subdivision 4;

G. a copy of a representative example of advertising used to promote the MNvest offering or solicit prospective purchasers;

H. a copy of the MNvest issuer's balance sheet and income statement made available to prospective purchasers pursuant to Minnesota Statutes, section 80A.461, subdivision 3, clause (4); and

I. any other information the administrator may reasonably require to determine the MNvest issuer's compliance with Minnesota Statutes, section 80A.461.

Subp. 2. Fees.

Notice filing fee payments made pursuant to Minnesota Statutes, section 80A.461, subdivision 3, clause (11), item (iii), are nonrefundable. Fee payments must be made payable to the Department of Commerce.

Subp. 3. Incomplete filings.

A notice filing that does not contain all information required by this part and by Minnesota Statutes, section 80A.461, subdivision 3, clause (11), or that does not include a correct fee payment, is incomplete and ineffective.

Subp. 4. Effective period.

The effective period of the offering begins ten days after the notice filing is received by the administrator. The effective period ends on the earlier of the following occurrences:

A. on the expiration date of the offering as stipulated in the MNvest disclosure documents; or

B. at the point when the offering fails to meet any of the MNvest exemption requirements.

Subp. 5. Post effective amendments.

A. After a MNvest notice filing has become effective, and throughout the effective period of the offering, the MNvest issuer must amend or supplement the information required by subpart 1 as necessary so that the documents provided by the MNvest issuer do not make any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading.

B. A copy of the amended documents required by item A as changed, revised, or supplemented and clearly marked to show changes from the previously filed version must be filed with the administrator not more than ten days after the amendment occurs. No additional fee is required for amendment filings made under this subpart.

C. If amendments are made to the disclosure document required under Minnesota Statutes, section 80A.461, subdivision 3, clause (11), item (ii), the MNvest issuer must direct the portal operator facilitating the MNvest offering to:

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3051 Escrow and Impoundment

A MNvest issuer must comply with the escrow requirements found in Minnesota Statutes, section 80A.461, subdivision 3, clause (8). The escrow and impoundment of funds is subject to the following:

A. All funds from purchasers of a MNvest offering must be deposited in the depository impound account controlled by the escrow agent within three business days after receipt by the MNvest issuer.

B. All purchaser funds must remain in escrow until the earliest of the following:

C. If the MNvest issuer does not raise the minimum offering amount by the earlier of 12 months from the effective date of the MNvest offering or the stipulated expiration date, the MNvest issuer must immediately notify the escrow agent that funds received from each purchaser and held in escrow for the MNvest offering must be refunded in full to the purchasers.

D. When the minimum offering amount for a MNvest offering is deposited with the escrow agent, the MNvest issuer must issue securities to purchasers of the MNvest offering within five days of the MNvest issuer's receipt of funds released from escrow for the MNvest offering.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3052 Records Retention Requirements for Mnvest Issuers

MNvest issuers must retain records related to MNvest offerings made pursuant to Minnesota Statutes, section 80A.461, for five years after the close of the MNvest offering. Retained records must include a copy of the following:

A. the MNvest notice form and accompanying documents filed with the administrator as part of the MNvest issuer's initial notice filing, and any subsequently amended MNvest notice forms and documents filed with the administrator;

B. records of all purchaser payments deposited into the escrow impound account, including information on when the payments were either released to the MNvest issuer or refunded to the purchaser;

C. records of all written communications sent to or received from purchasers in a MNvest offering while the offering is ongoing;

D. records of all agreements and compensation arrangements made between the MNvest issuer and the portal operator through which the MNvest issuer's securities are offered, including copies of written contracts and all amendments thereto;

E. records of all escrow agreements between the escrow agent, the MNvest issuer, and, if applicable, the portal operator through which the MNvest issuer's securities are offered, including copies of written contracts and all amendments thereto; and

F. all records used to establish compliance with Minnesota Statutes, section 80A.461, subdivision 9.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3053 Portal Operator Registration

Subpart 1. Form and submission.

A portal operator registration application made pursuant to Minnesota Statutes, section 80A.461, must be filed on a MNvest portal operator registration form, available on the Department of Commerce website or upon request from the administrator. The portal operator registration form must be mailed or delivered electronically to the administrator, along with the appropriate fee, at the address listed on the MNvest portal operator registration form. Information provided on or with the MNvest portal operator registration form must include, at minimum, the following:

A. the names, contact information, and titles of all control persons of the portal operator;

B. the web addresses of the MNvest portal;

C. documentation meeting the requirements of Minnesota Statutes, section 80A.461, subdivision 7, paragraph (a), clause (2);

D. information as to whether the portal operator is, or intends to be, a MNvest issuer;

E. information as to whether control persons of the MNvest portal are agents, representatives, or control persons of another portal operator, a broker-dealer, or an investment adviser and, if applicable, the names and Central Registration Depository (CRD) or Investment Adviser Registration Depository (IARD) numbers of each portal operator, broker-dealer, or investment adviser so associated with each control person of the MNvest portal;

F. a written explanation of the portal operator's use of a third party's software program or other services in developing, operating, or maintaining the MNvest portal;

G. a written explanation of the steps taken by the portal operator to verify the Minnesota residency of individuals purchasing securities through the MNvest portal pursuant to Minnesota Statutes, section 80A.461, subdivision 6, clause (3), item (i);

H. a written explanation as to how the portal operator calculates and collects fees pursuant to Minnesota Statutes, section 80A.461, subdivision 7, paragraph (c), clause (3); and

I. any other information the administrator may reasonably require to determine the portal operator's compliance with Minnesota Statutes, section 80A.461.

Subp. 2. Fees.

A person filing a MNvest registration form with the department shall include a nonrefundable $200 fee, made payable to the Department of Commerce. A MNvest registration form submitted to the department without the correct fee payment will not be reviewed by the department, and will remain ineffective and incomplete until the correct fee is submitted.

Subp. 3. Effectiveness of registration.

A portal operator registration does not become effective until the administrator has declared the registration effective.

Subp. 4. Incomplete applications.

A portal operator registration application that does not contain all information required by this part and by Minnesota Statutes, section 80A.461, subdivision 7, paragraph (a), or that does not include a correct fee payment, is incomplete. A registration application that remains incomplete 45 days after the administrator notifies the applicant of the reason for incompleteness is deemed denied effective on the 46th day after the administrator's notification.

Subp. 5. Post effective amendments.

A. After a portal operator registration has been declared effective, the portal operator shall amend or supplement the MNvest registration form to contain further material information, if any, necessary to make the information in the MNvest registration form not misleading or incorrect.

B. A copy of the MNvest registration form as changed, revised, or supplemented and clearly marked to show changes from the previously filed version must be filed with the administrator.

Subp. 6. Registration renewal.

To renew a portal operator registration, the portal operator must submit a MNvest portal operator registration form marked to indicate it is an application for renewal, along with the fee required by Minnesota Statutes, section 80A.461, subdivision 7, paragraph (b), to the administrator at least 15 days prior to the expiration of the portal operator's registration. Unless an order is in effect under Minnesota Statutes, section 80A.67, a complete application for renewal of a portal operator registration automatically becomes effective 16 days after the administrator receives the renewal application, or immediately upon the expiration of the portal operator's existing registration, whichever occurs later.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3054 Reporting Requirements

Subpart 1. Offerings reports.

MNvest issuers and portal operators must provide to the administrator upon request a report of a MNvest offering or MNvest offerings occurring or completed in reliance on Minnesota Statutes, section 80A.461. The report must be provided to the administrator within 30 days of the administrator's request, or at a sooner date specified by the administrator.

Subp. 2. Contents of issuer reports.

Reports requested from MNvest issuers pursuant to this part must contain:

A. the minimum offering amount set by the MNvest issuer for a MNvest offering;

B. the total amount of money raised through the MNvest offering;

C. the name and address of each purchaser involved in the MNvest offering;

D. the amount of money raised from each individual purchaser in the MNvest offering; and

E. confirmation as to whether and when purchasers' funds held in escrow for the MNvest offering were released to the MNvest issuer or returned to purchasers.

Subp. 3. Contents of portal operator reports.

Reports requested from portal operators pursuant to this part must contain, for each MNvest offering conducted through the MNvest portal in the requested period:

A. all of the information required in subpart 2, items A to D; and

B. the date the portal operator received from each purchaser the certification required under Minnesota Statutes, section 80A.461, subdivision 5.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3055 Protection of Purchaser Information

Subpart 1. Cybersecurity policy.

A. Portal operators and MNvest issuers must take reasonable steps to ensure that purchasers' financial and personal information is properly secured. Reasonable steps include, at a minimum, a written cybersecurity policy that outlines the MNvest issuer's or portal operator's policies and procedures for:

B. The cybersecurity policy required in item A must specifically include the MNvest issuer's or portal operator's procedures to establish compliance with Minnesota Statutes, section 325E.61.

C. MNvest issuers and portal operators must publish the cybersecurity policy required by this subpart on the portal operator's or MNvest issuer's website, with a prominent link to the cybersecurity policy on the website's homepage.

Subp. 2. Reporting of a cybersecurity attack or data breach.

MNvest issuers and portal operators must report to the administrator any action taken by the MNvest issuer or portal operator to meet the reporting requirements of Minnesota Statutes, section 325E.61.

A. The report sent to the administrator must not include any confidential or personally identifiable information of those individuals whose data were improperly accessed or acquired, unless the information is requested by the administrator. The report must include:

B. The report must be mailed or sent electronically to the administrator within 60 days of the MNvest issuer's or portal operator's discovery of the cybersecurity attack or data breach.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3056 Limits on Availability

Minnesota Statutes, section 80A.461, is not available for the following types of offerings:

A. offerings involving petroleum exploration or production, mining, or other extractive industries;

B. offerings relating to investments in virtual, digital, or crypto currencies;

C. offerings conducted concurrently through multiple MNvest portals;

D. offerings involving an investment company as defined and classified under Section 4 of the Investment Company Act of 1940; and

E. offerings in which it is proposed to issue stock or other equity interest in an entity that has not yet defined its business operations, has no business plan, has no stated investment goal for the funds being raised, or plans to engage in a merger or acquisition with an unspecified business entity.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3057 Restrictions on Resale

Securities offered under Minnesota Statutes, section 80A.461, have not been registered under federal or state securities laws and, therefore, cannot be resold unless the securities are registered or qualified for an exemption from registration under federal and state law. In addition, MNvest issuers shall make the disclosures required by Code of Federal Regulations, title 17, section 230.147 (f).

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3058 Investor Right of Cancellation

In an offering conducted under Minnesota Statutes, section 80A.461, an investor may cancel an investment commitment for any reason until such time as the target minimum offering amount identified in the MNvest notice form corresponding with the offering and filed with the administrator has been raised.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3059 Antifraud Provision

Nothing in this chapter exempts any person from any antifraud provisions of Minnesota Statutes, chapter 80A.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.3060 Restrictions on Use of the Term "mnvest."

Subpart 1. Website addresses.

The word "MNvest" must not be used in an Internet URL address or domain name:

A. owned by a portal operator or MNvest issuer; or

B. that automatically redirects a prospective purchaser to a MNvest portal. In addition, no MNvest portal shall hold itself out as being the "official" MNvest portal, the "only" MNvest portal, or otherwise describe itself using words of similar import, as determined by the administrator.

Subp. 2. Misrepresentations regarding recommendations or endorsements.

A person shall not make any representation, or use any device, title, descriptive name, or identifier that has the tendency or capacity to confuse or mislead a Minnesota resident to believe that a MNvest issuer, MNvest offering, or MNvest portal is endorsed, sponsored, sanctioned, or recommended by MNvest.

History

Statutory Authority: MS s 45.023; 80A.82
History: 40 SR 1617

Minn. R. 2876.4020 Agents Representing Issuers as Finders

Subpart 1. Definitions.

An individual's "immediate family" means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law of the individual and any other person, other than a tenant or employee, sharing the household of the individual.

Subp. 2. Limitations of activities.

An individual exempt from registration as an agent under Minnesota Statutes, section 80A.57 (b)(11), may perform only the following acts:

A. introduce prospective investors to issuers and issuers to prospective investors for compensation, if any, from the issuer only;

B. furnish to an issuer services that do not involve dealings with prospective investors if compensation for the services is not contingent, by agreement or in fact, upon investment by prospective investors; and

C. engage in communications and dealings with prospective investors that are unrelated to the investors' possible investment in the issuer. An individual relying upon this exemption is not required to conduct any independent investigation or review of the issuer's offering materials.

Subp. 3. Disclosure to investors.

An individual exempt from registration as an agent under Minnesota Statutes, section 80A.57 (b)(11), must disclose, or ensure that the issuer discloses, clearly and conspicuously in writing, to each investor prior to the time the investor enters into a binding agreement to purchase the issuer's securities to be sold in connection with the individual's services as an agent the following information:

A. the individual is acting as an agent for the issuer;

B. the amount of or method of calculation for any proposed payment by the issuer to the agent for the individual's services as an agent or in any other capacity for the issuer; and

C. any beneficial interest, direct or indirect, held by or to be acquired as part of the proposed payment to the individual acting as an agent, or held by or to be acquired as part of the proposed payment to a member of the individual's immediate family, in the issuer's securities.

Subp. 4. Unlawful activities.

It is unlawful for an individual exempt from registration as an agent under Minnesota Statutes, section 80A.57 (b)(11), to act as an agent in connection with an offer or sale of a security that violates Minnesota Statutes, section 80A.49, unless the individual:

A. made a reasonable effort to ascertain before performing the acts described in subpart 2, items A and B, whether the offer or sale was exempted from registration under Minnesota Statutes, section 80A.46 (11) or (14); and

B. reasonably believed that the offer or sale was so exempted.

Subp. 5. Notice.

[NOTICE REQUIRED BY MINNESOTA STATUTES, SECTION 80A.57 (b)(11)(D)]

STATE OF MINNESOTA

DEPARTMENT OF COMMERCE

85 SEVENTH PLACE EAST, SUITE 500

ST. PAUL, MINNESOTA 55101-2198

In accordance with the requirements of Minnesota Statutes, section 80A.57 (b)(11)(D), the undersigned, intending to represent one or more issuers with respect to an offer or sale of the issuer's securities in offerings that are exempted by Minnesota Statutes, section 80A.46 (11) or 80A.46 (14) provides the following information to the Minnesota Department of Commerce:

The undersigned undertakes to notify the Commissioner of Commerce in writing of any change in the foregoing information within five business days of the change.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4021 Direct Common Control

Broker-dealers are affiliated by direct common control, for the purpose of Minnesota Statutes, section 80A.57 (e), when 80 percent or more of the equity of each broker-dealer is beneficially owned by the same person or group of persons.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4050 Notice Filing Requirements for Federal Covered Investment Advisers

Subpart 1. Notice filing.

The notice filing for a federal covered investment adviser pursuant to Minnesota Statutes, section 80A.60 (a), shall be filed electronically with IARD on an executed Form ADV (Uniform Application for Investment Adviser Registration). A notice filing of a federal covered investment adviser shall be deemed filed when the fee required by Minnesota Statutes, section 80A.65, subdivision 2a, and the Form ADV are filed electronically with and accepted by IARD on behalf of the state.

Subp. 2. Form ADV Part 2.

The administrator shall either:

A. accept a copy of Part 2 of Form ADV as filed electronically with IARD; or

B. deem Part 2 of Form ADV filed. When the administrator deems Part 2 of Form ADV to be filed, a federal covered investment adviser is not required to submit Part 2 of Form ADV to the administrator unless requested. If requested, a federal covered investment adviser must provide, within five days of the request, Part 2 of Form ADV to the administrator.

Subp. 3. Renewal.

The annual renewal of the notice filing for a federal covered investment adviser pursuant to Minnesota Statutes, section 80A.60 (c), shall be filed electronically with IARD. The renewal of the notice filing for a federal covered investment adviser shall be deemed filed when the fee required by Minnesota Statutes, section 80A.65, subdivision 2a, is filed with and accepted by IARD on behalf of the state.

Subp. 4. Updates and amendments.

A federal covered investment adviser must file electronically with IARD, in accordance with the instructions in the Form ADV, any amendments to the federal covered investment adviser's Form ADV.

History

Statutory Authority: MS s 45.023; 80A.82; 80C.18
History: 34 SR 593; 48 SR 1127

Minn. R. 2876.4060 Electronic Filing with Designated Entity

Subpart 1. Designations.

The administrator designates:

A. the Web-based Central Registration Depository ("CRD") to receive and store filings and collect related fees from broker-dealers and agents representing broker-dealers on behalf of the administrator; and

B. the Web-based Investment Adviser Registration Depository ("IARD") to receive and store filings and collect related fees from investment advisers and federal covered investment advisers on behalf of the administrator.

Subp. 2. Use of CRD/IARD.

A. Unless otherwise provided, all applications, amendments, reports, notices, related filings, and fees required to be filed with the administrator pursuant to the Minnesota Securities Act or the rules adopted thereunder, shall be filed electronically with and transmitted to:

B. The following additional conditions relate to such electronic filings:

Subp. 3. Electronic filing.

Notwithstanding subpart 2, the electronic filing of any particular document and the collection of related processing fees shall not be required until such time as CRD/IARD provides for receipt of such filings and fees and reasonable notice is provided by the administrator. Any documents or fees required to be filed with the administrator that are not permitted to be filed with or cannot be accepted electronically by CRD/IARD shall be filed directly with the administrator.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4061 Application for Investment Adviser Registration

Subpart 1. Initial application.

The application for initial registration as an investment adviser pursuant to Minnesota Statutes, section 80A.58 (a), shall be made by completing Form ADV (Uniform Application for Investment Adviser Registration) in accordance with the form instructions and by filing the form electronically with IARD. The application for initial registration must also include the following:

A. proof of compliance by the investment adviser with the examination requirements of part 2876.4120;

B. any financial statements required in part 2876.4113, if applicable;

C. a copy of the surety bond required by part 2876.4115, if applicable;

D. the fee required by Minnesota Statutes, section 80A.65, subdivision 2; and

E. any other information the administrator may reasonably require.

Subp. 2. Form ADV Part 2.

The administrator shall either:

A. accept a copy of Part 2 of Form ADV as filed electronically with IARD; or

B. require a paper copy of Part 2 of Form ADV be filed directly with the administrator.

Subp. 3. Annual renewal.

The application for annual renewal registration as an investment adviser shall be filed electronically with IARD. The application for annual renewal registration must include the following:

A. the fee required by Minnesota Statutes, section 80A.65, subdivision 2; and

B. a copy of the surety bond required by part 2876.4115, if applicable.

Subp. 4. Updates and amendments.

A. An investment adviser must file electronically with IARD, in accordance with the instructions in the Form ADV, any amendments to the investment adviser's Form ADV.

B. An amendment will be considered to be filed promptly if the amendment is filed within 30 days of the event that requires the filing of the amendment.

C. Within 90 days of the end of the investment adviser's fiscal year, an investment adviser must file electronically with IARD an Annual Updating Amendment to the Form ADV.

Subp. 5. Completion of filing.

An application for initial or renewal registration is not considered filed for purposes of Minnesota Statutes, section 80A.58 (a), until the required fee and all required submissions have been filed with the administrator.

History

Statutory Authority: MS s 45.023; 80A.82; 80C.18
History: 34 SR 593; 48 SR 1127

Minn. R. 2876.4062 Application for Registration by Broker-Dealers and Agents Representing Broker-Dealers

Subpart 1. Initial application.

The application for initial registration:

A. As a broker-dealer pursuant to Minnesota Statutes, section 80A.56 (a), shall be made by completing Form BD (Uniform Application for Broker-Dealer Registration) in accordance with the form instructions and by filing the form electronically with Central Registration Depository (CRD). The application for initial registration must also include the following:

B. As an agent representing a broker-dealer pursuant to Minnesota Statutes, section 80A.57 (a), shall be made by completing Form U-4 (Uniform Application for Securities Industry Registration or Transfer) in accordance with the form instructions and by filing the form electronically with CRD. The application for initial registration must also include the following:

Subp. 2. Annual renewal.

To renew a registration as a broker-dealer or an agent representing a broker-dealer, the registrant must submit to CRD the fee required by Minnesota Statutes, section 80A.65, subdivision 2.

Subp. 3. Updates and amendments.

A. A broker-dealer must file electronically with CRD any amendments to the broker-dealer's Form BD in accordance with the form instructions.

B. An agent representing a broker-dealer must file electronically with CRD any amendments to the agent's Form U-4 in accordance with the form instructions.

C. An amendment will be considered to be filed promptly if the amendment is filed within 30 days of the event that requires the filing of the amendment.

Subp. 4. Completion of filing.

An application for initial or renewal registration is not considered filed for purposes of Minnesota Statutes, sections 80A.56 (a) and 80A.57 (a), until the required fee and all required submissions have been filed with the administrator.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4100 Amendments Requiring an Order of the Administrator

Amendments "requiring an order of the administrator," pursuant to Minnesota Statutes, section 80A.65, subdivision 3, shall mean any change in the language of a currently existing registration, unless a provision in Minnesota Statutes, chapter 80A, expressly allows an amendment to become effective without requiring an order of the administrator.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4101 Promptly Remedied

For purposes of Minnesota Statutes, section 80A.65, subdivisions 2 and 2a, an investment adviser and a federal covered investment adviser, respectively, will have "promptly remedied" a delay in payment or underpayment of fees if the adviser remits the fee payment to the administrator within ten business days of receipt of notification from the administrator of the delay or underpayment. If the payment is not received within the ten-business-day period, an investment adviser and a federal covered investment adviser will be found to have refused to pay the fee.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4110 Receipt of Money from Sales

No broker-dealer or agent participating in any distribution of securities, other than a firm commitment distribution of securities, shall accept any part of the sale price of any security being distributed unless:

A. the money or other consideration received is promptly transmitted to the persons entitled thereto; or

B. if the distribution is being made on an all-or-none basis, or on any other basis that contemplates that payment is not to be made to the person on whose behalf the distribution is being made until some further event or contingency occurs:

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4112 Minimum Financial Requirements for Investment Advisers; Net Capital Requirements for Broker-Dealers

Subpart 1. Custody.

An investment adviser registered or required to be registered under the Minnesota Securities Act who has custody of client funds or securities shall maintain at all times a minimum net worth of $35,000 except:

A. An investment adviser having custody solely due to direct fee deduction and complying with the terms described under part 2876.4116, subpart 1, item F, and the related books and records requirements, as described in part 2876.4114, shall not be required to comply with the net worth or bonding requirements of this part.

B. An investment adviser having custody solely due to advising pooled investment vehicles and complying with the terms described under part 2876.4116, subpart 1, item F, or subpart 2, item C, and the related books and records requirements, as described in part 2876.4114, shall not be required to comply with the net worth or bonding requirements of this part.

Subp. 2. Discretionary authority.

An investment adviser registered or required to be registered under the Minnesota Securities Act who has discretionary authority over client funds or securities but does not have custody of client funds or securities shall maintain at all times a minimum net worth of $10,000.

Subp. 3. Prepayments.

An investment adviser registered or required to be registered under the Minnesota Securities Act who accepts prepayment of more than $500 per client and six or more months in advance shall maintain at all times a positive net worth.

Subp. 4. Notice of deficiency.

Unless otherwise exempted, as a condition of the right to transact business in this state, every investment adviser registered or required to be registered under the Minnesota Securities Act shall by the close of business on the next business day notify the administrator if such investment adviser's net worth is less than the minimum required. After transmitting such notice, each investment adviser shall file by the close of business on the next business day a report with the administrator of its financial condition, including the following:

A. a trial balance of all ledger accounts;

B. a statement of all client funds or securities which are not segregated;

C. a computation of the aggregate amount of client ledger debit balances; and

D. a statement as to the number of client accounts.

Subp. 5. Net worth defined.

For purposes of subparts 1 to 9, the term "net worth" means an excess of assets over liabilities, as determined by generally accepted accounting principles, but shall not include as assets: prepaid expenses (except as to items properly classified as assets under generally accepted accounting principles), deferred charges, goodwill, franchise rights, organizational expenses, patents, copyrights, marketing rights, unamortized debt discount and expense, all other assets of intangible nature, home, home furnishings, automobiles, and any other personal items not readily marketable in the case of an individual; advances or loans to stockholders and officers in the case of a corporation; and advances or loans to partners in the case of a partnership.

Subp. 6. Custody defined.

For purposes of this part, "custody" is defined in part 2876.4116, subpart 3, item A.

Subp. 7. Exercising discretion.

For purposes of this part, an investment adviser shall not be deemed to be exercising discretion when it places trade orders with a broker-dealer pursuant to a third-party trading agreement if:

A. the investment adviser has executed a separate investment adviser contract exclusively with its client which acknowledges that a third-party trading agreement will be executed to allow the investment adviser to effect securities transactions for the client in the client's broker-dealer account;

B. the investment adviser contract specifically states that the client does not grant discretionary authority to the investment adviser and the investment adviser in fact does not exercise discretion with respect to the account; and

C. a third-party trading agreement is executed between the client and a broker-dealer which specifically limits the investment adviser's authority in the client's broker-dealer account to the placement of trade orders and deduction of investment adviser fees.

Subp. 8. Appraisals.

The administrator may require that a current appraisal be submitted in order to establish the worth of any asset.

Subp. 9. Out-of-state investment advisers.

Every investment adviser that has its principal place of business in a state other than this state shall maintain only such minimum net worth as required by the state in which the investment adviser maintains its principal place of business, provided the investment adviser is registered in such state and is in compliance with such state's minimum capital requirements.

Subp. 10. Net capital requirement.

Every broker-dealer registered or required to register under the Minnesota Securities Act shall at all times have and maintain net capital in compliance with Code of Federal Regulations, title 17, section 240.15c 3-1.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4113 Financial Reporting Requirements for Investment Advisers

Subpart 1. Custody.

Every investment adviser, registered or required to be registered, who has custody of client funds or securities or requires payment of advisory fees six months or more in advance and in excess of $500 per client shall first have filed with the administrator an audited balance sheet as of the end of the investment adviser's most recent fiscal year if the filing is submitted more than 135 days after the last day of the investment adviser's most recent fiscal year. If the filing is submitted within 135 days after the last day of the investment adviser's most recent fiscal year, then the investment adviser shall file with the administrator an audited balance sheet as of the end of the investment adviser's second most recent fiscal year. Each balance sheet filed pursuant to this part must be:

A. examined in accordance with generally accepted auditing standards and prepared in conformity with generally accepted accounting principles;

B. audited by an independent certified public accountant; and

C. accompanied by an opinion of the accountant as to the report of financial position, and by a note stating the principles used to prepare it, the basis of included securities, and any other explanations required for clarity.

Subp. 2. Discretionary authority.

Every registered investment adviser who has discretionary authority over client funds or securities, but not custody, shall first have filed with the administrator a balance sheet, which need not be audited, but which must be prepared in accordance with generally accepted accounting principles or such other basis of accounting acceptable to the administrator and represented by the investment adviser or the person who prepared the statement as true and accurate, as of the end of the investment adviser's most recent fiscal year for which a balance sheet has been prepared.

Subp. 3. Filing deadline.

If the balance sheet required to be filed under subpart 1 or 2 is as of a date more than 135 days from the date of filing of the application, then an audited or unaudited balance sheet that is as of a date within 135 days from the date of filing of the application must also be filed with the administrator.

Subp. 4. Out-of-state investment advisers.

Every investment adviser that has its principal place of business in a state other than this state shall file only such reports as required by the state in which the investment adviser maintains its principal place of business, provided the investment adviser is registered or licensed in such state and is in compliance with such state's financial reporting requirements.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4114 Record-Keeping Requirements

Subpart 1. Books and records; investment advisers.

Every investment adviser registered or required to be registered under the Minnesota Securities Act, Minnesota Statutes, chapter 80A, shall make and keep true, accurate, and current the following books, ledgers, and records.

A. Those books and records required to be maintained and preserved in compliance with Rule 204-2 of the Investment Advisers Act of 1940, Code of Federal Regulations, title 17, section 275.204 -2, notwithstanding the fact that the investment adviser is not registered or required to be registered under the Investment Advisers Act of 1940.

B. A file containing a copy of all written communications received or sent regarding any litigation involving the investment adviser, and regarding any written customer or client complaint.

C. Written information about each investment advisory client that is the basis for making any recommendation or providing any investment advice to such client.

D. Written procedures to supervise the activities of employees and investment adviser representatives that are reasonably designed to achieve compliance with applicable securities laws and regulations.

E. A file containing a copy of each document (other than any notices of general dissemination) that was filed with or received from any state or federal agency or self-regulatory organization and that pertains to the registrant or its investment adviser representatives, including all applications, amendments, renewal filings, and correspondence.

F. For investment advisers who have custody, as that term is defined in part 2876.4116, subpart 3, item A, of client funds or securities, all records and evidence of compliance required by Rule 206(4)-2 under the Investment Advisers Act of 1940.

Subp. 2. Out-of-state investment advisers.

Every investment adviser that has its principal place of business in a state other than this state shall be exempt from the requirements of this part, provided the investment adviser is registered in such state and is in compliance with the state's recordkeeping requirements.

Subp. 3. Manner of preservation; investment advisers.

Every investment adviser subject to subpart 1 shall preserve the following records in the manner prescribed.

A. All books and records required to be made under the provisions of subpart 1, items A to F, inclusive (except for books and records required to be made under the provisions of paragraphs (a)(11) and (a)(16) of SEC Rule 204-2), shall be maintained and preserved in an easily accessible place for a period of not less than five years from the end of the fiscal year during which the last entry was made on record, the first two years in the principal office of the investment adviser.

B. Partnership articles and any amendments, articles of incorporation, charters, minute books, and stock certificate books of the investment adviser and of any predecessor, shall be maintained in the principal office of the investment adviser and preserved until at least three years after termination of the enterprise.

C. Books and records required to be made under the provisions of paragraphs (a)(11) and (a)(16) of SEC Rule 204-2 shall be maintained and preserved in an easily accessible place for a period of not less than five years, the first two years in the principal office of the investment adviser, from the end of the fiscal year during which the investment adviser last published or otherwise disseminated, directly or indirectly, the notice, circular, advertisement, newspaper article, investment letter, bulletin, or other communication including by electronic media.

D. Notwithstanding other record preservation requirements of this part, the following records or copies shall be required to be maintained at the business location of the investment adviser from which the customer or client is being provided or has been provided with investment advisory services:

Subp. 4. Books and records; broker-dealers.

Every broker-dealer registered or required to be registered under the Minnesota Securities Act, Minnesota Statutes, chapter 80A, shall make and keep current its books and records in compliance with Code of Federal Regulations, title 17, sections 240.17a-3 and 240.17a-4.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4115 Bonding Requirements for Certain Investment Advisers

Subpart 1. Bond requirement.

Every investment adviser registered or required to be registered under the Minnesota Securities Act, Minnesota Statutes, chapter 80A, having custody of or discretionary authority over client funds or securities shall have first posted with the administrator a surety bond or an irrevocable letter of credit in the maximum amount authorized by Minnesota Statutes, section 80A.66, subsection (e). Any bond required by this subpart shall be issued by a company qualified to do business in this state. The bond must be in the form determined by the administrator and shall be subject to the claims of all clients of such investment adviser regardless of the client's state of residence.

Subp. 2. Custody.

For purposes of this part, "custody" is defined in part 2876.4116, subpart 3, item A.

Subp. 3. Exemptions.

A. An investment adviser that has its principal place of business in a state other than this state shall be exempt from the requirements of subpart 1, provided that the investment adviser is registered as an investment adviser in the state where it has its principal place of business and is in compliance with such state's requirements relating to bonding.

B. An investment adviser that continuously maintains net capital of not less than $100,000 shall be exempt from the requirements of subpart 1.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4116 Custody Requirements for Investment Advisers

Subpart 1. Safekeeping required.

It is unlawful and deemed to be a fraudulent, deceptive, or manipulative act, practice, or course of business for an investment adviser to have custody of client funds or securities unless:

A. The investment adviser notifies the administrator promptly in writing that the investment adviser has or is authorized to have custody of client funds or securities. The notification is required to be given on Form ADV.

B. A qualified custodian maintains those funds and securities:

C. If an investment adviser opens an account with a qualified custodian on its client's behalf, either under the client's name or under the name of the investment adviser as agent, the investment adviser must notify the client in writing of the qualified custodian's name, address, and the manner in which the funds or securities are maintained, promptly when the account is opened and following any changes to this information.

D. Account statements must be sent to clients, either:

E. A client may designate an independent representative to receive, on the client's behalf, notices and account statements as required under items C and D.

F. An investment adviser who has custody as defined in subpart 3, item A, subitem (1), unit (b), by having fees directly deducted from client accounts must also provide the following safeguards:

G. An investment adviser who has custody as defined in subpart 3, item A, subitem (1), unit (c), and who does not meet the exception provided under subpart 2, item C, must, in addition to the safeguards in items A to E, also comply with the following:

H. When a trust retains an investment adviser or employee, director, or owner of an investment adviser as trustee and the investment adviser acts as the investment adviser to that trust, the investment adviser will:

Subp. 2. Exceptions.

A. With respect to shares of an open-end company as defined in Section 5(a)(1) of the Investment Company Act of 1940 ("mutual fund"), the investment adviser may use the mutual fund's transfer agent in lieu of a qualified custodian for purposes of complying with subpart 1.

B. Certain privately offered securities.

C. An investment adviser is not required to comply with subpart 1, item D, with respect to the account of a limited partnership (or limited liability company, or another type of pooled investment vehicle) that is subject to an audit at least annually and distributes its audited financial statements prepared in accordance with generally accepted accounting principles to all limited partners (or members or other beneficial owners) within 120 days of the end of its fiscal year. The investment adviser must also notify the administrator in writing on Form ADV that the investment adviser intends to employ the use of the audit safeguards described in this item.

D. The investment adviser is not required to comply with this part with respect to the account of an investment company registered under the Investment Company Act of 1940.

E. An investment adviser is not required to comply with safekeeping requirements of Minnesota Statutes, section 80A.66, subsection (f), or the net worth and bonding requirements of parts 2876.4112, 2876.4113, subpart 1, and 2876.4115, if the investment adviser has custody solely because the investment adviser or employee, director, or owner of the investment adviser is a trustee for a beneficial trust, if all of the following conditions are met for each trust.

F. Any investment adviser who intends to have custody of client funds or securities but is not able to utilize a qualified custodian as defined in subpart 3, item C, must first obtain approval from the administrator and must comply with all of the applicable safekeeping provisions under subpart 1, including taking responsibility for those provisions that are designated to be performed by a qualified custodian.

Subp. 3. Definitions.

For purposes of this part, the following terms have the meanings given them.

A. "Custody" means holding directly or indirectly, client funds or securities, or having any authority to obtain possession of them, or having the ability to appropriate them.

B. "Independent representative" means a person who:

C. "Qualified custodian" means the following independent institutions or entities that are not affiliated with the investment adviser by any direct or indirect common control and have not had a material business relationship with the investment adviser in the previous two years:

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.4117 Investment Adviser Brochure Rule

Subpart 1. General requirements.

Unless otherwise provided in this part, an investment adviser, registered or required to be registered pursuant to Minnesota Statutes, section 80A.58, shall, in accordance with the provisions of this part, furnish each advisory client and prospective advisory client with a written disclosure statement which may be a copy of Part 2 of its Form ADV or written documents containing at least the information required by Part 2 of Form ADV, or such other information the administrator may require to carry out the public interest according to Minnesota Statutes, section 80A.85 (b).

Subp. 2. Delivery.

A. An investment adviser, except as provided in item B, shall deliver the statement required by this part to an advisory client or prospective advisory client:

B. The delivery of the statement required by item A need not be made in connection with entering into:

Subp. 3. Offer to deliver.

A. An investment adviser, except as provided in item B, annually shall, without charge, deliver or offer in writing to deliver upon written request to each of its advisory clients the statement required by this part.

B. The delivery or offer required by item A need not be made to advisory clients receiving advisory services solely pursuant to:

C. With respect to an advisory client entering into a contract or receiving advisory services pursuant to a contract for impersonal advisory services that requires a payment of $200 or more, an offer of the type specified in item A shall also be made at the time of entering into an advisory contract.

D. Any statement requested in writing by an advisory client pursuant to an offer required by this subpart must be mailed or delivered within seven days of the receipt of the request.

Subp. 4. Omission of inapplicable information.

If an investment adviser renders substantially different types of investment advisory services to different advisory clients, any information required by Part 2 of Form ADV may be omitted from the statement furnished to an advisory client or prospective advisory client if the information is applicable only to a type of investment advisory service or fee that is not rendered or charged, or proposed to be rendered or charged, to that client or prospective client.

Subp. 5. Other disclosures.

Nothing in this part shall relieve any investment adviser from any obligation pursuant to any provision of the Minnesota Securities Act, Minnesota Statutes, chapter 80A, or the rules thereunder or other federal or state law to disclose any information to its advisory clients or prospective advisory clients not specifically required by this part.

Subp. 6. Definitions.

For purposes of this part the following terms have the meanings given.

A. "Contract for impersonal advisory services" means any contract relating solely to the provision of investment advisory services:

B. "Entering into," in reference to an investment advisory contract, does not include an extension or renewal without material change of any such contract which is in effect immediately prior to the extension or renewal.

C. "Investment company contract" means a contract with an investment company registered under the Investment Company Act of 1940 which meets the requirements of Section 15(c) of that act.

History

Statutory Authority: MS s 45.023; 80A.82; 80C.18
History: 34 SR 593; 48 SR 1127

Minn. R. 2876.4120 Examination Requirements

Subpart 1. Required examination.

A. Unless otherwise waived by the administrator, each supervisory or control individual of an investment adviser shall take and pass within the two-year period immediately preceding the date of the application the Uniform Investment Adviser State Law Examination (S65) or the Uniform Combined State Law Examination (S66).

B. Unless otherwise waived by the administrator, each supervisory or control individual of a broker-dealer shall take and pass within the two-year period immediately preceding the date of the application at least one FINRA principal exam and either the Uniform Securities Agent State Law Examination (S63) or the Uniform Combined State Law Examination (S66).

C. Unless otherwise waived by the administrator, each agent representing a broker-dealer shall take and pass within the two-year period immediately preceding the date of the application at least one FINRA agent exam and either the Uniform Securities Agent State Law Examination (S63) or the Uniform Combined State Law Examination (S66).

Subp. 2. Required experience.

No person shall be registered as an investment adviser or a broker-dealer unless at least one person employed full time in a supervisory capacity, by the applicant for a license, was actively engaged in the securities business in a similar supervisory capacity for a minimum of three of the preceding five years.

Subp. 3. Exam exemption.

Any person who has been registered as an investment adviser in any state requiring the licensing, registration, or qualification of investment advisers within the two-year period immediately preceding the date of filing an application shall not be required to comply with the examination requirement in subpart 1, item A.

Subp. 4. Professional designations in lieu of exam.

Compliance with subpart 1, item A, is waived if the applicant has been awarded any of the following designations and at the time of filing an application is current and in good standing:

A. Certified Financial Planner (CFP) awarded by the Certified Financial Planners Board of Standards.

B. Chartered Financial Consultant (ChFC) or Masters of Science and Financial Services (MSFS) awarded by the American College, Bryn Mawr, Pennsylvania.

C. Chartered Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analysts.

D. Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants.

E. Chartered Investment Counselor (CIC) awarded by the Investment Adviser Association.

Subp. 5. S65 exemption.

An applicant who has taken and passed the Uniform Investment Adviser State Law Examination (S65) within two years prior to the date the application is filed with the administrator or at any time if the applicant has been registered as an investment adviser within the two years prior to the date the application is filed with the administrator shall not be required to take and pass the Uniform Investment Adviser State Law Examination again.

Subp. 6. Prior liquidated firm.

No person shall be registered as an investment adviser or a broker-dealer if any employee of the person was an officer, supervisor, or owner of ten percent or more of the securities of any firm liquidated under the Securities Investor Protection Act of 1970, unless good cause be shown that the issuance of the license would be in the public interest according to Minnesota Statutes, section 80A.85 (b).

Subp. 7. Unclaimed property.

As a condition of registration, every investment adviser and broker-dealer shall inform the administrator that it has complied with the requirements in Minnesota Statutes, chapter 345, relating to unclaimed property.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.5021 Broker-Dealer Conduct

Subpart 1. Fair dealing.

Every broker-dealer and agent has the fundamental responsibility for fair dealing in all of their relationships with customers and others and must comply with FINRA Rule 2111.

Subp. 2. Suitability.

In making recommendations to a customer, a broker-dealer must comply with FINRA Rule 2111.

Subp. 3. Supervision.

Every broker-dealer must supervise the activities of its registered agents and registered principals in compliance with FINRA Rules 3110, 3120, and 3170.

Subp. 4. Written notification.

At or before completion of each transaction with a customer, a broker-dealer must give or send to the customer a written notification that complies with FINRA Rule 2232 in conformity with Code of Federal Regulations, title 17, section 240.10b-10.

Subp. 5. Waiver.

Upon written application, the administrator may exempt from subpart 3, on specified terms and conditions, any broker-dealer that is neither registered with the United States Securities and Exchange Commission nor a member of a self-regulatory organization if the administrator finds that it is not necessary in the public interest or for the protection of investors to subject the broker-dealer to the requirements in subpart 3.

History

Statutory Authority: MS s 45.023; 80A.82; L 2025 1Sp4 art 7 s 35
History: 34 SR 593; 50 SR 1470

Minn. R. 2876.5022 Contents of an Investment Advisory Contract

Subpart 1. Generally.

The provisions of this part apply to federal covered investment advisers to the extent permitted by the National Securities Markets Improvement Act of 1996.

Subp. 2. Writing requirements.

It is unlawful for any investment adviser to enter into, extend, or renew any investment advisory contract unless it provides in writing:

A. the services to be provided, the term of the contract, the investment advisory fee, the formula for computing the fee, the amount of prepaid fee to be returned in the event of termination or nonperformance of the contract, and any grant of discretionary power to the investment adviser;

B. that no direct or indirect assignment or transfer of the contract may be made by the investment adviser without the consent of the client or other party to the contract;

C. that the investment adviser shall not be compensated on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client, unless the investment adviser adheres to the provisions in Code of Federal Regulations, title 17, section 275.205 -3; and

D. that the investment adviser, if a partnership, shall notify the client or other party to the investment contract of any change in the membership of the partnership within a reasonable time after the change.

Subp. 3. Unlawful acts.

It is unlawful for any investment adviser to:

A. include in an advisory contract, any condition, stipulation, or provisions binding any person to waive compliance with any provision of the Minnesota Securities Act or of the Investment Advisers Act of 1940, or any other practice contrary to the provisions of Section 215 of the Investment Advisers Act of 1940; or

B. enter into, extend, or renew any advisory contract contrary to the provisions of Section 205 of the Investment Advisers Act of 1940. This provision shall apply to all advisers required to be registered under the Minnesota Securities Act, notwithstanding whether the adviser would be exempt from federal registration pursuant to Section 203(b) of the Investment Advisers Act of 1940.

Subp. 4. Applicability of other laws.

Any person entering into or performing an investment advisory contract under this part is not relieved of any obligations under part 2876.5023 or any other applicable provision of the Minnesota Securities Act or any rule or order thereunder.

Subp. 5. Independent agent of advisory client.

Nothing in this part shall relieve a client's independent agent from any obligation to the client under applicable law.

Subp. 6. Definitions.

The following definitions apply for purposes of this part.

A. "Affiliate" shall have the same definition as in Section 2(a)(3) of the Investment Company Act of 1940.

B. "Assignment," as used in subpart 2, item B, includes any transaction or event that results in any change to the individuals or entities with the power, directly or indirectly, to direct the management or policies of, or to vote more than 50 percent of any class of voting securities of, the investment adviser as compared to the individuals or entities who had such power as of the date when the contract was first entered into, extended, or renewed.

C. "Client's independent agent" means any person who agrees to act as an investment advisory client's agent in connection with the contract, but does not include:

D. "Company" means a corporation, partnership, association, joint stock company, trust, or any organized group of persons, whether incorporated or not, or any receiver, trustee in a case under United States Code, title 11, or similar official or any liquidating agent for any of the foregoing, in his or her capacity as such. "Company" shall not include:

E. "Interested person" means:

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.5023 Prohibited Conduct in Providing Investment Advice

Subpart 1. Fiduciary duty.

A person who is an investment adviser or a federal covered investment adviser is a fiduciary and has a duty to act primarily for the benefit of its clients. This part applies to federal covered investment advisers to the extent permitted by the National Securities Markets Improvement Act of 1996. While the extent and nature of this duty varies according to the nature of the relationship between an investment adviser or a federal covered investment adviser and its clients and the circumstances of each case, an investment adviser or a federal covered investment adviser shall not engage in prohibited fraudulent, deceptive, or manipulative conduct, including the following:

A. recommending to a client to whom investment advisory services are provided the purchase, sale, or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry concerning the client's investment objectives, financial situation and needs, and any other information known by the investment adviser or federal covered investment adviser;

B. exercising any discretionary authority in placing an order for the purchase or sale of securities for a client without obtaining written discretionary authority from the client within ten business days after the date of the first transaction placed pursuant to oral discretionary authority, unless the discretionary authority relates solely to the price at which, or the time when, an order involving a definite amount of a specified security shall be executed, or both;

C. inducing trading in a client's account that is excessive in size or frequency in view of the financial resources, investment objectives, and character of the account;

D. placing an order to purchase or sell a security for the account of a client without authority to do so;

E. placing an order to purchase or sell a security for the account of a client upon instruction of a third party without first having obtained a written third-party trading authorization from the client;

F. borrowing money or securities from a client unless the client is a broker-dealer, an affiliate of the investment adviser, or a financial institution engaged in the business of loaning funds;

G. loaning money or securities to a client unless the investment adviser is a financial institution engaged in the business of loaning funds or the client is an affiliate of the investment adviser;

H. misrepresenting to any client, or prospective client, the qualifications of the investment adviser, or any employee or person affiliated with the investment adviser, or misrepresenting the nature of the advisory services being offered or fees to be charged for such service, or to omit to state a material fact necessary to make the statements made regarding qualifications, services, or fees, in light of the circumstances under which they are made, not misleading;

I. providing a report or recommendation to any client prepared by someone other than the investment adviser without disclosing that fact. This prohibition does not apply to a situation where the investment adviser uses published research reports or statistical analyses to render advice or where an investment adviser orders such a report in the normal course of providing service;

J. charging a client an unreasonable fee;

K. failing to disclose to clients in writing before any advice is rendered any material conflict of interest relating to the investment adviser, or any of its employees, or affiliated persons which could reasonably be expected to impair the rendering of unbiased and objective advice including:

L. while acting as principal for its own advisory account, to knowingly sell any security to or purchase any security from a client, or while acting as broker-dealer for a person other than the client, to knowingly effect any sale or purchase of any security for the account of the client, without disclosing to the client in writing before the completion of the transaction the capacity in which it is acting and obtaining the consent of the client to the transaction:

M. guaranteeing a client that a specific result will be achieved with advice rendered;

N. publishing, circulating, or distributing any advertisement which does not comply with Rule 206(4)-1 under the Investment Advisers Act of 1940;

O. making, in the solicitation of clients, any untrue statement of a material fact, or omitting to state a material fact necessary in order to make the statement made, in light of the circumstances under which they are made, not misleading;

P. failing to establish, maintain, and enforce written policies and procedures reasonably designed to prevent the misuse of material nonpublic information contrary to the provisions of Section 204A of the Investment Advisers Act of 1940;

Q. disclosing the identity, investments, or other financial information of any client or former client unless required by law to do so, or unless consented to by the client;

R. taking any action, directly or indirectly, with respect to those securities or funds in which any client has any beneficial interest, where the investment adviser has custody or possession of the securities or funds when the action of the investment adviser is subject to and does not comply with part 2876.4116;

S. engaging in any act, practice, or course of business which is fraudulent, deceptive, manipulative, or unethical; or

T. engaging in conduct or any act, indirectly or through or by any other person, which would be unlawful for such person to do directly under the provisions of the Minnesota Securities Act, Minnesota Statutes, chapter 80A, or any rule or order thereunder.

Subp. 2. Agency cross transactions.

The prohibitions of subpart 1 shall not apply to an investment adviser effecting an agency cross transaction for an advisory client provided the following conditions are met:

A. the advisory client executes a written consent prospectively authorizing the investment adviser to effect agency cross transactions for such client;

B. before obtaining written consent from the client, the investment adviser makes full written disclosure to the client that, with respect to agency cross transactions, the investment adviser will act as broker-dealer for, receive commissions from, and have a potentially conflicting division of loyalties and responsibilities regarding both parties to the transactions;

C. at or before the completion of each agency cross transaction, the investment adviser or any other person relying on this subpart sends the client a written confirmation. The written confirmation shall include:

D. at least annually, and with or as part of any written statement or summary of the account from the investment adviser, the investment adviser or any other person relying on this subpart sends each client a written disclosure statement identifying:

E. each written disclosure and confirmation required by this subpart must include a conspicuous statement that the client may revoke the written consent required under item A at any time by providing written notice to the investment adviser;

F. no agency cross transaction may be affected in which the same investment adviser recommended the transaction to both any seller and any purchaser;

G. for purposes of this subpart, "agency cross transaction for an advisory client" means a transaction in which a person acts as an investment adviser in relation to a transaction in which the investment adviser, or any person controlling, controlled by, or under common control with such investment adviser, acts as a broker-dealer for both the advisory client and another person on the other side of the transaction. When acting in such capacity the person is required to be registered as a broker-dealer in this state unless excluded from the definition; and

H. nothing in this subpart shall be construed to relieve an investment adviser from acting in the best interests of the client, including fulfilling a duty with respect to the best price and execution for the particular transaction for the client nor shall it relieve any investment adviser of any other disclosure obligations imposed by the Minnesota Securities Act, Minnesota Statutes, chapter 80A.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.5024 Regulation of Business of Financial Planning

Subpart 1. Definition.

"Business of financial planning" means providing, or offering to provide, financial planning services or financial counseling or advice, on a group or individual basis. Any person who, on advertisements, cards, signs, circulars, letterheads, or in any other manner, indicates that the person is a "financial planner," "financial counselor," "financial adviser," "investment counselor," "estate planner," "investment adviser," "financial consultant," or any other similar designation or title or combination thereof, is considered to be representing himself or herself to be engaged in the business of financial planning.

Subp. 2. Generally.

The provisions of this part apply to federal covered investment advisers to the extent permitted by the National Securities Markets Improvement Act of 1996, Public Law 104-290.

Subp. 3. Prohibition.

It is a fraudulent act, practice, and course of business within the meaning of Minnesota Statutes, section 80A.68, for any person registered or required to be registered under the Minnesota Securities Act, Minnesota Statutes, chapter 80A, to represent on advertisements, cards, signs, circulars, letterheads, or in any other manner, that the person is engaged in the business of financial planning unless the person provides a disclosure document to the client. A copy of the disclosure document must be delivered or mailed to the client when an account is opened. A licensed broker-dealer is authorized to mail the disclosure document on behalf of its agents. A record of the disclosure must be maintained for a period of three years. The disclosure document must contain the following:

A. the basis of any fees, commissions, or other compensation received by the person in connection with the rendering of financial planning services or financial counseling or advice in the following language: "My compensation may be based on the following: (a) ... commissions generated from the products I sell you, (b) ... fees, or (c) ... a combination of (a) and (b). [Comments]";

B. the identification of companies and/or affiliates that supply products or services offered or sold by the person in the following language: "I am authorized to offer or sell products and/or services issued by or through (name of firm(s) and/or affiliates): The products will be traded, distributed, or placed through the (name of clearing/trading firm(s) and/or affiliates)";

C. the licenses held by the person under Minnesota Statutes, chapter 60K, 80A, or 82 in the following language: "The (insert the term used by agent engaged in the business of financial planning) assigned to your account is licensed in Minnesota as: (a) ... an insurance producer, (b) ... a broker-dealer agent or broker-dealer, (c) ... a real estate broker or salesperson, or (d) ... an investment adviser"; and

D. the specific identity of any financial products or services, by category, for example mutual funds, stocks, or limited partnerships, the person is authorized to offer or sell in the following language: "The license(s) entitles me to offer and sell the following products and/or services: (a) ... securities, specifically the following: [List], (b) ... real property, (c) ... insurance, (d) ... other: [List]."

Subp. 4. Exemption.

The disclosure document need not be provided to a client who meets the requirements in Minnesota Statutes, section 80A.46, clause (13).

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.5025 Prohibited Uses of Senior-Specific Certifications and Professional Designations

Subpart 1. Generally.

The provisions of this part apply to federal covered investment advisers to the extent permitted by the National Securities Markets Improvement Act of 1996, Public Law 104-290.

Subp. 2. Prohibited uses of senior-specific certifications and professional designations.

A. The use of a senior-specific certification or professional designation by any person in connection with the offer, sale, or purchase of securities, or the provision of advice as to the value of or the advisability of investing in, purchasing, or selling securities, either directly or indirectly or through publications or writings, or by issuing or promulgating analyses or reports relating to securities, that indicates or implies that the user has special certification or training in advising or servicing senior citizens or retirees, in such a way as to mislead any person shall be a fraudulent, deceptive, and manipulative act or practice in the securities, commodities, investment, franchise, banking, finance, or insurance business.

B. The prohibited use of senior-specific certifications or professional designations includes the following:

Subp. 3. Regulated certifications and professional designations.

A. There is a rebuttable presumption that a certifying or designating organization is not disqualified solely for purposes of subpart 1, item B, subitem (4), when the certification or designation issued from the organization does not primarily apply to sales or marketing and when the organization or the certification or designation in question has been accredited by:

B. In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing seniors, factors to be considered shall include:

C. For purposes of this part, unless used in a manner that would mislead or confuse a reasonable consumer, a certification or professional designation does not include a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency, when the job title:

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.6052 Accounting Principles

All financial statements required by this chapter or by any official form of the administrator shall be prepared in accordance with generally accepted accounting principles unless otherwise permitted by rule or order.

Financial statements shall be audited by independent certified public accountants who shall express an opinion thereon, except where the particular form or this chapter permits the use of unaudited statements. Any financial statements prepared in accordance with the rules and requirements of the Securities and Exchange Commission shall satisfy the requirements of this part, provided, however, that the statements are audited by an independent certified public accountant who expresses an opinion thereon.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Minn. R. 2876.6110 Consent to Service of Process

Persons required to file with the administrator a consent to service of process should file Form U-2, Uniform Consent to Service of Process.

History

Statutory Authority: MS s 45.023; 80A.82
History: 34 SR 593

Chapter 2880 NONRENEWAL OF HOMEOWNERS INSURANCE

Minn. R. 2880.0050 Applicability

Parts 2880.0050 to 2880.0800 do not apply to commercial dwellings or farms, nor to policies under joint underwriting agreements where one of the insurers is a township mutual.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Minn. R. 2880.0100 Definitions

Subpart 1. Scope.

For the purpose of parts 2880.0050 to 2880.0800, the terms defined in this part have the meanings given them.

Subp. 2. Commercial dwelling.

"Commercial dwelling" means a building used primarily to produce income, such as a motel, hotel, or apartment house, but does not include an owner-occupied dwelling of four units or less.

Subp. 3. Experience period.

"Experience period" means the period of three years immediately preceding the insurer's nonrenewal of a policy of homeowners insurance.

Subp. 4. Multiline contract.

"Multiline contract" means a single insurance contract which provides coverage for homeowners insurance and for at least one other line of insurance authorized under Minnesota Statutes, section 60A.06, subdivision 1, clause (9).

Subp. 5. Nonrenewal.

"Nonrenewal" means an action taken by an insurer on an existing policy, at the end of the policy period, to:

A. terminate the policy;

B. reduce the policy's coverage, unless all the existing policies and those policies to be accepted as new business by the insurer in this state will have the same coverages;

C. increase the policy's deductible, unless all existing policies and those policies to be accepted as new business in this state, by the insurer, will provide for the same higher deductible; or

D. transfer a named insured from one rating plan to another within the same company, or from one company to another within a group of insurance companies, if the transfer results in a higher premium. A surcharge applied to a premium for a condition which increases the potential for loss, or the deletion of a claims free discount do not constitute a transfer of rating plans. A policy of homeowners insurance written for a term longer than one year is not subject to nonrenewal until the end of the policy term even if the insurer can rerate the policy annually.

Subp. 6. Nonrenewal notice.

"Nonrenewal notice" means a written notice to a named insured clearly and expressly informing the named insured of the insurer's intention not to renew the policy as of the renewal date.

Subp. 7. Policy of homeowners insurance.

"Policy of homeowners insurance" means a policy providing property and liability coverage on dwellings and includes policies which are generally described as homeowners policies, mobile homeowners policies, dwelling owners policies, condominium owners policies, and tenants policies.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Minn. R. 2880.0200 Grounds for Nonrenewal

No insurer shall refuse to renew a policy of homeowners insurance unless based on one or more reasons which shall be limited to the following:

A. The reasons stated for cancellation in Minnesota Statutes, section 65A.01, subdivision 3a.

B. Use of the premises for an illegal activity.

C. The termination of an agency contract, except as provided under Minnesota Statutes, section 60A.171, unless the insurer assigns the terminated agent's book of business to another agent. The insurer must transfer the policy to another agent if the insured makes a written request prior to the nonrenewal date. Notification of this right must be included in the nonrenewal notice.

D. Violations of local laws or ordinances which increase the possibility of a loss.

E. Refusal of the insured to eliminate known conditions which increase the potential for loss after notification by the insurer that the condition must be removed. Before a nonrenewal notice can be issued under this item, two written requests stating the condition to remove and the reason why the condition increases the potential for loss must be sent to the insured. The first notice must inform the insured as to any time limits for compliance. The second notice must inform the insured of the intent to nonrenew the policy if the condition is not removed.

F. A substantial change in the quality or availability of fire protection services.

G. If the insured has two or more losses during the experience period, but not to include:

H. The insurer ceases to write homeowners insurance in Minnesota.

I. Failure of the named insured to provide necessary underwriting information upon written request from the insurer, provided that before a nonrenewal notice can be issued under this item, two written requests asking for the information must be sent to the insured stating the reasons why the information is necessary. The second request must inform the insured of the intent to nonrenew the policy if the information is not received.

J. If real property taxes owing on the insured property have been delinquent for two or more years and continue delinquent at the time notice of nonrenewal is issued.

K. The named insured no longer owns the property or resides at the insured location, unless the spouse resides at the insured location and retains ownership, in which event the spouse will be endorsed onto the policy as the named insured. If an insurer has grounds to nonrenew a homeowners policy on a primary residence of a named insured, homeowners policies on secondary residences of the insured may also be nonrenewed. Grounds for nonrenewing homeowners policies on secondary residences cannot be used to nonrenew a homeowners policy on the primary residence. If an insured fails to renew the primary residence with an insurer, the insurer may nonrenew the secondary residence.

L. The reasons stated in Minnesota Statutes, section 72A.20, subdivision 13.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Minn. R. 2880.0300 Waiver of Penalties

If an insurer encounters a situation in which the insurer believes that the nonrenewal is not addressed by parts 2880.0050 to 2880.0800, the insurer may seek a waiver of penalties under the following procedure:

A. Notify the commissioner in writing, at least 90 days prior to the policy renewal date, by referring to this part and by stating the reasons for the proposed nonrenewal action.

B. If the commissioner determines that the situation is not covered by parts 2880.0050 to 2880.0800, but warrants a nonrenewal, the penalties in part 2880.0800 must be waived. The commissioner may decline to render an opinion.

C. The waiver of penalty decision must be retained by the insurer. A copy of the waiver of penalty decision must be returned to the commissioner by the insurer with its response to a written complaint made by the insured.

D. The commissioner's decision regarding waiver of penalties will have no bearing on the final decision as to the approval or disapproval of the nonrenewal action.

E. There is no precedential value in the commissioner's action under this part and each request must be judged on individual considerations.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Minn. R. 2880.0400 Nonrenewal Notices

A nonrenewal notice must be on a form approved by the Department of Commerce and the following information must be furnished to the insured on the front of the notice:

A. The specific reasons for the termination, which if based on loss experience must include the date of the loss, the type of loss, and amount of payment.

B. A statement advising the insured of the right of complaint with wording such as: "Minnesota law and rules limit the reasons for which your homeowners insurance policy may be nonrenewed, reduced as to the limits of coverage or coverage eliminated, or for which the policy may be canceled. If you believe this termination notice is in violation of Minnesota law or rule, you may, within 30 days of receiving this notice, send a written letter of complaint to the Commissioner of Commerce."

C. A statement advising the insured of the availability of insurance from the Minnesota Property Insurance Placement Facility with wording such as: "You may be eligible to obtain insurance coverage through the Minnesota Property Insurance Placement Facility. Your agent can assist you in arranging this coverage." The named insured cannot waive his or her right to receive a nonrenewal notice under the nonrenewal statutes and parts 2880.0050 to 2880.0800.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Minn. R. 2880.0500 Validity of Notice and Nonrenewal

No nonrenewal and no notice of nonrenewal of a homeowners policy is valid unless done in compliance with parts 2880.0050 to 2880.0800.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Minn. R. 2880.0600 Record Keeping

Each insurance company shall keep a register of all nonrenewals and company initiated cancellations, except those for nonpayment of premium. The register must be retained for three years and be available to the commissioner of commerce, or a designee, during business hours at the insurance company's place of business.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Minn. R. 2880.0700 Nonrenewal of Multiline Contracts

Nothing in parts 2880.0050 to 2880.0800 prohibits an insurance company from nonrenewing a multiline insurance contract. However, if parts 2880.0050 to 2880.0800 prevent nonrenewal of the homeowners insurance portion of the contract, then the insurance company shall issue to the named insured a policy of homeowners insurance providing coverage as included in the multiline contract.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Minn. R. 2880.0800 Penalties

Subpart 1. Generally.

An insurer failing to comply with parts 2880.0050 to 2880.0800 is subject to the following penalties during each calendar year period:

A. first violation, $100;

B. second violation, $300; and

C. third and subsequent violations, $500.

Subp. 2. Waiver.

Monetary penalties will not be levied if the commissioner determines that the nonrenewal notice was based on a good faith judgment supported by evidence that was in the possession of the insurer at the time of the sending of the nonrenewal notice, or if the nonrenewal was subject to the waiver of penalty provisions in part 2880.0300.

Subp. 3. Additional penalties.

Nothing contained in parts 2880.0050 to 2880.0800 prohibits the commissioner of commerce from applying additional penalties or remedies as may be imposed under Minnesota Statutes, chapter 72A.

History

Statutory Authority: MS s 65A.29
History: 10 SR 66

Chapter 2885 UNCLAIMED PROPERTY

Minn. R. 2885.0200 Purpose

The rules contained in this chapter are for the purpose of implementing provisions of the Uniform Disposition of Unclaimed Property Act, Minnesota Statutes, sections 345.31 to 345.60, as amended.

History

Statutory Authority: MS s 345.56

Minn. R. 2885.0300 Service Charges

The term "service charges" means any type of deduction by a holder, as defined in Minnesota Statutes, section 345.31, subdivision 5, from property presumed abandoned pursuant to the Uniform Disposition of Unclaimed Property Act, and also shall include:

A. for the types of property described in Minnesota Statutes, sections 345.32, 345.33, 345.35, and 345.37, deductions by a holder from property prior to the presumption of abandonment, which deductions are made by reason of the nonoccurrence of the events or acts that prevent the presumption of abandonment as described in those sections, or by reason of the inactivity, dormancy, or unclaimed status of the property; and

B. for the types of property described in Minnesota Statutes, sections 345.34, 345.36, 345.38, and 345.39, deductions by a holder from property prior to the presumption of abandonment, which deductions are made by reason of the inactivity, dormancy, or unclaimed status of the property.

History

Statutory Authority: MS s 345.56

Minn. R. 2885.0400 Report of Service Charges

If service charges have been deducted, a holder shall include or attach as part of the report filed pursuant to Minnesota Statutes, section 345.41:

A. the citation of the authority or a copy of the form of contract authorizing such service charges;

B. the value or amount of each item of property before any service charges were deducted therefrom;

C. the amount of service charges deducted from each item and the date or dates on which such service charges were deducted; and

D. such other information or documentation as the commissioner of commerce may reasonably require to explain the deduction of service charges. Such documentation may include records of communications or correspondence with the owner, passbook provisions, signature card, rules and regulations, bylaws, and any other documents concerning any agreement between the holder and the owner. This part shall also require the reporting of service charges if the total of such charges deducted from an item of property equals or exceeds the value of the item.

History

Statutory Authority: MS s 345.41; 345.56
History: L 1983 c 301 s 234

Minn. R. 2885.0500 Report of Discontinuance of Interest or Dividends

If payment of interest or dividends on property presumed abandoned pursuant to the Uniform Disposition of Unclaimed Property Act was discontinued, before or after the property was presumed abandoned, by reason of the inactivity, dormancy, or unclaimed status of the property, the holder shall include or attach as part of the report filed pursuant to Minnesota Statutes, section 345.41:

A. a copy of the form of contract which authorized such discontinuance of payment of interest or dividends; or

B. the citation of the authority for such discontinuance of payment of interest or dividends.

History

Statutory Authority: MS s 345.41; 345.56

Minn. R. 2885.0600 Report of Abandoned Property Held by Banking or Financial Institution or Business Association

The provisions of Minnesota Statutes, section 345.32, clauses (a)(4), (a)(5), and (b)(4) are effective as of July 1, 1977. Unless such sections are satisfied subsequent to said date the property shall be reportable to the commissioner of commerce.

History

Statutory Authority: MS s 345.41; 345.56
History: L 1983 c 301 s 234

Minn. R. 2885.0700 Receipt of Statement

For purposes of Minnesota Statutes, section 345.32, clauses (a)(4) and (b)(4), a tax report or regular statement of deposit shall be deemed to be the statement referred to in said sections.

History

Statutory Authority: MS s 345.41; 345.56

Minn. R. 2885.0800 Negative Property Report

A holder which has no property which is reportable pursuant to the Uniform Disposition of Unclaimed Property Act shall report that fact if so requested in writing by the commissioner of commerce.

History

Statutory Authority: MS s 345.41; 345.56
History: L 1983 c 301 s 234

Chapter 2890 PETROLEUM TANK RELEASES

Minn. R. 2890.0005 Applicability

This chapter, as adopted at 28 SR 383, applies to costs incurred for work performed on or after October 6, 2003, excluding:

A. costs incurred for work performed as part of one of the steps of consultant services as described in part 2890.1100, as it existed prior to October 6, 2003, for which the applicant began incurring costs before October 6, 2003; and

B. costs incurred for work performed before the leak reporting date in 2004 as part of a contract entered into before October 6, 1995. "Leak reporting date" means the month and day that the leak was reported to the state.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.0010 Repealed by subpart

Subpart 1.

[Renumbered 2890.0015, subpart 1]

Subp. 2.

[Renumbered 2890.0015, subp. 3]

Subp. 2a.

[Renumbered 2890.0015, subp. 8]

Subp. 2b.

[Renumbered 2890.0015, subp. 14]

Subp. 3.

[Renumbered 2890.0015, subp. 18]

Subp. 3a.

[Renumbered 2890.0015, subp. 26]

Subp. 3b.

[Renumbered 2890.0015, subp. 28]

Subp. 4.

[Renumbered 2890.0015, subp. 29]

Subp. 4a.

[Renumbered 2890.0015, subp. 72]

Subp. 5.

[Renumbered 2890.0015, subp. 89]

Subp. 5a.

[Renumbered 2890.0015, subp. 91]

Subp. 6.

[Repealed, 28 SR 383]

Subp. 7.

[Repealed, 28 SR 383]

Minn. R. 2890.0015 Definitions

Subpart 1. Scope.

For purposes of this chapter, the terms in this part have the meanings given them.

Subp. 2. Active remediation.

"Active remediation" means corrective actions such as free product removal, soil vapor extraction, air sparging, soil excavation, replacement of impacted drinking water wells, groundwater pump-out, and the installation of oxygen releasing compound.

Subp. 3. Agency.

"Agency" means the Pollution Control Agency.

Subp. 4. Agency status update.

"Agency status update" means the labor and materials required for the consultant to notify the agency, when necessary, of the results of field work.

Subp. 5. Air sample analysis.

"Air sample analysis" means quantifying the concentration of petroleum contaminants in an air sample.

Subp. 6. Annual monitoring report.

"Annual monitoring report" means the form and associated attachments required by the agency to report site monitoring results annually.

Subp. 7. Annual monitoring report preparation.

"Annual monitoring report preparation" means the labor and materials necessary to complete and submit the annual monitoring report to the agency, including, but not limited to, data analysis, data entry, drafting, photocopying, report review, shipping, and word processing.

Subp. 8. Applicant.

"Applicant" means a person eligible under Minnesota Statutes, section 115C.09, to receive reimbursement from the petroleum tank release cleanup fund.

Subp. 9. Applicant status update.

"Applicant status update" means a notification from the consultant to the applicant, in person or in writing, that explains the services performed, the data collected, and the recommendations for additional work.

Subp. 10. Aquifer determination.

"Aquifer determination" means the analysis of stratigraphic data and permeability measurements to determine whether the hydrogeologic unit is an aquifer as defined by the agency program that administers petroleum tank release cleanups.

Subp. 11. AST soil sampling.

"AST soil sampling" means soil sampling from an aboveground storage tank location.

Subp. 12. Background review.

"Background review" means a search of records to establish the site history. It includes gathering information from the applicant's records and public records. This information includes, but is not limited to, purchase and lease dates, operation dates, previous ownership, previous site use, current and previous underground storage tanks, current and previous waste oil tanks, types of products handled, current site status, tank and line testing results, inventory records, spill history, maintenance history, previous environmental assessments, and geologic setting.

Subp. 13. Biopiling.

"Biopiling" means composting.

Subp. 14. Board.

"Board" means the Petroleum Tank Release Compensation Board.

Subp. 15. Borehole sealing.

"Borehole sealing" means the filling and sealing of a borehole not completed as a monitoring well.

Subp. 16. Citizen contact.

"Citizen contact" means the labor and materials required to contact residents, property owners, business owners, and others to determine whether water wells, basements, or sumps exist on their property.

Subp. 17. Clean fill purchase, transportation, and installation.

"Clean fill purchase, transportation, and installation" means the purchase, transportation, placement, and compaction of soil necessary to replace excavated petroleum-contaminated soil.

Subp. 18. Commissioner.

"Commissioner" means the commissioner of the Pollution Control Agency.

Subp. 19. Compaction.

"Compaction" means the densification of soils by the application of mechanical energy.

Subp. 20. Composted soil sampling.

"Composted soil sampling" means soil sampling from the compost pile.

Subp. 21. Composting.

"Composting" means the controlled microbial degradation of petroleum-contaminated soil. It includes the following:

A. costs for use of land;

B. costs for permits necessary for the composting of the petroleum-contaminated soil;

C. costs for labor and materials required for the temporary storage of the petroleum-contaminated soil;

D. costs for fertilizer, microbes, or other enhancer;

E. costs for bulking agents; and

F. all labor and materials required for the construction of the compost pile and the demolition of the compost pile.

Subp. 22. Composting monitoring worksheet.

"Composting monitoring worksheet" means the form and associated attachments required by the agency for reporting the results of follow-up sampling of a specific batch of composted petroleum-contaminated soil.

Subp. 23. Composting monitoring worksheet preparation.

"Composting monitoring worksheet preparation" means the labor and materials necessary to complete and submit the composting monitoring worksheet to the agency, including, but not limited to, data analysis, data entry, photocopying, shipping, and word processing.

Subp. 24. Composting site application.

"Composting site application" means the form and associated attachments submitted to the agency to gain approval for a specific site to be used for the composting of petroleum-contaminated soil.

Subp. 25. Composting site application preparation.

"Composting site application preparation" means the labor and materials necessary to complete and submit the composting site application to the agency, including, but not limited to, data analysis, data entry, photocopying, shipping, and word processing.

Subp. 26. Consultant services.

"Consultant services" means the rendering of professional opinion, advice, or analysis regarding a release.

Subp. 27. Contaminated stockpile soil sampling.

"Contaminated stockpile soil sampling" means soil sampling from the stockpile of petroleum-contaminated soil.

Subp. 28. Contractor services.

"Contractor services" means products and services within a scope of work that can be defined by typical written plans and specifications including, but not limited to, excavation, treatment of contaminated soil and groundwater, soil borings and well installations, laboratory analysis, surveying, electrical work, plumbing, carpentry, and equipment.

Subp. 29. Corrective action.

"Corrective action" means an action taken to minimize, eliminate, or clean up a release to protect the public health and welfare or the environment.

Subp. 30. Decontamination.

"Decontamination" means completely cleaning down hole drilling equipment and tools to avoid cross-contamination.

Subp. 31. Disking.

"Disking" means the periodic tilling of land-treated petroleum-contaminated soil to aerate the soil.

Subp. 32. Draftsperson.

"Draftsperson" means a person with a trade school diploma or the equivalent in computer-assisted design.

Subp. 33. Drilling.

"Drilling" means the advancement of one or more soil borings to determine soil structure or to monitor for the presence of contaminants in soil. It includes hand auger drilling, hand-driven drilling, hollow stem auger drilling, push probing, sonic drilling, and any alternative method approved by the agency; borehole sealing; decontamination; drilling permitting; drinking water well installation; drinking water well permitting; mobilization/demobilization; monitoring well sealing; monitoring well installation; monitoring well permitting; and temporary well installation.

Subp. 34. Drilling oversight, field log preparation, and soil sampling.

"Drilling oversight, field log preparation, and soil sampling" means the oversight of the drilling of borings, including drilling log preparation and soil sampling.

Subp. 35. Drilling permit.

"Drilling permit" means a document issued by a state or local government agency to allow the advancement of soil borings.

Subp. 36. Drilling permitting.

"Drilling permitting" means the labor and materials required to obtain a drilling permit. It does not include the cost of the permit.

Subp. 37. Drinking water well installation.

"Drinking water well installation" means the installation of a well, as part of corrective action, that provides a permanent supply of drinking water.

Subp. 38. Drinking water well permitting.

"Drinking water well permitting" means obtaining permits to allow the drilling and installation of drinking water wells and filing well completion or installation records with state and local agencies.

Subp. 39. Drum disposal.

"Drum disposal" means the labor, materials, and equipment necessary to load, haul, and dispose of drums containing free product or waste generated at a leak site, including petroleum-contaminated water and used equipment and field supplies.

Subp. 40. Drum disposal management.

"Drum disposal management" means the making of arrangements for the disposal of drill cuttings, petroleum-contaminated water, or other petroleum-contaminated waste generated at a leak site.

Subp. 41. Entry level professional.

"Entry level professional" means a person with:

B. at least five years of experience in performing a majority of the following activities:

Subp. 42. Equipment and field supplies.

"Equipment and field supplies" means the purchase or rental of equipment and supplies necessary to perform consultant services including, but not limited to, AccuVac ampoules, carbon dioxide meters, color charts, colorimetric ampoules, coolers, coring devices, decontamination fluids, direct reading probes, dissolved iron field analysis kits, electronic water level indicators, explosimeters, filtration devices, flame ionization detectors, flow cells, ice, membrane electrode probes, oil water interface indicators, oxide semiconductor total hydrocarbon detectors, personal protective gear, pH meters, photoionization detectors, polyethylene bags, pumps, rope, sample containers, sample labels, sampling bailers, sampling gloves, steel tape, temperature probes, tubing, and water-finding paste.

Subp. 43. Excavation.

"Excavation" means the equipment and labor required to remove petroleum-contaminated soil and any overburden and surfacing that must be displaced to access the petroleum-contaminated soil.

Subp. 44. Excavation report.

"Excavation report" means the form and associated attachments required by the agency to document excavation and treatment of petroleum-contaminated soil.

Subp. 45. Excavation report preparation.

"Excavation report preparation" means the labor and materials necessary to complete and submit the excavation report to the agency, including, but not limited to, data analysis, data entry, drafting, photocopying, report review, shipping, and word processing.

Subp. 46. Excavation soil sampling.

"Excavation soil sampling" means soil sampling from the excavation.

Subp. 47. Field technician.

"Field technician" means a person who performs environmental field work.

Subp. 48. Field work notification and scheduling.

"Field work notification and scheduling" means the labor and materials required for the consultant to contact the applicant, the agency, and subcontractors to schedule field work; and the labor and materials required for the consultant to manage the project internally. It does not include submitting a report.

Subp. 49. Free product recovery report worksheet.

"Free product recovery report worksheet" means the form and associated attachments required by the agency to report interim free product recovery actions.

Subp. 50. Free product recovery report worksheet preparation.

"Free product recovery report worksheet preparation" means the labor and materials necessary to complete and submit the free product recovery report worksheet to the agency, including, but not limited to, data analysis, data entry, photocopying, shipping, and word processing.

Subp. 51. Groundwater sample analysis.

"Groundwater sample analysis" means quantifying the concentration of petroleum contaminants and/or inorganic compounds present in a groundwater sample.

Subp. 52. Groundwater sampling (other than permanent monitoring well).

"Groundwater sampling (other than permanent monitoring well)" means collecting water samples from a sampling point other than a permanent monitoring well to determine petroleum contaminant concentrations, quality assurance and quality control, and the amount of free product; filling, labeling, and preserving each sample vial; and completing chain-of-custody forms.

Subp. 53. Groundwater sampling (permanent monitoring well).

"Groundwater sampling (permanent monitoring well)" means collecting water samples from a permanent monitoring well to determine petroleum contaminant concentrations, quality assurance and quality control, and the amount of free product; filling, labeling, and preserving each sample vial; and completing chain-of-custody forms.

Subp. 54. Hauling.

"Hauling" means the transportation and unloading of:

A. petroleum-contaminated soil from the leak site to an agency-approved stockpiling site and/or soil disposal location; and

B. concrete, asphalt, or debris from the leak site to a disposal location.

Subp. 55. Health and safety plan.

"Health and safety plan" means preparation of a site-specific document containing local, state, and federal safety data instructions and guidelines for health and safety.

Subp. 56. Hydraulic conductivity field test.

"Hydraulic conductivity field test" means a test performed on a monitoring well to determine hydraulic conductivity, including a slug test, bail test, and pump test. It does not mean using a book value for hydraulic conductivity.

Subp. 57. Investigation report.

"Investigation report" means the comprehensive form and associated attachments required by the agency to document remedial investigation activities.

Subp. 58. Investigation report preparation (full RI).

"Investigation report preparation (full RI)" means the labor and materials necessary to complete and submit the investigation report to the agency when a full remedial investigation is necessary, including, but not limited to, aquifer determination, data analysis, data entry, drafting, photocopying, report review, shipping, and word processing.

Subp. 59. Investigation report preparation (LSI only).

"Investigation report preparation (LSI only)" means the labor and materials necessary to complete and submit the investigation report to the agency when only a limited site investigation is necessary, including, but not limited to, aquifer determination, data analysis, data entry, drafting, photocopying, report review, shipping, and word processing.

Subp. 60. Karst field survey.

"Karst field survey" means the labor, equipment and field supplies, and materials required to perform a qualitative survey to identify karst features and determine their landscape position; note where water moves across, into, and out of the landscape; and correlate the resulting data with information on depth to bedrock, surficial geology, and bedrock geology.

Subp. 61. Land treatment.

"Land treatment" means the placement and incorporation of petroleum-contaminated soil into the native soil surface for biodegradation of petroleum contaminants. It includes the following costs or activities:

A. costs for use of land;

B. costs for any permits necessary for the land treatment of the petroleum-contaminated soil;

C. costs for labor and materials required for the temporary storage of the petroleum-contaminated soil;

D. costs for fertilizer;

E. separation of rocks and debris from the petroleum-contaminated soil;

F. spreading of petroleum-contaminated soil and incorporation with native soil;

G. periodic disking of soil;

H. land-treated soil sampling; and

I. periodic reporting of the land-treated soil sampling results.

Subp. 62. Land treatment application.

"Land treatment application" means the form and associated attachments submitted to the agency to gain approval for the land treatment of a batch of petroleum-contaminated soil at an approved land treatment site.

Subp. 63. Land treatment application preparation.

"Land treatment application preparation" means the labor and materials necessary to complete and submit the land treatment application to the agency, including, but not limited to, data analysis, data entry, photocopying, shipping, and word processing.

Subp. 64. Land treatment monitoring worksheet.

"Land treatment monitoring worksheet" means the form and associated attachments required by the agency for reporting the results of follow-up sampling of a specific batch of petroleum-contaminated soil spread at a land treatment site.

Subp. 65. Land treatment monitoring worksheet preparation.

"Land treatment monitoring worksheet preparation" means the labor and materials necessary to complete and submit the land treatment monitoring worksheet to the agency, including, but not limited to, data analysis, data entry, photocopying, shipping, and word processing.

Subp. 66. Land treatment site application.

"Land treatment site application" means the form and associated attachments submitted to the agency to gain approval for a specific site to be used for the land treatment of petroleum-contaminated soil.

Subp. 67. Land treatment site application preparation.

"Land treatment site application preparation" means the labor and materials necessary to complete and submit the land treatment site application to the agency, including, but not limited to, data analysis, data entry, photocopying, shipping, and word processing.

Subp. 68. Land treatment spreading notification form.

"Land treatment spreading notification form" means the form and associated attachments used to notify the agency that petroleum-contaminated soil approved for land treatment has been spread.

Subp. 69. Land treatment spreading notification form preparation.

"Land treatment spreading notification form preparation" means the labor and materials necessary to complete and submit the land treatment spreading notification form to the agency, including, but not limited to, data analysis, data entry, photocopying, shipping, and word processing.

Subp. 70. Land-treated soil sampling.

"Land-treated soil sampling" means soil sampling from the land treatment site.

Subp. 71. Landfilling.

"Landfilling" means the placement of petroleum-contaminated soil into a landfill.

Subp. 72. Limited use applicant.

"Limited use applicant" means an applicant who:

A. has not regularly sold petroleum to others;

B. seeks reimbursement for costs incurred in response to a release from a tank containing no more than 10,000 gallons of petroleum; and

C. is unlikely to have known of federal and state regulations applicable to the tank because of the nature of the applicant's business or use of the tank.

Subp. 73. Loading.

"Loading" means the equipment and labor required to load into a truck at the leak site:

A. petroleum-contaminated soil;

B. surfacing that was removed as part of the process of excavating petroleum-contaminated soil; or

C. overburden that must be relocated within the site as part of the process of excavating petroleum-contaminated soil.

Subp. 74. Midlevel professional.

"Midlevel professional" means a person with:

A. a college degree in agricultural engineering, chemical engineering, civil engineering, environmental engineering, geological engineering, geotechnical engineering, soil science, geology, hydrogeology, or a related science; and at least four years of experience in performing one or more of the activities listed in this subpart; or

B. a graduate degree in the environmental sciences and at least three years of experience in performing one or more of the following activities:

Subp. 75. Minnesota Department of Health drinking water hotline contact.

"Minnesota Department of Health drinking water hotline contact" means the labor and materials required to contact the Minnesota Department of Health drinking water hotline to find out whether the leak site is within a drinking water supply management area.

Subp. 76. Mobilization/demobilization (drilling).

"Mobilization/demobilization (drilling)" means the preparation and transport to and from the leak site of necessary drilling equipment after the release is discovered.

Subp. 77. Mobilization/demobilization (heavy equipment).

"Mobilization/demobilization (heavy equipment)" means:

A. the preparation and transport to and from the leak site of any necessary heavy equipment after the release is discovered;

B. the preparation and transport to and from an off-site stockpiling location, if applicable, of equipment needed to consolidate the stockpile;

C. the preparation and transport to and from an off-site stockpiling location, if applicable, of equipment needed to load petroleum-contaminated soil into trucks for hauling to a disposal location; and

D. the preparation and transport to and from the land treatment site, if applicable, of equipment necessary for spreading petroleum-contaminated soil.

Subp. 78. Monitoring well.

"Monitoring well" means a well constructed for measuring water levels and collecting representative groundwater samples.

Subp. 79. Monitoring well development.

"Monitoring well development" means the work required to remove the fines and, if necessary, drilling fluid and to ensure that an adequate hydraulic connection exists between a monitoring well and the aquifer.

Subp. 80. Monitoring well installation.

"Monitoring well installation" means at-grade or above-grade completion of a monitoring well from a completed soil boring.

Subp. 81. Monitoring well installation oversight and development.

"Monitoring well installation oversight and development" means the oversight of the at-grade or above-grade completion of a monitoring well from a completed soil boring, including monitoring well development and monitoring well installation field log preparation.

Subp. 82. Monitoring well permitting.

"Monitoring well permitting" means the labor and materials required to obtain permits to allow the drilling and installation of monitoring wells and to file well completion or installation records with state and local agencies. It does not include the cost of the permits.

Subp. 83. Monitoring well sealing.

"Monitoring well sealing" means the permanent discontinuation of a monitoring well according to applicable well codes.

Subp. 84. Monitoring well sealing oversight.

"Monitoring well sealing oversight" means the time required to oversee the permanent discontinuation of a monitoring well according to applicable well codes.

Subp. 85. Nonspecific administration.

"Nonspecific administration" means the labor, equipment and field supplies, and materials required to perform routine administrative tasks that are not otherwise billed to the applicant, such as those required for scheduling and directing staff assignments, coordinating subcontractors, accounting and payroll, ordering and receiving supplies and equipment, and on-site supervision of staff and subcontractors.

Subp. 86. Off-site access time.

"Off-site access time" means the time spent by the consultant getting permission from property owners other than the applicant to enter their property to do a remedial investigation or carry out a corrective action plan and to provide information to the property owner about the results and activities conducted on the property.

Subp. 87. Overburden.

"Overburden" means soil that must be removed to access the petroleum-contaminated soil.

Subp. 88. Per diem.

"Per diem" means costs for meals and lodging when the distance to the leak site makes it more cost-effective to lodge overnight near the leak site.

Subp. 89. Person.

"Person" means an individual, partnership, association, public or private corporation, or other legal entity, including the United States government, an interstate commission or other body, the state, or any agency, board, bureau, office, department, or political subdivision of the state.

Subp. 90. Photocopying.

"Photocopying" means making copies of a report or worksheet submitted to the agency.

Subp. 91. Prima facie unreasonable.

"Prima facie unreasonable" means unreasonable absent proof by a preponderance of the evidence.

Subp. 92. Pumping of free product or petroleum-contaminated water.

"Pumping of free product or petroleum-contaminated water" means the cost to pump free product or petroleum-contaminated water from the excavation basin using a vacuum truck.

Subp. 93. Quarterly monitoring report.

"Quarterly onitoring report" means the form and associated attachments required by the agency to report quarterly site monitoring results for the period after the investigation report is submitted until that form is reviewed by agency staff or at other times when requested to provide such information by the agency.

Subp. 94. Quarterly monitoring report preparation.

"Quarterly monitoring report preparation" means the labor and materials necessary to complete and submit the quarterly monitoring report to the agency, including, but not limited to, data analysis, data entry, drafting, photocopying, report review, shipping, and word processing.

Subp. 95. Report.

"Report" means a report and its associated attachments that are required by the agency as a necessary part of corrective action.

Subp. 96. Sample shipping and transportation.

"Sample shipping and transportation" means the cost to ship or transport air, groundwater, or soil samples to a laboratory for analysis, and the labor and materials required to count, package, and prepare shipping paperwork for the samples.

Subp. 97. Saw cutting.

"Saw cutting" means the labor, materials, and tools required to cut through asphalt, concrete, or similar surfacing as part of corrective action.

Subp. 98. Senior level professional.

"Senior level professional" means a person with:

A. a college degree in agricultural engineering, chemical engineering, civil engineering, environmental engineering, geological engineering, geotechnical engineering, soil science, geology, hydrogeology, or a related science; and at least eight years of experience in performing one or more of the activities listed in this subpart; or

B. a graduate degree in the environmental sciences and at least seven years of experience in performing one or more of the following activities:

Subp. 99. Shipping.

"Shipping" means mailing an agency-required form, report, or worksheet to the applicant and agency.

Subp. 100. Soil disposal.

"Soil disposal" means:

A. biopiling;

B. composting;

C. land treatment;

D. landfilling;

E. thermal treatment; or

F. an alternative method of treatment or disposal allowed by agency rules, excluding drum disposal.

Subp. 101. Soil sample analysis.

"Soil sample analysis" means quantifying the concentration of petroleum contaminants and/or inorganic compounds present in a soil sample.

Subp. 102. Soil sampling.

"Soil sampling" means field screening and collecting soil samples to determine grain size, organic vapor concentrations, quality assurance and quality control, stratigraphy, and the amount of free product; filling, labeling, and preserving each sample vial; and completing chain-of-custody forms.

Subp. 103. Soil test pit excavation.

"Soil test pit excavation" means the excavation, backfilling, and compaction, if necessary, of small pits in the area of maximum contamination to determine the vertical and horizontal extent of petroleum-contaminated soil.

Subp. 104. Spreading.

"Spreading" means the labor and equipment necessary for the placement of petroleum-contaminated soil at the land treatment site.

Subp. 105. State duty officer emergency contact.

"State duty officer emergency contact" means a telephone call placed to the state duty officer immediately after a site assessment for emergency conditions indicates that an emergency condition exists at the site. It does not include a call placed to the state duty officer to report a release.

Subp. 106. Step of services.

"Step of services" means:

A. limited site investigation or full remedial investigation;

B. active remediation-initial field testing;

C. active remediation-data evaluation/site-specific system design;

D. active remediation-system installation, start-up, and operation and maintenance; or

E. active remediation-system decommissioning.

Subp. 107. Stockpiling.

"Stockpiling" means the equipment, materials, and labor necessary to temporarily store petroleum-contaminated soil on an impermeable surface and cover the petroleum-contaminated soil with plastic anchored in place to prevent exposure to the elements.

Subp. 108. Subsurface monitoring point.

"Subsurface monitoring point" means one location comprised of three depths (bottom, mid-depth, and top) from which monitoring readings are taken.

Subp. 109. Surface disposal tipping fees.

"Surface disposal tipping fees" means the fees paid to dispose of asphalt, concrete, sod, or other surfacing that was removed as part of corrective action.

Subp. 110. Surface removal.

"Surface removal" means the labor, materials, and tools required to remove asphalt, concrete, sod, or other surfacing as part of corrective action.

Subp. 111. Surface replacement.

"Surface replacement" means the labor, materials, and tools required to install appropriate base material and replace asphalt, concrete, sod, or other surfacing that was removed as part of corrective action.

Subp. 112. Surface water receptor survey and risk evaluation.

"Surface water receptor survey and risk evaluation" means the labor, equipment and field supplies, and materials required to perform a qualitative survey to identify surface water bodies that potentially may be impacted if petroleum contamination is present.

Subp. 113. Surveying and surveying equipment.

"Surveying and surveying equipment" means the labor, equipment and field supplies, and materials required to establish the locations and ground surface elevations of soil borings, monitoring wells, and other pertinent site features.

Subp. 114. System installation.

"System installation" means the labor and equipment necessary to install the remediation system.

Subp. 115. Temporary well installation.

"Temporary well installation" means the conversion of a soil boring into a temporary monitoring well.

Subp. 116. Temporary well installation oversight.

"Temporary well installation oversight" means the oversight of the conversion of a soil boring into a temporary monitoring well.

Subp. 117. Thermal treatment.

"Thermal treatment" means the burning of petroleum-contaminated soil by a soil roaster that has received an agency air emission permit. It includes:

A. costs for permits necessary for the thermal treatment of the petroleum-contaminated soil;

B. costs for labor and materials required for the temporary storage of the petroleum-contaminated soil; and

C. costs for taking postburn samples and reporting the results.

Subp. 118. Thermal treatment application.

"Thermal treatment application" means the form and associated attachments submitted to the agency to gain approval for the thermal treatment of a batch of petroleum-contaminated soil at a permitted thermal treatment facility.

Subp. 119. Thermal treatment application preparation.

"Thermal treatment application preparation" means the labor and materials necessary to complete and submit the thermal treatment application to the agency, including, but not limited to, data analysis, data entry, photocopying, shipping, and word processing.

Subp. 120. Travel time.

"Travel time" means the time required to mobilize equipment and to travel to and from the leak site or other location necessary to provide consultant services.

Subp. 121. Treatment of free product or petroleum-contaminated water.

"Treatment of free product or petroleum-contaminated water" means the cost to treat free product or petroleum-contaminated water recovered from the leak site, excluding free product or petroleum-contaminated water put into drums for drum disposal.

Subp. 122. Utility backfill investigation.

"Utility backfill investigation" means the advancement of hand-driven or hand-augered soil borings in the backfill surrounding sanitary and storm sewer lines, water mains, or other utilities that intercept contaminated soil or groundwater.

Subp. 123. Utility clearance.

"Utility clearance" means the process used by the consultant, driller, excavation contractor, or private utility coordinator to identify and locate all aboveground and underground utilities.

Subp. 124. Vapor receptor survey and risk evaluation.

"Vapor receptor survey and risk evaluation" means the labor, equipment and field supplies, and materials required to perform a qualitative survey to identify the location and type of nearby potential vapor receptors and to evaluate the information to identify risks from petroleum vapors.

Subp. 125. Vehicle mileage.

"Vehicle mileage" means the per-mile costs associated with providing and using a vehicle to travel to and from the leak site or other location necessary to provide consultant services.

Subp. 126. Water well receptor survey and risk evaluation.

"Water well receptor survey and risk evaluation" means the labor, equipment and field supplies, and materials required to perform a qualitative survey to identify water wells that may be at risk from the petroleum release and to provide information regarding the geology and groundwater use near the release site. It includes Minnesota Department of Health drinking water hotline contact.

Subp. 127. Word processing.

"Word processing" means using a computer or a typewriter to prepare correspondence or prepare a form, report, or worksheet submitted to the agency.

Subp. 128. Word processor.

"Word processor" means a person who performs word processing.

History

Statutory Authority: MS s 46.023; 115C.07
History: 12 SR 2142; 13 SR 496; 14 SR 1928; 15 SR 2266; 16 SR 2684; 18 SR 1471; 20 SR 227; 28 SR 383

Minn. R. 2890.0020 Board Meetings; Time, Place, Notice

Subpart 1. Regular meetings.

A regular meeting of the board must be scheduled at least four times a year. A scheduled meeting may be canceled if there is insufficient business.

Subp. 2. Special meetings.

A special meeting may be called by the chair or by written request of three board members.

History

Statutory Authority: MS s 115C.07
History: 12 SR 2142; 28 SR 383

Minn. R. 2890.0030 Vice-Chair

A vice-chair must be elected by the board at the first regular board meeting of each calendar year. The vice-chair must preside at regular and special meetings in the absence of the chair and perform other duties assigned by the board. If the vice-chair position becomes vacant, a vice-chair must be elected at the next regularly scheduled board meeting.

History

Statutory Authority: MS s 115C.07
History: 12 SR 2142; 18 SR 1471; 28 SR 383

Minn. R. 2890.0040 Conduct of Meetings

Subpart 1. Quorum.

A quorum consists of three board members.

Subp. 2. Minutes.

Meetings must be tape recorded and minutes prepared by staff.

Subp. 3. Parliamentary procedure.

Except as specifically provided by statute or negotiation, Robert's Rules of Order must govern questions that may arise at a meeting of the board.

Subp. 4. Abstentions.

The abstention of a board member or members does not prevent the remaining members from conducting a legal vote.

History

Statutory Authority: MS s 115C.07
History: 12 SR 2142; 28 SR 383

Minn. R. 2890.0050 Conflict of Interest

When a member of the board has a direct or indirect financial or employment interest relating to a matter before the board, and when that interest is reasonably likely to affect the member's impartiality or judgment in the matter, the member must reveal the interest and must not participate in, or vote upon, the matter.

History

Statutory Authority: MS s 115C.07
History: 12 SR 2142; 28 SR 383

Minn. R. 2890.0060 Reimbursement of Costs

Subpart 1. Generally.

An applicant eligible for reimbursement may apply to the board for reimbursement of eligible costs.

Subp. 2. Conditions for reimbursement.

A reimbursement may not be made unless the board determines that the commissioner has determined that the corrective action has, or when completed will have, adequately addressed the release in terms of public health, welfare, and the environment.

Subp. 2a.

[Repealed, 18 SR 1471]

Subp. 2b.

[Repealed, 18 SR 1471]

Subp. 3. Multiple applicants.

If there is more than one applicant who incurs reimbursable costs for a single release or at a single corrective action site, each applicant must apply separately for reimbursement. Not more than $1,000,000 may be reimbursed for costs associated with a single release, regardless of the number of persons eligible for reimbursement.

Subp. 4.

[Repealed, 18 SR 1471]

Subp. 5. Cost forgiven.

A cost that has been forgiven by a consultant or contractor is not an incurred cost for the purposes of this chapter.

Subp. 6. Cost subject to condition.

A cost that has been made conditional by the consultant or contractor on a subsequent reimbursement determination is not an incurred cost for the purposes of this chapter.

History

Statutory Authority: MS s 46.023; 115C.07
History: 12 SR 2142; 13 SR 496; 14 SR 1928; 15 SR 2266; 18 SR 1471; 28 SR 383

Minn. R. 2890.0065 Reduction of Reimbursement Amount

Subpart 1. Amount of reduction.

Pursuant to Minnesota Statutes, section 115C.09, subdivision 3, paragraph (i), the board must reduce the amount of reimbursement to be made to an applicant as follows:

A. The board must reduce the amount of reimbursement for failure to comply with state and federal rules and regulations applicable to the tank as follows:

B. For failure to give the agency notice of the release as required by Minnesota Statutes, section 115.061, the board must consider the timeliness of the release reporting in determining the amount of the reduction. The board must reduce the amount of reimbursement by a minimum of $1,000. The minimum amount of the reduction must be $200, rather than $1,000, for a limited use applicant unaware of the reporting requirement.

C. For failure to cooperate fully with the agency in responding to the release, the board must reduce the amount of reimbursement by up to 50 percent.

Subp. 2.

[Repealed, 18 SR 1471]

Subp. 2a. Calculations of reductions.

Percentage or dollar reductions must be applied as specified in this subpart. If the board imposes more than one dollar reduction on an application, the dollar amounts must be added together and the total dollar amount of reduction must be applied to the application. If the board imposes more than one percentage reduction on an application, the percentage amounts must be added together and then applied to the reimbursement request to determine a dollar amount of the reduction. If the board imposes both percentage and dollar amount reductions on an application, the dollar amount reductions must be applied after the percentage reductions.

Subp. 3. Deviations.

The board may increase or decrease the amount of reduction by up to 100 percent of the original amount of reimbursement, or use either dollar amounts or percentages for a reduction, based on the following factors:

A. the reasonable determination by the agency that the noncompliance poses a threat to the environment;

B. whether the noncompliance was negligent, knowing, or willful;

C. the deterrent effect of the award reduction on other tank owners and operators;

D. the amount of reimbursement reduction recommended by the commissioner; and

E. the documentation of noncompliance provided by the commissioner.

Subp. 4. Supplemental applications.

A. When the board imposes a reduction in the form of a percentage, the percentage for that reduction must continue to be imposed on supplemental applications for the same release.

B. When the board imposes a reduction in the form of a dollar amount, the amount of the reduction must be a onetime penalty. That dollar amount reduction must not continue to be imposed on supplemental applications unless necessary to fully impose the reduction.

History

Statutory Authority: MS s 115C.07
History: 15 SR 2266; 18 SR 1471; 28 SR 383

Minn. R. 2890.0070 Eligible Costs

Subpart 1. Reimbursable corrective actions.

Costs associated with the following corrective actions may be eligible for reimbursement from the fund:

A. Emergency response and initial site hazard mitigation. Costs may include, but are not limited to, those necessary to abate acute risks to human health, safety, and the environment.

B. Temporary site hazard control measures. Costs may include, but are not limited to, temporary provision of drinking water and housing, initial abatement of vapors, and removal of free product.

C. Investigation and source identification including, but not limited to, collecting and analyzing soil samples, testing the groundwater, testing adjacent drinking water supplies, tank integrity testing, and engineering and geoscientific services.

D. Development of a corrective action plan in accordance with the commissioner's requirements.

E. Cleanup of releases including, but not limited to, removal, treatment, or disposal of surface and subsurface contamination and provision of a permanent alternative water supply. Cleanup must be performed in accordance with a corrective action plan approved by the commissioner.

Subp. 2.

[Repealed, 16 SR 2684]

Subp. 3. Documentation of eligible costs.

The applicant must get and keep records necessary to document incurred costs submitted in an application for reimbursement for seven years from the date the application is submitted to the board. Among the records required are all invoices, time records, equipment records, receipts, proposals, and bids.

History

Statutory Authority: MS s 46.023; 115C.07
History: 12 SR 2142; 14 SR 1928; 15 SR 2266; 16 SR 2684; 20 SR 227; 28 SR 383

Minn. R. 2890.0071 [Renumbered 2890.0200]

[Renumbered 2890.0200]

Minn. R. 2890.0072 [Repealed, 28 SR 383]

[Repealed, 28 SR 383]

Minn. R. 2890.0073 Repealed by subpart

Subpart 1.

[Repealed, 28 SR 383]

Subp. 1a.

[Renumbered 2890.0015, subp. 2]

Subp. 1b.

[Renumbered 2890.0015, subp. 4]

Subp. 2.

[Repealed, 28 SR 383]

Subp. 2a.

[Renumbered 2890.0015, subp. 6]

Subp. 2b.

[Renumbered 2890.0015, subp. 7]

Subp. 2c.

[Renumbered 2890.0015, subp. 9]

Subp. 2d.

[Renumbered 2890.0015, subp. 10]

Subp. 3.

[Repealed, 28 SR 383]

Subp. 3a.

[Renumbered 2890.0015, subp. 11]

Subp. 4.

[Renumbered 2890.0015, subp. 12]

Subp. 5.

[Repealed, 28 SR 383]

Subp. 6.

[Repealed, 28 SR 383]

Subp. 6a.

[Renumbered 2890.0015, subp. 16]

Subp. 6b.

[Renumbered 2890.0015, subp. 20]

Subp. 6c.

[Renumbered 2890.0015, subp. 22]

Subp. 6d.

[Renumbered 2890.0015, subp. 23]

Subp. 6e.

[Renumbered 2890.0015, subp. 24]

Subp. 6f.

[Renumbered 2890.0015, subp. 25]

Subp. 7.

[Renumbered 2890.0015, subp. 27]

Subp. 8.

[Repealed, 28 SR 383]

Subp. 9.

[Repealed, 28 SR 383]

Subp. 10.

[Repealed, 28 SR 383]

Subp. 11.

[Renumbered 2890.0015, subp. 32]

Subp. 11a.

[Renumbered 2890.0015, subp. 34]

Subp. 11b.

[Renumbered 2890.0015, subp. 40]

Subp. 12.

[Renumbered 2890.0015, subp. 41]

Subp. 13.

[Renumbered 2890.0015, subp. 42]

Subp. 14.

[Renumbered 2890.0015, subp. 46]

Subp. 15.

[Renumbered 2890.0015, subp. 44]

Subp. 15a.

[Renumbered 2890.0015, subp. 45]

Subp. 16.

[Renumbered 2890.0015, subp. 47]

Subp. 16a.

[Renumbered 2890.0015, subp. 48]

Subp. 16b.

[Renumbered 2890.0015, subp. 49]

Subp. 16c.

[Renumbered 2890.0015, subp. 50]

Subp. 17.

[Repealed, 28 SR 383]

Subp. 18.

[Repealed, 28 SR 383]

Subp. 18a.

[Renumbered 2890.0015, subp. 52]

Subp. 19.

[Renumbered 2890.0015, subp. 53]

Subp. 20.

[Repealed, 28 SR 383]

Subp. 21.

[Renumbered 2890.0015, subp. 55]

Subp. 22.

[Renumbered 2890.0015, subp. 56]

Subp. 23.

[Repealed, 28 SR 383]

Subp. 23a.

[Renumbered 2890.0015, subp. 57]

Subp. 23b.

[Renumbered 2890.0015, subp. 58]

Subp. 23c.

[Renumbered 2890.0015, subp. 59]

Subp. 23d.

[Renumbered 2890.0015, subp. 60]

Subp. 23e.

[Renumbered 2890.0015, subp. 62]

Subp. 23f.

[Renumbered 2890.0015, subp. 63]

Subp. 23g.

[Renumbered 2890.0015, subp. 64]

Subp. 23h.

[Renumbered 2890.0015, subp. 65]

Subp. 23i.

[Renumbered 2890.0015, subp. 66]

Subp. 23j.

[Renumbered 2890.0015, subp. 67]

Subp. 23k.

[Renumbered 2890.0015, subp. 68]

Subp. 23l.

[Renumbered 2890.0015, subp. 69]

Subp. 23m.

[Renumbered 2890.0015, subp. 70]

Subp. 23n.

[Renumbered 2890.0015, subp. 75]

Subp. 24.

[Renumbered 2890.0015, subp. 74]

Subp. 25.

[Repealed, 28 SR 383]

Subp. 26.

[Renumbered 2890.0015, subp. 78]

Subp. 26a.

[Renumbered 2890.0015, subp. 79]

Subp. 26b.

[Renumbered 2890.0015, subp. 81]

Subp. 26c.

[Renumbered 2890.0015, subp. 84]

Subp. 27.

[Repealed, 28 SR 383]

Subp. 27a.

[Renumbered 2890.0015, subp. 85]

Subp. 28.

[Renumbered 2890.0015, subp. 86]

Subp. 29.

[Repealed, 28 SR 383]

Subp. 30.

[Renumbered 2890.0015, subp. 88]

Subp. 30a.

[Renumbered 2890.0015, subp. 90]

Subp. 31.

[Repealed, 28 SR 383]

Subp. 32.

[Repealed, 28 SR 383]

Subp. 33.

[Repealed, 28 SR 383]

Subp. 33a.

[Renumbered 2890.0015, subp. 93]

Subp. 33b.

[Renumbered 2890.0015, subp. 94]

Subp. 34.

[Repealed, 28 SR 383]

Subp. 34a.

[Renumbered 2890.0015, subp. 95]

Subp. 35.

[Repealed, 28 SR 383]

Subp. 35a.

[Renumbered 2890.0015, subp. 96]

Subp. 36.

[Renumbered 2890.0015, subp. 98]

Subp. 36a.

[Renumbered 2890.0015, subp. 99]

Subp. 37.

[Repealed, 28 SR 383]

Subp. 38.

[Repealed, 28 SR 383]

Subp. 39.

[Repealed, 28 SR 383]

Subp. 40.

[Repealed, 28 SR 383]

Subp. 41.

[Repealed, 28 SR 383]

Subp. 42.

[Repealed, 28 SR 383]

Subp. 43.

[Renumbered 2890.0015, subp. 102]

Subp. 44.

[Repealed, 28 SR 383]

Subp. 45.

[Repealed, 28 SR 383]

Subp. 46.

[Repealed, 28 SR 383]

Subp. 47.

[Repealed, 28 SR 383]

Subp. 48.

[Repealed, 28 SR 383]

Subp. 49.

[Repealed, 28 SR 383]

Subp. 49a.

[Renumbered 2890.0015, subp. 105]

Subp. 49b.

[Renumbered 2890.0015, subp. 106]

Subp. 49c.

[Renumbered 2890.0015, subp. 108]

Subp. 49d.

[Renumbered 2890.0015, subp. 112]

Subp. 50.

[Renumbered 2890.0015, subp. 113]

Subp. 51.

[Repealed, 28 SR 383]

Subp. 52.

[Repealed, 28 SR 383]

Subp. 53.

[Repealed, 28 SR 383]

Subp. 53a.

[Renumbered 2890.0015, subp. 116]

Subp. 53b.

[Renumbered 2890.0015, subp. 118]

Subp. 53c.

[Renumbered 2890.0015, subp. 119]

Subp. 54.

[Renumbered 2890.0015, subp. 120]

Subp. 54a.

[Renumbered 2890.0015, subp. 122]

Subp. 54b.

[Renumbered 2890.0015, subp. 123]

Subp. 55.

[Repealed, 28 SR 383]

Subp. 56.

[Renumbered 2890.0015, subp. 124]

Subp. 57.

[Repealed, 28 SR 383]

Subp. 57a.

[Renumbered 2890.0015, subp. 125]

Subp. 58.

[Repealed, 28 SR 383]

Subp. 59.

[Repealed, 28 SR 383]

Subp. 60.

[Repealed, 28 SR 383]

Subp. 61.

[Repealed, 28 SR 383]

Subp. 62.

[Repealed, 28 SR 383]

Subp. 63.

[Repealed, 28 SR 383]

Subp. 64.

[Repealed, 28 SR 383]

Subp. 64a.

[Renumbered 2890.0015, subp. 126]

Subp. 67.

[Repealed, 28 SR 383]

Subp. 68.

[Repealed, 28 SR 383]

Subp. 69.

[Repealed, 28 SR 383]

Subp. 69a.

[Renumbered 2890.0015, subp. 127]

Subp. 70.

[Renumbered 2890.0015, subp. 128]

Minn. R. 2890.0074 Repealed by subpart

Subpart 1.

[Renumbered 2890.1000, subpart 1]

Subp. 2.

[Renumbered 2890.1000, subp. 6]

Minn. R. 2890.0075 MR 1993 [Repealed, 20 SR 227]

MR 1993 [Repealed, 20 SR 227]

Minn. R. 2890.0076 Repealed by subpart

Subpart 1.

[Renumbered 2890.1300, subpart 1]

Subp. 2.

[Renumbered 2890.1400]

Subp. 3.

[Repealed, 28 SR 383]

Subp. 4.

[Repealed, 28 SR 383]

Subp. 5.

[Renumbered 2890.1500]

Minn. R. 2890.0077 Repealed by subpart

Subpart 1.

[Renumbered 2890.2000, subpart 1]

Subp. 2.

[Renumbered 2890.2000, subp. 3]

Subp. 3.

[Renumbered 2890.2000, subp. 4]

Subp. 4.

[Renumbered 2890.2000, subp. 5]

Subp. 5.

[Repealed, 28 SR 383]

Subp. 6.

[Renumbered 2890.2000, subp. 7]

Minn. R. 2890.0078 Repealed by subpart

Subpart 1.

[Repealed, 28 SR 383]

Subp. 2.

[Renumbered 2890.2100, subpart 1]

Subp. 3.

[Renumbered 2890.2100, subp. 2]

Minn. R. 2890.0079 [Renumbered 2890.2200]

[Renumbered 2890.2200]

Minn. R. 2890.0080 MR 1993 [Repealed, 20 SR 227]

MR 1993 [Repealed, 20 SR 227]

Minn. R. 2890.0081 Repealed by subpart

Subpart 1.

[Repealed, 28 SR 383]

Subp. 1a.

[Renumbered 2890.0015, subp. 5]

Subp. 1b.

[Renumbered 2890.0015, subp. 13]

Subp. 1c.

[Renumbered 2890.0015, subp. 15]

Subp. 2.

[Renumbered 2890.0015, subp. 17]

Subp. 3.

[Renumbered 2890.0015, subp. 19]

Subp. 3a.

[Renumbered 2890.0015, subp. 20]

Subp. 3b.

[Renumbered 2890.0015, subp. 21]

Subp. 3c.

[Renumbered 2890.0015, subp. 30]

Subp. 4.

[Renumbered 2890.0015, subp. 31]

Subp. 4a.

[Renumbered 2890.0015, subp. 33]

Subp. 4b.

[Renumbered 2890.0015, subp. 35]

Subp. 4c.

[Renumbered 2890.0015, subp. 36]

Subp. 4d.

[Renumbered 2890.0015, subp. 37]

Subp. 4e.

[Renumbered 2890.0015, subp. 38]

Subp. 4f.

[Renumbered 2890.0015, subp. 39]

Subp. 5.

[Renumbered 2890.0015, subp. 43]

Subp. 5a.

[Renumbered 2890.0015, subp. 51]

Subp. 6.

[Renumbered 2890.0015, subp. 54]

Subp. 7.

[Repealed, 28 SR 383]

Subp. 8.

[Renumbered 2890.0015, subp. 61]

Subp. 8a.

[Renumbered 2890.0015, subp. 71]

Subp. 9.

[Renumbered 2890.0015, subp. 73]

Subp. 9a.

[Renumbered 2890.0015, subp. 76]

Subp. 10.

[Renumbered 2890.0015, subp. 77]

Subp. 10a.

[Renumbered 2890.0015, subp. 78]

Subp. 10b.

[Renumbered 2890.0015, subp. 80]

Subp. 10c.

[Renumbered 2890.0015, subp. 82]

Subp. 10d.

[Renumbered 2890.0015, subp. 83]

Subp. 11.

[Repealed, 28 SR 383]

Subp. 12.

[Renumbered 2890.0015, subp. 87]

Subp. 12a.

[Renumbered 2890.0015, subp. 92]

Subp. 12b.

[Renumbered 2890.0015, subp. 97]

Subp. 12c.

[Renumbered 2890.0015, subp. 100]

Subp. 12d.

[Renumbered 2890.0015, subp. 101]

Subp. 13.

[Renumbered 2890.0015, subp. 103]

Subp. 14.

[Renumbered 2890.0015, subp. 104]

Subp. 15.

[Renumbered 2890.0015, subp. 107]

Subp. 15a.

[Renumbered 2890.0015, subp. 109]

Subp. 15b.

[Renumbered 2890.0015, subp. 110]

Subp. 15c.

[Renumbered 2890.0015, subp. 111]

Subp. 16.

[Renumbered 2890.0015, subp. 114]

Subp. 16a.

[Renumbered 2890.0015, subp. 115]

Subp. 17.

[Renumbered 2890.0015, subp. 117]

Subp. 18.

[Renumbered 2890.0015, subp. 121]

Subp. 19.

[Renumbered 2890.0015, subp. 123]

Minn. R. 2890.0082 Repealed by subpart

Subpart 1.

[Renumbered 2890.2400]

Subp. 2.

[Renumbered 2890.2600]

Subp. 3.

[Renumbered 2890.2700]

Subp. 4.

[Renumbered 2890.3800]

Minn. R. 2890.0083 [Renumbered 2890.4000]

[Renumbered 2890.4000]

Minn. R. 2890.0084 Repealed by subpart

Subpart 1.

[Repealed, 28 SR 383]

Subp. 2.

[Renumbered 2890.4100, subp. 1]

Subp. 3.

[Renumbered 2890.4100, subp. 2]

Minn. R. 2890.0085 [Renumbered 2890.4200]

[Renumbered 2890.4200]

Minn. R. 2890.0086 [Renumbered 2890.4300]

[Renumbered 2890.4300]

Minn. R. 2890.0089 [Repealed, 28 SR 383]

[Repealed, 28 SR 383]

Minn. R. 2890.0090 [Renumbered 2890.4400]

[Renumbered 2890.4400]

Minn. R. 2890.0100 [Renumbered 2890.4500]

[Renumbered 2890.4500]

Minn. R. 2890.0110 [Renumbered 2890.4600]

[Renumbered 2890.4600]

Minn. R. 2890.0120 [Renumbered 2890.4700]

[Renumbered 2890.4700]

Minn. R. 2890.0130 [Renumbered 2890.4800]

[Renumbered 2890.4800]

Minn. R. 2890.0200 Ineligible Costs

Subpart 1. Generally.

Costs are not eligible for reimbursement when they are:

A. associated with actions that do not minimize, eliminate, or clean up a release to protect the public health and welfare or the environment;

B. not incurred by the applicant; or

C. not reasonable.

Subp. 2. Specific items.

Among ineligible costs are:

A. costs related to the repair or replacement of tanks, upgrading tanks, removal of tanks, or abandonment of tanks in place;

B. loss of income, including the applicant's purported loss of income from land used for the treatment or disposal of contaminated soil generated from the applicant's leak site;

C. attorney fees or other fees charged by an attorney or by another person for providing legal or quasi-legal advice, filing appeals, or providing legal testimony;

D. costs for permanent relocation of residents;

E. decreased property values for the applicant's property;

F. costs for the applicant's own time spent in planning, performing, or administering a corrective action, when the applicant is an individual;

G. costs for aesthetic or site improvements;

H. costs for work performed that is not in compliance with safety codes including, but not limited to, Occupational Safety and Health Administration requirements, well codes, and fire codes;

I. per diem charges for sites less than 60 miles from an office of the person providing consultant services or contractor services;

J. costs for repair or restoration of structures, surfaces, or land damaged by equipment used in the corrective action, unless the damage was unavoidable to implement corrective action;

K. costs for the demolition, disposal, removal, repair, or replacement of the following items, when the demolition, disposal, removal, repair, or replacement is necessary to remove, repair, upgrade, or replace a tank:

L. costs for the removal of water from an excavation basin, unless required by the agency as part of a corrective action;

M. site restoration costs for clean fill in excess of the agency-approved amount of petroleum-contaminated soil removed for disposal;

N. administrative costs incurred in obtaining reimbursement from the board, including, but not limited to, compiling materials for and preparing applications to the board for reimbursement, responding to inquiries from the board or its staff, or appearing before the board;

O. costs for correspondence that result from avoidable noncompliance with agency deadlines;

P. costs for priority turnaround of laboratory analysis, unless requested by the agency;

Q. late payment fees;

R. fees charged by property owners for access to their property, unless charged to preserve public safety;

S. interest costs other than those eligible for reimbursement under Minnesota Statutes, chapter 115C;

T. costs for a phase I or II environmental site assessment;

U. costs for work done solely to facilitate a property transfer;

V. costs for property acquisition;

W. administrative costs associated with acquiring business, preparing or responding to a request for proposal, or preparing invoices for services provided or performed;

X. costs for reports not submitted to the agency or not required by the agency;

Y. costs for work that the agency has determined was incompetently performed;

Z. consultant markup charges; or

AA. costs for work performed after the agency has granted full site closure, excluding:

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.1000 Written Proposal and Cost Summary Requirements for Consultant Services

Subpart 1. Written proposal.

Costs incurred for consultant services are prima facie unreasonable when the applicant has not obtained a written proposal for consultant services according to this part. The applicant must get proposals for consultant services only from persons who are registered with the board as consultants. A proposal for a step of services must be on the form prescribed by the board for that step of services.

Subp. 2. Excavation and soil disposal oversight before investigation.

An applicant is not required to get a written proposal for the following consultant services when they are performed as part of excavation and soil disposal oversight that occurs before the first limited site investigation or full remedial investigation of the leak site occurs:

A. AST soil sampling;

B. composted soil sampling;

C. contaminated stockpile soil sampling;

D. excavation report preparation;

E. excavation soil sampling;

F. field work notification and scheduling;

G. groundwater sampling (other than permanent monitoring well);

H. land-treated soil sampling;

I. sample shipping and transportation;

J. state duty officer emergency contact; and

K. utility clearance.

Subp. 3. Steps of services.

A written proposal for consultant services must be approved by the applicant for each necessary step of services. The applicant must approve in writing a written proposal for a step of services before incurring costs for that step of services.

Subp. 4. Emergency services.

An applicant is not required to get a written proposal for consultant services that are required by emergency conditions that pose such a threat to the public health and welfare or the environment that there is not sufficient time to get a proposal for the necessary services.

Subp. 5. Notarization required.

The applicant's signature indicating acceptance of a written proposal for consultant services must be dated with the date on which the applicant approves the proposal in writing and must be notarized. If the proposal is not in compliance with any of these conditions, it is not a valid competitive proposal for the purposes of this chapter.

Subp. 6. Cost summary.

Costs incurred for consultant services that are not summarized on a form prescribed by the board are prima facie unreasonable. The cost summary form prescribed by the board must be according to parts 2890.1000 to 2890.2200.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383; 30 SR 1003

Minn. R. 2890.1100 Reasonableness of Work Performed for Each Step of Services

Subpart 1. Generally.

Costs incurred for work not covered by this part are prima facie unreasonable.

Subp. 2. Limited site investigation or full remedial investigation.

Costs incurred for a limited site investigation or full remedial investigation other than costs for tasks or items required by the agency to investigate the release are prima facie unreasonable.

Subp. 3. Active remediation-initial field testing.

Costs incurred for active remediation-initial field testing other than costs for tasks or items required by the agency to determine whether the technology approved by the agency after reviewing the investigation report will be effective in reducing the risk associated with the release are prima facie unreasonable.

Subp. 4. Active remediation-site-specific system design.

Costs incurred for active remediation-site-specific system design other than costs for tasks or items required by the agency to evaluate the data generated during the active remediation-initial field testing step of services, if it was conducted, or to complete and submit the site-specific system design and determine the costs associated with the design, are prima facie unreasonable.

Subp. 5. Active remediation-system installation, start-up, and operation and maintenance.

Costs incurred for active remediation-system installation, start-up, and operation and maintenance other than costs for tasks or items required by the agency to install, start-up, operate, and maintain the approved corrective action system are prima facie unreasonable.

Subp. 6. Active remediation-system decommissioning.

Costs incurred for active remediation-system decommissioning other than costs for tasks or items required by the agency to dismantle the approved corrective action system after its operation is no longer necessary and to remove the dismantled system from the site and restore the site are prima facie unreasonable.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.1150 Maximum Costs for Consultant Services

Costs for consultant services are prima facie unreasonable when they do not meet the standards and requirements in parts 2890.1000 to 2890.2200.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.1300 Maximum Preliminary Labor Charges

Subpart 1. General.

When a task listed in this part is performed during the limited site investigation or full remedial investigation step of services or as part of excavation and soil disposal oversight before the investigation, the cost is prima facie unreasonable when it exceeds the amount specified for it in the proposal for consultant services or the maximum cost specified for it in this part when the task was started, whichever is less.

Subp. 2. Administrative tasks.

A. Agency status update has a maximum cost of $156 per field work event.

B. Applicant status update has a maximum cost of:

C. Background review has a maximum cost of $903 per leak site.

D. Drum disposal management has a maximum cost of $451 per disposal.

E. Field work notification and scheduling has a maximum cost of $306 per field work event for which notification and scheduling are necessary.

F. Health and safety plan has a maximum cost of $413 per leak site.

G. Nonspecific administration has a maximum cost of $322 per step of services.

H. Off-site access time has a maximum cost of $1,610 per off-site property to which access is required.

I. Sample shipping and transportation has a maximum cost of $145 per shipping event.

J. State duty officer emergency contact has a maximum cost of $155 per call.

Subp. 3. Consultant drilling and excavation activities.

A. Drilling oversight, field log preparation, and soil sampling have a maximum cost of:

B. Free product recovery through hand bailing or portable pump has a maximum cost of $171 per well per event.

C. Hydraulic conductivity field test has a maximum cost of $226 per monitoring well for which the performance of a hydraulic conductivity field test is necessary.

D. Monitoring well installation oversight and development has a maximum cost of $451 per well, plus $226 per well that requires more than two hours for monitoring well development.

E. Monitoring well sealing oversight has a maximum cost of $113 per well.

F. Surveying and surveying equipment has a maximum cost of:

G. Temporary well installation oversight has a maximum cost of:

H. Utility backfill investigation has a maximum cost of $113 per hand-auger boring.

I. Utility clearance has a maximum cost of:

Subp. 4. Field and receptor surveys.

A. Karst field survey has a maximum cost of $3,190.

B. Surface water receptor survey and risk evaluation has a maximum cost of $226 per leak site.

C. Vapor receptor survey and risk evaluation has a maximum cost of $1,128 per leak site, plus:

D. Water well receptor survey and risk evaluation has a maximum cost of $1,212 per leak site, plus $57 per citizen contact or property surveyed beyond 15.

Subp. 5. Sampling.

A. AST soil sampling has a maximum cost of $57 per sample that is listed on the chain-of-custody form received by the laboratory.

B. Composted soil sampling has a maximum cost of $113 per sampling event.

C. Contaminated stockpile soil sampling has a maximum cost of $57 per sample that is listed on the chain-of-custody form received by the laboratory.

D. Excavation soil sampling has a maximum cost of:

E. Groundwater sampling (permanent monitoring well) has a maximum cost of $198 per well per sampling event.

F. Groundwater sampling (other than permanent monitoring well) has a maximum cost of $57 per sampling point from which a sample is taken and delivered to a laboratory for analysis.

G. Land-treated soil sampling has a maximum cost of $113 per sampling event.

Subp. 6. Submissions to agency.

A. Annual monitoring report preparation has a maximum cost of $2,479 per report, plus:

B. Composting monitoring worksheet preparation has a maximum cost of $113 per worksheet.

C. Composting site application preparation has a maximum cost of $903 per composting site.

D. Excavation report preparation has a maximum cost of $789 per report.

E. Free product recovery report worksheet preparation has a maximum cost of $226 per site.

F. Investigation report preparation (full RI) has a maximum cost of:

G. Investigation report preparation (LSI only) has a maximum cost of $5,601, plus:

H. Land treatment application preparation has a maximum cost of $226 per application.

I. Land treatment monitoring worksheet preparation has a maximum cost of $171 per worksheet.

J. Land treatment site application preparation has a maximum cost of $903 per land treatment site.

K. Land treatment spreading notification form preparation has a maximum cost of $113 per notification.

L. Quarterly monitoring report preparation has a maximum cost of $620 per report, plus:

M. Thermal treatment application preparation has a maximum cost of $226 per application.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.1350 Alternative Technologies

In determining the reasonableness of a cost for a consultant services task or item that is:

A. not an emergency response task;

B. not listed in part 2890.1300, 2890.1500, or 2890.1600; and

C. performed during the limited site investigation or full remedial investigation step of services or as part of excavation and soil disposal oversight before the investigation, the board will consider the prevailing market cost for the task or item and the amount charged in the same geographical area during the same time period for a substantially similar task or item.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.1400 Maximum Hourly Rates

A. After the applicant has accepted a consultant's first written proposal for consultant services at the applicant's site, hourly rate charges for subsequent services performed at the leak site by that consultant that exceed the hourly rates listed in the consultant's first written proposal for consultant services at the applicant's site are prima facie unreasonable.

B. Notwithstanding item A, hourly rate charges that exceed by a maximum of five percent per year the hourly rates listed in the consultant's first written proposal for consultant services at the applicant's site are not prima facie unreasonable when at least one year has passed since the applicant approved that proposal in writing.

C. Notwithstanding items A and B, hourly rate charges for consultant services in excess of the following are prima facie unreasonable: senior level professional at $209 per hour, midlevel professional at $155 per hour, entry level professional at $113 per hour, field technician at $106 per hour, draftsperson at $89 per hour, and word processor at $64 per hour.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.1500 Maximum Travel and Per Diem Charges

The cost for an item listed in this subpart is prima facie unreasonable when it exceeds the amount specified for it in the proposal for consultant services or the specified maximum cost, whichever is less.

A. Travel time has a maximum cost of:

B. Vehicle mileage has a maximum cost of $1.06 per mile.

C. Per diem has a maximum cost of $218 per day.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.1600 Maximum Equipment and Field Supplies Charges

Equipment and field supplies have a maximum cost of the following:

A. for a disposable item, the cost to buy the item; or

B. for a reusable item, the cost to buy the item or to rent it for the amount of time necessary to transport and use it, whichever is less.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.1700 Maximum Labor Charges for Work Performed During Active Remediation Steps of Services

For a task performed during active remediation-initial field testing; active remediation-data evaluation/site-specific system design; active remediation-system installation, start-up, and operation and maintenance; or active remediation-system decommissioning, the cost is prima facie unreasonable when:

A. it exceeds the amount specified for it in the proposal approved by the board's staff under part 2890.2000, subpart 5; or

B. the proposal that includes it is not approved by the board's staff under part 2890.2000, subpart 5.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.1800 Emergency Response Costs

A cost for an emergency response task performed after January 31, 2003, that exceeds the amount specified for it in the Minnesota Department of Administration's "Hazardous Spill and Substance Release - Full Service Emergency Response" contract when the task was performed is prima facie unreasonable. The Minnesota Department of Administration's "Hazardous Spill and Substance Release - Full Service Emergency Response" contract (publ. Minnesota Department of Administration Materials Management Division, 2003) is incorporated by reference in this part and is updated biennially. Two copies of the document are located in the State Law Library.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.1850 Costs for Required Permits

A cost for a permit required for the performance of a consultant services task is prima facie unreasonable when it exceeds the actual cost of the permit.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.1900 Adjustment of Dollar Amounts

A. The dollar amounts in parts 2890.1300 to 2890.1600 must be adjusted periodically, as provided in this part, according to and to the extent of changes in the implicit price deflator for the gross domestic product, 1996 = 100, compiled by the United States Department of Commerce, and hereafter referred to as the index. The index for the fourth quarter of 2001 is the original reference base index for purposes of this part. When the dollar amounts in parts 2890.1300 to 2890.1600 are adjusted, the index for the fourth quarter of the preceding year becomes the current reference base index for purposes of this part. The implicit price deflator for the gross domestic product (publ. United States Department of Commerce Bureau of Economic Analysis) is incorporated by reference in this part and is revised quarterly. It is available on the Internet at www.bea.doc.gov/bea/dn/nipaweb/index.asp.

B. The dollar amounts in parts 2890.1300 to 2890.1600 must be adjusted on July 1 of each year after 2002 in which the percentage of change, calculated to the nearest whole percentage point, between the index for the fourth quarter of the preceding year and the current reference base index is ten percent or more; but the part of the percentage change in the index in excess of a multiple of ten percent must be disregarded and the dollar amounts must change only in multiples of ten percent and, when they exceed $5, must be rounded to the nearest whole dollar.

C. If the index is revised, the percentage of change under this part must be calculated on the basis of the revised index. If a revision of the index changes the reference base index, a revised reference base index must be determined by multiplying the reference base index then applicable by the rebasing factor furnished by the United States Department of Commerce. If the index is superseded, the index referred to in this part is the one represented by the United States Department of Commerce as reflecting most accurately changes in the purchasing power of the dollar for consumers and businesses.

D. The board must announce and publish:

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.2000 Competitive Bidding Requirements for Consultant Services Proposals

Subpart 1. Generally; dollar cost bidding.

The applicant must get written competitive proposals for consultant services according to this part. Items on the consultant proposal must be bid by dollar amount per item.

Subp. 2. Prevention of collusion; requests for proposals.

A. The applicant may not request from a consultant or receive from a consultant, directly or indirectly:

B. The applicant may not request or allow a consultant to determine which other consultant receives a request for a proposal.

C. A proposal obtained in a manner prohibited by this subpart is not a valid competitive proposal for the purposes of this chapter.

Subp. 3. Excavation and soil disposal oversight before investigation.

An applicant is not required to seek competing proposals from consultants for the following consultant services when the services are performed as part of excavation and soil disposal oversight that occur before the first limited site investigation or full remedial investigation of the leak site occurs:

A. AST soil sampling;

B. composted soil sampling;

C. contaminated stockpile soil sampling;

D. excavation report preparation;

E. excavation soil sampling;

F. field work notification and scheduling;

G. groundwater sampling (other than permanent monitoring well);

H. land-treated soil sampling;

I. sample shipping and transportation;

J. state duty officer emergency contact; and

K. utility clearance.

Subp. 4. Limited site investigation or full remedial investigation.

The applicant must get at least two written competitive proposals for services for a limited site investigation or full remedial investigation according to parts 2890.1000 to 2890.2200. The proposals must be on a form prescribed by the board according to parts 2890.1000 to 2890.2200. The proposals must comply with the requirements of parts 2890.1000 to 2890.2200. Costs for the following contractor services may be included in a proposal for the limited site investigation or full remedial investigation step of services: air sample analysis; drilling; groundwater sample analysis; and soil sample analysis.

A. Standard scope: unless the applicant knows, determines, or reasonably suspects that an investigation conducted according to the following assumptions and scope of work would not meet its intended purpose, limited site investigation costs must be bid based on the following standard assumptions and scope of work:

B. Nonstandard scope: when the applicant knows or reasonably suspects that an investigation conducted according to the standard assumptions in item A would not meet its intended purpose, the applicant must get a minimum of two written competitive proposals for a limited site investigation or full remedial investigation based on identical assumptions about the characteristics of the site. The proposals must specifically state the assumptions of the proposal concerning:

Subp. 5. Subsequent steps of services.

A. After the limited site investigation or full remedial investigation step of services, the applicant must get a written proposal for each necessary subsequent step of services in accordance with part 2890.1000 but is not required to seek competing proposals. Costs for the following contractor services may be included in the proposal: air sample analysis, drilling, groundwater sample analysis, soil sample analysis, and system installation. The proposal must be submitted to the board's staff for review before the commencement of the proposed work. The applicant must not approve the proposal until it has been reviewed by the board's staff. In conducting its review, the board's staff will consider the following items, if applicable to the particular proposal:

B. A written proposal for active remediation-system installation, start-up, and operation and maintenance must include the proposed costs for up to one year of system operation and maintenance. When the time period covered by the proposal expires, the applicant must obtain a new proposal for up to one year of ongoing system operation and maintenance, if necessary, until the agency determines that operation of the system can stop.

Subp. 6. Switching consultants.

When the applicant wishes to hire a different consulting firm, the applicant must follow the procedures in items A and B.

A. If the limited site investigation or full remedial investigation step of services has not been completed, the applicant must get competitive proposals for the limited site investigation or full remedial investigation step of services according to subpart 4.

B. If the limited site investigation or full remedial investigation step of services has been completed, the applicant must get a written proposal for the appropriate step of services from the new consultant according to subpart 5.

Subp. 7. Lowest cost proposal.

A. Except as provided in part 2890.2100, total costs for a step of services that exceed the total costs in the lowest competitive proposal for a step of services based on identical assumptions about the characteristics of the site are prima facie unreasonable, unless the applicant provides documented proof to demonstrate that the selected consultant's qualifications are superior to those of the consultant who gave the lowest competitive proposal and justify the selection of a higher cost proposal. Among the factors relevant to the qualifications of a consultant are education, experience, and certifications and registrations. A prior business relationship between the applicant and consultant is not relevant to the qualifications of a consultant. The board must consider the cost for a consultant service in the lowest overall competitive proposal as a reasonable amount to charge for a specific task or item if the cost for that task or item does not exceed the maximum cost stated in parts 2890.1300 to 2890.1850.

B. When the proposals obtained by the applicant for the limited site investigation or full remedial investigation step of services are not based on identical assumptions about the characteristics of the site, the proposals are not valid competitive proposals.

Subp. 8. Exemptions from competitive bidding requirements.

The applicant may be granted an exemption from the competitive bidding requirement of this part if the board determines that the applicant has documented that:

A. only one consultant was reasonably available to perform the necessary services and that the costs are not substantially in excess of costs typically charged for similar services by comparable consultants in the same geographical area;

B. the necessary services were required by an emergency that did not allow the applicant sufficient time to get proposals for necessary services; or

C. a standard contract entered into via an annual bidding or evaluation process results in lower corrective action costs than obtaining proposals on a per-job basis.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383; 30 SR 1003

Minn. R. 2890.2100 Deviations from Proposed Tasks or Maximum Costs for Consultant Services

Subpart 1. Deviations from proposed tasks or maximum costs after proposal approved by applicant.

A. Costs for tasks performed that are different than or in addition to the tasks specified in a proposal for a step of services approved by the applicant are not prima facie unreasonable when:

B. Consultant services charges for a task that exceed the cost specified for that task in a proposal approved by the applicant are not prima facie unreasonable when:

C. The applicant must approve change orders on a form prescribed by the board. The change order must contain the following:

Subp. 2. Additional or different tasks approved by the agency.

Notwithstanding subpart 1, costs for tasks performed that are different than or in addition to those specified in a proposal for a step of services approved by the applicant are not prima facie unreasonable when the agency states in writing before the performance of those tasks that the performance of those tasks is necessary and appropriate for the completion of the corrective action.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.2200 Actual Consultant Services Costs

Notwithstanding parts 2890.1000 to 2890.2100, the board must not reimburse applicants for a cost for a consultant services task that exceeds the cost for the actual hours spent by the consultant performing that task plus reasonable costs for any equipment, field supplies, and materials used in performing that task that are not separately invoiced.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.2300 Maximum Costs for Contractor Services

Costs for contractor services are prima facie unreasonable when they do not meet the standards and requirements in parts 2890.2400 to 2890.4300.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.2400 Maximum Costs in "means" Book

Costs that exceed the amount specified in the bid for contractor services or the amount stated in the most recent edition of "Means Heavy Construction Cost Data," as of the date the task was started, whichever is less, for mobilization/demobilization over 50 miles one way; surface replacement of surfacing other than concrete and asphalt; and contractor services not otherwise listed in this part, are prima facie unreasonable. "Means Heavy Construction Cost Data" (ed. Kornelis Smit et al., publ. R.S. Means Company, Inc., 2002), is incorporated by reference in this part, and is updated on an annual basis. Two copies of the document are located in the State Law Library.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.2500 Maximum Costs for System Installation

System installation costs are prima facie unreasonable:

A. when they exceed the amount specified for them in the consultant services proposal approved by the board's staff under part 2890.2000, subpart 5; or

B. when the consultant services proposal that includes them is not approved by the board's staff under part 2890.2000, subpart 5.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.2600 Maximum Costs for Mobilization/Demobilization (heavy Equipment), Saw-Cutting, Soil Disposal, Surface Removal, and Surface Replacement

For a task listed in this part, the cost is prima facie unreasonable when it exceeds the amount specified for it in the bid for contractor services or the maximum cost specified for it in this part when the task was started, whichever is less.

A. Mobilization/demobilization (heavy equipment), including crew and equipment.

B. Saw-cutting.

C. Soil disposal.

D. Surface removal.

E. Surface replacement.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.2700 Maximum Analytical Charges

For a task listed in parts 2890.2800 to 2890.3000, the cost is prima facie unreasonable when it exceeds the lowest of the following: the amount specified for it in the bid for contractor services; the amount specified for it in the consultant proposal for the associated step of services; and the maximum cost specified for it in parts 2890.2800 to 2890.3000 when the task was started.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.2800 Air Sample Analysis

Air sample analysis: BTEX-air has a maximum cost of $146 per analysis.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.2900 Groundwater Sample Analysis

Groundwater sample analysis:

A. BTEX/MTBE-water has a maximum cost of $64 per analysis;

B. dissolved oxygen-water has a maximum cost of $15 per analysis;

C. DRO-water, solvent extraction, direct injection, gas chromatography, has a maximum cost of $74 per analysis;

D. GDPH-water has a maximum cost of $242 per analysis;

E. GRO-water, purge and trap, gas chromatography, has a maximum cost of $64 per analysis;

F. lead-water has a maximum cost of $41 per analysis;

G. lead, hardness-water has a maximum cost of $27.50 per analysis;

H. manganese-water has a maximum cost of $41 per analysis;

I. methane-water has a maximum cost of $234 per analysis;

J. nitrate-water has a maximum cost of $32 per analysis;

K. pH-water has a maximum cost of $12 per analysis;

L. polyaromatic hydrocarbons (PAHs)-water has a maximum cost of:

M. polychlorinated biphenyls (PCBs)-water has a maximum cost of $177 per analysis;

N. RCRA metals (arsenic, barium, cadmium, chromium, lead, mercury, selenium, silver)-water has a maximum cost of $242 per analysis;

O. soluble ferrous iron-water has a maximum cost of $44 per analysis;

P. sulfate-water has a maximum cost of $21 per analysis;

Q. sulfide-water has a maximum cost of $64 per analysis;

R. total iron-water has a maximum cost of $41 per analysis;

S. VOCs-water has a maximum cost of:

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3000 Soil Sample Analysis

A. BTEX/MTBE-soil has a maximum cost of $64 per analysis;

B. DRO-soil has a maximum cost of $81 per analysis;

C. GDPH-soil has a maximum cost of $242 per analysis;

D. grain size analysis has a maximum cost of $242 per analysis when a hydrometer is used, and $121 per analysis when a hydrometer is not used;

E. GRO-soil has a maximum cost of $64 per analysis;

F. lead-soil has a maximum cost of $57 per analysis;

G. polyaromatic hydrocarbons (PAHs)-soil has a maximum cost of $363 per analysis;

H. polychlorinated biphenyls (PCBs)-soil has a maximum cost of $186 per analysis;

I. RCRA metals (arsenic, barium, cadmium, chromium, lead, mercury, selenium, silver)-soil has a maximum cost of $202 per analysis;

J. TCLP-soil, extraction only, has a maximum cost of $218 per analysis;

K. VOCs-soil has a maximum cost of:

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3100 Maximum Drilling Charges, Direct Push Technology

For a task listed in this part, the cost is prima facie unreasonable when it exceeds the lowest of the following: the amount specified for it in the bid for contractor services; the amount specified for it in the consultant proposal for the associated step of services; and the maximum cost specified for it in this part when the task was started.

The following costs include costs for decontamination, drilling permitting, monitoring well permitting, and completion of well-sealing notification forms:

A. direct push probing, $218 per hour if the probe unit has a retraction force of up to 15,000 pounds, or $322 per hour if the probe unit has a retraction force of greater than 15,000 pounds;

B. one-inch well completion, $218 per hour plus $21 per foot;

C. push probe sealing, $1.61 per foot;

D. mobilization/demobilization (drilling) (0 to 50 miles one way), $403;

E. mobilization/demobilization (drilling) (51 to 500 miles one way), $403 plus $10 per mile over 50;

F. mobilization/demobilization (drilling) (over 500 miles one way), $3,543; and

G. per diem, $218 per day per person.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3200 Maximum Drilling Charges, Other Technologies

For a task listed in parts 2890.3300 to 2890.3700, the cost is prima facie unreasonable when it exceeds the lowest of the following: the amount specified for it in the bid for contractor services; the amount specified for it in the consultant proposal for the associated step of services; and the maximum cost specified for it in parts 2890.3300 to 2890.3700 when the task was started.

The costs specified in parts 2890.3300 to 2890.3700 include costs for decontamination, drilling permitting, monitoring well permitting, and completion of well-sealing notification forms.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.3300 Soil Boring Advancement

Subpart 1. General.

Costs for soil boring advancement are as described in this part.

Subp. 2. Hollow-stem auger.

Hollow-stem auger drilling in sand, silt, or clay, with continuous sampling. Items A to D list the depth of the boring and the maximum cost per boring:

A. 0 - 25 feet, $1,128;

B. 26 - 50 feet, $1,128 plus $39 per foot beyond 25 feet;

C. 51 - 100 feet, $2,093 plus $68 per foot beyond 50 feet; and

D. over 100 feet, $5,476 plus $85 per foot beyond 100 feet.

Subp. 3. Mud or air rotary.

Mud or air rotary drilling in limestone or hard rock, with surface sampling only. Items A to D list the depth of the boring and the maximum cost per boring:

A. 0 - 25 feet, $2,054;

B. 26 - 50 feet, $2,054 plus $64 per foot beyond 25 feet;

C. 51 - 100 feet, $3,664 plus $75 per foot beyond 50 feet; and

D. over 100 feet, $7,369 plus $97 per foot beyond 100 feet.

Subp. 4. Air coring.

Air coring of limestone or hard rock with continuous sampling. Items A to D list the depth of the boring and the maximum cost per boring:

A. 0 - 25 feet, $2,254;

B. 26 - 50 feet, $2,254 plus $74 per foot beyond 25 feet;

C. 51 - 100 feet, $4,081 plus $76 per foot beyond 50 feet; and

D. over 100 feet, $7,852 plus $108 per foot beyond 100 feet.

Subp. 5. Rotosonic drilling.

Rotosonic drilling in sand, silt, or clay, with continuous sampling. Items A to D list the depth of the boring and the maximum cost per boring:

A. 0 - 25 feet, $2,336;

B. 26 - 50 feet, $2,336 plus $96 per foot beyond 25 feet;

C. 51 - 100 feet, $4,711 plus $103 per foot beyond 50 feet; and

D. over 100 feet, $9,865 plus $134 per foot beyond 100 feet.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3400 Aboveground Well Installation

Subpart 1. General.

Costs for well installation of an above-grade well are as described in this part.

Subp. 2. Hollow-stem auger.

Hollow-stem auger in sand, silt, or clay, with continuous sampling:

A. subitems (1) and (2) list the depth of the well and the maximum cost per two-inch PVC well, and subitems (3) and (4) list the depth of the well and the maximum cost per two-inch well (steel riser with PVC screen):

B. subitems (1) and (2) list the depth of the well and the maximum cost per four-inch PVC well, and subitems (3) and (4) list the depth of the well and the maximum cost per four-inch well (steel riser with PVC screen):

C. subitems (1) and (2) list the depth of the well and the maximum cost per six-inch PVC well, and subitems (3) and (4) list the depth of the well and the maximum cost per six-inch well (steel riser with PVC screen):

Subp. 3. Mud or air rotary.

Mud or air rotary in limestone or hard rock, with surface sampling only:

A. subitems (1) to (4) list the depth of the well and the maximum cost per two-inch well (steel riser with PVC screen):

B. subitems (1) to (4) list the depth of the well and the maximum cost per four-inch well (steel riser with PVC screen):

C. subitems (1) to (4) list the depth of the well and the maximum cost per six-inch well (steel riser with PVC screen):

Subp. 4. Air coring.

Air coring in limestone or hard rock, with continuous sampling:

A. subitems (1) to (4) list the depth of the well and the maximum cost per two-inch well (steel riser with PVC screen):

B. subitems (1) to (4) list the depth of the well and the maximum cost per four-inch well (steel riser with PVC screen):

C. subitems (1) to (4) list the depth of the well and the maximum cost per six-inch well (steel riser with PVC screen):

Subp. 5. Rotosonic drilling.

Rotosonic drilling in sand, silt, or clay, with continuous sampling:

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3500 At-Grade Well Installation

Subpart 1. General.

Costs for well installation of an at-grade well are as described in this part.

Subp. 2. Hollow-stem auger.

Hollow-stem auger in sand, silt, or clay, with continuous sampling:

Subp. 3. Mud or air rotary.

Mud or air rotary in limestone or hard rock, with surface sampling only:

A. subitems (1) to (4) list the depth of the well and the maximum cost per two-inch well (steel riser with PVC screen):

B. subitems (1) to (4) list the depth of the well and the maximum cost per four-inch well (steel riser with PVC screen):

C. subitems (1) to (4) list the depth of the well and the maximum cost per six-inch well (steel riser with PVC screen):

Subp. 4. Air coring.

Air coring in limestone or hard rock, with continuous sampling:

A. subitems (1) to (4) list the depth of the well and the maximum cost per two-inch well (steel riser with PVC screen):

B. subitems (1) to (4) list the depth of the well and the maximum cost per four-inch well (steel riser with PVC screen):

C. subitems (1) to (4) list the depth of the well and the maximum cost per six-inch well (steel riser with PVC screen):

Subp. 5. Rotosonic drilling.

Rotosonic drilling in sand, silt, or clay, with continuous sampling:

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3600 Soil Boring and Monitoring Well Sealing

The following tasks have a maximum cost as listed in items A to E when the wells to be sealed are located in sand, silt, or clay:

A. soil boring sealing, $6 per foot;

B. two-inch well sealing, $15 per foot;

C. four-inch well sealing, $25 per foot;

D. six-inch well sealing, $32 per foot; and

E. at-grade well pad removal, $402 per well pad.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3700 Drilling Mobilization/Demobilization and Drill Crew Per Diem for Technologies Other Than Direct Push

The following tasks have a maximum cost as listed in items A to D when one of these technologies is used: hollow-stem auger, mud or air rotary, air coring, or rotosonic, or when the tasks are necessary for well sealing:

A. mobilization/demobilization (drilling) (0 to 50 miles one way), $644;

B. mobilization/demobilization (drilling) (51 to 500 miles one way), $644 plus $11 per mile over 50 miles;

C. mobilization/demobilization (drilling) (over 500 miles one way), $4,993; and

D. per diem, $218 per day per person.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3800 Maximum Costs for Other Contractor Services

For the following tasks, the cost is prima facie unreasonable when it exceeds the amount specified for it in the bid for contractor services or the maximum cost specified when the task was started, whichever is less:

A. clean fill purchase, transportation, and installation has a maximum cost of $25.30 per cubic yard;

B. drum disposal has a maximum cost of $242 for a drum and its contents, plus $106 per hour for the associated loading and hauling;

C. excavation has a maximum cost of $12 per cubic yard;

D. hauling has a maximum cost of $161, plus 40 cents per cubic yard/mile;

E. loading has a maximum cost of $4.83 per cubic yard;

F. pumping of free product or petroleum-contaminated water using a vacuum truck has a maximum cost of:

G. soil test pit excavation has a maximum cost of $161 per test pit;

H. stockpiling has a maximum cost of:

I. surface disposal tipping fees has a maximum cost of the reasonable actual cost charged by the disposal facility;

J. treatment of free product or petroleum-contaminated water has a maximum cost of:

K. utility clearance has a maximum cost of:

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383; L 2010 c 241 s 4; MS s 115C.07 subd 3 paragraph (f)

Minn. R. 2890.3850 Costs for Required Permits

A cost for a permit required for the performance of a contractor services task is prima facie unreasonable when it exceeds the actual cost of the permit.

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.3900 Adjustment of Dollar Amounts

A. The dollar amounts in parts 2890.2600, 2890.2800 to 2890.3100, and 2890.3300 to 2890.3800 must be adjusted periodically, as provided in this part, according to and to the extent of changes in the implicit price deflator for the gross domestic product, 1996 = 100, compiled by the United States Department of Commerce, and referred to in this part as the index. The index for the fourth quarter of 2001 is the original reference base index for purposes of this part. When the dollar amounts in parts 2890.2600, 2890.2800 to 2890.3100, and 2890.3300 to 2890.3800 are adjusted, the index for the fourth quarter of the preceding year becomes the current reference base index for purposes of this part. The implicit price deflator for the gross domestic product (publ. United States Department of Commerce Bureau of Economic Analysis) is incorporated by reference in this part and is revised quarterly. It is available on the Internet at www.bea.doc.gov/bea/dn/nipaweb/index.asp.

B. The dollar amounts in parts 2890.2600, 2890.2800 to 2890.3100, and 2890.3300 to 2890.3800 must be adjusted on July 1 of each year after 2002 in which the percentage of change, calculated to the nearest whole percentage point, between the index for the fourth quarter of the preceding year and the current reference base index is ten percent or more; but the part of the percentage change in the index in excess of a multiple of ten percent must be disregarded and the dollar amounts must change only in multiples of ten percent and, when they exceed $5, must be rounded to the nearest whole dollar.

C. If the index is revised, the percentage of change under this part must be calculated on the basis of the revised index. If a revision of the index changes the reference base index, a revised reference base index must be determined by multiplying the reference base index then applicable by the rebasing factor furnished by the United States Department of Commerce. If the index is superseded, the index referred to in this part is the one represented by the United States Department of Commerce as most accurately reflecting changes in the purchasing power of the dollar for consumers and businesses.

D. The board must announce and publish:

History

Statutory Authority: MS s 115C.07
History: 28 SR 383

Minn. R. 2890.4000 Competitive Bidding Requirements for Contractor Services

Subpart 1. Generally; competitive bidding required.

The applicant must get, publicly or privately, a minimum of two written competitive bids for each contractor service before incurring costs for that contractor service and must approve the winning bid in writing before incurring costs for that contractor service. Bids for contractor services must be on a form prescribed by the board according to parts 2890.2400 to 2890.4300. The applicant must get bids for contractor services only from persons who are registered with the board as a contractor.

Subp. 2. Contractor services in consultant proposals.

When costs for air sample analysis, drilling, groundwater sample analysis, soil sample analysis, or system installation are included in a consultant proposal, bidding requirements for these services are not governed by subpart 1 and part 2890.4300, but are governed by parts 2890.1000 to 2890.2100 and 2890.4200.

Subp. 3. Notarization required.

The applicant's signature indicating acceptance of a written bid for contractor services must be dated with the date on which the applicant approves the bid in writing and must be notarized.

A bid obtained in a manner prohibited by this subpart is not a valid competitive bid for the purposes of this chapter.

Subp. 4. Dollar cost bidding and cost per cubic yard bidding required.

Items on the contractor bid must be bid by dollar amount per unit of service. For purposes of this part, one cubic yard equals 1.4 tons. The following contractor services must be itemized on a cost per cubic yard basis on the bid form for contractor services:

A. excavation;

B. clean fill purchase, transportation, and installation;

C. off-site stockpiling;

D. on-site stockpiling;

E. loading;

F. surface disposal tipping fees;

G. surface removal, when the surfacing removed is reinforced concrete; and

H. soil disposal.

Subp. 5. Lowest cost bid.

A. Except as provided in part 2890.4100, total costs for contractor services that exceed the total cost in the lowest competitive bid for contractor services are prima facie unreasonable, unless the applicant provides documented proof to demonstrate that the selected contractor's qualifications are superior to those of the contractor who gave the lowest competitive bid and justify the selection of a higher cost bid. Among the factors relevant to the qualifications of a contractor are education, experience, and certifications and registrations. A prior business relationship between the applicant and the contractor is not relevant to the qualifications of a contractor. The board must consider the cost for a contractor service in the lowest overall competitive bid as a reasonable amount to charge for a specific task or item if the cost for that task or item does not exceed the maximum cost stated in parts 2890.2400 to 2890.3850.

B. When the bids obtained by the applicant for contractor services are not based on identical assumptions about the scope of work to be performed, the bids are not valid competitive bids.

Subp. 6. Exemptions from competitive bidding requirements.

The applicant may be granted an exemption from the competitive bidding requirements of this part if the board determines that the applicant has documented:

A. that only one contractor was reasonably available to perform the necessary service and that the costs are not substantially in excess of costs typically charged for similar services by comparable contractors in the same geographical area;

B. that the necessary services were required by an emergency that did not allow the applicant sufficient time to get bids for the necessary services; or

C. that a standard contract that was entered into via an annual bidding or evaluation process results in lower corrective action costs than obtaining bids on a per-job basis.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.4100 Deviations from Maximum Costs for Contractor Services

Subpart 1. Bids over maximum costs owing to unavailability of contractors.

A cost for a contractor task that exceeds the maximum cost specified for that task in parts 2890.2400 to 2890.3850 is not prima facie unreasonable when:

A. the bid accepted by the applicant before the provision of contractor services specifically states that the amount exceeds the maximum cost limits and provides a detailed explanation of the reasons for costs in excess of the maximum cost limits; and

B. the applicant demonstrates by reasonable evidence that:

Subp. 2. Additional costs incurred after bid approved by applicant.

A. Costs for contractor services that exceed the amount specified in a bid approved by the applicant are not prima facie unreasonable when:

B. The applicant must approve change orders on a form prescribed by the board. The charge order form must contain the following:

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.4200 Actual Contractor Services Costs

Notwithstanding parts 2890.2400 to 2890.4100, the board must not reimburse applicants for a cost for a contractor services task that exceeds the cost for the actual hours spent by the contractor performing that task when contractor services are charged based on the contractor's time.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.4300 Written Invoice Requirements for Contractor Services

Costs incurred for contractor services that are not billed to the applicant on an invoice form prescribed by the board are prima facie unreasonable. The invoice form prescribed by the board must be consistent with the bid form for contractor services and according to parts 2890.2400 to 2890.4200.

History

Statutory Authority: MS s 115C.07
History: 20 SR 227; 28 SR 383

Minn. R. 2890.4400 Application Process

Subpart 1. Applications.

An applicant must complete, sign, and submit to the board a written application. The application must be made on a form prescribed by the board and must contain at least the following:

A. the legal name of the person making the application;

B. a description of the site of the release;

C. a copy of all competitive bids and competitive proposals obtained by the applicant as required by parts 2890.2000 and 2890.4000;

D. a copy of the proposals for each step of services as required by parts 2890.1000 to 2890.2000;

E. a copy of all change orders, if any, as required by parts 2890.2100 and 2890.4100;

F. a copy of all cost summaries and invoices as required by parts 2890.1000 and 2890.4300; and

G. a copy of a site map that identifies the locations of any soil borings advanced and any monitoring wells installed as part of corrective action at the leak site.

Subp. 2. Time of application; costs payable under an insurance policy.

The applicant must make reasonable efforts to collect payment from an insurer for any costs that are payable under an applicable insurance policy before applying for reimbursement for those costs.

Subp. 3. Supplemental applications.

An applicant who has already submitted to the board an application for reimbursement and who has incurred additional or continuing eligible costs may apply for reimbursement of those costs by filing a supplemental application. An applicant may file a supplemental application only if the applicant has not submitted the costs on a previous application and the costs are not related to a new release at the site.

Subp. 4. Signatures.

An application must be signed as follows:

A. for a corporation, by a principal executive officer of at least the level of vice-president, by the duly authorized representative or agent of the executive officer if the representative or agent is responsible for the overall operation of the facility that is the subject of the application, or by a person whom the board of directors designates by a corporate resolution;

B. for a partnership, sole proprietorship or individual, by a general partner, the proprietor, or individual respectively; or

C. for a municipality, state, federal, or other public agency, by either a principal executive officer or ranking elected official, or by the duly authorized representative or agent of the principal executive officer if the representative or agent is responsible for the overall operation of the facility that is the subject of the application.

Subp. 5. Certification.

A person who signs an application for reimbursement must make the following certification: "I certify under penalty of law that this document and all attachments were prepared under my direction or supervision in accordance with a system designed to assure that qualified personnel properly gather and evaluate the information submitted. Based on my inquiry of the person or persons who manage the system, or those persons directly responsible for gathering the information, the information submitted is, to the best of my knowledge and belief, true, accurate, and complete.

I certify that if I have submitted invoices for costs that I have incurred but that remain unpaid, I will pay those invoices within 30 days of receipt of reimbursement from the board. I understand that if I fail to do so, the board may demand return of all or a part of reimbursement paid to me and that if I fail to comply with the board's demand, that the board may recover the reimbursement, plus administrative and legal expenses in a civil action in district court. I understand that I may also be subject to a civil penalty."

Additionally, if the applicant is not an individual, the person authorized under subpart 4 must make the following certification: "I further certify that I am authorized to sign and submit this application on behalf of (entity)."

Subp. 6. Report of commissioner.

No later than 15 days after receiving notification from the board's staff that a complete application has been received, the commissioner must provide the board with a written report on:

A. whether the corrective action was appropriate in terms of protecting public health, welfare, and the environment; and

B. the applicant's compliance or noncompliance with the requirements listed in Minnesota Statutes, section 115C.09, subdivision 3, paragraph (i). The report must include documentation supporting the commissioner's findings, if necessary. In addition, the board may, as it considers necessary, ask for additional information from the commissioner or ask for participation of agency staff at a board meeting. Responses to requests for information must be delivered in a timely manner. The board may delegate these powers to its staff.

History

Statutory Authority: MS s 115C.07
History: 12 SR 2142; 14 SR 1928; 15 SR 2266; 16 SR 2684; 18 SR 1471; 20 SR 227; 28 SR 383; 30 SR 1003

Minn. R. 2890.4500 Review and Determination

Subpart 1. Review.

The board's staff must review applications. When the staff finds that the application is incomplete or otherwise deficient, the staff must promptly advise the applicant of the incompleteness or deficiency. Further processing of the application affected by the deficiency must be suspended until the applicant has supplied the necessary information or otherwise corrected the deficiency. A complete application and the corresponding report of the commissioner constitute the written record.

Subp. 2. Staff determination.

After a reimbursement application is complete and the commissioner has provided the information relevant to the application, the board's staff must determine the eligibility of the applicant and the eligibility of the costs specified in the application. The reimbursement determination that results from these determinations constitutes the reimbursement determination made by the commissioner of commerce under authority delegated by the board according to Minnesota Statutes, section 115C.09, subdivision 10.

Subp. 3. Board determination.

When the board considers an appeal of a reimbursement determination, the board must determine the amount of the reimbursement based on those costs it finds are eligible, actually incurred, and reasonable. The determination must be made on the basis of the written record. The board may also allow supplemental information explaining the application to be presented orally. The board may establish a fair and reasonable limit on time allowed for oral presentation.

The applicant must be notified in writing within ten business days of the board's decision. If the board rejects all or a part of the request for reimbursement, a statement of the reasons for rejection must be included with the notification.

History

Statutory Authority: MS s 115C.07
History: 12 SR 2142; 18 SR 1471; 28 SR 383

Minn. R. 2890.4600 Right to Appeal

Subpart 1. Appeal from determination of commissioner of commerce.

An applicant for reimbursement may appeal to the board a reimbursement determination made by the commissioner of commerce under authority delegated by the board according to Minnesota Statutes, section 115C.09, subdivision 10, by submitting a written notice setting forth the specific basis for the appeal. The applicant for reimbursement must file written notice with the board of an appeal of a reimbursement determination made by the commissioner of commerce within 60 days of the date that the commissioner of commerce sends written notice to the applicant of the reimbursement determination. The written notice must set forth the specific basis for the appeal.

Subp. 2. Appeal from decision of the board.

A. An applicant for reimbursement may appeal a reimbursement determination of the board as a contested case under Minnesota Statutes, chapter 14. An applicant for reimbursement must provide written notification to the board of a request for a contested case, setting forth the specific basis for the appeal, within 30 days of the date that the board makes a reimbursement determination. On appeal, the Office of Administrative Hearings must determine whether the evidence submitted to the board entitles the applicant to reimbursement and whether the board's determination is otherwise consistent with or contrary to law.

B. This subpart applies to reimbursement determinations made by the board as a result of an appeal to the board under subpart 1 and reimbursement determinations made by the board when the board has not delegated its authority to make reimbursement determinations.

C. An appeal of a reimbursement determination may only be made by an applicant as defined by Minnesota Statutes, chapter 115C.

History

Statutory Authority: MS s 115C.07
History: 12 SR 2142; 15 SR 2266; 18 SR 1471; 28 SR 383

Minn. R. 2890.4700 Funding of Mpca Actions

In accordance with Minnesota Statutes, section 115C.10, subdivision 1, paragraph (a), the agency may apply to the board for money to pay for actions taken under Minnesota Statutes, section 115C.03, if all other state and federal funds appropriated for such actions have been exhausted. The application must consist of a written statement of proposed corrective actions, an itemized estimate of costs for the proposed actions, and documentation that applicable state appropriations and federal awards have been exhausted by actions authorized under Minnesota Statutes, section 115C.03.

The board must pay the agency the cost of the proposed actions if the board determines that:

A. applicable state and federal funds are exhausted;

B. the agency's proposed actions are authorized under Minnesota Statutes, section 115C.03; and

C. an adequate amount exists in the fund to pay for the proposed actions.

History

Statutory Authority: MS s 115C.07
History: 12 SR 2142; 28 SR 383

Minn. R. 2890.4800 Action on Notice of Lien Filing

In accordance with Minnesota Statutes, section 514.673, the commissioner must send written notice of intent to file an environmental lien notice to each board member. If a regular meeting of the board is to be held within 30 days of receipt of the commissioner's notice, the approval of the lien filing must be considered at the next regular meeting. If no regular meeting is scheduled within the 30-day period, a special meeting to consider approval of the lien filing must be scheduled at the request of at least one board member. If the board takes no action on the matter within the 30-day period, the commissioner may file the lien notice.

History

Statutory Authority: MS s 115C.07
History: 13 SR 496; 28 SR 383

Chapter 2891 RESIDENTIAL BUILDING CONTRACTORS

Minn. R. 2891.0010 [Repealed, L 2007 c 140 art 13 s 3]

[Repealed, L 2007 c 140 art 13 s 3]

Minn. R. 2891.0020 Records

For the purposes of this license, a licensee shall maintain records showing all plans, contracts, documents, records, receipts, and disbursements by a licensee of all the licensee's transactions as a contractor for a period of not less than three years after completion of any construction project or operation to which the records refer, and shall have the records available for inspection by the commissioner during normal business hours. Records must be kept at the licensee's business address.

History

Statutory Authority: MS s 45.023; 326.87; 326.98; 326B.821
History: 18 SR 1471; L 2007 c 140 art 8 s 30; art 13 s 4

Minn. R. 2891.0030 [Repealed, L 2007 c 140 art 13 s 3]

[Repealed, L 2007 c 140 art 13 s 3]

Minn. R. 2891.0040 Fraudulent, Deceptive, or Dishonest Practices

Subpart 1. Description.

For the purposes of Minnesota Statutes, section 326B.84, subdivision 1, clause (2), the following acts and practices are considered fraudulent, deceptive, or dishonest practices:

A. misrepresentation of a material fact by the applicant in obtaining a license;

B. engaging in false, fraudulent, or misleading advertising;

C. making any material misrepresentation or omission in the procurement of a building contract;

D. any fraud or dishonesty in the execution of, or in the material alteration of, any contract, mortgage, promissory note, or other document incident to a building transaction;

E. conducting a building or remodeling contracting business in any name other than the one in which the contractor is licensed, unless the licensee has filed a certificate of assumed name with the secretary of state and provided a copy of the certificate to the commissioner;

F. contracting or offering to contract while the license is revoked, under suspension, or inactive for any reason;

G. knowingly contracting for, or performing, a service beyond the scope of the license; or

H. performing any construction without obtaining applicable local building permits and inspections.

Subp. 2. Nonlimitation of authority.

Nothing in this part limits the authority of the commissioner to take action against a licensee for fraudulent, deceptive, or dishonest practices not specifically described in this part.

History

Statutory Authority: MS s 45.023; 326.87; 326.98; 326B.821
History: 18 SR 1471; L 2007 c 140 art 8 s 30; art 13 s 4

Minn. R. 2891.0050 Incompetent, Untrustworthy, or Financially Irresponsible Practices

Subpart 1. Description.

For the purposes of Minnesota Statutes, section 326B.84, subdivision 1, clause (6), the following acts and practices are considered incompetent, untrustworthy, or financially irresponsible:

A. failure to maintain any required license bond, or Minnesota workers' compensation, liability, or unemployment benefits as required by applicable law;

B. accrual of $500 or more in delinquent taxes, penalties, or interest, owed to the state, pursuant to Minnesota Statutes, section 270C.72; or

C. diversion of funds paid to a licensee from the purposes for which the funds were intended.

Subp. 2. Nonlimitation of authority.

Nothing in this part limits the authority of the commissioner to take action against a licensee for incompetent, untrustworthy, or financially irresponsible practices not specifically described in this part.

History

Statutory Authority: MS s 45.023; 326.87; 326.98; 326B.821
History: 18 SR 1471; L 1997 c 66 s 80; L 1999 c 107 s 66; L 2000 c 343 s 4; L 2005 c 151 art 1 s 116; L 2007 c 140 art 8 s 30; art 13 s 4

Subpart 1. Scope.

For purposes of parts 5228.0100 to 5228.0130, the following terms have the meanings given them.

Subp. 2. Attorney.

"Attorney" means a person licensed to practice law in Minnesota who represents a party for a fee on matters over which the commissioner has jurisdiction.

Subp. 3. Commissioner.

"Commissioner" means the commissioner of the Department of Labor and Industry or the commissioner's designee.

Subp. 4. Compensation or workers' compensation benefits.

"Compensation" or "workers' compensation benefits" has the meaning given compensation in Minnesota Statutes, section 176.011, subdivision 8.

Subp. 5. Employee.

"Employee" has the meaning given it in Minnesota Statutes, section 176.011, subdivisions 9 and 9a.

Subp. 6. Employer.

"Employer" has the meaning given it in Minnesota Statutes, section 176.011, subdivision 10.

Subp. 7. Fraud unit.

"Fraud unit" means the workers' compensation investigative unit established at the Department of Labor and Industry under Minnesota Statutes, section 176.86.

Subp. 8. Health care provider.

"Health care provider" has the meaning given it in Minnesota Statutes, section 176.011, subdivision 24, and includes managed care organizations certified by the commissioner.

Subp. 9. Illegal activity.

"Illegal activity" for purposes of Minnesota Statutes, section 176.86, means acts, omissions, or material misrepresentations which are in violation of statutes or rules relating to workers' compensation, including Minnesota Statutes, section 176.178 or 609.52. The acts and omissions include, but are not limited to, the following:

A. making a knowingly false statement or misrepresentation to obtain or deny workers' compensation benefits;

B. presenting a knowingly false material written or oral statement in support of, or in opposition to, a claim for workers' compensation benefits, including a notice, proof of injury, bill and payment for services, test result, and medical or legal expense;

C. knowingly assisting persons or parties who engage in illegal activity; or

D. making a knowingly false material statement or material representation regarding entitlement to benefits with the intent to discourage an injured worker from pursuing a claim or with the intent to encourage an employee to pursue a claim.

Subp. 10. Insurer.

"Insurer" has the meaning given it in Minnesota Statutes, section 79.01, subdivision 2, and includes self-insurers.

Subp. 11. Material fact.

"Material fact," for purposes of Minnesota Statutes, section 176.178, means a fact which if untruly asserted or wrongfully suppressed, if it had been known to the person paying workers' compensation benefits, would have influenced the decision to pay. Material facts include, but are not limited to:

A. representations or omissions regarding employment status, income, or job offers by any party which result in an underpayment or overpayment or payment of benefits;

B. representations or omissions regarding symptoms or ability to perform physical activities, including but not limited to standing, sitting, driving, walking, climbing, crawling, or any other aspect relating to a work or non-work-related medical condition or functional capacity which affects the payment or nonpayment of workers' compensation benefits;

C. representations or omissions regarding past or present medical conditions, illnesses, diseases, or injuries, whether related to employment or not, which influence the decision to pay or not pay workers' compensation benefits and which result in underpayment, overpayment, payment, or nonpayment of workers' compensation benefits;

D. representations or omissions concerning medical treatment or supplies or rehabilitation services submitted in connection with claims by health care providers under Minnesota Statutes, section 176.135, or rehabilitation providers under Minnesota Statutes, section 176.102, for reimbursement which result in an overpayment or nonpayment;

E. representations or omissions regarding compensable hours and costs or disputed amounts on attorney fee petitions which result in overpayment of attorney fees;

F. representations or omissions to the commissioner concerning the payment or receipt of workers' compensation benefits by employers, employees, insurers, third-party administrators, or attorneys;

G. representations or omissions to the commissioner concerning the filing of requested or required reports under Minnesota Statutes, chapter 176, by employers, employees, insurers, third-party administrators, or attorneys;

H. representations or omissions by a person regarding a notice of injury under Minnesota Statutes, section 176.141; and

I. representations or omissions by a party or person regarding the occurrence, nature, or extent of a claimed work injury under Minnesota Statutes, chapter 176.

Subp. 12. Person.

"Person" means a party, individual, partnership, association, corporation, or other legal entity including, but not limited to, employers, employees, insurers, third-party administrators, attorneys, health care providers, vendors, and rehabilitation providers.

Subp. 13. Probable cause.

"Probable cause" means evidence which leads fraud unit investigators to reasonably believe that illegal activity has been or is being committed.

Subp. 14. Prosecuting authority.

"Prosecuting authority" means the attorney general, county attorney, or other appropriate law enforcement agency or agency designee having jurisdiction and authority to prosecute criminal, civil, or administrative violations of Minnesota Statutes, sections 176.178, 176.179, and 609.52.

Subp. 15. Rehabilitation provider.

"Rehabilitation provider" has the meaning given it in part 5220.0100, subpart 28.

Subp. 16. Request for action.

"Request for action" means the fraud unit standard for referral to the prosecuting authority based on probable cause that illegal activity has been or is being committed.

History

Statutory Authority: MS s 176.87
History: 17 SR 3380

Minn. R. 5228.0110 Identification of Suspected Fraud or Payments Not Received in Good Faith

The fraud unit shall be responsible for the investigation and identification of workers' compensation fraud under Minnesota Statutes, sections 176.178 and 609.52, subdivision 2, clauses (d) and (e), and other illegal practices related to workers' compensation. Evidence of overpayments not received in good faith as defined by Minnesota Statutes, section 176.179, may be referred to the appropriate paying party to commence proceedings to seek reimbursement.

History

Statutory Authority: MS s 176.87
History: 17 SR 3380

Minn. R. 5228.0120 Investigative Powers

Subpart 1. Authority.

Fraud unit investigators shall have full investigating powers under Minnesota Statutes, section 175.20 and chapter 176, for the purpose of undertaking investigations.

Subp. 2. Disclosure of information.

Fraud unit investigators may require the disclosure of personal or privileged information without written authorization under Minnesota Statutes, section 72A.502.

Subp. 3. Violations.

Potential violations of Minnesota Statutes, sections 176.178, 176.179, and 609.52, include, but are not limited to:

A. employee representations or omissions;

B. employer representations or omissions;

C. insurer representations or omissions;

D. health care provider representations or omissions;

E. rehabilitation provider representations or omissions;

F. attorney representations or omissions; and

G. other persons whose representations or omissions constitute material facts inducing the wrongful payment or receipt of workers' compensation benefits.

History

Statutory Authority: MS s 176.87
History: 17 SR 3380

Minn. R. 5228.0130 Determinations by Fraud Unit

Subpart 1. Investigation; scope.

The fraud unit shall determine:

A. whether violations of statutes or rules relating to workers' compensation, including Minnesota Statutes, section 176.178, 176.179, or 609.52, exist and can be documented by evidence sufficient to warrant a request for action or to support proceeding with civil, criminal, or administrative legal action;

B. whether there is probable cause for a request for action to the appropriate prosecuting authority; and

C. whether other referrals should be made for civil, criminal, or administrative action.

Subp. 2. Post-investigative action.

Following the completion of an investigation, the fraud unit shall take one or more of the following actions:

A. determine that no further action is necessary;

B. refer to the paying party entitled to seek an order for reimbursement of overpayment of benefits not received in good faith under Minnesota Statutes, section 176.179;

C. refer by request for action to the appropriate prosecuting authority for criminal review and legal action;

D. refer for civil legal action or review;

E. refer to the appropriate state licensing authorities having disciplinary jurisdiction over licensees or registrants including, but not limited to, the commissioners of commerce, health, and labor and industry;

F. refer to the Lawyers Professional Responsibility Board for review or investigation of attorneys;

G. refer to the Department of Commerce for review or action concerning insurers, third-party administrators, or other business entities;

H. refer to the commissioner for review of whether administrative sanctions for licensees, registrants, or rehabilitation and health care providers under Minnesota Statutes, chapter 176, are appropriate;

I. refer to the boards, commissions, or departments having regulatory oversight of rehabilitation or health care providers including, but not limited to, the health-related licensing boards enumerated and defined in Minnesota Statutes, section 214.01, subdivision 2, the medical services review board, and the rehabilitation review panel;

J. refer to the Department of Human Rights, the Equal Employment Opportunity Commission, or the United States Department of Justice, Civil Rights Division, Office of the Americans with Disabilities Act, for review and action concerning disability discrimination; or

K. refer to the commissioner for further investigation, review, or action regarding safety or labor standards violations.

History

Statutory Authority: MS s 176.87
History: 17 SR 3380

Chapter 7601 WEIGHTS AND MEASURES

Minn. R. 7601.0100 Definitions

Subpart 1. Scope.

The terms used in this chapter have the meanings given them in this part.

Subp. 2. Animal scale and livestock scale.

"Animal scale" and "livestock scale" mean platform scales designed and used to weigh livestock. An animal scale is used to weigh a single animal. A livestock scale is used to weigh several animals. Both have an enclosure and gates built on the scale platform.

Subp. 3. Commercial; commercial use; commercial purpose.

"Commercial," "commercial use," and "commercial purpose" refer to weights and measures used or located on premises where they could be used to:

A. determine the weight, measure, or count of commodities or things sold, offered, or exposed for sale, on the basis of weight, measure, or count; or

B. compute the basic charge or payment for services rendered on the basis of weight, measure, or count.

Subp. 4. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce.

Subp. 5. Department.

"Department" means the Department of Commerce.

Subp. 6. Director.

"Director" means the director of the Weights and Measures Division of the Department of Commerce.

Subp. 7. Division.

"Division" means the Weights and Measures Division of the Department of Commerce, and employees of the Weights and Measures Division having statutory authority delegated by the director.

Subp. 8. Hopper scale.

"Hopper scale" means a scale designed and used to weigh bulk commodities in a container, hopper, box, or tank mounted on the scale.

Subp. 9. Minimum division.

"Minimum division" means the value of the smallest subdivision or unit that a scale, meter, or other weighing or measuring device is designed to indicate or display.

Subp. 10. Minnesota seal.

"Minnesota seal" means a security seal placed on commercial weighing and measuring equipment by the division to prevent unauthorized adjustment of the equipment.

Subp. 11. National Institute of Standards and Technology (NIST).

"National Institute of Standards and Technology" and "NIST" mean the United States Department of Commerce, National Institute of Standards and Technology.

Subp. 12. National Type Evaluation Program (NTEP).

"National Type Evaluation Program" and "NTEP" mean a program of weighing and measuring device evaluation and certification operated by the National Conference on Weights and Measures (NCWM).

Subp. 13. Place in service.

"Place in service" means to authorize commercial use of newly installed or repaired weighing and measuring equipment pending an inspection by the division. This type of authorization may only be performed by a registered person.

Subp. 14. Railway track scale.

"Railway track scale" means a scale of appropriate capacity and design that is used to weigh a rail car.

Subp. 15. Registered person, registrant.

"Registered person" and "registrant" mean a person who has voluntarily registered with the division and who installs, services, repairs, or reconditions weighing and measuring equipment.

Subp. 16. Registration certificate.

"Registration certificate" means an annual certificate issued by the division to a person who voluntarily registers with the division and who installs, adjusts, services, repairs, or reconditions commercial weighing and measuring equipment.

Subp. 17. Scale division.

"Scale division" means the value, in units of mass, of the smallest subdivision or unit that can be indicated by a scale.

Subp. 18. Sensitivity requirement.

"Sensitivity requirement" means a performance requirement for a scale equipped with a nonautomatic indicator. It is a prescribed change in the rest position of the indicator, caused by a prescribed change in load on the scale. The requirement is stated in terms of scale divisions. For example, a load equivalent to two divisions must cause the prescribed change in the rest position of the indicator.

Subp. 19. Soil bearing.

"Soil bearing" refers to the load, in units of mass per area, that can be placed upon soil without causing deformation, settling, or soil failure.

Subp. 20. Vehicle scale.

"Vehicle scale" means a platform scale designed and used to weigh trucks, farm equipment, or other large industrial or highway vehicles in one draft or weighing operation.

Subp. 21. Weighing and measuring equipment.

"Weighing and measuring equipment" means all weights and measures of every kind, all instruments and devices for weighing and measuring, and any appliances and accessories associated with those instruments and devices, which are used, or located on premises where they could be used, to:

A. determine the weight, measure, or count of commodities or things sold, offered, or exposed for sale on the basis of weight, measure, or count; or

B. compute the basic service charge or payment for services rendered on the basis of weight, measure, or count.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; L 2001 1Sp4 art 6 s 1; 30 SR 346

Minn. R. 7601.0200 Variances

Subpart 1. Director to grant.

If a variance is requested in a manner prescribed by subpart 2 and if the approval criteria in subpart 3 are met, the director shall grant a variance to any part of this chapter, except a rule that specifies a tolerance or the value of a minimum division.

Subp. 2. Request.

An owner or operator of commercial weighing and measuring equipment may apply to the director for a variance to any part of this chapter. The request must be in writing and must:

A. explain why a variance is needed;

B. explain the proposed alternative to the rule; and

C. include drawings if the request is for a railroad track, vehicle, or livestock scale. The drawings must illustrate the design, construction, and location of the scale.

Subp. 3. Approval criteria.

The director shall grant a variance when appropriate to maintain good commercial practices or when enforcement of the rules would cause undue hardship. The director shall consider the following criteria in evaluating a request for a variance:

A. good commercial practices are maintained when the director is able to determine that under normal operating conditions the weighing and measuring equipment will remain accurate and reliable and the variance will not harm the owner or operator or their customers; and

B. undue hardship exists when the applicant demonstrates that:

Subp. 4. Refusal to grant.

The director shall refuse to grant a variance if the request does not meet the requirements of subpart 2, or if the director determines that the criteria for approval in subpart 3 have not been met.

Subp. 5. Response by division to request.

All requests will be answered by the division in writing, setting forth the reasons for granting or refusing to grant the requested variance.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.1000 Nist Handbook 44 Incorporated by Reference

Subpart 1. NIST Handbook 44 (2019).

Weighing and measuring equipment manufactured, offered, or exposed for sale or sold or given away for use in trade or commerce in Minnesota must conform to the requirements and specifications of NIST Handbook 44. NIST Handbook 44 (2019), "Specifications, Tolerances, and Other Technical Requirements for Weighing and Measuring Devices," as adopted by the 103rd National Conference on Weights and Measures and published by the United States Department of Commerce, National Institute of Standards and Technology, is incorporated by reference subject to the following exceptions:

A. If NIST Handbook 44 (2019) contains any provisions contrary to the laws of Minnesota, or contrary to any rule, except part 7601.1000, of the Minnesota Department of Commerce, Minnesota law and department rules govern and supersede contrary provisions of NIST Handbook 44.

B. The sentence of NIST Handbook 44 (2019), section 2.20 Scales, specification S.1.8.4., stating that "Unit price displays visible to the customer shall be in terms of single whole units of weight and not in common or decimal fractions of the unit" is deleted.

C. The specification S.1.2.2.2., section 2.20 Scales, does not apply.

D. The director shall not enforce specifications and user requirements in NIST Handbook 44 (2019) that would require owners of motor fuel dispensers to install equipment capable of allowing the customer to select the unit price. These requirements are contained in section 3.30 Liquid-Measuring Devices, specification S.1.6.4.1., specification S.1.6.5., specification S.1.6.5.4., and user requirement UR.3.3.

E. The specification S.2.4., and user requirements UR.2.2 and UR.2.6.1, in section 3.31 Vehicle-Tank Meters of NIST Handbook 44 (2019) do not apply.

Subp. 2. Handbook availability, location.

NIST Handbook 44, as adopted by reference in subpart 1, is available to the public at the Minnesota State Law Library, Minnesota Judicial Center, 25 Rev. Dr. Martin Luther King Jr. Blvd., Saint Paul, Minnesota, 55155, and is not subject to frequent change.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; L 2001 1Sp4 art 6 s 1; 30 SR 346; 46 SR 731

Minn. R. 7601.1010 Nist Handbook 44; Compliance Required

Subpart 1. Compliance.

A person who owns or operates weighing or measuring equipment for commercial purposes in Minnesota must use weighing and measuring equipment that meets all applicable requirements in NIST Handbook 44 as adopted under part 7601.1000. Only the director, or a department employee delegated by the director, shall determine the applicability of, and compliance with, the requirements of NIST Handbook 44.

Subp. 2. Certification of weighing or measuring equipment.

A person who sells, installs, owns, or operates commercial weighing or measuring equipment manufactured after January 1, 1996, must sell, install, or use only weighing or measuring equipment of a make, model, and type for which a "Certificate of Conformance" has been issued by the National Conference on Weights and Measures (NCWM).

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 30 SR 346

Minn. R. 7601.1020 Nist Handbook 133 Incorporated by Reference

Subpart 1. NIST Handbook 133.

NIST Handbook 133 (2019), "Checking the Net Contents of Packaged Goods," as adopted by the 103rd National Conference on Weights and Measures and published by the United States Department of Commerce, National Institute of Standards and Technology, is incorporated by reference. If NIST Handbook 133 contains any provision contrary to the laws of Minnesota, the rules of the Minnesota Department of Commerce, or the packaging or labeling rules of the Minnesota Department of Agriculture, Minnesota laws and rules govern and supersede contrary provisions of NIST Handbook 133.

Subp. 2. Handbook availability, location.

NIST Handbook 133, as adopted by reference in subpart 1, is available to the public at the Minnesota State Law Library, Minnesota Judicial Center, 25 Rev. Dr. Martin Luther King Jr. Blvd., Saint Paul, Minnesota, 55155, and is not subject to frequent change.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; L 2001 1Sp4 art 6 s 1; 30 SR 346; 46 SR 731

Minn. R. 7601.2000 Protection from Environment

Subpart 1. Outdoor scales.

The director shall require special protection from the environment for an outdoor scale if the division finds that the scale is adversely affected by weather or other environmental factors. Environmental protection includes:

A. belting or other suitable material to cover the clearance around a scale platform;

B. wind skirts, wind walls, or effective foundation heating for aboveground scales;

C. an improved drainage system or sump pump for pit-type scales;

D. special shielding or weatherproofing of a scale indicator;

E. a complete building to protect a scale from the weather; and

F. modifications, shielding, and other special measures to protect an electronic scale from radio frequency interference and electromagnetic interference.

Subp. 2. Fertilizer scales.

A hopper, tank, or mixer scale used for weighing dry or liquid bulk fertilizer must be completely enclosed in a building.

Subp. 3. Grain hopper scales.

A hopper, tank, or mixer scale used for weighing grain or grain by-products must be completely enclosed in a building.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 30 SR 346

Minn. R. 7601.2010 Sensitivity Requirement

For a scale not equipped with a balance indicator, but with a minimum graduated interval less than ten pounds, the sensitivity requirement is three times the value of the minimum graduated interval or 15 pounds, whichever is less.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.3000 Railway Track Scales; Plans

Subpart 1. Manufacturer's plans.

Before installing a railway track scale, the scale manufacturer shall furnish complete design, assembly, and construction plans to the purchaser.

Subp. 2. Installer's plans.

The scale purchaser shall furnish installation plans to the director. The plans must show the scale location, the foundation drawings, and all commodity-handling equipment that could affect the operation of the scale. The plans must also include the information on soil bearing required by part 7601.3020, subpart 1.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 30 SR 346

Minn. R. 7601.3010 Railway Track Scale Permits

The director shall issue a permit to install a railway track scale if plans for installing the scale are submitted according to part 7601.3000, and if the planned scale installation meets the requirements of parts 7601.3020 and 7601.3030. The director shall review and approve the plans before issuing a permit. A railway track scale must not be installed without a permit.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 30 SR 346

Minn. R. 7601.3015 Application

The requirements in parts 7601.3020 and 7601.3030 apply only to railway track scales that will be used to weigh individual, stationary rail cars, and do not apply to railway track scales that will be used to weigh rail cars in motion.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 30 SR 346

Minn. R. 7601.3020 Railway Track Scale Foundation

Subpart 1. Soil bearing.

The owner, operator, or installer of a railway track scale shall complete a soil bearing test, performed by a registered engineer, before constructing the scale foundation. The soil bearing test must determine the load-bearing capacity of the soil that will lie under the completed scale foundation. The engineer's report, including a statement that the soil bearing is suitable for the scale to be installed, must be submitted to the director before constructing the scale foundation. The director shall review and approve the report before issuing a permit for a scale installation.

Subp. 2. Materials and construction.

Foundation walls, floors, footings, and weighing element support piers must be constructed of reinforced, poured concrete that conforms to the scale manufacturer's design requirements and drawings. The concrete must be uniform and continuous. Reinforcing material in the piers and walls must be securely tied to the reinforcing material in the adjacent walls and floor.

Subp. 3. Dimensions.

The foundation must be deep enough to provide a finished pit seven feet deep, measured from the top of the finished foundation wall to the top surface of the finished pit floor.

Subp. 4. Length.

For a railway track scale installed after January 1, 1995, the length or combination of lengths of the weighing element or elements must be sufficient to allow single draft weighing.

Subp. 5. Aboveground scale; concrete pier foundation.

An aboveground railway track scale foundation must meet the requirements in items A to H.

A. The weighing elements must be supported on reinforced concrete foundation piers.

B. Concrete surface slabs must be poured independently between the main foundation piers.

C. The end piers of the foundation must have end walls to prevent fill material from interfering with scale operation.

D. Where foundation construction techniques allow, the surfaces of the concrete slabs between the foundation piers must be sloped down from the longitudinal centerline to each side to prevent dirt accumulation under the platform.

E. The clearance between the bottom of the weighbridge or other main structural member and the slab surface must be at least six inches.

F. The scale platform, structural member, foundation surfaces, and surrounding area must be designed to allow access for cleaning under the scale platform and around all weighing elements.

G. For outdoor scales, the tops of the piers and the surfaces of the slab or slabs between the piers must be above the existing grade level so that water will drain away from the scale.

H. The piers must extend below the local frost line.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 30 SR 346

Minn. R. 7601.3030 Approach Rails and Piers

Subpart 1. Approach rails.

A railway track scale must be installed with approach rails at the end of the scale. The approach rails must be at least 50 feet long and must be parallel to the scale rails in both the horizontal and vertical planes.

Subp. 2. Approach panels.

A reinforced concrete approach panel must be installed at each end of the scale. The panels must:

A. be level;

B. extend 25 feet from the scale foundation end walls; and

C. be designed to maintain a permanent and level approach to the scale.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 30 SR 346

Minn. R. 7601.4000 Vehicle and Livestock Scales; Plans

Subpart 1. Scales installed by buyer.

For a vehicle or livestock scale needing assembly or foundation construction by the scale buyer, the manufacturer shall provide to the buyer complete plans, drawings, and instructions for assembling and installing the scale and for building the foundation. The director may require a scale buyer to submit plans to the division before construction.

Subp. 2. Aboveground vehicle and livestock scales.

The owner, operator, or installer of an aboveground vehicle or livestock scale shall submit complete plans and drawings of the scale and foundation to the director before installing the scale. The drawings must show the finished grade level of the area that will surround the scale site. The director shall review and approve the drawings, and must respond in writing to the scale owner or operator.

Subp. 3. Floating concrete slab foundation.

The owner, operator, or installer of an aboveground vehicle or livestock scale to be installed on a floating concrete slab foundation shall comply with subpart 2 and shall complete a soil bearing test, performed by a registered engineer, before constructing the scale foundation. The soil bearing test must determine the load-bearing capacity of the soil that will lie under the completed scale foundation. The engineer's report, including a statement that the soil bearing is suitable for the scale to be installed, must be submitted to the director before constructing the scale foundation. The director shall review and approve the report and respond in writing to the owner or operator.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.4010 Vehicle and Livestock Scale Foundations

Subpart 1. Generally.

Vehicle and livestock scales installed after December 31, 1985, must be installed on a reinforced, poured, concrete foundation. Scales may be installed in a concrete pit, according to subpart 2, or above grade level according to subpart 3 or 4. The foundation must be designed to support the weight of the scale and the anticipated maximum load on the scale without significant settling or cracking. Weighing element stands or bases must be securely bolted to the foundation. Space between a stand or base and the foundation must be filled with nonshrinking grout.

Subp. 2. Pit-type scale foundation.

A pit-type vehicle or livestock scale foundation must meet the following requirements:

A. the walls, floors, footings, and weighing element support piers must be reinforced, poured concrete;

B. the clearance between the bottom of the weighbridge or other main structural member and the surface of the pit floor must be at least 48 inches;

C. for outdoor scales, the pit floor must have an effective drain system so that the pit floor remains reasonably dry and clean;

D. for outdoor scales, the tops of the pit walls must be above the existing grade level so that water will drain away from the scale; and

E. for outdoor scales, the foundation must extend below the local frost line.

Subp. 3. Aboveground scale; concrete pier foundation.

An aboveground vehicle or livestock scale foundation must meet the requirements in items A to H.

A. The weighing elements must be supported on reinforced concrete foundation piers.

B. Concrete surface slabs must be poured independently between the main foundation piers.

C. The end piers of the foundation must have end walls to prevent fill material from interfering with scale operation.

D. Where foundation construction techniques allow, the surfaces of the concrete slabs between the foundation piers must be sloped in a manner that will prevent water, dirt, and debris accumulation under the platform.

E. The clearance between the bottom of the weighbridge or other main structural member and the slab surface must be at least six inches for vehicle scales and at least 12 inches for livestock scales.

F. The scale platform, structural members, foundation surfaces, and surrounding area must be designed to allow access for cleaning under the scale platform and around all weighing elements.

G. For outdoor scales, the tops of the piers and the surfaces of the slab or slabs between the piers must be above the existing grade level so that water will drain away from the scale.

H. The piers must extend below the local frost line.

Subp. 4. Aboveground scale; floating concrete slab foundation.

An aboveground vehicle or livestock scale may be installed on a floating concrete slab foundation. The foundation must meet the following requirements:

A. The scale weighing element or elements must be supported on a monolithic, reinforced concrete slab. The entire slab must be at least 12 inches thick, and must conform to the scale manufacturer's installation and reinforcing requirements.

B. The foundation must be constructed on soil that has a uniform natural or engineered soil bearing of at least 1,500 pounds per square foot. See part 7601.4000, subpart 3.

C. A base of uniform, compacted, permeable aggregate, at least 24 inches deep, must be installed. The concrete slab foundation must be poured on top of this base.

D. The top surface of the foundation slab must be installed above the surrounding grade level so that water will flow away from the foundation and away from the permeable aggregate base that supports the foundation.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 30 SR 346; 46 SR 731

Minn. R. 7601.4020 Vehicle and Livestock Scale Approaches

Subpart 1. Before January 1, 1986.

A vehicle scale installed before January 1, 1986, must have at least 12 feet or a distance equal to one-third of the deck length, whichever is greater, of straight hard surface driveway on either end of the scale not over one-third inch per foot out of level of the platform. The first six feet on both ends must be constructed of reinforced concrete.

Subp. 2. After December 31, 1985.

For a vehicle or livestock scale installed after December 31, 1985, each end of the scale must have a straight, paved approach that meets the following requirements:

A. Approaches must be at least as wide as the scale platform and at least ten feet long or one-third of the scale platform length, whichever is greater.

B. The first ten feet of each approach must be a reinforced concrete approach panel, one end of which rests on an extension of the scale foundation end wall. The remaining length of each approach must be paved with concrete or asphalt.

C. Approaches must be sloped down from the scale platform. Maximum slope allowed is one-third inch per foot. Approaches must not be sloped up from the scale platform.

D. For aboveground scales, the foundation end walls must have wing wall extensions, or the sides of the approach slopes must be paved, so that fill material cannot fall under the scale platform.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.4030 Animal and Livestock Scales; Printer Required

An animal or livestock scale must be equipped with a printing device. The printer must be maintained in good working condition so that a clear printed record of each transaction is available to both buyer and seller.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.4040 Animal and Livestock Scales; Tolerances

Subpart 1. Tolerance.

For animal and livestock scales, the basic maintenance tolerance is one pound per 1000 pounds of test load (0.1 percent). The acceptance tolerance is one-half of the basic maintenance tolerance.

Subp. 2. Shift test tolerance.

A shift test must be conducted on animal and livestock scales. The maximum test load is one-fourth of the scale capacity. A scale may be approved if the sum of the indicated errors for two load-bearing readings in the same section is within tolerance.

"Section" means a part of a vehicle, livestock, or railroad track scale that consists of a pair of main load-bearing supports arranged so that the vertical plane passing through both supports is usually transverse to the direction that the load is applied to the scale platform.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.5000 Hopper Scales

Subpart 1. Capacity.

For a hopper scale, the load capacity of the hopper must be at least 80 percent of the capacity of the weight indicator. Load capacity must be determined by using the highest density material that will normally be weighed in the hopper.

Subp. 2. Dust-control systems.

Weighing accuracy of a hopper scale system must not be affected by air flow or by a fluctuation or differential in air pressure caused by a dust-control system. If scale accuracy can be affected by adjusting dampers or flow-control devices in the dust-control system, the dampers and devices must be sealed with a Minnesota seal to prevent adjustment.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.6000 Temperature Correction for Measuring Lp Gas

Subpart 1. Requirements.

When liquefied petroleum gas is sold or delivered to a consumer as a liquid and by liquid measurement, the volume of liquid sold and delivered must be corrected to a temperature of 60 degrees Fahrenheit through the use of the volume correction table, shown in part 7601.9900, and calculated under subpart 2, or through use of an approved meter with a sealed automatic compensating mechanism. A sale ticket must show the delivered gallons, the temperature at the time of delivery, and the corrected gallonage, or must state that temperature correction was automatically made.

This part does not apply to unit sales or deliveries made directly to mobile fuel tanks with a capacity of less than 100 gallons.

Subp. 2. Calculation.

To convert from measured volume at another temperature to net volume at 60 degrees Fahrenheit: measure the volume and temperature, determine the specific gravity at 60 degrees Fahrenheit, refer to the column in the volume conversion table, set forth in part 7601.9900, corresponding to the specific gravity, and read the volume conversion factor opposite the observed temperature. Multiply the observed volume by this factor to obtain the volume at 60 degrees Fahrenheit.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.7000 Placing in Service Program; Purpose and Policy

Subpart 1. Registered persons.

The director shall offer a voluntary registration program for persons who install, adjust, repair, service, or test commercial weighing and measuring equipment. The purposes of the program are to:

A. allow privately employed individuals to place newly installed or repaired weighing and measuring equipment into commercial service, pending an inspection by the division; and

B. minimize the compliance burden on owners and operators of weighing and measuring equipment by simplifying installation and repair and by reducing the amount of time the equipment is out of service.

Subp. 2. Nonregistered persons.

A nonregistered person is not prohibited from repairing commercial weighing and measuring equipment. However, Minnesota Statutes, chapter 239, prohibits commercial use of equipment that has been repaired by a nonregistered person until the equipment has been approved by the division.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.7010 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7601.7020 Certificate of Registration

The director shall issue a registration certificate to an applicant who meets the requirements of this part. The certificate authorizes the applicant to exercise the privileges in part 7601.7050 and to fulfill the responsibilities in part 7601.7060 for a category of commercial weighing and measuring equipment specified by the director. The certificate remains in effect for 12 months following the date of issue, or until it is returned by the registrant or revoked by the director. The director shall issue a certificate to an applicant who has:

A. completed the application or met the reciprocity requirements in part 7601.7040;

B. met the standards and test equipment requirements in part 7601.7080;

C. attended a placing in service training seminar offered by the division to all new applicants, except that a registrant who renews a registration certificate is not required to attend annually; and

D. completed and passed a written examination to demonstrate the applicant's understanding of the appropriate requirements in department rules, including NIST Handbook 44.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 46 SR 731

Minn. R. 7601.7030 Registration Fee

The division shall charge an annual fee for each registration certificate issued. It must include the costs of administering the placing in service program and calibrating the registrant's standards and test equipment.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 46 SR 731

Minn. R. 7601.7040 Reciprocity

The director may issue a registration certificate to a person who is registered in a placing in service program in another state. The person is required to:

A. complete the application;

B. provide evidence of registration in another state;

C. provide evidence that the standards and test equipment requirements in part 7601.7080 have been met;

D. attend a placing in service training seminar offered by the division to all new applicants, except that a registrant who renews a registration certificate is not required to attend annually; and

E. complete and pass a written examination to demonstrate the applicant's understanding of the appropriate requirements in department rules, including NIST Handbook 44.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; 46 SR 731

Minn. R. 7601.7050 Privileges of Voluntary Registrant

A registrant may:

A. remove an official rejection tag placed on weighing and measuring equipment by the division;

B. remove a Minnesota security seal installed on weighing and measuring equipment by the division;

C. repair and place in service weighing and measuring equipment rejected by the division; and

D. place in service new or newly installed weighing and measuring equipment.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.7060 Responsibilities of Voluntary Registrant

Subpart 1. Performance.

A registrant shall:

A. ensure that all equipment placed in service complies with this chapter, including NIST Handbook 44;

B. personally perform or observe all installation, service, adjustment, repair, and testing of weighing and measuring equipment placed in service; and

C. use only standards and test equipment that meet the requirements of part 7601.7080.

Subp. 2. Placing in service required.

A registrant shall place in service all commercial weighing and measuring equipment when the registrant, or a person under the direct supervision and observation of the registrant, has:

A. installed the equipment;

B. repaired the equipment, following official rejection by the division; or

C. removed a Minnesota security seal from the equipment.

Subp. 3. Reporting.

When work authorized in part 7601.7050 is performed, a registrant shall:

A. fill out a placed in service report form;

B. carefully follow the instructions on the form and provide all of the required information in legible handwriting or typewriting;

C. submit the original form to the division within five days after completing the work;

D. submit a copy of the form to the owner or operator of the equipment when the work is completed; and

E. retain a copy of the form.

Subp. 4. Security seals.

When a registrant removes a security seal from the adjusting or calibrating mechanism of a weighing or measuring device, the registrant shall:

A. install a new security seal in a manner that will ensure that the device cannot be adjusted without removing or defacing the security seal; and

B. imprint the seal with the registrant's placing in service registration number.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.7070 Placed in Service Report

Upon request from a registrant, the director shall provide a supply of placed in service report forms to the registrant.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.7080 Standards and Testing Equipment

Subpart 1. Required equipment list.

The director shall publish a list of the standards and test equipment required for registration in each category of weighing and measuring equipment service.

Subp. 2. Annual calibration required.

A registrant shall annually submit the required standards and test equipment for inspection, testing, and calibration by the division's metrology laboratory, by the federal government, or by a NIST-certified metrology laboratory operated by an agency of another state government.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.7090 Problem Resolution; Certificate of Registration

Subpart 1. Director may inspect.

The director may, at any time, inspect the work performed by a registrant. The director shall use these inspections to determine whether the registrant is performing repairs in compliance with Minnesota Statutes and department rules.

Subp. 2. Problem resolution system, list of violations.

Each of the following acts are considered a violation of department rules. When the director finds that a registrant has committed one or more of the following violations, the director shall impose an appropriate remedial action described in subparts 3 to 7. The conditions for determining the appropriate remedial action are included with each remedial action in subparts 3 to 7. Violations include:

A. failing to submit a placing in service report for commercial weighing or measuring equipment that the registrant has installed, adjusted, or repaired;

B. submitting a placing in service report that is incomplete or that contains inaccurate information;

C. placing in service any weighing or measuring equipment without performing a test utilizing the test equipment required by the director under part 7601.7080;

D. placing in service any weighing or measuring equipment that does not meet the specifications, tolerances, and other requirements of department rules, including the requirements of NIST Handbook 44;

E. placing in service any weighing and measuring equipment after a registrant's certificate of registration has expired;

F. removing a rejection tag after a registrant's certificate of registration has expired;

G. failing to install a security seal as required by part 7601.7060, subpart 4;

H. incorrectly installing a security seal so that it is possible to adjust the accuracy or change the calibration of weighing or measuring equipment without removing, damaging, or defacing the security seal;

I. continuing to install, adjust, or repair commercial weighing or measuring equipment after the director has suspended the registration certificate for up to 30 days;

J. continuing to install, adjust, or repair commercial weighing or measuring equipment after the director has suspended the registration certificate for up to 90 days; or

K. failing to pay a registration fee or equipment calibration fee more than 90 days after the division has issued an invoice for payment to the registered person.

Subp. 3.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 4. Warning letter.

The director shall issue a warning letter to a registrant if the director finds that the registrant has committed any of the violations listed in subpart 2, items A to H. The warning letter must state that the registrant has violated department rules, must specify the violations, and must state that the director may suspend or revoke the registration certificate for continued violations.

Subp. 5. 30-day suspension.

The director shall suspend a registration certificate for up to 30 days if the director finds that a registrant has committed, on three or more occasions within a 90-day period, any of the violations in subpart 2, items A to H. The director shall inform the registrant in writing of the suspension, the reasons for the suspension, and the privileges that must not be exercised while the certificate is under suspension.

Subp. 6. 90-day suspension.

The director shall suspend a registration certificate for up to 90 days if the director finds that a registrant has committed, on six or more occasions within a 90-day period, any of the violations in subpart 2, items A to H, or if the director finds that a registrant has committed the violation in subpart 2, item I, at any time. The director shall inform the registrant in writing of the suspension, the reasons for the suspension, and the privileges that must not be exercised while the certificate is under suspension.

Subp. 7. Revocation.

The director shall revoke a registration certificate if the director finds that a registrant has committed either of the violations in subpart 2, items J and K. The director shall inform the registrant in writing of the revocation, the reasons for the revocation, and the activities that are prohibited by the revocation.

Subp. 8. Reinstatement.

The director shall reinstate a registration certificate that has been revoked if the director receives an application for reinstatement from a person whose registration certificate has been revoked, if the applicant has paid all registration fees and calibration fees required, and the applicant has met all of the requirements of parts 7601.7020 to 7601.7040. The director must not reinstate a registration certificate that has been under revocation for less than 120 days.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928; L 2014 c 222 art 1 s 58; 46 SR 731

Minn. R. 7601.7100 Lists of Registered Persons

The director shall publish, and supply upon request from any interested person, lists of registered service persons.

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Minn. R. 7601.8000 [Repealed, 46 SR 731]

[Repealed, 46 SR 731]

Minn. R. 7601.9000 Registration Program for Lpg Meter Inspectors; Purpose

The purpose of the registration program is to allow privately employed individuals to inspect and test liquefied petroleum gas (LPG) meters.

History

Statutory Authority: MS s 239.06
History: 30 SR 346

Minn. R. 7601.9010 Registration

Subpart 1. Permit holders.

The director shall accept applications for the registration program from registered permit holders as defined in part 7601.7000.

Subp. 2. Application.

An applicant shall provide the following information on an application form provided by the division:

A. the registrant's name, company, and permit number;

B. a list of calibration equipment to be used during inspections; and

C. a copy of the current calibration certificate for all equipment.

Subp. 3. Testing.

If an applicant passes a written test and a field test, then the director shall authorize the applicant to inspect and test liquefied petroleum gas meters. The director shall develop and offer these tests to qualified applicants.

Subp. 4. Permit required.

An applicant must continue to maintain the status of registered placing in service permit holder.

History

Statutory Authority: MS s 239.06
History: 30 SR 346

Minn. R. 7601.9020 Inspection Seals

The director shall provide each registered inspector with inspection stickers that, when applied, will indicate that a meter was tested and met specifications and tolerances at the time of the test. A new sticker must be applied annually.

History

Statutory Authority: MS s 239.06
History: 30 SR 346

Minn. R. 7601.9030 Inspection Reports

A registered inspector shall complete a required test report for each meter tested and submit the original report to the director within five days. The director shall issue a warning to the owner for each meter that fails to pass an inspection performed by a registered inspector. The director shall place an "out-of-service" tag on the meter, unless the meter is condemned or removed from use.

When a meter is repaired between annual inspections, a registered inspector shall comply with part 7601.7060.

History

Statutory Authority: MS s 239.06
History: 30 SR 346

Minn. R. 7601.9040 Director May Inspect

The director may inspect the work performed by a registered inspector at any time. The director shall use these inspections to determine whether the registrant is performing repairs in compliance with this chapter and Minnesota Statutes, chapter 239.

The director shall maintain a list of all liquefied petroleum gas meters in service in the state, and shall provide this list to any registered inspector that requests it.

The director shall keep current records of inspections for enforcement purposes.

History

Statutory Authority: MS s 239.06
History: 30 SR 346

Minn. R. 7601.9050 Violations and Sanctions

Subpart 1. Violations.

In addition to part 7601.7090, subpart 2, each of the following acts and failures to act is considered a violation of this chapter:

A. failure to submit a test report after completing an inspection;

B. misuse or misapplication of inspection stickers;

C. failure to renew placing in service registration; and

D. use of test equipment that is past its calibration due date.

Subp. 2. Warning.

The director shall issue a warning letter to a registered inspector if the director finds that the registrant has committed any of the violations listed in part 7601.7090, subpart 2, or any of the violations listed in this part.

Subp. 3. Suspension.

The director shall suspend for 30 days a registrant's permit if the director finds that the registrant has committed:

A. more than one of the violations listed in part 7601.7090, subpart 2;

B. more than one of the violations listed in this part; or

C. any violation listed in this part or part 7601.7090 at any time after the director has issued a warning letter to the registrant.

Subp. 4. Revocation.

The director shall revoke a registered inspector's permit if the director finds that the registrant has committed any violation after the director has suspended the registrant's permit.

History

Statutory Authority: MS s 239.06
History: 30 SR 346

Minn. R. 7601.9900 Volume Correction Factor Table

History

Statutory Authority: MS s 239.06
History: 20 SR 1928

Chapter 7602 WEIGHTS AND MEASURES; INSPECTION FEES

Minn. R. 7602.0100 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Chapter 7606 ENERGY CONSERVATION FINANCING

Minn. R. 7606.0010 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7606.0020 Repealed by subpart

Subpart 1.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 2.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 3.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 4.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 5.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 5a.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 6.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 7.

[Repealed, 31 SR 1605]

Subp. 8.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 9.

[Repealed, L 2014 c 222 art 1 s 58]

Subp. 10.

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7606.0030 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7606.0040 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7606.0050 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7606.0060 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7606.0070 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7606.0080 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Chapter 7607 ENERGY CONSERVATION INVESTMENT LOANS

Subpart 1. Scope.

For purposes of parts 7610.0100 to 7610.0700, the following definitions shall apply.

Subp. 2. Adjusted net demand.

"Adjusted net demand" means system demand, minus firm purchases, plus firm sales.

Subp. 3.

[Repealed, 16 SR 1400]

Subp. 4. Annual adjusted net demand.

"Annual adjusted net demand" means annual system demand, minus firm purchases, plus firm sales.

Subp. 5. Annual electrical consumption.

"Annual electrical consumption" means sales of megawatt hours of electricity to ultimate consumers over a 12-month period beginning January 1 and ending December 31 of the reporting year.

Subp. 6. Annual system demand.

"Annual system demand" means the highest system demand occurring during the 12-month period ending with the current month. For seasonal reporting the current month is the last month of the season being reported.

Subp. 7. Capacity factor.

"Capacity factor" is the ratio, expressed as a percent, of gross generation in megawatt hours to the product of period hours times maximum dependable capacity. There are 8,760 period hours per year, except during a leap year when there are 8,784. Maximum dependable capacity is the dependable plant capacity in winter or summer, whichever is smaller.

Subp. 8. Commissioner.

"Commissioner" means the commissioner of the Minnesota Department of Commerce.

Subp. 8a. Department.

"Department" means the Minnesota Department of Commerce.

Subp. 9.

[Repealed, 16 SR 1400]

Subp. 10. Firm purchases; firm sales.

"Firm purchases" and "firm sales" mean the amount of power to be purchased or sold and intended to have assured availability.

Subp. 10a. Interruptible load.

"Interruptible load" means the amount of electric power made available under agreements permitting curtailment or cessation of delivery by the supplier.

Subp. 11. Forced outage rate.

"Forced outage rate" is a measure of the total time the plant was unavailable due to forced outage. It is the ratio, expressed as a percent of forced outage hours to the sum of the total number of hours the plant was actually operated with breakers closed to the station bus plus the forced outage hours.

Subp. 12.

[Repealed, 16 SR 1400]

Subp. 13.

[Repealed, 16 SR 1400]

Subp. 14. Last calendar year.

"Last calendar year" means the calendar year immediately preceding the year in which reports are required to be filed.

Subp. 15. Load factor.

"Load factor" means the ratio of the average load in megawatts supplied during a designated period to the maximum load in megawatts that was supplied during that designated period.

Subp. 16. Minnesota service area.

"Minnesota service area" means that portion of a utility's system lying within Minnesota.

Subp. 17.

[Repealed, L 2001 c 23 s 1]

Subp. 18. Municipal power agency.

"Municipal power agency" means a municipal corporation incorporated under Minnesota Statutes, sections 453.51 to 453.62. For purposes of these parts, a municipal power agency may elect to supply in aggregate the data required by these parts for its members. Data submitted in this fashion must be in the format specified by the commissioner.

Subp. 19. Net generating capacity.

"Net generating capacity" means the total amount of kilowatts, less station use, that all the generating facilities of a system could supply at the time of its maximum system demand, including the capacity of the generating units that are temporarily out of service for maintenance or repair.

Subp. 20. Net generation.

"Net generation" means gross generation minus megawatt hours used for station use.

Subp. 21. Net reserve capacity obligation.

"Net reserve capacity obligation" means the annual adjusted net demand multiplied by the percent reserve capacity requirement.

Subp. 22. Operating availability.

"Operating availability" is a measure of the total time during which a plant is available. It is the ratio, expressed as a percent, of available hours to period hours. Available hours are the sum of service hours and reserve shutdown hours.

Subp. 23. Participation power.

"Participation power" means power and energy that are sold from a specific generating unit or units for a period of six or more months on a continuously available basis (except when such unit or units are temporarily out of service for maintenance, during which time the delivery of energy from other generating units is at the seller's option).

Subp. 24. Participation purchases; participation sales.

"Participation purchases" and "participation sales" mean purchases and sales under a participation power agreement or a seasonal participation power agreement.

Subp. 25. Peak demand.

"Peak demand" means the highest megawatt demand during a designated period recorded on a one hour integrated reading basis.

Subp. 26. Residential electrical space heating customer.

"Residential electrical space heating customer" means a residential customer who uses electricity as a source of space heating throughout the entire premises from permanently installed electric heating equipment.

Subp. 26a. Schedule L purchase.

"Schedule L purchase" means the amount of interruptible load replacement energy that is planned to be purchased for the purpose of serving interruptible load.

Subp. 27. Seasonal adjusted net demand.

"Seasonal adjusted net demand" means seasonal system demand, minus firm purchases, plus firm sales.

Subp. 28. Seasonal participation power.

"Seasonal participation power" means participation power sold and bought on a seasonal (summer or winter) basis.

Subp. 29. Seasonal system demand.

"Seasonal system demand" means the maximum system demand on the applicant's system that occurs or is expected to occur in any normal summer season or winter season.

Subp. 30. Summer season.

"Summer season" means the period from May 1 through October 31.

Subp. 31. System.

"System" means that combination of generating, transmission, and distribution facilities that makes up the operating physical plant of the utility, whether owned or nonowned, for the delivery of electrical energy to ultimate consumers, and includes the geographic area where the utility's ultimate consumers are located.

Subp. 32. System demand.

"System demand" means the number of megawatts that is equal to the megawatt hours required in any clock hour, attributable to energy required by the system during such hour for supply of firm energy to ultimate consumers, including system losses, and also including any transmission losses occurring on other systems and supplied by the system for transmission of firm energy, but excluding generating station uses and excluding transmission losses charged to another system.

Subp. 33. Ultimate consumers.

"Ultimate consumers" means consumers purchasing electricity for their use and not for resale.

Subp. 34. Utility.

"Utility" means any entity engaged in the generation, transmission, or distribution of electrical energy, including but not limited to a private investor-owned utility or a public or municipally owned utility.

Subp. 35. Winter season.

"Winter season" means the period from November 1 through April 30.

History

Statutory Authority: MS s 216C.10
History: L 1983 c 289 s 115 subd 1; L 1987 c 186 s 15; c 312 art 1 s 9,10; 16 SR 1400; L 2001 c 23 s 1; L 2001 1Sp4 art 6 s 1

Minn. R. 7610.0110 Purpose and Scope

Subpart 1. Purpose.

The purpose of parts 7610.0100 to 7610.0700 is to implement the forecasting, statistical, and informational reporting requirements of Minnesota Statutes, sections 216C.17 and 216C.18. Parts 7610.0100 to 7610.0700 are adopted pursuant to the powers of the commissioner conferred by Minnesota Statutes, section 216C.10, clause (1), and are designed to identify emerging energy trends based on supply and demand, conservation and public health and safety factors, and to determine the level of statewide and service area energy needs.

Subp. 2. Scope.

Each electric utility serving Minnesota shall submit the information required by parts 7610.0100 to 7610.0700 to the commissioner in the form specified by the commissioner.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9,10 subd 1; 16 SR 1400

Minn. R. 7610.0120 Registration

Any electric utility that commences operations in the state shall file a registration statement with the commissioner within 30 days after commencing operation. Each registration statement shall be on forms issued by the commissioner and shall contain the name and headquarter address of the utility, the type of utility, the names and addresses of all officers of the utility, and the name, address, and telephone number of a person who may be contacted for information about the utility. Registration statements must be updated as a part of each utility's annual report.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9

Minn. R. 7610.0130 Annual Reporting Dates

Subpart 1. Annual.

Utilities listed under part 7610.0300 shall file the information required by parts 7610.0100 to 7610.0700 by July 1 of each year. All other electric utilities shall file only the information required by parts 7610.0120, 7610.0170, and 7610.0600, items B to J, by July 1 of each year. For good cause shown, the department may grant a utility an extension from the deadline following receipt of a written request from the utility.

Subp. 2.

[Repealed, 16 SR 1400]

Subp. 3.

[Repealed, 16 SR 1400]

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0140 Corrections

Substantial corrections of any report or statement must be filed with the department within ten days following the date of the event prompting the change in reported information or the date upon which the person filing became aware of the inaccuracy. The change or correction shall identify the form and the paragraph of the information to be changed or corrected.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0150 Federal or State Data Substitution

Upon written request by any utility, the commissioner may allow it to substitute data provided to the federal government or another state agency in lieu of data required by these parts if the data required by both agencies is substantially the same.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9

Minn. R. 7610.0160 [Repealed, L 2001 c 23 s 1]

[Repealed, L 2001 c 23 s 1]

Minn. R. 7610.0170 Federal Reports Filed by Utilities

A utility shall identify to the commissioner the energy-related forms and reports that it regularly files with the Federal Energy Regulatory Commission, the United States Department of Energy, the Rural Electrification Administration, and other federal agencies. Upon request of the commissioner, a utility shall make copies of the forms or reports available to the commissioner.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0200 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Minn. R. 7610.0210 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Minn. R. 7610.0220 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Minn. R. 7610.0300 Who Must File

The following utilities must file the information required by parts 7610.0100 to 7610.0700: Northern States Power Company, Minnesota Power, Otter Tail Power Company, Interstate Power Company, Minnkota Power Cooperative, Cooperative Power Association, United Power Association and Dairyland Power Cooperative, and the Southern Minnesota Municipal Power Agency. Data that is compiled within the same calendar year for either an extended forecast or a certificate of need application may be substituted interchangeably to satisfy those portions of both sets of rules that have identical data requirements. For these cases, references to the material substituted and a copy of the appropriate reference material must be submitted to meet the reporting requirements.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0310 Content of Historical Data and Forecast

The following data must be provided:

A. the annual electrical consumption by ultimate consumers and number of customers at year's end within the utility's system and for its Minnesota service area only for the past calendar year, the present calendar year, and the subsequent 14 years, for each of the following categories:

B. the annual system consumption and generation data for the last year, the present year, and the 14 subsequent years for each of the following categories:

C. an estimate of the demand for power by ultimate consumers in the utility's system for each of the categories listed in item A at the time of the last annual system peak demand;

D. the utility's system peak demand by month for the last calendar year;

E. the utility's seasonal firm purchases and seasonal firm sales for each utility involved in each transaction for the last year, the present year, and the 14 subsequent years;

F. the utility's seasonal participation purchases and participation sales for each utility involved in each transaction for the last year, the present year, and the 14 subsequent years;

G. for the summer season and for the winter season of the last year, the present year, and the 14 subsequent years, the load and generation capacity data requested in subitems (1) to (13), including anticipated purchases, sales, capacity retirements, and capacity additions, including those that may depend upon certificates of need not yet issued:

H. for the present calendar year and the subsequent 14 years, a list in megawatts of proposed additions and retirements in generating capability; and

I. the utility's method of determining its system reserve margin and the appropriateness of the margin.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0315 Forecasts Using Alternative Sector Definitions

Utilities required to provide forecasts by category of consumption under part 7610.0310, item A, may request in writing that the department accept alternative definitions for one or more of the categories defined in part 7610.0310, item A. A utility must provide the alternative definition or definitions in writing. This must be filed with each subsequent forecast following approval by the department. If the department concludes that a previously accepted alternative definition is no longer acceptable, the department must inform the utility in writing at least six months before the reporting date for the next annual forecast.

History

Statutory Authority: MS s 216C.10
History: 16 SR 1400

Minn. R. 7610.0320 Forecast Documentation

Subpart 1. Forecast methodology.

An applicant may use the forecast methodology that yields the most useful results for its system. However, the applicant shall detail in written form the forecast methodology employed to obtain the forecasts provided under parts 7610.0300 to 7610.0315, including:

A. the overall methodological framework that is used;

B. the specific analytical techniques that are used, their purpose, and the components of the forecast to which they have been applied;

C. the manner in which these specific techniques are related in producing the forecast;

D. where statistical techniques have been used, the purpose of the technique, typical computations (e.g., computer printouts, formulas used) specifying variables and data, and the results of appropriate statistical tests;

E. forecast confidence levels or ranges of accuracy for annual peak demand and annual electrical consumption; and

F. a brief analysis of the methodology used, including its strengths and weaknesses, its suitability to the system, cost considerations, data requirements, past accuracy, and any other factors considered significant by the utility.

Subp. 2. Data base for forecasts.

The utility shall discuss in written form the data base used in arriving at the forecast presented in part 7610.0310, including:

A. a complete list of all data sets used in making the forecast, including a brief description of each data set and an explanation of how each was obtained, (e.g., monthly observations, billing data, consumer survey, etc.) or a citation to the source (e.g., population projection from the state demographer); and

B. a clear identification of any adjustments made to raw data to adapt them for use in forecasts, including the nature of the adjustment, the reason for the adjustment, and the magnitude of the adjustment.

Subp. 3. Discussion.

The utility shall discuss in writing each essential assumption made in preparing the forecasts, including the need for the assumption, the nature of the assumption, and the sensitivity of forecast results to variations in the essential assumptions.

Subp. 4. Subject of assumption.

The utility shall discuss the assumptions made regarding the availability of alternative sources of energy, the expected conversion from other fuels to electricity or vice versa, future prices of electricity for customers in the utility's system and the effect that such price changes will likely have on the utility's system demand, the assumptions made in arriving at any data requested in part 7610.0310 that is not available historically or not generated by the utility in preparing its own internal forecast, the effect of existing energy conservation programs under federal or state legislation on long term electrical demand, the projected effect of new conservation programs that the utility deems likely to occur through future state and federal legislation on long term electrical demand, and any other factor considered by the utility in preparing the forecast. In addition the utility shall state what assumptions were made, if any, regarding current and anticipated saturation levels of major electric appliances and electric space heating within the utility's service area. If a utility makes no assumptions in preparing its forecast with regard to current and anticipated saturation levels of major electrical appliances and electric space heating it shall simply state this in its discussion of assumptions.

Subp. 5. Coordination of forecasts with other systems.

The utility shall provide in writing:

A. a description of the extent to which the utility coordinates its load forecasts with those of other systems, such as neighboring systems, associate systems in a power pool, or coordinating organizations; and

B. a description of the manner in which such forecasts are coordinated, and any problems experienced in efforts to coordinate load forecasts.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0400 Present Facilities

A utility required to report under part 7610.0300 shall provide the following information on each power plant serving or capable of serving its Minnesota service area as of January 1 of the current year:

A. the name and type of the plant;

B. the statutory or home rule charter city or town and the county in which the plant is located;

C. actual summer and winter plant capacity as measured by the maximum load that could be supplied by present equipment on a peaking basis;

D. the total number of net megawatt hours generated by the plant for nonplant use during the last calendar year;

E. if coal is a fuel source, the average Btu content of the coal;

F. the quantities of primary and secondary fuels consumed during the last calendar year;

G. the year in which the plant or each unit of a multiunit plant began operation;

H. the type of unit for each unit of generating equipment in the plant; and

I. if available, for base load plants provide the capacity factor, operating availability, and forced outage rate.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0410 Future Facility Additions

A utility required to report under part 7610.0300 shall estimate the additional power plants or additions to existing plants necessary to provide for the energy growth predicted by the forecasts in parts 7610.0300 to 7610.0320. A utility shall supply the following information about each additional plant or addition:

A. the proposed general location of each plant currently in the planning stage, or the actual location of each plant currently under construction;

B. the year the plant is to begin operation;

C. the estimated cost of the new facility at the time of construction;

D. the estimated summer and winter plant capacity of anticipated generating equipment;

E. the estimated total annual net megawatt hours generated for nonplant use by the plant operating at normal conditions under normal maintenance and circumstances, during its first full calendar year of operation;

F. the estimated type and amount of fuel to be used to operate the plant on an annual basis under conditions set forth in item E; and

G. the type of unit or units proposed for the plant.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0420 Future Facility Retirements

A utility required to report under part 7610.0300 shall list the planned facility retirements that will take place within the next 15 years. The utility shall provide the following information about a facility retirement: the location and type of the plant; the forecasted retirement date; and the plant's actual summer and winter capacity.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0430 Fuel Requirements and Generation by Fuel Type

Subpart 1. Quantity used.

Based on the data reported under part 7610.0400 each utility shall report the quantity of coal, natural gas, middle distillates, heavy oils, nuclear energy, and other fuels used by its Minnesota power plants during the last calendar year, and the net megawatt hours of electrical energy generated by each type of fuel. Net generation from Minnesota hydropower plants shall also be provided. If data is reported for other fuels, the type of fuel shall be specified.

Subp. 2. Estimated quantity necessary.

Each utility shall estimate the quantities of the fuel which will be necessary for use by its Minnesota power plants to provide for the electrical energy growth predicted by the forecast projected in parts 7610.0300 to 7610.0320. Each utility shall also estimate by fuel type the net megawatt hours electricity which will be produced by its Minnesota power plants under the forecast. A forecast of net generation from Minnesota hydropower plants shall also be provided. In preparing such estimates, each utility shall consider increases in fuel use by existing facilities and possible conversions between fuel types.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0500 Transmission Lines

Subpart 1. Existing transmission lines.

Each utility shall report the following information in regard to each transmission line over 200 kilovolts now in existence:

A. a map showing the location of each line;

B. the design voltage of each line;

C. the size and type of conductor;

D. the approximate location of d.c. terminals or a.c. substations; and

E. the approximate length of each line in Minnesota.

Subp. 2. Transmission line additions.

Each generating and transmission utility, as defined in part 7610.0100, shall report the information required in subpart 1 for all future transmission lines over 200 kilovolts that the utility plans to build within the next 15 years.

Subp. 3. Transmission line retirements.

Each generation and transmission utility, as defined in part 7610.0100, shall identify all present transmission lines over 200 kilovolts that the utility plans to retire within the next 15 years.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9

Minn. R. 7610.0600 Other Information Reported Annually

A utility shall provide the following information for the last calendar year:

A. the demand in megawatts by hour over a 24-hour period for:

B. the names, addresses, and the kilowatt hours of electricity consumed by customers of the utility who annually consume over 10,000 megawatt hours;

C. a detailed map, on which the scale is shown, of the utility's Minnesota service area, identifying power plants, principal substations, and transmission lines over 200 kilovolts, identified by voltage;

D. a listing of the purchases and sales for resales the utility had with other utilities, including the names of the other utilities and megawatt hours purchased or sold for resale during the last year;

E. its present rate schedules as of June 1 of the present year;

F. a copy of report form EIA-861 filed with the Energy Information Administration of the United States Department of Energy;

G. for rural electric cooperatives, part D. of the financial and statistical report to the United States Department of Agriculture;

H. for utilities that are not members of the MWPSG, the total megawatts of generation capacity, the megawatt hours generated during the last calendar year, the amount of fuel used to generate the electricity, and the average Btu content of the coal used for electric generation;

I. actual data on the number of residential electric space heating customers and units it has and the total megawatt hours of electricity sold these customers during the past calendar year (if a utility cannot provide actual data estimates may be accepted); and

J. its deliveries to ultimate consumers and revenues for the last calendar year broken down by categories determined by the commissioner.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0700 [Repealed, L 2001 c 23 s 1]

[Repealed, L 2001 c 23 s 1]

Minn. R. 7610.0800 Definitions

Subpart 1. Scope.

For purposes of parts 7610.0800 to 7610.1230, the following definitions shall apply.

Subp. 2.

[Repealed, 16 SR 1400]

Subp. 3. Annual gas consumption.

"Annual gas consumption" means the total amount of gas used or disposed of in Minnesota for all purposes by either a gas utility or interstate pipeline company. This definition shall not include natural gas in storage at the end of the reporting year.

Subp. 4. Annual sales to ultimate consumers.

"Annual sales to ultimate consumers" means gas sales to end use customers in a utility's or pipeline company's Minnesota service area.

Subp. 5. Basic forecast.

"Basic forecast" refers to that more elementary, less documented forecast required of all Minnesota gas utilities. While all utilities must file a basic forecast, only specifically designated utilities must in addition file an extended forecast that requires additional data and greater documentation.

Subp. 6.

[Repealed, 16 SR 1400]

Subp. 7. Curtailment.

"Curtailment" means a reduction or cutoff of supply to firm or interruptible customers that is related directly to deficiencies in gas supply.

Subp. 7a. Department.

"Department" means the Minnesota Department of Commerce.

Subp. 8. Design day.

"Design day" means the 24-hour period of the greatest theoretical gas demand at a given 24-hour average temperature.

Subp. 9. Design day availability.

"Design day availability" means the volume of each type of gas available on the design day and the maximum total volume of such supplies.

Subp. 10. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce.

Subp. 11. Firm contract customers.

"Firm contract customers" means customers served under schedules or contracts that neither anticipate nor permit interruption.

Subp. 12. Gas.

"Gas" means any form of gaseous fuel distributed as a vapor through distribution systems to ultimate consumers, including natural gas and all gaseous fuels equivalent in performance to natural gas.

Subp. 13. Gas volume.

"Gas volume" means the volume of gas as measured at 14.73 psia at 60 degrees Fahrenheit. All volumes shall be in thousands of cubic feet (MCF) unless otherwise stated.

Subp. 14. Interruptible contract customers.

"Interruptible contract customers" means customers served under schedules or contracts that anticipate or permit interruption of service during the term of the contract.

Subp. 15. Interstate gas pipeline company.

"Interstate gas pipeline company" means an entity that operates an interstate gas pipeline that provides gas to any utility located in Minnesota, also referred to in these rules as "pipeline company" or "interstate pipeline company."

Subp. 16. Large energy facility.

"Large energy facility" means any pipeline for transporting natural or synthetic gas at pressure in excess of 200 pounds per square inch with more than 50 miles of its length in Minnesota, any facility designed for or capable of storing on a single site more than 100,000 gallons of liquefied natural gas or synthetic gas, or any underground gas storage facility requiring a permit pursuant to Minnesota Statutes, section 103I.681, subdivision 1, paragraph (a).

Subp. 17. Last calendar year.

"Last calendar year" means the calendar year immediately preceding the year in which reports are required to be filed.

Subp. 18. Liquefied natural gas.

"Liquefied natural gas" means natural gas stored as a liquid at or near atmospheric pressure at a temperature of approximately minus 260 degrees Fahrenheit.

Subp. 19. Minnesota service area.

"Minnesota service area" means the geographical area within the state of Minnesota where a gas utility or interstate pipeline company serves ultimate consumers. The Minnesota service area for an interstate pipeline company shall also include all Minnesota utilities which it services.

Subp. 20. Natural gas.

"Natural gas" means a naturally occurring mixture of hydrocarbons and nonhydrocarbon gases found in porous geologic formations beneath the earth's surface, the principal constituent of which is methane.

Subp. 21. Peak day.

"Peak day" means the 24-hour period of greatest gas sendout.

Subp. 22. Substitute natural gas.

"Substitute natural gas" means any gaseous fuel equivalent in performance to natural gas that is created from other gases, liquids, or solid hydrocarbons. Substitute natural gas shall include manufactured gas, gas produced from liquid petroleum gases such as propane, butane, and gas produced from naphtha. Whenever the term "synthetic gas" is used within these parts it shall be construed to mean the same as substitute natural gas.

Subp. 23. Ultimate consumer.

"Ultimate consumer" means end use customers who do not sell gas for resale.

Subp. 24. Utility.

"Utility" means any entity in Minnesota whose primary business is the distribution of gas to ultimate consumers, including but not limited to a private investor-owned utility or a public or municipally owned utility.

History

Statutory Authority: MS s 216C.10
History: L 1983 c 289 s 115 subd 1; L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400; L 2001 1Sp4 art 6 s 1

Minn. R. 7610.0810 Purpose and Scope

Subpart 1. Purpose.

The purpose of parts 7610.0800 to 7610.1230 is to implement the forecasting, statistical, and informational reporting requirements of Minnesota Statutes, sections 216C.17 and 216C.18. These parts are adopted under the powers of the commissioner conferred by Minnesota Statutes, section 216C.10, clause (a), and are designed to identify emerging energy trends based on supply and demand, conservation, and public health and safety factors, and to determine the level of statewide and service area energy needs.

Subp. 2. Scope.

Each gas utility serving ultimate consumers in the state of Minnesota and each interstate gas pipeline company serving any gas utility located in the state of Minnesota or ultimate consumers in the state shall submit the information required by these parts to the commissioner in the form specified by the commissioner.

Any entity that is both a gas utility company and an interstate gas pipeline company shall file one report on its pipeline operations and one report on its utility operations.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9,10 subd 1; 16 SR 1400

Minn. R. 7610.0820 Annual Reporting Dates

Subpart 1. Gas utilities.

A utility and interstate gas pipeline company shall file with the commissioner the information required by parts 7610.0850 to 7610.1230 by July 1 of each year. For good cause shown, the department may grant a utility an extension from the deadline following receipt of a written request from the utility.

Subp. 2.

[Repealed, 16 SR 1400]

Subp. 3.

[Repealed, 16 SR 1400]

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0830 Corrections

Corrections of a substantial nature to any report or statement which pertain to historical data and not forecasts shall be filed with the department within ten days following the date of the event prompting the change in reported information or the date upon which the person filing became aware of the inaccuracy. The change or correction shall identify the form and the paragraph of the information to be changed or corrected.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0840 Federal or State Data Substitution

Upon written request by a utility, the commissioner may allow it to substitute data provided to the federal government or another state agency in place of data required by parts 7610.0800 to 7610.1230 if the data required by both agencies is substantially the same.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0850 Registration

A gas utility serving ultimate consumers and an interstate gas pipeline company serving a utility in Minnesota must file a registration statement with the commissioner. A utility or interstate pipeline company that begins operation in the state shall file a registration statement with the commissioner within 30 days after beginning operation. The registration statement must be on forms issued by the commissioner and available from the department. The registration statement must contain the name and headquarters address of the utility or interstate pipeline company, the names and addresses of officers of the utility or interstate pipeline company, and the name, address, and telephone number of a person who may be contacted for information about the utility or interstate pipeline company.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0860 Federal Reports: Utility, Pipeline Company

A utility and interstate pipeline company shall identify to the commissioner the forms and reports pertaining to gas supply and demand that it regularly filed with the Federal Energy Regulatory Commission, the federal Department of Energy, and other federal agencies. Upon request of the commissioner, a utility or pipeline company shall make copies of any forms or reports available to the commissioner.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0900 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Minn. R. 7610.0910 Overall Supply and Demand

The basic forecast and current data shall contain the following data and forecasts for the last calendar year, the present year, and the subsequent five years:

A. annual sales to ultimate consumers within the utility's Minnesota service area;

B. other deliveries of gas to commercial consumers in Minnesota;

C. other deliveries of gas to industrial consumers in Minnesota;

D. the annual volume of gas delivered or expected to be delivered to other utilities for resale;

E. the annual volume of gas used in the operation of the utility within its Minnesota service area;

F. the annual volume of gas used in the utility's Minnesota service area but unaccounted for in items A to E;

G. the total annual gas consumption, for all purposes, in the utility's Minnesota service area, with total consumption equaling the sum of items A to F, excluding gas held in storage at year's end;

H. the total annual volume of substitute natural gas provided by the utility to supplement the utility's supply of natural gas for use in its Minnesota service area;

I. the total annual volume of liquefied natural gas supply withdrawn from storage by the utility for use in its Minnesota service area;

J. the total volume of natural gas withdrawn from underground storage by the utility for use in its Minnesota service area;

K. the total annual volume of gas received or estimated to be received from the interstate pipeline company for use in its Minnesota service area;

L. the design-day maximum gas demand volume for the utility's Minnesota service area firm customers;

M. the maximum winter peak-day volume of gas sent out or expected to be sent out in the utility's Minnesota service area;

N. the design-day availability of each type of gas and the maximum one-day volume of gas the supplies will provide;

O. the amount of substitute natural gas the utility can produce from the feedstock it will have in storage at the beginning of the winter heating season for use in its Minnesota service area;

P. the amount of liquid natural gas the utility will have for use in storage at the beginning of the winter heating season for use in its Minnesota service area;

Q. the amount of natural gas the utility will have in underground storage for use at the beginning of the winter heating season; and

R. the type and amount of fuel used or to be used in Minnesota to produce substitute natural gas.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.0914 Sales by Customer Category

Subpart 1. Sales of 3,000,000 Mcf or more.

Utilities with annual Minnesota sales during the last calendar year of 3,000,000 Mcf or greater shall provide historic and forecast data on sales to ultimate customers and the number of customers during the last calendar year, the present year, and the subsequent first through the fifth, tenth, and 15th years for:

A. residential firm sales;

B. commercial firm sales;

C. commercial interruptible sales;

D. industrial firm sales;

E. industrial interruptible sales; and

F. total annual gas consumed in Minnesota, which is the sum of items A to E.

Subp. 2. Sales of less than 3,000,000 Mcf.

Utilities with annual Minnesota sales during the last calendar year of less than 3,000,000 Mcf shall provide data on sales to ultimate customers and the number of customers for the categories listed in subpart 1, items A to F, for the last calendar year only.

History

Statutory Authority: MS s 216C.10
History: 16 SR 1400

Minn. R. 7610.0920 Last Calendar Year Historical Data

For the last calendar year, historical data must be supplied. For each other reporting year, the forecasts must be made using the utility's or pipeline company's best estimate for each of the items requested. Utilities must prepare these forecasts to the best of their ability and knowledge based on those assumptions and factors that the reporting utility considers most likely to occur. The assumptions and factors used in deriving the forecasts must be stated in writing. The utility shall evaluate the size of the estimating error, given the conditions and factors used in the estimate. The utility shall comment on possible deviations from the forecast and what factors might create those deviations. A utility required to file a forecast documentation under part 7610.1010 need not file forecast documentation required in this part.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1000 Peak-Day Forecast

Utilities with annual Minnesota sales of more than 10,000,000 Mcf during the last calendar year must file a peak-day consumption forecast. A utility required to file a forecast under this part shall identify or estimate the demand for gas on the peak sendout day during the last calendar year, the current year, and the subsequent five years for the following categories of demand:

A. residential firm sales;

B. commercial industrial firm sales;

C. commercial industrial interruptible sales;

D. other deliveries to ultimate customers;

E. own company gas;

F. gas unaccounted for;

G. gas delivered to other utilities for sale;

H. total peak-day gas consumed in Minnesota; and

I. total peak-day consumption in Minnesota.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1010 Forecast Documentation

Subpart 1. Forecast methodology.

A utility may use whatever forecast methodology it believes is most appropriate for its Minnesota service area. However, utilities with annual Minnesota sales of more than 10,000,000 Mcf during the last calendar year shall describe the forecast methodology employed by providing the following documentation:

A. the overall methodological framework used;

B. the specific analytical techniques used, their purpose, and the components of the forecast to which they have been applied;

C. the manner in which these specific techniques are related in producing the forecast;

D. where statistical techniques have been used, the purpose of the techniques, typical computations (e.g., computer printouts, formulas used) specifying variables and data, and the results of appropriate statistical tests;

E. forecast confidence levels or ranges of accuracy for annual peak demand and annual gas consumption;

F. a brief analysis of the methodology used, including its strengths and weaknesses, its suitability to the utility's service area, cost considerations, data requirements, past accuracy, and any other factors considered significant by the utility; and

G. an explanation of any discrepancies between the forecasts presented by the utility and forecasts submitted in past years.

Subp. 2. Data base for forecasts.

The utility shall provide a written discussion of the data base used in arriving at the forecast presented in parts 7610.0900 to 7610.1010 including:

A. a complete list of all data sets used in making the forecast, including a brief description of each data set and an explanation of how it was obtained, (e.g., monthly observations, billing data, consumer survey, etc.) or a citation to the source (e.g., population projection from the state demographer); and

B. a clear explanation of any adjustments made to raw data to adapt them for use in forecasts, including the nature of the adjustments, the reasons for the adjustments, and the magnitude of the adjustments.

Subp. 3. Discussion of assumptions.

Subp. 4. Subject of assumption.

The utility shall discuss the assumptions made regarding the availability of alternative sources of energy, any expected conversion from other fuels to gas or vice versa, future prices of gas for customers in the utility's Minnesota service area and the effect that such price changes will likely have on demand, the assumptions made in arriving at any data requested in parts 7610.0900 to 7610.1010 that are not available historically or not generated by the utility in preparing its own internal forecast, the effect of existing energy conservation programs under federal or state legislation or long term gas demand, the projected effect of new conservation programs that the utility deems likely to occur through future state and federal legislation on long term gas demand, and any other factor considered by the utility in preparing the forecast.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1100 Present Facilities

Each gas utility shall provide the following information with regard to existing facilities serving its Minnesota service area as of January 1 of the current year:

A. The name and geographic location of all underground storage facilities for natural gas. For each facility include:

B. The name and geographic location of all liquefied natural gas facilities. For each facility include:

C. The name and geographic location of all substitute natural gas facilities. For each facility include:

D. A map, on which the general scale is indicated, of the utility's Minnesota service area, identifying municipalities served, substitute natural gas facilities, underground natural gas storage facilities, liquefied natural gas facilities, major distribution lines, interconnections with other utilities, and delivery points with interstate pipeline companies.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9

Minn. R. 7610.1110 Future Facility Requirements

Each utility shall estimate the additional facilities or additions to existing facilities necessary to meet the level of gas consumption predicted in its forecast under parts 7610.0900 to 7610.0920. Each utility shall supply the following information:

A. The name and geographic location of all new underground natural gas storage facilities or additions to existing facilities. For each facility include:

B. The name and geographic location of all new liquefied natural gas storage facilities or additions to existing facilities. For each facility include:

C. The name and geographic location of all new substitute natural gas facilities or additions to existing facilities. For each facility include:

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9

Minn. R. 7610.1120 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Minn. R. 7610.1130 Other Information Reported by Utilities

Subpart 1. General data.

Gas utilities must also report:

A. the total monthly consumption of gas during the last calendar year in the following classifications:

B. additional municipalities or geographic areas outside the utility's current service area that it expects to serve and the year when service will begin;

C. the total number of customers and total sales during the last calendar year to:

D. the criteria used to determine the classification of a customer as a firm or interruptible customer; and

E. its total sales in MCF to ultimate customers by county for the last calendar year.

Subp. 2. Customer information.

For the last calendar year, a utility shall provide a list of customers and their addresses who have gas requirements in excess of 200 Mcf on their peak day each year. For a customer so identified, the utility shall list:

A. annual actual sales;

B. annual estimated curtailment;

C. annual estimated requirements, which should equal the sum of items A and B;

D. alternative fuel used; and

E. curtailment priority rank.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1200 Interstate Gas Pipelines; Forecast, Statistics

Subpart 1. Requirement.

Each interstate pipeline company shall annually submit to the commissioner, for the last calendar year, the present calendar year, and the subsequent first, fifth, tenth, and 15th years, actual data and forecasts of anticipated annual Minnesota service area consumption and supply of natural gas.

Subp. 2. Contents of report.

The basic forecast and current data report must contain the following data for each year cited in subpart 1:

A. the annual sales and deliveries to Minnesota gas utility distribution companies for resale;

B. the annual sales and deliveries to ultimate consumers in Minnesota, excluding sales and deliveries that are transported in part by Minnesota distribution utilities; and

C. the maximum one-day amount of gas that must be provided to the Minnesota service area to meet contractual obligations to the gas utilities served.

Subp. 3. Basis of forecasts.

In meeting the requirements of subpart 1, historical data for the last calendar year must be supplied.

For each other reporting year, the forecasts must be made using the interstate pipeline company's best estimate for each of the items. Interstate pipeline companies must prepare these forecasts to the best of their ability and knowledge based on those assumptions and factors that the reporting utility considers most likely to occur. An interstate pipeline company shall evaluate the size of estimating error possible given the conditions and factors used in the estimate. A utility company shall comment on possible deviation from the forecast and what factors might create the deviation.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1210 Map of Present Facilities

An interstate pipeline company shall provide a map, on which the general scale is shown, of the utility's Minnesota service area identifying distribution utility companies served, underground natural gas storage facilities, underground liquid natural gas facilities, substitute natural gas facilities, major transmission lines, and interconnection with other interstate pipeline companies.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1220 Map of Future Facilities

An interstate pipeline company shall provide a Minnesota service area map identifying future transmission lines, natural gas storage facilities, liquefied natural gas storage facilities, substitute natural gas storage facilities, additional distribution utility companies to be served, and additional interconnections with other interstate natural gas pipeline companies.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1230 Disposition of Gas by Interstate Pipelines

Each interstate pipeline company shall file a copy of its annual FERC form 2 with the department.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1300 Definitions

Subpart 1. Scope.

For the purposes of parts 7610.1300 to 7610.1610, the following definitions shall apply.

Subp. 2.

[Repealed, 16 SR 1400]

Subp. 3. Aviation gasoline.

"Aviation gasoline" means all of the various grades of aviation gasoline as defined in American Society for Testing and Materials (ASTM) D 910-70.

Subp. 4.

[Repealed, 16 SR 1400]

Subp. 5. Commissioner.

"Commissioner" means the commissioner of the Department of Commerce.

Subp. 5a. Department.

"Department" means the Minnesota Department of Commerce.

Subp. 6. End user.

"End user" means any person who is an ultimate consumer of a petroleum product other than a wholesale purchaser consumer.

Subp. 7. Jet fuel.

"Jet fuel" means those fuels commonly known as kerosene base jet fuel and naphtha base jet fuel.

Subp. 8. Large energy facility.

"Large energy facility" means any facility on a single site designed for or capable of storing more than 1,000,000 gallons of crude petroleum, petroleum fuels, oil, or derivatives thereof, or any pipeline greater than six inches in diameter and having more than 50 miles of its length in Minnesota used for the transportation of crude petroleum, petroleum fuels, oil, or derivatives thereof.

Subp. 9. Middle distillate.

"Middle distillate" means any derivative of petroleum including kerosene, home heating oil, range oil, stove oil, and diesel fuel that has a 50 percent boiling point in the ASTM D86 standard distillation test falling between 371 degrees Fahrenheit and 700 degrees Fahrenheit. "Middle distillate" shall not include kerosene-based and naphtha-based jet fuel, heavy fuel oils grades numbers 4, 5, and 6, intermediate fuel oils that are blends containing number 6 oil, and all specialty items such as solvents, lubricants, waxes, and process oil.

Subp. 10. Motor gasoline.

"Motor gasoline" means a mixture of volatile hydrocarbons, suitable for operation of an internal combustion engine, whose major components are hydrocarbons with boiling points ranging from 140 degrees Fahrenheit to 390 degrees Fahrenheit and whose source is distillation of petroleum and cracking, polymerization, and other chemical reactions by which naturally occurring petroleum hydrocarbons are converted to those that have superior fuel properties.

Subp. 11. Petroleum pipeline company.

"Petroleum pipeline company" means any company that owns or operates in Minnesota any pipeline greater than six inches in diameter and having more than 50 miles of its length in Minnesota used for the transportation of crude petroleum, petroleum fuels, oil, or derivatives thereof.

Subp. 12. Prime petroleum supplier.

"Prime petroleum supplier" means the supplier or producer that makes the first sale of any petroleum product into the state distribution system for consumption within the state. Any supplier or producer that is considered a Minnesota prime supplier by the Federal Energy Agency shall be deemed to be a prime petroleum supplier under these rules. "Prime petroleum supplier" shall not include any licensed petroleum distributor or propane retailer who takes delivery of a product in another state for use in Minnesota, if the distributor or retailer has in possession a letter from the supplier stating that the supplier has or will report the sales of said product to the Federal Energy Agency and the state, or if the total amount of any single product so received by the distributor or retailer is less than 500,000 gallons per year.

Subp. 13. Propane.

"Propane" means the chemical C3H8 in its commercial forms including propane butane mixes in which propane constitutes greater than ten percent of the mixture by weight. Included within the definition of propane is the propane content of natural gas liquids and refinery gas when used for refinery fuel use.

Subp. 14. Residual fuel oil.

"Residual fuel oil" means the fuel oil commonly known as: numbers 4, 5, and 6 fuel oils; bunker C; Navy special fuel oil; crude oil when burned directly as a fuel; and all other fuel oils which have a 50 percent boiling point over 700 degrees Fahrenheit in the ASTM D-86 standard distillation test.

Subp. 15. Total petroleum products.

"Total petroleum products" means propane, butane, propane/butane mix, motor gasoline, kerosene, number 2 heating oil, diesel fuel, other middle distillates, aviation gasoline, jet fuel, number 4 for utilities, numbers 5 and 6 for utilities, number 4 for nonutilities, numbers 5 and 6 for nonutilities, bunker C, Navy special, other residuals, lubricants, special naphthas, and solvents.

Subp. 16. Wholesale purchaser consumer.

"Wholesale purchaser consumer" means any ultimate consumer that, as part of its normal business practices, purchases or obtains a product from a supplier and receives delivery of that product into a storage tank substantially under the control of that consumer at a fixed location; and that: purchased or obtained more than 20,000 gallons of that allocated product for its own use in agricultural production in any completed calendar year subsequent to 1971; or purchased or obtained more than 50,000 gallons of that allocated product in any completed calendar year subsequent to 1971 for use in one or more multifamily residences; or purchased or obtained more than 84,000 gallons of that allocated product in any completed calendar year subsequent to 1971.

Subp. 17. Wholesale purchaser reseller.

"Wholesale purchaser reseller" means any firm that purchases, receives through transfer, or otherwise obtains (as by consignment) an allocated product and resells or otherwise transfers it to other purchasers without substantially changing its form.

History

Statutory Authority: MS s 216C.10
History: L 1983 c 289 s 115 subd 1; L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400; L 2001 1Sp4 art 6 s 1

Minn. R. 7610.1310 Purpose

The purpose of parts 7610.1300 to 7610.1610 is to implement the forecasting, statistical, and informational requirements of Minnesota Statutes 1974, sections 116H.10 and 116H.11. These parts are adopted pursuant to the powers of the commissioner conferred by Minnesota Statutes 1974, section 116H.08, clause (a), and are designed to identify emerging energy trends based on supply and demand, conservation, and public health and safety factors, and to determine the level of statewide and service area energy needs.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9

Minn. R. 7610.1320 Scope

Each prime petroleum supplier and petroleum pipeline company in the state shall submit the information required by these parts to the commissioner in the form specified by the commissioner.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1330 Annual Reporting Dates

Subpart 1. Prime petroleum supplier, pipeline company.

A prime petroleum supplier and pipeline company shall file with the commissioner or its trade association, as applicable, the information required by parts 7610.1300 to 7610.1500 by July 1 of each reporting year. For good cause shown, the department may grant a prime petroleum supplier an extension from the deadline following receipt of a written request from the company.

Subp. 2.

[Repealed, 16 SR 1400]

Subp. 3.

[Repealed, 16 SR 1400]

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1340 Corrections

Corrections of any report or statement must be filed with the department within ten days following the date of the event prompting the change in reported information or the date upon which the person filing became aware of the inaccuracy. The change or correction shall identify the form and the paragraph of the information to be changed or corrected.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1350 Federal or State Data Substitution

The commissioner may, upon written request, allow any prime petroleum supplier or petroleum pipeline company to substitute data provided to the federal government or another state agency in lieu of data required by these parts if the data required by both agencies is substantially the same.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9

Minn. R. 7610.1360 Registration

A prime petroleum supplier or petroleum pipeline company that begins operations in the state shall file a registration statement with the commissioner within 30 days after beginning operation. The registration statement must be on forms issued by the commissioner. The registration statement must contain the name and headquarters address of the prime petroleum supplier or petroleum pipeline company, the names and addresses of officers of the supplier or company, and the name, address, and telephone number of a person who may be contacted for information about the prime petroleum supplier or petroleum pipeline company.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1370 Federal Reports; Petroleum Suppliers, Pipelines

Each prime petroleum supplier and petroleum pipeline company shall identify to the commissioner all forms and reports pertaining to energy supply and demand that it regularly files with any federal agency. Upon request of the commissioner, each firm shall make copies of any such forms or reports available to the commissioner.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9

Minn. R. 7610.1380 Historical Supply Data

Each prime petroleum supplier shall submit annually to the commissioner the annual supply of motor gasoline, middle distillates, jet fuels, aviation gasoline, residual fuel oil, propane, and total petroleum products that the supplier provides or will provide to its Minnesota service area. This data must be submitted for the last calendar year only.

History

Statutory Authority: MS s 216C.10
History: 16 SR 1400

Minn. R. 7610.1400 Annual Forecasts

Each prime petroleum supplier that operates a refinery located in Minnesota or an adjacent state must submit annually to the commissioner five-, ten-, and 15-year forecasts of crude inputs and production at its Minnesota area refinery.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1410 Content of Forecasts

The energy forecast required under part 7610.1400 must contain the following data for each reporting year:

A. the annual supply of motor gasoline, middle distillates, jet fuels, aviation gasoline, residual fuel oil, propane, and total petroleum products that the supplier provides or will provide to its Minnesota service area; and

B. the annual volume of crude oil in number of barrels available to the supplier's refinery.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1420 Reporting Years

The data required in part 7610.1410 shall be supplied for the following years:

A. the last calendar year;

B. the present calendar year;

C. the year five years after the present calendar year;

D. the year ten years after the present calendar year; and

E. the year 15 years after the present calendar year.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1430 Criteria for Forecast

For the last calendar year, historical data must be supplied. If recorded figures are not available, estimates must be used and be identified as estimates. For each other reporting year, the forecast must be made using the supplier's best estimates of the amount of each petroleum product that will be supplied. These estimates must be based on the factors that the supplier considers most likely to occur in its Minnesota service area. The data for each reporting year must be calculated by applying these factors to the data for the last calendar year for which actual data required in part 7610.1410 is available.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1500 Present Facilities

A prime petroleum supplier or pipeline company shall provide to the commissioner the following information on facilities that it owns in Minnesota as of January 1 of the current year:

A. for storage tanks at any one site in excess of 1,000,000 gallons:

B. a map depicting the location of pipelines from their origin to their termination in Minnesota.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 186 s 15, c 312 art 1 s 9; 16 SR 1400

Minn. R. 7610.1510 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Minn. R. 7610.1520 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Minn. R. 7610.1600 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Minn. R. 7610.1610 [Repealed, 16 SR 1400]

[Repealed, 16 SR 1400]

Chapter 7615 PETROLEUM SET-ASIDE PROGRAM

Minn. R. 7615.0100 Definitions

Subpart 1. Scope.

For the purposes of parts 7615.0100 to 7615.0350 the terms defined in this chapter have the meanings given them.

Subp. 2. Agriculture.

"Agriculture" means certain activities in food production, processing, and sales as set out in the Standard Industrial Classification Manual, 1972 edition.

A. Included activities are:

B. Excluded activities are:

Subp. 3. Assignment.

"Assignment" means an order by the office or the board to a prime supplier to release state set-aside product to a specific person.

Subp. 4. Average product use.

"Average product use" means the volume of product purchased during the same month last year.

Subp. 5. Board.

"Board" means the state set-aside appeals board.

Subp. 6. Cargo and freight hauling.

"Cargo and freight hauling" means hauling by any truck with a gross vehicle weight of 20,000 pounds or more and the shipping of goods by rail or water.

Subp. 7. Commissioner.

"Commissioner" means the commissioner of the Minnesota Department of Commerce.

Subp. 8. Current month requirement.

"Current month requirement" means the volume of product needed by an end user to meet its supply need for the present month.

Subp. 9. Decision.

"Decision" means the ruling of the board about any appeal.

Subp. 10. Department.

"Department" means the Minnesota Department of Commerce.

Subp. 11. Emergency services.

"Emergency services" means activities immediately necessary to preserve the health or safety of the citizens. Emergency services include: ambulance operation; city, county, state, and federal law enforcement; firefighting; mobilized National Guard; and Red Cross services.

Subp. 12. End user.

"End user" means a final consumer of motor gasoline or middle distillate.

Subp. 13. Energy production.

"Energy production" means the manufacturing, processing, storage, or transportation of primary energy sources including electricity, natural gas, or petroleum products. Energy production excludes electric utilities whose needs for electrical energy can be met by purchase from members of the Mid Continent Area Power Pool.

Subp. 14. Essential services.

"Essential services" means activities that provide continuing public health and safety services. They include: energy production; government services; maintenance vehicles for telecommunication services; postal services; sanitation services; and cargo and freight hauling.

Subp. 15. Fuel coordinator.

"Fuel coordinator" means city council or county board appointed individuals who verify state set-aside applications.

Subp. 16. Government services.

"Government services" includes: activities of the judicial branch of government; jail and prison activities; meetings of elected political officials; the Division of Emergency Management city, county, and state activities; hearings of mobilized local energy conservation boards; hearings of the Office of Administrative Hearings; and minimum services to provide Aid For Dependent Children, SNAP, Social Security income, and Social Security checks.

Subp. 17. Middle distillates.

"Middle distillates" means distillates obtained between kerosene and lubricating oil fractions in the refining process, including kerosene, number one and number two heating oil, and number one and number two diesel fuel.

Subp. 18. Motor gasoline.

"Motor gasoline" means a liquid mixture of hydrocarbons produced by the distillation of petroleum and used chiefly as a fuel in internal combustion engines.

Subp. 19. Office.

"Office" means the unit within the department responsible for the state set-aside program.

Subp. 20. Officer.

"Officer" means the individual who manages the office and who has authority to sign orders and documents for the state set-aside program.

Subp. 21. Order.

"Order" means a written document signed by the officer or the commissioner directing a prime supplier to release a product for an assignment. The office may telephone an order to the prime supplier, but the office shall promptly send the written order to the prime supplier's representative. The order is effective the day it is signed by the officer or commissioner.

Subp. 22. Passenger transportation.

"Passenger transportation" means: conventional public transit service that operates on a fixed route and is available to the public for a fare; intercity bus transportation; van pools; subscription buses; tour and charter bus transportation; bus transportation of pupils for educational purposes; taxicabs licensed to conduct business in a municipality; rail passenger transportation; aviation ground support for regularly scheduled airlines; and special transportation services for the elderly or persons with disabilities.

Subp. 23. Person.

"Person" means an individual and any legally existing business, government unit, or institution.

Subp. 24. Plant protection.

"Plant protection" means sufficient heat and power to keep from freezing pipes and damaging equipment.

Subp. 25. Postal service.

"Postal service" means the delivery of first, second, or third class United States mail.

Subp. 26. Prime supplier.

"Prime supplier" means the producer or supplier now or hereafter making the first sale of middle distillates or motor gasoline subject to the state set-aside program for consumption within the state.

Subp. 27. Prime supplier's representative.

"Prime supplier's representative" means an individual who is authorized to act as liaison for the prime supplier in regular activities of the state set-aside program.

Subp. 28. Retail outlet.

"Retail outlet" means a person who sells refined petroleum products from fixed tanks in a fixed location to end users in retail volumes.

Subp. 29. Sanitation services.

"Sanitation services" means the activities of a person who supplies water to the public through public utilities, or collects or disposes of gaseous, liquid, or solid wastes for the public.

Subp. 30. Service.

"Service" means personal service or service by certified United States mail, postage prepaid, addressed to a person at the person's last known address.

Subp. 31. Shortfall.

"Shortfall" means the amount by which demand exceeds supply of crude oil or refined petroleum products during any month.

Subp. 32. State.

"State" means the state of Minnesota.

Subp. 33. State set-aside.

"State set-aside" means the amount of middle distillates or motor gasoline required to be made available by a prime supplier for utilization by the commissioner to resolve or mitigate emergencies or hardships due to shortages of supply.

Subp. 34. Supplier.

"Supplier" means a person, other than the United States Department of Defense, who furnishes a refined petroleum product or crude oil to end users, other suppliers, wholesale purchaser consumers, or wholesale purchaser resellers.

Subp. 35. Wholesale purchaser consumer.

"Wholesale purchaser consumer" means an end user who purchases truck transport volumes of middle distillate or motor gasoline or both from a prime supplier.

Subp. 36. Wholesale purchaser reseller.

"Wholesale purchaser reseller" means a person who obtains petroleum product from a supplier and, without additional refining, sells or transfers the product to other purchasers.

History

Statutory Authority: MS s 216C.16
History: L 1983 c 289 s 115 subd 1; L 1987 c 71 s 2; c 312 art 1 s 9,10; L 2001 1Sp4 art 6 s 1; L 2003 1Sp14 art 1 s 106; L 2005 c 56 s 2; L 2019 1Sp9 art 1 s 42

Minn. R. 7615.0120 Authority

Parts 7615.0100 to 7615.0350 are adopted pursuant to Minnesota Statutes, section 216C.16, subdivision 7.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9,10 subd 1

Minn. R. 7615.0130 Purpose

Parts 7615.0100 to 7615.0350 govern the administration of the state petroleum product set-aside program. The state set-aside program provides emergency petroleum supplies to relieve the hardship caused by shortages of refined petroleum products or other emergencies. The purpose of the program is to minimize the adverse impacts of shortages and dislocations on the state's citizens and economy.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9

Minn. R. 7615.0200 Monthly Reports

Subpart 1. Timing.

Each prime supplier and producer or supplier making the first sale of propane or residual fuel oil within the state shall submit to the office a monthly report. The report shall be submitted in time to be received by the office each month no later than the 25th day of the month.

Subp. 2. Content.

The report shall include actual volumes of product sold in the previous month and the forecasted volumes of product to be delivered in the month following the month in which the report is submitted. The following petroleum products shall be included in each monthly report:

A. propane (consumer grade);

B. motor gasoline (total);

C. unleaded motor gasoline;

D. kerosene;

E. number 1 distillate;

F. number 2 heating oil;

G. diesel fuel;

H. aviation gasoline;

I. kerosene base jet fuel;

J. naphtha base jet fuel;

K. number 4 distillate;

L. residual fuel oil with sulfur content equal to or less than one percent; and

M. residual fuel oil with sulfur content greater than one percent.

Subp. 3. Form.

The monthly reports shall be submitted in a standardized form approved by the office.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9

Minn. R. 7615.0210 Prime Supplier's Representative

Each prime supplier shall report to the office the name, mailing address, and telephone number of a representative to act for the company regarding state set-aside. The duties of this representative shall include confirming monthly state set-aside volumes and accepting and processing state set-aside orders.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9

Minn. R. 7615.0220 Nonpublic Data

Reports submitted pursuant to parts 7615.0200 to 7615.0220 are nonpublic data in accordance with Minnesota Statutes, section 13.68.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9

Minn. R. 7615.0300 Applications

Subpart 1. Who may apply.

The following persons may apply for state set-aside if they are supplied middle distillate or motor gasoline or both directly by a prime supplier:

A. a wholesale purchaser consumer or an end user seeking an assignment because of hardship or emergency; or

B. wholesale purchaser resellers seeking assignments to supply their traditional wholesale purchaser and end user accounts because of hardship or emergency.

Subp. 2. Form of application.

An applicant shall submit an application to the office for each month of hardship or emergency.

A. Except as provided in item B, applications shall be submitted in writing on forms approved by the office and signed by the applicant. Each application shall be verified and signed by a fuel coordinator attesting to the applicant's need for state set-aside products. The office may request reasonable additional information from an applicant as needed to support the claim of hardship or emergency.

B. An application may be made orally when extraordinary circumstances make it impossible for the applicant to submit a written application. When an oral application is made, the fuel coordinator shall orally certify to the office that the applicant has an emergency or hardship situation. It is the responsibility of the applicant to insure both that the fuel coordinator contacts the office and that the written application is submitted within five days following the oral application. If the written application is not submitted within five days following the oral application, the office may refuse to accept future oral requests from that applicant.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9

Minn. R. 7615.0310 Evaluation Criteria for Middle Distillates

Subpart 1. Amount.

The amount of middle distillates available for state set-aside is a volume equal to four percent of all prime suppliers' monthly supply estimate as stated in the monthly report filed pursuant to parts 7615.0200 to 7615.0220. Applicants shall specify the gallons requested for each end user category and the reason for any need of volumes in excess of contract volumes. All assignments shall be based on the priorities in subparts 2 to 5.

Subp. 2. First priority.

First priority middle distillate users include:

A. agriculture;

B. emergency services;

C. essential services;

D. heating customers with no alternate source of fuel, including hospitals, multiunit housing, nursing homes, and residences;

E. major industrial and commercial activities whose continued operation is essential to the economic well being of an area, including auto manufacturing and mining;

F. minimum plant and building protection; and

G. passenger transportation.

Subp. 3. Second priority.

Second priority middle distillate users are heating customers on interruptible natural gas or another primary source of fuel. They include hospitals, multiunit housing, nursing homes, and residences.

Subp. 4. Third priority.

Third priority middle distillate users include government buildings, for heating; industrial and commercial activities not included in subpart 2; and schools.

Subp. 5. Priorities during fuel oil emergencies.

Notwithstanding the priorities stated in subparts 2, 3, and 4, when an energy supply fuel oil emergency has been declared pursuant to chapter 7620 and Minnesota Statutes, section 216C.15, the priorities stated in part 7620.0400 shall apply.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9,10 subd 1

Minn. R. 7615.0320 Evaluation Criteria for Motor Gasoline

Subpart 1. Volume.

The volume of motor gasoline available for state set-aside is a volume equal to three percent of all prime suppliers' monthly supply estimate as stated in the monthly report filed pursuant to parts 7615.0200 to 7615.0220. The office may assign state set-aside motor gasoline volumes, when the applicant submits accurate and complete documentation, based on the criteria in subparts 2 to 5.

Subp. 2. Agricultural motor gasoline shortfall.

If the traditional supplier of an agricultural operation is unable to supply average motor gasoline use, the office may release amounts of state set-aside equal to the shortfall. The office may require the applicant to list the name, telephone number, and average motor gasoline use of the ultimate consumer.

If unusual weather conditions, natural disasters, or other extreme occurrences require more than average motor gasoline use, the office may make a state set-aside assignment to satisfy the greater requirement. In these cases, the applicant shall provide the office with the current monthly requirement and a justification for the request.

Subp. 3. Community or area hardship.

Community or area hardship:

A. If a supplier pullout produces a shortfall of motor gasoline in a local area, a wholesale purchaser reseller in the area may apply for a state set-aside assignment. The applicant shall submit the name, address, and approximate gallons per month sold by the supplier who has pulled out.

B. State set-aside may be assigned to alleviate a shortfall caused by the closing of a motor gasoline retail outlet in a community. The applicant must certify that residents would have to drive 20 or more miles round trip to obtain motor gasoline between the hours of 7:00 a.m. and 8:00 p.m. and provide the office with the name, address, and approximate gallons per month sold of all retail outlets which have opened or closed in the last calendar year within a ten-mile radius of the retail outlet requesting the state set-aside assignment.

C. A wholesale purchaser reseller may receive an assignment on the basis of unusual growth if the applicant can demonstrate the existence of a shortfall because of a population increase in the community of over ten percent since 1980, new business in the community employing 500 or more employees since 1980, or relocation of a highway since 1980.

D. The office may assign state set-aside motor gasoline to a retail outlet that has historically remained open 24 hours a day and provided emergency road service.

Subp. 4. Natural disasters.

The office may assign state set-aside motor gasoline to alleviate a shortage of motor gasoline due to a natural disaster including: floods; blizzards; fire; high winds; and tornadoes. Applicants shall state the nature of the disaster, the number of gallons sold, and to whom.

Subp. 5. Priority vehicles.

The office may assign state set-aside motor gasoline to meet the requirements of certain priority vehicles because of a shortfall. Applicants may apply for state set-aside to make up the difference between 100 percent of contract volume and the amount of supply currently available for the following types of priority vehicles: emergency services, essential services, and passenger transportation services.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9

Minn. R. 7615.0330 Application Processing Procedures

Subpart 1. Investigations.

The office may initiate an investigation of any statement in an application and utilize in its evaluation of the application any relevant facts obtained by the investigation. The office may solicit and accept information from third persons relevant to any application, provided that the applicant is afforded an opportunity to respond.

Subp. 2. Additional information.

If the office determines that the application does not have sufficient information to support a decision, it may request the necessary additional information from the applicant. If the applicant repeatedly or willfully fails to supply additional information, the office may deny the application.

Subp. 3. Processing.

The office shall process applications each month for that month as follows:

A. Applications made by wholesale purchaser consumers or by wholesale purchaser resellers on behalf of wholesale purchaser consumers or end users shall be processed within five working days after receipt.

B. Except when the applicant applies for state set-aside under part 7615.0320, subpart 3, applications that are made by or on the behalf of retail outlets shall be processed within five working days after the 15th day of the month.

C. Applications needing additional information shall be processed within five working days after receipt of the requested information.

Subp. 4. Implementation.

State set-aside assignments shall be implemented as follows:

A. Upon approval or modification of a request for state set-aside product, the office shall issue an order authorizing the assignment and serve it on the prime supplier from whom the state set-aside product is to be drawn.

B. Upon denial of an application, the office shall notify the applicant in writing, stating the reason for denial.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9

Minn. R. 7615.0340 Appeals Process

Subpart 1. Process.

Within ten days after the effective date of an order or the mailing date of a denial, any person aggrieved may appeal in writing to the commissioner. The written appeal shall include:

A. the reason for the appeal, including why the action by the office is deemed unwise or unjust;

B. the names, addresses, and telephone numbers of any persons whom it is believed might be injured by the order being appealed; and

C. the objective of the appeal, including reversal of the office action, modification of the action, or other remedies.

Subp. 2. Commissioner's action.

Within five days of receipt of the appeal, the commissioner shall:

A. set a hearing date at least ten days after initiation of the appeal;

B. serve all interested parties with a copy of the appeal and notice of the time and place of the hearing; and

C. issue a stay of the order if it appears probable that a party may suffer serious injury, the order appears in conflict with Minnesota Statutes, section 216C.16 or other law, or it appears probable that the board will grant the appeal.

Subp. 3. State set-aside appeals board.

The state set-aside appeals board consists of:

A. the commissioner or the commissioner's designee, as chairperson;

B. the commissioner of the Minnesota Department of Agriculture or designee thereof;

C. the commissioner of commerce of the Minnesota Department of Commerce or designee thereof;

D. the director of the Office of Emergency Management of the Minnesota Department of Public Safety or designee thereof; and

E. the chairperson of the Minnesota Public Utilities Commission or designee thereof.

Subp. 4. Decisions on appeals.

The commissioner plus any two or more additional members may hear and decide appeals.

Subp. 5. Informal disposition.

At any time during the proceedings, the affected parties may conclude a mutually acceptable settlement of the appeal.

History

Statutory Authority: MS s 216C.16
History: L 1983 c 289 s 114 subd 1; L 1984 c 655 art 1 s 92; L 1987 c 71 s 2; c 312 art 1 s 9,10 subd 1

Minn. R. 7615.0350 Hearings

Subpart 1. Rights of parties to hearing.

Affected parties have a right to:

A. a hearing before the board;

B. representation by an attorney;

C. present public evidence;

D. present witnesses who will testify under oath;

E. cross examine witnesses; and

F. present rebuttal testimony and argument.

Subp. 2. Rules of evidence.

The board shall admit and consider any reasonable evidence. The board may exclude evidence it determines to be immaterial, irrelevant, or repetitious. The board shall consider only the evidence which is entered into the public record of the hearing.

If the board desires to use technical facts within its specialized knowledge or publicly accepted facts that were not part of the evidence presented, the board shall notify the parties and give them an opportunity to rebut those facts. After the rebutting evidence is received and reviewed, the board shall review all the evidence when making the decision.

Subp. 3. Public record of hearing.

The board shall prepare an official record, which shall include:

A. all pleadings, motions, and intermediate rulings;

B. evidence received or considered;

C. a statement of facts not introduced in evidence but considered by the board and questions of those facts by affected persons including rebuttals and objections;

D. proposed findings and exceptions;

E. any decision, opinion, or report by the board; and

F. all memoranda or data submitted to the board by the office except advice of the office's attorney.

Subp. 4. Verbatim record.

The board shall make a verbatim record of the hearing on recording equipment. Any party may request that a court reporter make the record, but that person shall pay the court reporter's fee. The board shall transcribe the record only upon request and only if the requester agrees to pay for the cost of transcribing.

Subp. 5. Hearing procedure.

Hearing procedure:

A. If the appellant fails to appear, the board may declare a default and deny the appeal.

B. After opening the hearing, the chairperson shall read the rights of the parties to the hearing and the rules regarding evidence, from subparts 1 and 2. The chairperson shall also call for the parties to present any written matter that they wish to introduce as an exhibit and offer as evidence.

C. A representative of the office shall introduce the jurisdictional exhibits including the written appeal received by the commissioner, the notice of hearing, and any agreements entered into by the parties to the appeal.

D. The appellant may make an opening statement. Other parties may make statements in the order determined by the board.

E. After opening statements, the appellant may present its case. Other parties may present their cases in the order determined by the board.

F. The board shall determine the order for cross examining witnesses.

G. The parties may next give oral or written rebuttal evidence and final arguments in the order determined by the board.

H. After final arguments, the board may: close the hearing; announce the time and place of the next hearing; or continue the hearing to some future time. The board shall give a five-day written notice to all parties prior to holding a continued hearing.

Subp. 6. Decorum.

The chairperson may take action to insure the orderly conduct of public business at the hearing, as authorized by Minnesota Statutes, section 624.72, subdivision 3.

Subp. 7. Decision.

Within five days after the hearing is closed, the board shall issue its decision on the appeal.

The decision shall state that the denial or order of the office was modified, reversed, or upheld. If modified or reversed, the decision must state exactly what action is required. The decision shall state the conclusions of fact and law used to reach the ruling.

The commissioner shall, by the close of the working day following the decision, serve a copy of the decision on the parties to the hearing.

History

Statutory Authority: MS s 216C.16
History: L 1987 c 312 art 1 s 9

Chapter 7620 PETROLEUM SUPPLY EMERGENCIES

Minn. R. 7620.0100 Definitions

Subpart 1. Scope.

For purposes of parts 7620.0100 to 7620.0730 the terms defined in this part have the meanings given them.

Subp. 2. Agriculture.

"Agriculture" means activities of establishments primarily engaged in food production, processing, and sale classified under the industry code numbers specified below as set forth in "Standard Industrial Classification Manual," 1972 edition, and the transport of goods and commodities for the below defined activities:

A. Major Group 01 - Crops, except for industry code numbers 0132 tobacco, and 0181 ornamental floriculture and nursery products;

B. Major Group 02 - Livestock, except for animal specialties, industry code numbers 0271, 0272, and 0279;

C. Major Group 07 - Agricultural Services, except for industry code numbers 0742 veterinary services for animal specialties, 0752 animal specialty services, 0781 landscape counseling and planning, 0782 lawn and garden services, and 0783 ornamental shrub and tree services;

D. Major Group 09 - Fishing, Hunting, and Trapping;

E. Major Group 20 - Food and Kindred products, except for all industry codes under Group 208 Beverages, and 2065 candy and other confectionery products;

F. Group 514 - Groceries and Related Products (all industry codes found thereunder);

G. Group 515 - Farm Product Raw materials (all industry codes found thereunder); and

H. Major Group 54 - Food Stores.

Subp. 3. Assistant commissioner.

"Assistant commissioner" means the assistant commissioner of the Minnesota Department of Commerce who heads the Energy Division.

Subp. 4. Baseline consumption.

"Baseline consumption" means the reasonable estimate of the amount of motor fuel consumed by employees or students in commuting to and from the worksite plus the amount of motor fuel consumed for a school's or an employer's travel, over a period which represents the normal level of operation. For determining baseline consumption any of the following methods shall constitute a representative period for the purpose of these rules: the preceding 12 months; or the most recent three-year average; or a 12-month "rolling base" where the most recent month's data is added and the thirteenth month's data deleted.

Subp. 5. Btu.

"Btu" means British thermal unit, a unit of energy measurement used for comparative purposes.

Subp. 6. Cargo, freight, and mail hauling, including newspaper deliveries.

"Cargo, freight, and mail hauling, including newspaper deliveries" means: motor carriers for hire, licensed and operating under Minnesota Statutes, sections 221.012 to 221.293 including independent owner-operators transporting goods under a lease or contract indicating their "for hire" status, where the lease can be produced by the driver-operator; local cartage carriers, licensed and operating under Minnesota Statutes, section 221.296; interstate motor carriers, operating in Minnesota under Minnesota Statutes, sections 221.60 to 221.68; mail hauling by any motor vehicle owned and operated by the United States Postal Service; and newspaper delivery by a motor vehicle identified as a newspaper carrier; trucks that have truck bodies specifically designed for cargo and freight hauling and are commercial vehicles as defined in subpart 9; and rail, barge, and ship transportation of cargo or freight.

Subp. 7. Carpool.

"Carpool" means a continuing travel arrangement by which three or more persons travel together in a vehicle owned or rented by one or more of such persons.

Subp. 8. Commercial building.

"Commercial building" means a building all of whose occupants are engaged in commerce, unless residential occupants have separate heating controls.

Subp. 9. Commercial vehicles.

"Commercial vehicles" means vehicles registered and licensed in the commercial class with the Division of Driver and Vehicle Services of the Department of Public Safety, or vehicles that by their design, size, or company identification or by the presence of specialized equipment, tools, or instruments of the trade or profession or other evidence of commercial use are obviously being used for commercial purposes.

Subp. 10. Commissioner.

"Commissioner" means the commissioner of the Minnesota Department of Commerce.

Subp. 11. Company-owned vehicles.

"Company-owned vehicles" means passenger automobiles, vans, and light trucks owned or leased by the employer.

Subp. 12. Consumer.

"Consumer" means a person that consumes fuel oil, or motor fuel whether diesel fuel, gasoline, propane, or alcohol.

Subp. 13. County or municipal fuel coordinator.

"County or municipal fuel coordinator" means a person who has been appointed by the county board or city council to act as local fuel allocation resource person.

Subp. 14. Demand.

"Demand" means the quantity of products or services for which there are willing and able purchasers.

Subp. 15. Department.

"Department" means the Minnesota Department of Commerce.

Subp. 16. Division.

"Division" means the Division of Emergency Management of the Department of Public Safety.

Subp. 17. Division director.

"Division director" means the director of the Division of Emergency Management.

Subp. 18. Electric utility.

"Electric utility" means an entity engaged in the generation, transmission, or distribution of electric energy for sale.

Subp. 19. Emergency vehicle.

"Emergency vehicle" means any of the following vehicles: a vehicle of a fire department or fire-fighting unit; a publicly owned law enforcement vehicle or privately owned vehicle used by a law enforcement officer for police work under agreement, express or implied, with the local authority; a vehicle of a licensed emergency ambulance service, whether publicly or privately owned; an emergency vehicle of a municipality, department or public service corporation including emergency services vehicles approved by the chief of police of a municipality, the county sheriff, or the division director; a vehicle of a utility or contractor while performing emergency repairs or maintenance for electric, water, waste treatment, natural gas or telecommunications utilities and end user primary services, and petroleum, petroleum products or natural gas pipelines or facilities; a vehicle of the state, county, municipal, or other subdivision of government used for snow removal, emergency road and traffic signal repair or search and rescue operations, or privately owned vehicles of a contractor under contract to perform these services.

Subp. 20. Employer-provided parking.

"Employer-provided parking" means a space such as a lot, garage, or other space, or portion thereof, which is used for the parking of commuter vehicles, and which is wholly or partly owned or leased by an employer or otherwise made available to its employees, except that this term shall not include park and ride facilities or customer parking provided by a retail or service establishment.

Subp. 21. Employment site.

"Employment site" means a building, facility, complex or site at which employees work or study, or any combination of such buildings or sites which are geographically close.

Subp. 22. Energy production.

"Energy production" means transportation of energy or primary fuels by pipeline, transmission line, rail, barge or a motor carrier included in the definition of cargo, freight and mail hauling or other trucks and the refining, processing, production and distribution of coal, natural gas, petroleum or petroleum products, shale oil, nuclear fuels, and electrical energy.

Subp. 23. Environmental standards.

"Environmental standards" means the laws, regulations, and rules, federal and state, intended to protect the environment.

Subp. 24. Essential government services.

"Essential government services" means court and judicial activities, jails and prisons, meetings of duly elected political officials, operations of the Division of Emergency Management and the emergency operating center, hearings of local energy conservation boards and the Office of Administrative Hearings, minimum services to provide MFIP, SSI, and Social Security checks and other welfare payments including SNAP, and activities which provide life-sustaining services.

Subp. 25. Extracurricular activities.

"Extracurricular activities" means school-sponsored activities requiring transportation off campus, except for the daily transportation of students to and from school.

Subp. 26. Flexible work hours.

"Flexible work hours" or "flextime" means a work system in which employees at an employment site have some discretion in their choice of working hours.

Subp. 27. Forecast.

"Forecast" means a projection of future demand or supply for a specified time period.

Subp. 28. Fuel oil.

"Fuel oil" means a liquid or liquefiable petroleum product with a flashpoint above 100 degrees Fahrenheit which is used to generate heat or power including middle distillate oil or residual oil.

Subp. 29. Health and residential care services.

"Health and residential care services" means hospitals, nursing homes, penal institutions, and all types of residential treatment centers including drug/alcoholism treatment centers, residential mental health centers, and residential care centers for persons with developmental or other disabilities.

Subp. 30. Highways.

"Highways" means interstate, trunk, county state-aid, county, and municipal state-aid highways in Minnesota, as defined in Minnesota Statutes, section 160.02, subdivisions 17, 18, 21, 26, and 29, and United States Code 1980, title 23, section 101.

Subp. 31. Homeowner.

"Homeowner" means a person who has a vested legal or beneficial interest, jointly or severally, in a dwelling which is occupied by that person.

Subp. 32. Jitney.

"Jitney" means a spontaneous carpool formed by driving along an existing transit route and picking up riders for a fare or participating in a telephone ride exchange system. Jitneys supplement existing transit service.

Subp. 33. Licensed motor vehicle dealer.

"Licensed motor vehicle dealer" means a motor vehicle seller or lessor licensed to do business under Minnesota Statutes, section 168.27, subdivisions 2 to 25.

Subp. 34. Middle distillate.

"Middle distillate" means a derivative of petroleum, including kerosene, home heating oil, range oil, stove oil, and diesel fuel, which has a 50 percent boiling point in the ASTM D86 standard distillation test falling between 370 degrees and 700 degrees Fahrenheit, except that kerosene-base and naphtha-base jet fuel, heavy fuel oils as defined in ASTM D-396, grades #4, 5, and 6, intermediate fuel oils (which are blends containing #6 oil), and specialty items such as solvents, lubricants, waxes, and process oil are excluded.

Subp. 35. Military uses.

"Military uses" means the activities of the armed forces of the United States and of the Minnesota Department of Military Affairs, the Office of Adjutant General, military reservations, installations, armories, air bases, and facilities owned or controlled by the state for military purposes, and includes the National Guard, the state guard, and any other organization or components of the organized militia authorized by Minnesota Statutes, chapters 190 to 193, known as the Military Code.

Subp. 36. Moped.

"Moped" means a pedal bicycle or similar two-wheel vehicle propelled by a motor.

Subp. 37. Motorcycle.

"Motorcycle" means a vehicle with two wheels in tandem, propelled by an internal combustion engine, and sometimes having a sidecar with a third wheel.

Subp. 38. Motor fuel.

"Motor fuel" means a mixture of volatile hydrocarbons, suitable for operation of an internal combustion engine.

Subp. 39. Motor vehicle owner.

"Motor vehicle owner" means a person owning or renting a motor vehicle, or having exclusive use thereof, under a lease or otherwise, for a period greater than seven days.

Subp. 40. Park and ride facility.

"Park and ride facility" means a parking facility the use of which is limited exclusively to the parking of commuter vehicles whose occupants transfer at the facility to transit or paratransit services.

Subp. 41. Passenger transportation services.

"Passenger transportation services" means conventional public transit service which operates on a fixed route and is available to the public for a fare, intercity bus transportation, vanpools, subscription buses, tour and charter bus transportation, bus transportation of pupils for educational purposes, taxicabs licensed to conduct business in a municipality, air and rail passenger transportation except for air charter services, and special transportation services for the elderly or persons with disabilities.

Subp. 42. Permit sticker.

"Permit sticker" means a self-adhesive tag issued by the Department of Public Safety to designate the weekday on which a vehicle issued that sticker is prohibited from being operated.

Subp. 43. Person.

"Person" means an individual, firm, estate, trust, sole proprietorship, partnership, association, company, corporation, governmental unit or subdivision thereof, or a charitable or educational institution.

Subp. 44. Plant protection.

"Plant protection" means minimum plant maintenance necessary to secure buildings and prevent damage to equipment or plant property from inclement weather or loss of essential processes.

Subp. 45. Prohibited day.

"Prohibited day" means the day for which a vehicle owner has been issued a permit sticker, designating it a "no driving" day for that vehicle.

Subp. 46. Residence.

"Residence" means the place where a natural person lives, including hotels and motels and buildings being used as emergency housing facilities.

Subp. 47. Residual fuel oil.

"Residual fuel oil" means the fuel oil commonly known as: number 4, number 5, and number 6 fuel oils; bunker C; navy special fuel oil; and all other fuel oils that have a 50 percent boiling point over 700 degrees Fahrenheit in the ASTM D-86 standard distillation test.

Subp. 48. Sanitation services.

"Sanitation services" means: the collection and disposal for the public of solid or liquid wastes and hazardous wastes, whether by public or private entities; the maintenance, operation and repair of liquid purification and waste facilities; and the provision of a water supply by public utilities, whether private or publicly owned and operated.

Subp. 49. Shortage.

"Shortage" means a situation in which demand exceeds supply and normal market forces will not act to equalize supply and demand within a reasonable period.

Subp. 50. Staggered work hours.

"Staggered work hours" means employee starting and quitting times stipulated at step intervals by the employer so that work arrival and departure times of employees on a single shift are spread over a period of at least two hours.

Subp. 51. State set-aside.

"State set-aside" means the amount of an allocated product from the total supply of a supplier made available to the state to meet emergencies and hardship needs under Minnesota Statutes, section 216C.16.

Subp. 52. Subscription bus.

"Subscription bus" means a transit service in which employers or groups of employees contract with a public or private bus operator to provide daily commuter service for a group of subscribers on a prepaid or daily fare basis, following a fixed route and a schedule tailored to meet the needs of the subscribers.

Subp. 53. Supplier.

"Supplier" means a firm or a part of a subsidiary of a firm (other than the Department of Defense) which presently supplies, sells, transfers, or otherwise furnishes (as by consignment) a petroleum product to wholesale purchasers or end users, including refiners, natural gas processing plants or fractioning plants, importers, resellers, jobbers, and retailers.

Subp. 54. Telecommunications.

"Telecommunications" means the repair, operation, and maintenance of voice, data, telegraph, video, and similar communication services for the public by a communications common carrier, or by a firm providing the same service in direct competition with a communications common carrier.

Subp. 55. Tenant.

"Tenant" means a person who occupies (but does not own) a dwelling under an oral or written agreement, lease, or contract, for a period of time, which requires the payment of rent.

Subp. 56. Vanpool.

"Vanpool" means eight or more persons commuting on a daily basis to and from work in a vehicle with a seating arrangement designed to carry eight to 15 adult passengers.

Subp. 57. Vehicle lessee.

"Vehicle lessee" means a person, firm, or corporation possessing a motor vehicle by lease.

History

Statutory Authority: MS s 216C.15
History: L 1983 c 289 s 115 subd 1; L 1987 c 71 s 2, c 312 art 1 s 9,10 subd 1; L 2001 1Sp4 art 6 s 1; L 2003 1Sp14 art 1 s 106; L 2005 c 56 s 2; L 2006 c 212 art 1 s 25; L 2019 1Sp9 art 1 s 42

Minn. R. 7620.0120 Authority

These parts are authorized by Minnesota Statutes, section 216C.15. These parts will also meet, in part, federal requirements set forth in the Emergency Energy Conservation Act of 1979, section 212, United States Code, 1976 and 1979 supplement III, title 42, section 8512.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9,10 subd 1

Minn. R. 7620.0130 Purpose

These parts identify measures that may be used in the event of a petroleum supply emergency. The further purposes of these parts are: to protect the health and safety of the citizens of the state by ensuring that certain priority petroleum users have sufficient fuel to conduct essential activities; to facilitate the distribution of supplies to the public in a fair manner; to identify and authorize the actions to be undertaken by governmental agencies in an energy supply emergency; to describe the responsibilities of major employers and school district authorities in petroleum supply emergency planning and implementation; to establish an appeals system and procedures for exemptions from and exceptions to emergency measures; and to authorize the state executive to provide for the public health, safety, and welfare during an energy supply emergency.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0140 Scope of Rules

These parts shall apply:

A. generally, during a declared energy supply emergency (see part 7620.0210);

B. generally, during a declared energy supply alert (see part 7620.0200); and

C. to the Minnesota Department of Commerce when the department is preparing to recommend that an energy supply alert or an energy supply emergency be declared.

History

Statutory Authority: MS s 216C.15
History: L 1983 c 289 s 115 subd 1; L 1987 c 312 art 1 s 9; L 2001 1Sp4 art 6 s 1

Minn. R. 7620.0200 Energy Supply Alert

An energy supply alert shall be declared to inform Minnesota citizens of a potential energy shortage, encourage conservation, and initiate a state of readiness for the shortage.

An energy supply alert may be declared when the department forecast indicates a reasonable likelihood that an energy supply shortage will occur within six months from the date of declaration.

The commissioner shall have sole responsibility for declaring an energy supply alert.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0210 Energy Supply Emergency

Subpart 1. Definition.

An energy supply emergency is a state of declared emergency resulting from a shortage of energy resources, including petroleum products, natural gas, or electricity.

Subp. 2. Department of Commerce.

When the department's forecast shows that short-term demand for a fuel or fuels exceeds the forecast of short-term supply and that a supply shortage will occur within three months, the commissioner may recommend that an energy supply emergency be declared by submitting a written statement to the Executive Council or legislature. The statement shall include the factors the commissioner considered in reaching a decision to recommend that an emergency be declared and the reasons for the recommendation.

Subp. 3. Executive Council or legislature.

The Executive Council (consisting of the governor, the lieutenant governor, the attorney general, the auditor, and the secretary of state) or the legislature has responsibility for declaring an energy supply emergency.

An energy supply emergency automatically expires in 30 days, unless renewed by the legislature. Each renewed energy supply emergency may not continue for longer than 30 days, unless otherwise provided by law. Minnesota Statutes, section 216C.15, subdivision 3.

Emergencies may be declared for all or part of the state and measures may be invoked accordingly. The declaration of emergency shall define the geographic area included in the energy supply emergency.

The declaration shall be promptly disseminated and brought to the attention of the general public by the Executive Council or legislature, whichever body declares the emergency. The energy supply emergency resolution shall be promptly filed with the division, the department, and the secretary of state.

History

Statutory Authority: MS s 216C.15
History: L 1983 c 289 s 115 subd 1; L 1987 c 312 art 1 s 9,10; L 2001 1Sp4 art 6 s 1; L 2003 c 112 art 2 s 50

Minn. R. 7620.0220 Operating Organization During Emergency

Subpart 1. Energy emergency operating center.

During a declared energy supply emergency, the division will set up an energy operating center.

The director of the emergency operating center will be the division director. The division director shall oversee the implementation of the emergency plan.

The emergency operating center will be located at a site designated by the division director and staffed by personnel from the division, the department and other state agencies as deemed necessary by the division director and approved by the governor.

Subp. 2. Minnesota Department of Commerce.

The department shall assist the division by analyzing the energy supply situation, evaluating alternative courses of action included in the emergency plan, and advising on the proper time and sequence for implementing emergency measures.

The department shall select and recommend to the governor the least restrictive measures specified in parts 7620.0500 to 7620.0730, capable of eliminating a fuel shortage.

The assistant commissioner shall review employer and school district conservation plans and certify those which meet the requirements set out in part 7620.0620 or 7620.0630.

The commissioner shall make the final decision on each appeal taken from measures contained in these parts.

Subp. 3. Emergency services.

The division shall implement the energy emergency plan and coordinate the emergency operations of government agencies involved in energy supply emergency actions.

The division shall use the regional and local fuel coordinators to coordinate emergency operations throughout the state.

By January 1, 1983, the Division of Emergency Management shall develop an internal management and operations plan for implementing the measures contained in these parts.

Subp. 4. Directing state agencies.

The governor may order any state agency or department to carry out the measures contained in these parts under the powers given the governor in the Minnesota Civil Defense Act, Minnesota Statutes, chapter 12.

History

Statutory Authority: MS s 216C.15
History: L 1983 c 289 s 115 subd 1; L 1987 c 71 s 2; c 312 art 1 s 9; L 2001 1Sp4 art 6 s 1

Minn. R. 7620.0230 Local Energy Conservation Board

Subpart 1. Counties and cities.

Each county and each city of the first class shall create a local energy conservation board to hear requests for exemptions or exceptions to the measures listed in parts 7620.0510, 7620.0520, 7620.0530, subparts 1 and 4, 7620.0600, 7620.0610, and 7620.0640 to 7620.0730.

The governor may order additional local energy conservation boards to be established upon the department's determination that additional boards are necessary to ensure compliance with the timing provisions in part 7620.0330.

The appointment of additional local energy conservation boards and their conduct shall be governed by the procedures set forth in subpart 2 and parts 7620.0310 to 7620.0340.

Subp. 2. Members.

The chair of the county board of commissioners shall appoint a five-member county local energy conservation board which includes two elected officials from the county or municipalities within the county, a health professional, the county fuel coordinator and a member of the public. If the county fuel coordinator is not able to sit on the local conservation board, an additional member shall be selected from the public. The county attorney shall advise the local energy conservation board.

For cities of the first class and other designated municipalities, the chair of the city council shall appoint a five-member municipal local energy conservation board which includes two elected city officials, the city fuel coordinator, a health professional, and a member of the public. If the city fuel coordinator is not able to sit on the local conservation board, an additional member shall be selected from the public. The city attorney shall advise the local energy conservation board.

Subp. 3. Appointments.

Appointments to the local energy conservation board shall be made when an energy supply alert or energy supply emergency is declared. The appointer shall make reasonable efforts to avoid any conflict of interests in appointing the members of the local energy conservation board.

Subp. 4. Quorum.

Three members shall constitute a quorum. The chair of the local energy conservation board shall be designated by the appointing authority.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0240 Penalties

Subpart 1. Statutory penalties.

Penalties for the violation of any provision of the plan are set out in Minnesota Statutes, section 216C.30.

Subp. 2. Misdemeanor.

Any person who violates the plan or knowingly submits false information in any report required by the plan shall be guilty of a misdemeanor. Maximum penalty is $500 or 90 days or both. Each day of violation shall constitute a separate offense.

Subp. 3. Enforcement.

The plan may be enforced by injunction, action to compel performance, or other appropriate action in the district court of the county where the violation takes place. The existence of an adequate remedy at law shall not be a defense to such an action.

Subp. 4. Civil penalties.

A court which finds that a person has violated a requirement of the plan or has knowingly submitted false information in any report required by the plan, or has violated a court order issued pursuant to the plan may impose a civil penalty of not more than $10,000 for each such violation. These funds are payable to the general fund in the state treasury.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9,10 subd 1

Minn. R. 7620.0300 Location of Appeal

An appeal shall be delivered by mail or in person to the following location:

A. An appeal of mandatory measures, except those described in part 7620.0530, items A and B and part 7620.0610, shall be heard by the local energy conservation board and should be directed to the county courthouse, or the mayor's office, whichever is appropriate.

B. An appeal from a decision not to certify an employer conservation plan and an appeal from an order to implement an employer plan shall be heard by an administrative law judge appointed by the chief administrative law judge and shall be directed to the Office of Administrative Hearings, 5th Floor, Flour Exchange Building, 310 Fourth Avenue South, Minneapolis, Minnesota 55415.

C. An appeal of an order to curtail delivery of fuel oil, part 7620.0530, item C, or an order to adopt emergency rules for relaxation of environmental standards part 7620.0530, item A, and an appeal of priority status shall be heard by an administrative law judge appointed by the chief administrative law judge and shall be directed to the Office of Administrative Hearings, 5th Floor, Flour Exchange Building, 310 Fourth Avenue South, Minneapolis, Minnesota 55415.

History

Statutory Authority: MS s 216C.10
History: L 1984 c 640 s 32; L 1987 c 312 art 1 s 9

Minn. R. 7620.0310 Content of Appeal

Subpart 1. Action related to declared energy supply emergency.

An appeal from an action taken pursuant to a declared energy supply emergency or under authority of these parts shall be in writing and signed by the appellant. The appeal shall state:

A. full identification of appellant and where appellant can be located to receive notice of decision;

B. the action from which the appeal is made, including the individual or unit of government taking the action, and the date and nature of the action;

C. the bases of the appeal, including the reasons the appellant believes the action to be unjust or unwise;

D. the names and addresses of persons known to the appellant who might be adversely or beneficially affected by the outcome of the appeal;

E. the nature of the relief sought, whether reversal, modification, or some other relief.

Subp. 2. Other appeals.

The appeal of a decision not to certify an employer conservation plan or of an order to implement all or any part of an approved conservation plan shall include a description of the existing or proposed conservation programs through which the employer claims compliance with part 7620.0610. In the case of an appeal from a decision not to approve part 7620.0610, subpart 11, item A employer plans (submitted after an energy supply emergency is declared), the appeal shall also contain documentation of the methodology on which the claim of motor fuel savings or program performance is based and a calculation of appellant's baseline consumption.

History

Statutory Authority: MS s 216C.10
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0320 Timing and Procedures

Subpart 1. Hearing date.

Within three working days after receipt of an appeal, the local conservation board or administrative law judge, whichever is appropriate, shall set a hearing date. The hearing shall be held as soon as practicable but not later than seven working days after receipt of the appeal, unless appellant requests a later hearing date. The chair of the local conservation board (or designate), or the administrative law judge, shall notify all known affected persons, either verbally or in writing, of the appeal and the time and place for the hearing, not less than two working days before the hearing. An appeal shall be considered received when it has arrived at the appropriate location designated in part 7620.0300. A local energy conservation board may convene at any location within its jurisdiction for expediting appeals and decreasing the distance to the hearing for appellants.

Subp. 2. Administrative Procedure Act.

Appeals shall be governed by the Administrative Procedure Act, Minnesota Statutes, chapter 14 and the rules of the Office of Administrative Hearings, parts 1400.5010 to 1400.8400, except that during an energy supply emergency the provisions of parts 7620.0300 to 7620.0340 shall supersede the above-cited rules wherever the two conflict with one another.

Subp. 3. Parties.

The parties to an appeal from actions taken during a declared energy supply emergency shall be the appellant and the emergency operating center. Appeals from a decision not to certify an employer or school district conservation plan shall name the assistant commissioner as a party to the appeal.

Subp. 4. Representation.

A party may be represented by counsel.

Subp. 5. Compliance by appellant.

An appellant subject to provisions of these parts must comply with all applicable mandatory measures or requirements pending a final decision on the appeal. A final decision shall be made under part 7620.0340.

Subp. 6. Informal disposition.

Informal disposition of an appeal or any issue in an appeal may be made at any point in the proceeding by stipulation, agreed settlement, or consent order between the appellant and the emergency operating center. In the case of employer and school district conservation plans, the assistant commissioner shall have the power to informally dispose of an appeal by agreement or consent order.

Subp. 7. Appellant's failure to appear.

Failure of an appellant to appear after timely notice is sufficient cause for denial of an appeal.

Subp. 8. Operating center's failure to appear.

The failure of the emergency operating center to appear at a hearing of a local energy conservation board on an appeal from an emergency measure shall not constitute a default or bar the commissioner from reversing the board's decision so long as the commissioner complies with the timing provisions in part 7620.0340, subpart 3.

Subp. 9. Prehearing conference.

The administrative law judge or local energy conservation board may order a prehearing conference to be held at any time prior to a hearing, if a conference may simplify the issues or provide an opportunity for settlement. If a prehearing conference is ordered, notice of the time and place of the conference shall be served on all parties to the appeal not less than two working days before the date of the conference.

Subp. 10. Appeals not to be heard.

Appeals shall not be heard if received more than ten working days after the termination or expiration of the energy supply emergency.

History

Statutory Authority: MS s 216C.10
History: L 1984 c 640 s 32; L 1987 c 312 art 1 s 9, c 384 art 2 s 1; 26 SR 391

Minn. R. 7620.0330 Hearings

Subpart 1. Conduct of hearing.

An appellant has a right to a hearing before the local energy conservation board, or the administrative law judge, whichever is appropriate. (See part 7620.0300.) At the hearing the parties may present and cross examine witnesses, and present written evidence, rebuttal testimony and argument with respect to the issue or issues raised in the appeal.

Subp. 2. Official record.

The local energy conservation board or the administrative law judge shall prepare an official record of each hearing. A party requesting a verbatim transcript of the hearing shall bear the expense of preparing the transcript.

Subp. 3. Procedures.

The chair of the local energy conservation board and the administrative law judge shall use procedures set by the Office of Administrative Hearings at the hearing. The administrative law judge or local conservation board may prohibit devices which interfere with the hearing and may evict persons who disrupt the hearing.

History

Statutory Authority: MS s 216C.15
History: L 1984 c 640 s 32; L 1987 c 312 art 1 s 9

Minn. R. 7620.0340 Decision

Subpart 1. Basis.

No factual information or evidence which is not part of the record shall be considered by the board or the administrative law judge in deciding an issue in an appeal, except that official notice may be taken of pertinent facts.

Subp. 2. Recommended decision.

Within two working days after the hearing is closed, the local conservation board or the administrative law judge shall issue a recommended decision in writing, including the findings and conclusions on which the decision is based. A copy of the recommendation shall be served by first class mail on all parties to the appeal and delivered to the commissioner with the whole record of the appeal. Service is effective on the postmark date.

Subp. 3. Decision by commissioner.

The commissioner may affirm or reverse a decision of a local conservation board or an administrative law judge or may remand the appeal for further hearing on specified parts. The commissioner must notify the appellant of an intent to reverse or remand a decision within two working days after receipt of the recommended decision. The commissioner shall issue a written statement setting forth the grounds for reversing a recommended decision no later than five working days after receipt of the recommendation, and a copy of the statement shall be served on the appellant and sent to the local conservation board or administrative law judge by first class mail. Failure of the commissioner to give timely notice of intent to reverse or remand a recommended decision will act to automatically affirm the recommended decision.

Subp. 4. Judicial review.

The appellant may seek judicial review of a final decision of the commissioner in accordance with the Minnesota Administrative Procedure Act, Minnesota Statutes, chapter 14.

History

Statutory Authority: MS s 216C.15
History: L 1984 c 640 s 32; L 1987 c 312 art 1 s 9, c 384 art 2 s 1

Minn. R. 7620.0400 Priority Uses of Fuel Oil

Subpart 1. Purpose.

The priority ranking set out below, and the allocation and conservation measures contained in parts 7620.0500 to 7620.0530, are intended to reduce the demand for petroleum products used for heating and power generation and ensure that the necessary fuel requirements of higher priority consumers are met before the lower priority consumers.

Subp. 2. Priority uses.

In an energy supply emergency resulting from a shortage of fuel oil, highest priority uses are those essential for the health and safety of the citizens of the state. Uses within categories are not ranked by preference.

A. First priority fuel oil uses are:

B. Second priority fuel oil uses are those necessary to minimize the economic disruption of a fuel oil shortage. Second priority fuel oil uses are:

C. Third priority uses are those not essential for the immediate health and safety of the citizens of the state. These include:

D. In an energy supply emergency, suppliers shall be requested to deliver fuel oil to higher priority consumers before lower priority consumers, where no practicable substitute fuels are available.

E. Vehicles considered to be transporting agricultural products must have the words "first priority agricultural product" on their bill of lading or must be visibly transporting first priority agricultural products.

F. Fuel oil users may apply for state set-aside product if fuel oil becomes otherwise unobtainable, according to state set-aside application procedures developed according to Minnesota Statutes, section 216C.16. Preference shall be given higher priority consumers over lower priority consumers in the assignment of state set-aside product.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9,10 subd 1

Minn. R. 7620.0410 Priority Uses of Motor Fuel

Subpart 1. Purpose.

The priority ranking set out below and the supply management and conservation measures contained in parts 7620.0600 to 7620.0730 are intended to reduce the demand for motor fuels and ensure that the necessary fuel requirements of first priority consumers are met before lower priority consumers.

Subp. 2. Priority uses.

In an energy supply emergency resulting from a shortage of gasoline, diesel fuel, or other petroleum product used as a motor fuel, higher priority uses are those necessary for protecting the health and safety of the citizens of the state, and minimizing the economic disruption of the state's economy. Uses within priority categories are not ranked according to preference.

A. First priority motor fuel uses are:

B. Exemptions granted in parts 7620.0600 to 7620.0730 are based on the above list of first priority uses.

C. First priority consumers may apply for state set-aside product as provided by Minnesota Statutes, section 216C.16, if fuel supplies become otherwise unavailable. Applications for state set-aside shall be made according to set-aside application procedures adopted according to Minnesota Statutes, section 216C.16. Preference shall be given first priority motor fuel consumers in assignment of state set-aside product.

D. Users claiming an exemption under these parts or operating a vehicle under an exempt status must do so in good faith. Abuse of a vehicle's exemption status will constitute a violation of these parts and subject the user to the penalties described in part 7620.0240.

E. When a motor fuel is also used as a home heating fuel and that specific fuel is in short supply, the fuel oil priority rankings described in part 7620.0400 shall apply.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9,10 subd 1

Minn. R. 7620.0420 Severe Shortage

If the commissioner determines that the supply shortfall of petroleum and petroleum products is so severe that the existing production and distribution system is incapable of providing adequate supplies to all first priority consumers of motor fuel or diesel fuel, then the commissioner shall advise the governor that deliveries to otherwise priority consumers be curtailed, so that higher priority consumers will be provided the necessary fuel to continue essential operations. The governor may order the curtailment of priority consumers when in the governor's judgment, the available supply best serves to preserve the health and safety of the citizens of the state when put to a higher priority use.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0500 Declaration and Selection of Measures

Upon declaration of an energy supply emergency for petroleum, the governor shall select from the following measures in parts 7620.0510 to 7620.0530 to reduce the shortage of fuel oil.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0510 Voluntary Measures

Subpart 1. Homeowners and renters.

Homeowners and renters shall be requested to turn their thermostats back to between 62 degrees Fahrenheit and 66 degrees Fahrenheit during the day and 60 degrees Fahrenheit and 58 degrees Fahrenheit during the night and unoccupied hours, and shall be requested to set back water heater thermostats to between 105 degrees Fahrenheit and 115 degrees Fahrenheit (or the lowest setting). Residences occupied by persons for whom such a measure endangers health shall be warned not to comply with this measure. Such persons include the elderly and sick and children under the age of one.

Subp. 2. Conservation targets.

Voluntary industrial, commercial, government, and residential conservation targets shall be established to reduce energy usage, including electricity and natural gas, especially during periods of peak usage.

Subp. 3. Reducing hours.

Commercial and industrial establishments shall be requested to reduce their hours of operations where this action saves energy.

Subp. 4. Releasing fuel oil.

Commercial and industrial users shall be requested to release fuel oil from inventory supplies. The procedures for state set-aside allocation adopted according to Minnesota Statutes, section 216C.16 will be used to allocate voluntarily released inventory. Suppliers shall be directed to deliver fuel oil supplies consisting of voluntary releases according to the system of priorities described in part 7620.0400, subpart 2.

Subp. 5. Closing buildings.

Business, industrial, and government institutions shall be requested to close nonessential buildings.

Subp. 6. Public information.

Public information efforts shall be used to instruct Minnesotans in fuel oil-, natural gas-, and electricity-saving measures. Regular information updates regarding the status and severity of the shortage shall be issued.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9,10 subd 1

Minn. R. 7620.0520 Mandatory Measures

Subpart 1. Compliance with federal regulations.

Commercial buildings shall be ordered to comply with the standards that were set in the Emergency Building Temperature Restrictions (EBTR), Code of Federal Regulations 1979, title 10, part 490. Buildings which were exempted under EBTR are exempted from this part.

Subp. 2. No smoking; reduced ventilation.

Smoking within buildings shall be prohibited and reduction of the amount of outside air entering the building ventilation systems may be ordered.

Subp. 3. Electric utilities measures.

Electric utilities with oil-fired generating facilities which are members of the mid continent area power pool shall be ordered to use oil of a quality not suitable for home heating or to shut down these plants and purchase power from the pool when power from nonpetroleum-fired generating facilities is available from the pool.

Subp. 4. Slowed deliveries of fuel oil.

Fuel oil suppliers shall be ordered to stop deliveries to large users (1,000 gallon or larger storage tanks) until those users have less than one week's fuel oil supply on hand.

Subp. 5. Conversion to residual oil.

Business, industrial, and government institutions which now burn middle distillate, natural gas, or propane and which have the capacity to burn residual oil shall be ordered to convert to residual oil during the emergency, unless such action is specifically prohibited by other law or rule of the Minnesota Pollution Control Agency or other agency. Each firm or institution required to convert to residual oil shall be notified at least ten days prior to the effective date of the measure of the state's intent to implement this measure.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0530 Measures for Severe Shortages

When the department determines that actions listed in parts 7620.0510 and 7620.0520 have not been or will not be sufficient to eliminate the shortage the following measures may be selected by the governor:

A. Owners/operators of commercial, industrial, and government buildings shall be ordered to reduce heating thermostats to 62 degrees Fahrenheit during the day where such action does not violate part 5205.0110, subpart 3 of the Department of Labor and Industry, and 50 degrees Fahrenheit at night or during unoccupied periods.

B. Emergency rules shall be ordered adopted or rules may be ordered suspended to relax environmental standards, where such action would yield significant fuel oil savings.

C. Delivery of fuel oil supplies to specific industrial sectors, including commerce and government, shall be ordered to be curtailed according to the following criteria. A curtailment order shall be in writing signed by the division director, and shall be delivered by registered mail to firms in the industrial sectors and area suppliers at least ten days prior to the effective date of the measure.

D. Homeowners and renters may be requested to close homes and move in with friends, relatives, or into emergency shelters. The emergency operating center shall assist in this effort by designating shelters, aiding in securing homes, and providing emergency transportation.

E. Actions available for implementation under parts 7620.0510 and 7620.0520 will remain available under this part.

History

Statutory Authority: MS s 216C.15
History: L 1984 c 640 s 32; L 1987 c 312 art 1 s 9

Minn. R. 7620.0540 Selection of Motor Emergency Measures

Upon declaration of an energy supply emergency based upon a petroleum shortage, the governor shall select from the following measures to reduce a motor fuel shortage.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0600 Public Information Measure

Subpart 1. Purpose.

This measure is intended to conserve motor fuel through voluntary public conservation in response to a declared energy emergency, and through broad public application of vehicle efficiency improvements and ridesharing promoted through public service announcements, conservation demonstrations, and dissemination of energy-related literature.

Subp. 2. News releases.

The emergency operating center shall prepare and issue news releases to news media throughout the state containing at least the following:

A. the specific cause or causes of the gasoline or petroleum shortage;

B. estimates by the department of the shortfall of supplies expected for Minnesota;

C. estimates by the department of the probable duration of the energy emergency; and

D. a list of specific actions taken and measures imposed to reduce shortage.

Subp. 3. Diesel-powered automobiles.

Owners and operators of diesel-powered automobiles may be requested to substantially reduce or discontinue use of their diesel vehicles during severe fuel oil shortages.

Subp. 4. Literature.

The emergency operating center shall make available to large worksites, schools, and local energy coordinators, literature which relates vehicle fuel economy to driving practices and vehicle maintenance.

Subp. 5. Public service announcements.

The emergency operating center shall provide public service announcements to the media which emphasize the importance of individual and corporate efforts in conserving motor fuel and provide specific conservation tips.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0610 Employer-Based Motor Fuel Conservation Measure

Subpart 1. Purpose.

The purpose of this measure is to conserve motor fuel by requiring certain employers to reduce employee commuting and business-related motor fuel consumption in an energy supply emergency. The department shall inform affected employers before May 25, 1983, of the requirements for participating in the employer-based conservation measure. The governor may not implement this measure before May 25, 1983.

Subp. 2. Scope.

The following employers are required to comply with the provisions of this measure:

A. employers who have employment sites where 100 or more persons are employed during the course of any 24-hour period during a normal work week;

B. all educational institutions at the postsecondary school level with a total combined student faculty commuting population of 200 or more persons, including colleges, universities, and technical colleges; and

C. state, county, and municipal governments who have employment sites where 50 or more persons are employed. Employers having fewer employees at a location shall be encouraged to adopt strategies listed under this subpart or implement any other conservation activity which reduces employee-commuting and business-related motor fuel consumption.

Subp. 3. Technical assistance.

Technical assistance in the preparation of emergency motor fuel conservation plans will be provided by the department upon request.

Subp. 4. Employer plans.

Employer plans may be submitted to the department for each applicable site or in conjunction with a business consortium, community, local, municipal, or county-wide plan, so long as each employer subject to this part identifies the conservation strategies adopted for each work site and the program elements listed under subpart 9.

Employers may choose to submit energy conservation plans to the department before the declaration of an energy emergency in the form and manner provided in subpart 5 or 6.

Subp. 5. Employer emergency motor fuel conservation plan.

Employers may submit an emergency motor fuel conservation plan that demonstrates how employee-commuting and business travel motor fuel consumption would be reduced during an energy supply emergency. The employer may choose conservation strategies which achieve the required reduction.

Employer plans must contain conservation strategies which taken together would reduce an employer's baseline consumption by 15 percent.

Employers submitting self-styled emergency motor fuel conservation plans shall include a calculation of their baseline consumption as defined in part 7620.0100, the expected motor fuel savings attributed to the selected strategies, and the plan elements described in subpart 9.

Employers will be credited for travel reduction actions taken prior to submission of their plans that yield ongoing fuel savings.

The assistant commissioner may decline to certify an employer plan submitted under this paragraph which fails to support the level of savings attributed to each of the proposed activities. Self-styled employer plans may contain any of the strategies provided in subpart 6.

Subp. 6. Employer motor fuel reduction strategies.

Employers shall select at least four strategies from the categories I and II, but in no case less than one from category I.

Subp. 7. Category I.

Category I strategies:

A. Establish a carpool program for employees. An employer rideshare program may be independently sponsored or provided in conjunction with a local or community ridesharing program. A rideshare program must minimally provide for: promotion of ridesharing through company bulletins, advertisements, and policies; the capability to match employees to carpools through ride boards, computer listings, or other methods which provide information necessary to match rideshare applicants; and a rideshare coordinator who will be responsible for the sponsored program.

B. Sponsor an employee vanpool program. An employer may purchase, rent, lease, or otherwise provide employees with vans for commuting to and from work. The employer may demonstrate an equivalent level of employee participation in an independent or employee-owned vanpool, but in any case shall maintain a participation rate of at least seven percent of total employment to qualify as providing a vanpool program.

C. Provide an auxiliary transportation service (e.g., subscription bus or shuttle service) or participate in a consortium of two or more employers to provide the service. A qualifying auxiliary transportation service shall consist of vehicles with a minimum carrying capacity of 20 passengers, a participation rate of 50 percent of employees who live within a three-mile radius of the work site, or the equivalent number, and at least one commuter check point at least five miles from the work site. Employer-sponsored rideshare programs which fulfill the requirements of subpart 7 will be certified by the department. Employers may issue "identifying" rideshare stickers to qualifying employees' vehicles. Rideshare vehicles will be eligible to purchase fuel as priority vehicles under the flag system described in part 7620.0650 and will be exempt from the odd-even purchase restriction described in part 7620.0630.

Subp. 8. Category II.

Category II strategies:

A. Adopt and enforce a parking management strategy which provides for preferential parking for high-occupancy vehicles in employer parking lots or subsidizes at least 20 percent of the cost of contract parking in independently operated parking facilities for employee carpools, or both.

B. Prohibit the use of company-owned vehicles for single occupancy commuting and adopt a policy of using company vehicles for employee carpools.

C. Purchase an electric or electric hybrid vehicle.

D. Promote transit use by employees through direct sale of transit passes at the work site, fare subsidies, or display of direct and connecting routes serving the work site.

E. Provide facilities which promote employee commuting by bicycle or moped. These facilities might include indoor or sheltered bicycle parking, high security bicycle parking, showers and dressing areas for bikers.

F. Participate with a rideshare agency to provide jitney service to persons requesting travel to a destination on or near the route taken for business purposes. An employer-owner or employee-owned vehicle used for business purposes may be used for the jitney service.

G. Institute flexible or staggered work hours.

H. Participate in an independently sponsored truck and bus fuel economy project which offers both energy-conscious driver education and instruction on fuel-economizing vehicle maintenance and accessories. Employers choosing this strategy must maintain a fleet of at least ten vehicles used for cargo and freight hauling.

Subp. 9. Content of conservation plan.

An employer submitting an emergency motor fuel conservation plan according to subpart 5 or 6 shall identify in its plan the following:

A. the carpool, vanpool, or subscription bus program sponsored or subscribed to, and an estimate of the number of employees currently using and expected to use such services;

B. title of the person or persons responsible for supervising each plan component;

C. the internal media to be used to inform employees of the employer's program;

D. the administrative assistance and in-house resources that the employer will provide for employee ridesharing services;

E. the schedule for implementing chosen strategies; and

F. the personnel (by title or position) that will perform essential plant protection for the firm during a driving ban.

Subp. 10. Employers actions upon governor's order.

Employers shall institute all strategies contained in an approved employer conservation plan when the governor orders the employer-based motor fuel conservation measure.

Subp. 11. Employers without conservation plan.

Employers who do not have an approved emergency motor fuel conservation plan before the declaration of an energy supply emergency for motor fuel shall:

A. submit to the department within 15 days after declaration of an energy supply emergency for motor fuel a plan to reduce baseline consumption by at least 15 percent over a period of three months or longer; or

B. institute a compressed work week pursuant to an executive order of the governor that designates the weekday on which employers not qualifying under subpart 5, 6, or 11, item A, shall not perform or have an employee perform any activity related to the business except where:

C. the following businesses or governmental activities shall be exempt from a compressed work week regardless of subpart 11:

Subp. 12. Public announcement.

The emergency operating center shall publicly announce the implementation of the employer-based conservation measure at least ten days prior to the effective date of the measure.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 258 s 12, c 312 art 1 s 9; L 1989 c 246 s 2

Minn. R. 7620.0620 School Conservation Measure

Subpart 1. Purpose.

The purpose of this measure is to conserve motor fuel by requesting schools to adopt strategies to reduce student commuting and school-sponsored activities in an energy supply emergency.

Subp. 2. Scope.

Each school district, as defined by the Education Code, Minnesota Statutes, chapters 120 to 129, and nonpublic schools, as defined in Minnesota Statutes, section 123B.41, subdivision 9, which have a combined student staff population of 100 persons or more, is requested to comply with this measure.

Subp. 3. Submission of conservation plan.

School boards are requested to voluntarily submit to the department before April 1, 1984, or within 45 days after declaration of an energy supply emergency, whichever comes first, an emergency motor fuel conservation plan as defined in subpart 4 or 5.

Subp. 4. School emergency conservation plan: option A.

School districts may submit a self-styled conservation plan including any conservation strategies that taken together would have an objective of reducing baseline consumption by approximately 15 percent during an energy supply emergency.

Self-styled conservation plans are requested to include:

A. a calculation of the baseline consumption, defined in part 7620.0100, subpart 4;

B. the expected motor fuel savings attributed to each selected strategy; and

C. the plan elements described in subpart 6. School districts will be credited for travel-reduction actions taken prior to submission of their plans that yield ongoing motor fuel savings.

Subp. 5. School emergency conservation plan: option B reduction strategies.

Option B reduction strategies:

A. School districts are requested to select at least three strategies from the following categories, with at least one strategy being from category I.

B. Category I strategies consist of:

C. Category II strategies consist of:

Subp. 6. Contents of school district conservation plans.

Emergency motor fuel conservation plans submitted by school districts are requested to include:

A. the title of the person or position responsible for implementing the plan during an energy supply emergency for motor fuel;

B. the internal media to be used to inform school staff and students of a school district program measure; and

C. the implementation schedule for category II, strategies (1), (2), (3), and (6).

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9; L 1998 c 397 art 11 s 3

Minn. R. 7620.0630 Odd-Even Purchase Requirement Measure

Subpart 1. Purpose.

The purpose of the odd-even purchase requirement is to conserve motor fuel and facilitate the orderly purchase of motor fuel by alternating the days of purchase eligibility.

Subp. 2. Scope.

Retail sales and purchases of motor fuel shall be restricted to even-numbered days of the month for persons in possession of vehicles whose license plate numbers end in one of the even digits 0, 2, 4, 6, 8; and to odd-numbered days of the month for persons in possession of vehicles whose license plate numbers end in the odd digits 1, 3, 5, 7, and 9.

Specialty and personalized license plates which display no ending numeral are deemed to be "odd" for purposes of the purchase requirement.

The restrictions in this part shall not apply on the 31st day of any month or on the 29th day of February in a leap year.

Subp. 3. Exemptions.

The following vehicles shall be exempt from the odd-even purchase requirement (motor fuel may be purchased for them on any day of the week):

A. Vehicles being driven for any first priority use defined in part 7620.0410. For the odd-even purchase requirement, vanpools will be those vehicles either displaying a "vanpool" designation issued by a vanpool leasing agency, vanpool services agency, or employer, or carrying at least eight passengers on a work commuting trip.

B. Ridesharing vehicles identified by employers with state certified conservation plans, as described in subpart 7.

C. Commercial vehicles, as defined in part 7620.0100, subpart 9.

D. Vehicles operated by a person with a disability and displaying a disability license plate or other special identification.

E. Vehicles with out-of-state license plates.

F. Motorcycles and mopeds.

G. Vehicles not licensed for highway use.

H. Vehicles held for sale by a licensed motor vehicle dealer in the ordinary course of business.

I. Vehicles being operated by individuals under emergency circumstances which in the judgment of the retailer demand an exception. If such an exception is granted by the retailer, the license number and signature of the person granted the exception shall be obtained.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9; L 2005 c 56 s 2

Minn. R. 7620.0640 Minimum Purchase Requirement Measure

Subpart 1. Purpose.

The purpose of this measure is to decrease vehicle lines at motor fuel retail outlets by reducing the frequency of fillups.

Subp. 2. Measure requirements.

Motor fuel shall not be sold, dispersed, or otherwise transacted by a motor fuel retailer for use in any vehicle unless the amount transacted and dispersed is at least five gallons. In the event the quantity purchased is less than the five-gallon minimum, the purchaser shall pay the retailer an additional amount so that the total transaction price is equal to the stated pump price times the five-gallon minimum.

In any single transaction, not more than six gallons of motor fuel may be sold or dispensed into a container, other than the fuel tank of a vehicle, to be transported away from the premises of the retail seller. Such containers must meet applicable safety requirements.

Subp. 3. Display of notice.

A person selling motor fuel in transactions to which provisions of this part apply shall display at the point of sale notice of such provisions.

Subp. 4. Compliance required.

Both the motor fuel retailer and the vehicle operator are required to comply with the provisions of this part.

Subp. 5. Exemptions.

The following users are not required to purchase a minimum amount:

A. Vehicles being driven for first priority uses, as defined in part 7620.0410. For the minimum purchase requirement, vanpools are those vehicles either displaying a "vanpool" designation issued by a vanpool-leasing agency or vanpool services agency, or carrying at least eight passengers on a work-commuting trip.

B. Motorcycles and mopeds and similar three-wheeled vehicles.

C. Out-of-state licensed vehicles.

D. Vehicles held for sale or lease by licensed motor vehicle dealers in the ordinary course of business.

E. Vehicles being operated by individuals under emergency circumstances which in the judgment of the retailer demand an exception. If such an exception is granted by the retailer the license number and signature of the person granted the exception shall be obtained.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0650 Flag Requirement for Motor Fuel Retailers

Subpart 1. Purpose.

The purposes of this measure are to signal to motorists availability of motor fuel for purchase at stations through the display of flags and to permit retailers to limit sales to priority users only.

Subp. 2. Requirement.

Each motor fuel retail station shall clearly indicate its motor fuel supply and servicing status by displaying a flag of one of the three colors listed below:

A. A green flag indicates that motor fuel is available to the public subject to the purchase restrictions imposed by these parts. A station flying a green flag cannot show preference to any customer, except that emergency vehicles may be allowed to move to the front of an existing line to be fueled.

B. A yellow flag indicates that motor fuel is available only to first priority vehicles, as defined in part 7620.0410, and to ridesharing vehicles which have been identified by employers according to the terms and provisions of a state-certified conservation plan, as described in part 7620.0610. A station flying a yellow flag shall not show preference in the sale of motor fuel to any priority vehicle.

C. A red flag indicates a station is out of fuel and/or is closed. No motor fuel may be dispensed from a station flying a red flag, except to emergency vehicles, as defined in part 7620.0100, subpart 19.

Subp. 3. Description of flag; location.

Flags shall be square and at least two feet by two feet but no greater than three feet by three feet in size. They shall be made of cloth or plastic. Flags shall be located on the boulevard or near enough to the street to allow visibility of at least 100 yards in each direction of the station.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0660 Motor Fuel Availability Measure

Subpart 1. Purpose.

The purpose of this measure is to assure that motor fuel is available for purchase at key locations throughout the state 24 hours a day and that these locations and their hours of operation are locally publicized.

Subp. 2. Set-aside product assignment.

Motor fuel retailers who have historically remained open 24 hours a day and provided emergency road service may apply for state set-aside product assignment according to the state set-aside application procedures authorized by Minnesota Statutes, section 216C.16.

Subp. 3. Publicity.

The emergency operating center shall publicize the location of the stations participating in the availability program in local newspapers. This information will also be supplied to the AAA of Minnesota (American Automobile Association) and the Economic Development Division's Tourist Information Center, both of which provide motor fuel availability information.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9,10 subd 1

Minn. R. 7620.0670 Strict Enforcement of Posted Highway Speed Limits

Subpart 1. Purpose.

The purpose of this measure is to conserve motor fuel by strictly enforcing the current maximum speed limit on state highways.

Subp. 2. Speed limit.

Motorists shall strictly obey the maximum legal speed limit. Violations of the maximum legal speed limit during a declared energy supply emergency shall be subject to the additional penalties provided in part 7620.0240.

Subp. 3. Governor's request.

The governor shall request state, county, and municipal law enforcement agencies to intensify speed limit enforcement through personnel assignments and increased road surveillance.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0700 Ordering

When the department determines that the measures listed in parts 7620.0600 to 7620.0670 have not eliminated or will not eliminate the shortage of motor fuel, the governor may order any of the following measures.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0710 Vehicle Permit Sticker Measure

Subpart 1. Purpose.

This measure is intended to conserve motor fuel by prohibiting the use of vehicles for one day per week.

Subp. 2. Applicability.

Vehicle owners shall apply to the Department of Public Safety for a no-driving-day designation permit sticker. The applicant may select any day (Monday through Sunday) as the no-driving day for the applicant's vehicle but must choose the same day for all vehicles owned. The owner must prominently display the sticker on each vehicle owned and driven during the term of this measure.

A vehicle rented or leased for a period exceeding seven days shall be considered owned by the lessee for purposes of this measure.

Upon the effective date of the vehicle permit sticker requirement, all Minnesota-licensed motor vehicles subject to the requirement must display a permit sticker in the lower right hand corner of the front windshield.

Subp. 3. Exemptions.

The following are exempt from provisions of this part:

A. vehicles being driven for any first priority use defined in part 7620.0410;

B. vehicles held for sale or lease by a licensed motor vehicle dealer in the ordinary course of business;

C. motorcycles and mopeds;

D. short-term rental vehicles; and

E. such other vehicles as the governor may determine.

Subp. 4. Sticker.

Vehicle owners operating a motor vehicle under one of the qualifying exemptions listed in subpart 3 must apply to the Division of Driver and Vehicle Services (DDVS) of the Department of Public Safety for an exempt sticker. Exempt stickers issued by the DDVS must be prominently displayed on the vehicle for which the exempt permit was issued.

Subp. 5. Rental agencies.

Vehicle rental agencies must apply for exempt stickers for vehicles rented for periods less than one week. Upon approval of a rental agency's application, DDVS will exempt stickers for designated rental vehicles. Vehicles rented or leased for use predominantly in Minnesota for periods exceeding seven days must be registered by the lessee.

Subp. 6. Waivers.

The governor may waive the requirement for the display of exempt permit stickers for any vehicle class listed under subpart 3.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9; 17 SR 1279

Minn. R. 7620.0720 Speed Limit Reduction Measure

Subpart 1. Purpose.

This measure is intended to conserve motor fuel by reducing the maximum speed limit on all highways in Minnesota.

Subp. 2. Lower speed limit.

The governor upon the advice of the department shall order the commissioner of transportation to set a lower speed limit on all highways in Minnesota. The commissioner of transportation shall lower the speed limit during an energy supply emergency pursuant to Minnesota Statutes, section 169.141.

Subp. 3. Violations.

Violation of the maximum limit during an energy supply emergency for motor fuel shall carry the additional penalties as provided in part 7620.0240.

Subp. 4. Governor's request.

The governor may request state, county, and municipal law enforcement agencies to intensify speed limit enforcement activities through personnel assignments and increased road surveillance efforts.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Minn. R. 7620.0730 Driving Ban Measure

Subpart 1. Purpose.

This measure is intended to conserve motor fuel by prohibiting the use and operation of all nonexempt motor vehicles for a specified 24-hour period.

Subp. 2. Ordering.

Upon the department's determination that a 24-hour driving ban is necessary to reduce the demand for motor fuel, the governor may order an emergency driving ban. Upon the governor's order, the division director shall issue the order and a statement to the news media to be promptly disseminated and brought to the attention of the public. The statement shall state the designated date of the ban, the emergency services which will remain available during the ban, the enforcement actions to be taken, and the penalties imposed for violation of the ban. The statement shall be released at least five days prior to the imposition of the driving ban.

Subp. 3. Unlawful public road use.

It shall be unlawful for anyone to operate a Minnesota registered and licensed motor vehicle on public roads during the period of driving ban.

Subp. 4. Exemptions.

The following motor vehicle uses shall be exempt from a driving ban:

A. emergency vehicles;

B. sanitation services vehicles;

C. aviation ground support vehicles;

D. vehicles identified as required in part 7620.0620, subpart 7, item F and used by employees in commuting for the purposes of plant protection;

E. vehicles used in providing or transporting employees for emergency medical care, residential care, telecommunications services, energy production, and news reporting;

F. individuals who require daily medical treatment; and

G. out-of-state licensed vehicles.

Subp. 5. Sticker or card.

Any vehicle registered and licensed by the state of Minnesota and operated during a driving ban shall prominently display a sticker or card that clearly identifies that vehicle as exempt. The governor may waive this requirement for any category of exempted user, for example, police, fire, ambulance, or aviation ground support vehicles.

Subp. 6. Guidelines.

The department will issue guidelines for identification of exempt vehicles prior to a driving ban.

History

Statutory Authority: MS s 216C.15
History: L 1987 c 312 art 1 s 9

Chapter 7630 DECORATIVE GAS LAMPS

Minn. R. 7630.0100 Definitions

Subpart 1. Scope.

For purposes of this chapter, the following definitions shall apply.

Subp. 2. Agency.

"Agency" means the Department of Commerce.

Subp. 3. AMC per GLPG.

"AMC per GLPG" means average marginal cost per gallon of LP gas. It is the annual cost to a person purchasing one additional gallon of LP gas per month for one year divided by 12.

Subp. 4. AMC per KWH.

"AMC per KWH" means average marginal cost per kilowatt hour. It is the annual cost to a person purchasing one additional kilowatt hour of electricity each month for one year divided by 12.

Subp. 5. AMC per MCF.

"AMC per MCF" means average marginal cost per 1,000 cubic feet of natural or mixed gas. It is the annual cost to a person purchasing one additional MCF of natural or mixed gas each month for one year divided by 12.

Subp. 6. Applicant.

"Applicant" means the person submitting an application for a variance to the prohibition on use of decorative gas lamps.

Subp. 7. Btu.

"Btu" means British thermal unit, a common unit of energy measurement, which is used in these rules for comparative purposes. For purposes of this chapter one MCF of natural or mixed gas shall be considered to contain 1,000,000 Btu's and one gallon of LP gas shall be considered to contain 93,000 Btu's.

Subp. 8. Complete application.

"Complete application" means an application that satisfies all of the requirements of this chapter.

Subp. 9. Conversion cost.

"Conversion cost" means the dollar cost of adapting a decorative gas lamp to one producing light by electrical energy, or of replacing a gas lamp with an electrical fixture that will provide an equivalent amount of light for the same location.

Subp. 10. Decorative gas lamp.

"Decorative gas lamp" means any device installed for the purpose of illumination by burning natural, mixed, or LP gas and utilizing either a mantle or an open flame, but does not include a portable gas camp lantern or lamp.

Subp. 11. Commissioner.

"Commissioner" means the commissioner of the agency.

Subp. 12. Home owner.

"Home owner" means one or more persons, jointly or severally, in whom is vested a legal or beneficial interest in a dwelling, no more than one-half the square footage of which is occupied by tenants.

Subp. 13. KWH.

"KWH" means kilowatt hour, 1,000 watt hours, a common unit of measurement for electrical energy. One kilowatt hour of electricity is equivalent to 3,412 Btu's.

Subp. 14. LP gas.

"LP gas" means liquefied petroleum gas or propane.

Subp. 15. MCF.

"MCF" means 1,000 cubic feet, a common quantity for measurement of natural gas.

Subp. 16. Person.

"Person" means any individual, partnership, corporation, joint stock company, unincorporated association or society, municipal corporation, or any government or governmental subdivision, unit, or agency, other than a court of law.

Subp. 17. Tenant.

"Tenant" means any person who is occupying a dwelling under any agreement, lease, or contract, whether oral or written, and for whatever period of time, which requires the payment of moneys as rent for the use of the dwelling unit, and all other regular occupants of such dwelling unit.

Subp. 18. Utility.

"Utility" means any entity engaged in the generation, transmission, or distribution of electric energy and any entity engaged in the transmission or distribution of natural or synthetic natural gas, including but not limited to a private investor-owned utility or a public or municipally owned utility.

History

Statutory Authority: MS s 216C.10
History: L 1983 c 289 s 115 subd 1; L 1987 c 186 s 15; c 312 art 1 s 9; L 2001 1Sp4 art 6 s 1

Minn. R. 7630.0110 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0120 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0200 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0210 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0220 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0300 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0310 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0320 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0330 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0340 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0350 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Minn. R. 7630.0360 [Repealed, L 2014 c 222 art 1 s 58]

[Repealed, L 2014 c 222 art 1 s 58]

Chapter 7635 RESIDENTIAL ENERGY CONSERVATION PROGRAM

Minn. R. 7635.0100 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0110 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0120 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0130 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0140 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0150 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0160 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0170 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0180 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0200 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0210 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0220 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0230 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0240 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0250 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0260 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0300 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0310 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0320 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0330 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0340 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0400 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0410 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0420 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0500 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0510 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0520 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0530 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0600 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0610 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0620 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0630 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.0640 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.1000 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.1010 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.1020 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7635.1030 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Chapter 7640 THERMAL INSULATION STANDARDS

Minn. R. 7640.0100 Authority; Purpose; Incorporations by Reference

Subpart 1. Authority.

The commissioner of the Department of Commerce is authorized by Minnesota Statutes, sections 325F.20, subdivision 1, and 325F.21, subdivisions 1 and 2, to establish standards for the product quality, safety, installation, and labeling of thermal insulation products, and to establish test programs and procedures to ensure that standards established by this chapter are met.

Subp. 2. Purpose.

This chapter applies to the manufacture, distribution, sale, and installation of thermal insulation material in residential buildings within Minnesota. This chapter sets minimum standards for the product quality and safety of thermal insulation materials specified in this chapter, minimum procedures for the testing of insulation materials under these standards, and minimum standards for installation of those products.

Subp. 3. Incorporations by reference.

This chapter incorporates numerous standards by reference that are published by ASTM, Conshohocken, Pennsylvania. This chapter also incorporates an ANSI/ISO/ASQ standard by reference, published by the American Society for Quality, Milwaukee, Wisconsin. This chapter also incorporates an ICC-Evaluation Services standard by reference, published by the ICC-Evaluation Service, Whittier, California. This chapter also incorporates an ASHRAE standard by reference, published by ASHRAE, Atlanta, Georgia. The standards and tests incorporated by reference are all an integral part of current insulation industry testing procedures. All manufacturers and testing laboratories presently possess or have access to each referenced incorporation.

All of the incorporated standards are subject to frequent change. Copies of all standards incorporated by reference are available in the Office of the Commissioner of Commerce.

History

Statutory Authority: MS s 45.023; 325F.20; 325F.21
History: 10 SR 1208; L 1987 c 312 art 1 s 9; 13 SR 532; 32 SR 2213; 39 SR 1167

Minn. R. 7640.0110 Applicability and Conduct

Subpart 1. Residential insulation products regulated.

A. This chapter applies to thermal insulation products for use in residential buildings within Minnesota. Residential buildings covered are those that are not more than three stories in height and contain no conditioned common space that is shared between dwellings, and each dwelling unit contains a separate means of egress. Exception: insulation installed in manufactured buildings constructed in accordance with Code of Federal Regulations, title 24, part 3280.

B. Insulation products regulated by this chapter include:

Subp. 2. Conduct.

A. Thermal insulation materials sold, distributed, or installed in Minnesota residential buildings must be demonstrated by test to conform with the standards set forth in part 7640.0130.

B. Industry members installing thermal insulation shall follow manufacturer's written application instructions.

C. Insulation used for exterior below-grade application must be recommended by the manufacturer for exterior below-grade application.

D. Industry members must comply with the requirements of the United States Federal Trade Commission in Code of Federal Regulations, title 16, part 460.

E. Any false, misleading, or unsubstantiated statements in a sales presentation, or on any label, product literature, or product intended for the purchaser, as identified in Minnesota Statutes, section 325F.22, 325F.67, or 325F.69, subdivision 1, are subject to the state's remedies provided in Minnesota Statutes, sections 325F.24 and 325F.70.

F. If any representation is made that a product to be installed in Minnesota residential buildings will affect heat flow or energy savings, the representation must be based on the building envelope climate criteria set forth in the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) Standard 90.1-2010.

Subp. 3. Retail sales.

Retailers of residential thermal insulation products for do-it-yourself installation must make available to each purchaser the manufacturer's written instructions describing the product's recommended use, proper application methods, and required or recommended installation safety measures. "Make available to each purchaser" means either providing the required materials, a conspicuous posting located where customers procure products stating that the manufacturer's written instructions describing the product's recommended use, proper application methods, and required or recommended installation safety measures are immediately available on request, or identifying a website where these instructions can be found.

Subp. 4.

[Repealed, 32 SR 2213]

Subp. 5.

[Repealed, 14 SR 2633]

History

Statutory Authority: MS s 45.023; 325F.20; 325F.21
History: 10 SR 1208; L 1987 c 312 art 1 s 9; 13 SR 532; 13 SR 2982; 16 SR 2026; 32 SR 2213; 39 SR 1167

Minn. R. 7640.0120 Definitions

Subpart 1. Applicability.

For the purposes of this chapter, the following definitions of terms apply. Technical, scientific, and engineering terms undefined by this part have the meanings given in ASTM C168-13, Standard Definitions of Terms Relating to Thermal Insulation Materials.

Subp. 2.

[Repealed, 32 SR 2213]

Subp. 3. Approved laboratory.

"Approved laboratory" means any testing facility, including a facility owned or operated by a manufacturer, that has been accredited by one or more of the following agencies to perform the required test:

A. United States Department of Commerce, National Voluntary Laboratory Accreditation Program, Gaithersburg, Maryland;

B. Standards Council of Canada, Ottawa, Ontario, Canada;

C. International Accreditation Service, Inc.; or

D. other accreditation body that is a signatory to the Mutual Recognition Arrangement of the International Laboratory Accreditation Cooperation. Exception: In the event that an approved laboratory program is temporarily delayed or is not capable of being accredited to perform a test or tests, a testing laboratory possessing the appropriate equipment, facilities, and qualified personnel to perform the required testing is an approved laboratory.

Subp. 4.

[Repealed, 32 SR 2213]

Subp. 5.

[Repealed, 32 SR 2213]

Subp. 6.

[Repealed, 32 SR 2213]

Subp. 7.

[Repealed, 32 SR 2213]

Subp. 8.

[Repealed, 32 SR 2213]

Subp. 9.

[Repealed, 32 SR 2213]

Subp. 10.

[Repealed, 13 SR 2982]

Subp. 11. ICC-Evaluation Services Report.

ICC-Evaluation Services Report means an evaluation service report prepared in accordance with an acceptance criteria approved by the ICC-Evaluation Service, Whittier, California.

Subp. 12. Industry members.

"Industry members" means:

A. manufacturers of insulation, wholesalers, and retailers of insulation;

B. contractors and applicators who sell and install residential insulation;

C. those engaged in the marketing of insulation who are, or who purport to act as, agents of manufacturers or suppliers of insulation; and

D. installers of insulation the manufacture of which is completed at the jobsite who do not follow the manufacturer's installation instructions. These installers are considered manufacturers for the purpose of this chapter.

Subp. 13.

[Repealed, 32 SR 2213]

Subp. 14.

[Repealed, 32 SR 2213]

Subp. 15.

[Repealed, 32 SR 2213]

Subp. 16.

[Repealed, 32 SR 2213]

Subp. 17. Manufacturer of insulation.

"Manufacturer of insulation" means:

A. an industry member who produces insulation materials in their final form for distribution or sale to intermediate and ultimate consumers;

B. an industry member who produces insulation materials or installation instructions for a product the manufacture of which is completed at the jobsite; or

C. an installer of an insulation product the manufacture of which is completed at the jobsite who does not follow the product's installation instructions. An applicator, contractor, or fabricator of insulation materials who installs, applies, or uses insulation materials for their intended uses and follows the manufacturer's installation instructions, without changing the thermal or physical properties of the insulation material is not a manufacturer of insulation.

Subp. 18.

[Repealed, 32 SR 2213]

Subp. 19.

[Repealed, 32 SR 2213]

Subp. 19a. Quality assurance program.

"Quality assurance program" means the collective set of plans, activities, and events that are provided to ensure that the product or service will satisfy given needs. A quality assurance program must conform to ANSI/ISO/ASQ Q9001-2000: "Quality Management Systems Requirements, " ICC-ES AC10, "Acceptance Criteria for Quality Documentation," or an equivalent standard.

Subp. 20. R or R value.

"R" or "R value" means the measure of resistance to heat flow through a material or assembly of materials. It may be stated as the reciprocal of the heat flow through a material expressed in British thermal units per hour, per square foot, per degree Fahrenheit. R value indicates "thermal performance."

Subp. 20a.

[Repealed, 32 SR 2213]

Subp. 20b.

[Repealed, 32 SR 2213]

Subp. 21.

[Repealed, 32 SR 2213]

Subp. 22.

[Repealed, 32 SR 2213]

Subp. 23.

[Repealed, 32 SR 2213]

Subp. 24.

[Repealed, 32 SR 2213]

Subp. 25.

[Repealed, 32 SR 2213]

Subp. 26.

[Repealed, 16 SR 2026]

History

Statutory Authority: MS s 45.023; 325F.20; 325F.21
History: 10 SR 1208; L 1987 c 312 art 1 s 9; 13 SR 532; 13 SR 2982; 14 SR 2633; 16 SR 2026; L 2001 1Sp4 art 6 s 1; 32 SR 2213; 39 SR 1167

Minn. R. 7640.0130 Standards for Insulation Materials and Installation

Subpart 1.

[Repealed, 32 SR 2213]

Subp. 2. General requirements.

A. All regulated thermal insulation materials must be tested for compliance with the standards according to subpart 3, 4, 5, 6, 7, or 8. An insulation product that has been tested for compliance with another version of an ASTM standard for the product type and is composed of the identical material, for example the same chemical make-up, composition, or physical properties, but that has different dimensional characteristics, such as width, length, or thickness, does not need to undergo additional testing.

B. When the ASTM amends, reorganizes, or modifies a standard test method and the manufacturer or testing laboratory desires to use the new version, the department may be petitioned to adopt the new test method version. Until the department adopts or decides not to adopt the new version, the petitioner may request a temporary variance, pursuant to Minnesota Statutes, sections 14.055 and 14.056, to use the new test method version.

C. Manufacturers shall have a quality assurance program in place for all regulated thermal insulation products. A quality assurance program must be in place for installers of products whose manufacture is completed at the job site. Manufacturers and other industry members must maintain an in-house quality assurance program in order for products to meet the required standards. If a manufactured product fails to meet those required standards, the department shall notify the industry member to pursue corrective measures.

D. Installers must follow manufacturer's installation instructions.

Subp. 3. Cellulose insulation.

A. Cellulose insulation must comply with item B, C, or D and meet the following requirements:

B. Cellulose fiber in loose-fill form must comply with ASTM C739-11, Standard Specification for Cellulosic Fiber Loose-Fill Thermal Insulation. Cellulose loose-fill insulation must be installed in accordance with ASTM C1015-06(2011)e1, Standard Practice for Installation of Cellulosic and Mineral Fiber Loose-Fill Thermal Insulation.

C. Cellulose fiber spray-applied must comply with either:

D. Cellulose fiber stabilized must comply with ASTM C1497-12, Standard Specification for Cellulosic Fiber Stabilized Thermal Insulation.

E. Cellulosic fiber insulating board must comply with ASTM C208-12, Standard Specification for Cellulosic Fiber Insulating Board.

F. Industry members and other persons may not engage in the mobile manufacture of cellulose insulation, which means the simultaneous on-site production and installation of cellulose insulation as an integral mechanical and manufacturing process.

Subp. 4. Mineral fiber insulation.

A. Mineral fiber in loose fill form must comply with ASTM C764-11, Standard Specification for Mineral Fiber Loose Fill Thermal Insulation.

B. Mineral fiber in batts and blankets form must comply with ASTM C665-12, Standard Specification for Mineral Fiber Blanket Thermal Insulation for Light Frame Construction and Manufactured Housing. Mineral fiber in batts and blankets must be installed in accordance with ASTM C1320-10, Standard Practice for Installation of Mineral Fiber Batt and Blanket Thermal Insulation for Light Frame Construction.

C. Mineral fiber in board form must comply with ASTM C612-10, Standard Specification for Mineral Fiber Block and Board Thermal Insulation.

D. Spray applied mineral fiber must comply with ASTM C1014-08(2013), Standard Specification for Spray Applied Mineral Fiber Thermal and Sound Absorbing Insulation.

Subp. 5. Foam plastic insulation.

All foam plastic insulation must achieve stated performance at 75 degrees Fahrenheit mean temperature. For foam plastic insulations that incorporate blowing agents other than air or pentane, R-value tests must be done on specimens that have been treated in accordance with either the test method identified for the product in items A to F or the Federal Trade Commission R-Value rule, Code of Federal Regulations, title 16, part 460, to fully reflect the effect of aging on the product's R-value.

A. Rigid, cellular polystyrene insulation must comply with either ASTM C578-12b, Standard Specification for Rigid, Cellular Polystyrene Thermal Insulation, or item F.

B. Faced polyisocyanurate in board form must comply with either ASTM C1289-14a, Standard Specification for Faced Rigid Cellular Polyisocyanurate Thermal Insulation Board, or item F.

C. Field-applied urea formaldehyde foam must meet the following requirements:

D. Closed-cell spray-applied polyurethane foam must comply with either ASTM C1029-13, Standard Specification for Spray Applied Rigid Polyurethane Thermal Insulation, or item F.

E. Rigid cellular phenolic insulation must comply with either ASTM C1126-13, Standard Specification for Faced or Unfaced Rigid Cellular Phenolic Thermal Insulation, or item F.

F. Foam plastic insulation products are deemed to meet the requirements of this subpart if they have:

Subp. 6. Perlite and vermiculite insulation.

A. Perlite loose fill insulation must meet the following requirements:

B. Vermiculite in loose fill form must meet the following requirements:

Subp. 7. Reflective insulation.

A. Reflective insulation for building applications must meet the requirements of either ASTM C1224-11, Standard Specification for Reflective Insulation for Building Applications, or ICC-AC02, Acceptance Criteria for Reflective Foil Insulation. Reflective insulation must be installed according to ASTM C727-12, Standard Practice for Installation and Use of Reflective Insulation in Building Constructions.

B. Radiant barrier products must meet the requirements of either ASTM C1313/C1313M-13, Standard Specification for Sheet Radiant Barriers for Building Construction Applications, or ICC-EG220, Evaluation Guideline for Sheet Radiant Barriers. Radiant barriers must be installed according to ASTM C1158-05, Standard Practice for Installation and Use of Radiant Barrier Systems (RBS) in Building Construction.

Subp. 7a. Cotton fiber insulation products.

Cotton fiber insulation products must meet the criteria of ICC-EG81, Evaluation Guideline for Cotton Fiber Insulation.

Subp. 7b. Polyester loose-fill and blanket insulation products.

Polyester loose-fill and blanket insulation products must meet the criteria of ICC-AC187, Acceptance Criteria for Polyester Loose-Fill and Blanket Insulations.

Subp. 7c. Vacuum insulation panel insulation.

Vacuum insulation panel insulation must meet the requirements of ASTM C1484-10, Standard Specification for Vacuum Insulation Panels.

Subp. 8. Other insulation.

Insulation other than insulation specified in subparts 1 to 7c must comply with the requirements of this subpart. The thermal insulation material chosen for testing must be representative of material produced by the manufacturer during normal production runs.

A. Thermal performance characteristics must be determined in accordance with this item.

B. Water or moisture absorption must be determined according to one of the following methods: ASTM C272/C272M-12; ASTM C553-11, section 14; ASTM C739-11, section 12; or ASTM D2842-12.

C. If the material is foam in place, a test must be conducted to determine the response to thermal and humid aging in accordance with ASTM C1029-13, section 10.6.

D. If the material contains formaldehyde, the product and installation must conform with Minnesota Statutes, section 325F.18, and part 4620.1800.

E. The product must not produce a detectable odor that is classified as objectionable and strong or very strong by ASTM C1304-08, Standard Test Method for Assessing the Odor Emission of Thermal Insulation Materials.

F. Surface burning characteristics must be determined in accordance with ASTM E84-13a, "Standard Test Method for Surface Burning Characteristics of Building Materials," or Underwriters Laboratories Standard UL 723, "Standard for Fire Tests of Building Construction and Materials."

G. The manufacturer shall provide a statement that the insulation and its intended uses are safe and effective and do not pose a threat to human health. The manufacturer shall disclose any known or reasonably suspected attributes of the product that will adversely affect its safety or effectiveness.

History

Statutory Authority: MS s 45.023; 325F.20; 325F.21
History: 10 SR 1208; 11 SR 2285; L 1987 c 186 s 15, c 312 art 1 s 9; 13 SR 532; 13 SR 754; 13 SR 2982; 14 SR 2633; 16 SR 2026; 32 SR 2213; 39 SR 1167

Minn. R. 7640.0140 [Repealed, 32 SR 2213]

[Repealed, 32 SR 2213]

Minn. R. 7640.0150 Reporting Requirements

Subpart 1.

[Repealed, 39 SR 1167]

Subp. 2. Reporting.

Upon request by the commissioner, an industry member who offers for sale in this state any products subject to this part shall provide the following information:

A. the manufacturer's name, address, phone number, and contact person;

B. product names, including any and all generic, trade, and brand names the product may be identified by;

C. type of product;

D. product literature, including installation instructions and promotional materials, a copy of the label affixed to the product, a copy of the product's material safety data sheet, and a list of the intended uses of the product, including whether the product is recommended for exterior below-grade application;

E. a fact sheet as required by FTC R value rule, identified in Code of Federal Regulations, title 16, part 460;

F. a report demonstrating the performance of the product, including:

G. a statement that each product meets or exceeds the test standards required by this chapter;

H. if follow up agreement is required by part 7640.0130, the:

I. a description of the quality assurance program.

Subp. 3.

[Repealed, 39 SR 1167]

History

Statutory Authority: MS s 45.023; 325F.20; 325F.21
History: L 1987 c 312 art 1 s 9; 13 SR 532; 13 SR 2982; 14 SR 2633; 32 SR 2213; 39 SR 1167

Minn. R. 7640.0160 [Repealed, 32 SR 2213]

[Repealed, 32 SR 2213]

Minn. R. 7640.0170 [Repealed, 32 SR 2213]

[Repealed, 32 SR 2213]

Minn. R. 7640.0180 [Repealed, 32 SR 2213]

[Repealed, 32 SR 2213]

Chapter 7645 COMMUNITY ENERGY GRANTS

Chapter 7655 ENERGY AUDITS; RENTAL BUILDINGS

Minn. R. 7655.0100 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0120 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0200 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0210 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0220 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0230 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0240 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0250 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0260 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0270 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0280 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0290 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0300 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0310 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0320 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0330 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0400 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0410 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Minn. R. 7655.0420 [Repealed, L 2007 c 136 art 3 s 7]

[Repealed, L 2007 c 136 art 3 s 7]

Chapter 7660 ENERGY AUDITS; INSTITUTIONS

Minn. R. 7660.0010 [Repealed, L 2001 c 23 s 1]

[Repealed, L 1993 c 327 s 24]

Minn. R. 7665.0380 [Repealed, L 1993 c 327 s 24]

[Repealed, L 1993 c 327 s 24]

Subpart 1.

[Repealed, 33 SR 1480]

Subp. 2.

MR 1992 Supplement 1 [Repealed, 16 SR 2687; 33 SR 1480]

Subp. 2.

[Repealed, 33 SR 1480]

Subp. 3.

[Repealed, 33 SR 1480]

Subp. 4.

[Repealed, 33 SR 1480]

Subp. 5.

[Repealed, 33 SR 1480]

Subp. 6.

[Repealed, 33 SR 1480]

Subp. 7.

[Repealed, 33 SR 1480]

Subp. 8.

[Repealed, 33 SR 1480]

Subp. 9.

[Repealed, 33 SR 1480]

Subp. 10.

[Repealed, 33 SR 1473]

Chapter 7680 LOCAL ENERGY AUDITS

[Repealed, L 2014 c 254 s 26]

Minn. R. 7685.0120 [Repealed, L 2014 c 254 s 26]

[Repealed, L 2014 c 254 s 26]

Minn. R. 7685.0130 [Repealed, L 2014 c 254 s 26]

[Repealed, L 2014 c 254 s 26]

Minn. R. 7685.0140 [Repealed, L 2014 c 254 s 26]

[Repealed, L 2014 c 254 s 26]

Chapter 7690 ENERGY CONSERVATION IMPROVEMENT

Minn. R. 7690.0100 Definitions

Subpart 1. Scope.

The terms used in this chapter have the meanings given them in this part.

Subp. 1a. Commissioner.

"Commissioner" means the appointed commissioner of the Minnesota Department of Commerce.

Subp. 2. Department.

"Department" means the Department of Commerce.

Subp. 3. Low income.

"Low income" has the meaning given it in Minnesota Statutes, section 216B.241, subdivision 1b.

History

Statutory Authority: MS s 216B.241
History: 14 SR 2193; 22 SR 1402; L 2001 1Sp4 art 6 s 1

Minn. R. 7690.0200 Purpose

The purpose of this chapter is to specify procedures to be followed by public utilities in submitting, and by the department in analyzing and selecting, proposals for conservation improvement programs and to provide for the participation of other interested persons in developing conservation improvement programs.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; 14 SR 2193; 22 SR 1402

Minn. R. 7690.0300 Scope

This chapter applies to proposals by public utilities and other interested persons for utility investments in conservation improvement programs.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; 14 SR 2193; 22 SR 1402

Minn. R. 7690.0400 [Repealed, 22 SR 1402]

[Repealed, 22 SR 1402]

Minn. R. 7690.0500 Biennial Conservation Improvement Program Filing

Subpart 1. Time limits.

No later than July 1 of each even-numbered year beginning in 1998, a public natural gas utility required by Minnesota Statutes, section 216B.241, to invest in a conservation improvement program shall file with the department a biennial conservation improvement program. No later than August 1, 1997, and every odd-numbered year afterward, a public electric utility required by Minnesota Statutes, section 216B.241, to invest in a conservation improvement program shall file with the department a conservation improvement program.

Subp. 2. Contents.

The biennial conservation improvement program filing must include:

A. a comprehensive description of the proposed program, including a description of each project making up the program;

B. for each individual project, a completed project information sheet that will be provided by the department. The project information sheet can be used to provide the information required in items E and F;

C. for each project making up the program, a description of the expected effect of each project on peak demand and energy consumption with supporting assumptions, including a list of each conservation technology or process to be promoted and the energy- and demand-savings assumptions associated with each identified technology;

D. for each electric utility that must submit an integrated resource plan to the Public Utilities Commission, an explanation of how its overall conservation improvement program enables the utility to meet the long-term demand-side management goals established in its most recent integrated resource plan;

E. an estimate of the expected cost-effectiveness of each project to the utility, to the project's participants, to the utility's ratepayers, and to society;

F. for each project targeted at residential consumers, an estimate of the anticipated percentage of use of each project among:

G. a detailed budget for each project for the next two years;

H. a description of the utility's ratemaking treatment and cost-recovery method;

I. an estimate of participation in each project;

J. an explanation of how the proposed projects provide for the involvement of community energy organizations when appropriate;

K. an outline of the proposed plan for evaluating the effectiveness of each proposed project;

L. for each renewable energy project, an estimate of the net energy and capacity to be produced by each project and the projected reliability of the technology that would be used; and

M. additional information that the department determines is necessary as a result of its review or evaluation of previous projects of the particular utility.

Subp. 3. Completeness review.

Upon receipt of a utility's plan, the department shall conduct a completeness review based on the filing requirements listed in subpart 2. The department's findings after this review must set forth the information necessary to make the plan complete and the date by which the information must be filed. The department staff's findings must be issued no later than ten days after the plan is filed with the department. When the department determines that the necessary information has been filed to make the plan complete, it shall serve a written notice of completion on the utility and persons on the utility's service list established under part 7690.0800, subpart 1.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; 14 SR 2193; 22 SR 1402

Minn. R. 7690.0550 Program Status Report

By April 1 of each year, an electric utility shall file with the department, and by May 1 of each year, a natural gas utility shall file with the department, a status report on each project operated during the previous year. The status report must include the following information for each project:

A. the approved participation goal, and the actual participants served during the previous calendar year;

B. the estimate of (1) low-income and (2) renter residential customer participation levels as anticipated in the approved biennial conservation improvement program filing, and the utility's estimates of low-income participation level and renter participation level actually achieved, if applicable;

C. the approved budget, and the actual expenditures;

D. the approved energy- and demand-savings goals, and the actual energy and demand savings achieved for the previous year; and

E. the cost-effectiveness of the project based on the results of previous years and the actual expenditures, as calculated from the utility, participant, ratepayer, and societal perspectives. An electric or gas utility may submit its financial incentive filing to meet the requirements of the status report if the financial incentive filing includes all of the information specified in items A to E.

History

Statutory Authority: MS s 216B.241
History: 22 SR 1402

Minn. R. 7690.0600 [Repealed, 22 SR 1402]

[Repealed, 22 SR 1402]

Minn. R. 7690.0700 Existing Program Projects; Filing

The filing requirements for renewing existing conservation improvement program projects are the same as for newly proposed projects. However, if the department has information already on file, the utility or interested person renewing a project may submit a project update sheet that references information the department already has on file. The project update sheet must include the project information sheet described in part 7690.0500, subpart 2, and must contain the following information:

A. the date and docket number of when the project was most recently approved by the department with complete information pursuant to part 7690.0500, subpart 2;

B. an explanation of why the project should be continued, including support from the project's most recent status report;

C. a list and explanation of all project modifications since the commissioner's most recent approval; and

D. an estimate of the cost per kilowatt ($/kW) and cost per kilowatt hour ($/kWh) for electric utility projects, and the cost per 1,000 cubic feet ($/Mcf) for gas utility projects.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; 14 SR 2193; 22 SR 1402

Minn. R. 7690.0800 Service Lists and Notice

Subpart 1. Service lists.

The department shall establish service lists for specific utilities to use in providing public notice of conservation improvement programs. The list must include the Public Utilities Commission, the Residential and Small Business Utilities Division of the Office of the Attorney General, persons involved in the public utility's previous conservation improvement program, persons who participated in the public utility's last general rate case with respect to conservation programs, and other persons the department believes are interested in the public utility's next conservation improvement program. The department shall maintain an updated service list.

Subp. 2. Notice of filing.

At the time it files its conservation improvement program, program change proposal, or alternative proposal with the department, the public utility or interested party must provide written notice of its filing to persons on the utility's service list established under subpart 1. The notice must state that a copy of the utility's or interested party's filing is available for public inspection at the enumerated business office locations of the utility and at the department's office. The notice must also state that the utility or interested party will make a copy of the proposed program available to interested persons upon request.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; 14 SR 2193; 22 SR 1402

Minn. R. 7690.0900 Comments; Biennial Conservation Improvement

The department shall allow 30 days for written comments on the public utility's biennial conservation improvement program. The time period allowed for written comments begins on the date that the department's finding of completion under part 7690.0500, subpart 3, is issued. The department shall allow 15 days from the filing of the comments for written reply comments. These comments and reply comments must be filed with the Public Utilities Commission, the department, and the utility to which they are addressed. The persons submitting the comments or responses must provide them to any person, upon request.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; L 1987 c 312 art 1; 14 SR 2193; 22 SR 1402

Minn. R. 7690.1000 Proposed Decision

Subpart 1. Prepared by staff.

After reviewing the comments submitted under part 7690.0900, the department staff shall prepare a proposed decision approving, disapproving, or modifying a program, project, or evaluation plan. The proposed decision must be issued no later than 30 days after the reply comments described in part 7690.0900 are due.

Subp. 2. Copies sent.

The department staff shall serve a copy of its proposed decision on the utility, on any person who submitted a comment under part 7690.0900, and on all other persons the department believes are interested in the public utility's conservation improvement program.

Subp. 3. Comment period.

The department shall allow 15 days from the date the proposed decision is issued for written comments on the proposed decision.

History

Statutory Authority: MS s 216B.241
History: 14 SR 2193; 22 SR 1402

Minn. R. 7690.1100 Responses; Written Record

The department may require written responses to comments, oral argument, negotiations, settlement conferences, formal hearing, or other procedures it considers necessary or helpful to enable it to review, analyze, and select appropriate programs under Minnesota Statutes, section 216B.241. Written papers or summaries of oral meetings for each proceeding filed with the department must also be served upon the parties on the service list and become part of the record upon which the department will decide the case.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; 14 SR 2193; 22 SR 1402

Minn. R. 7690.1200 Biennial Program Approval, Disapproval, Modification

Subpart 1. Determination of reasonable investment.

The department shall determine whether a proposed program or modified program will result in reasonable investments in and expenditures for energy conservation improvements. In making this determination, the commissioner shall consider the following information, which must be included in a public utility's filing:

A. the program's compliance with statutory spending requirements, as specified in Minnesota Statutes, section 216B.241, subdivision 1a, with each utility calculating the required spending level by using the gross operating revenues in the year preceding the calendar year in which the filing is submitted and by defining gross operating revenues as:

B. the impact of the program or modified program on:

C. the cost-effectiveness of the program or modified program, as calculated from the utility, ratepayer, participant, and societal perspectives;

D. the total number of low-income and rental customers expected to be affected by the program or modified program;

E. the total number of customers within a customer class expected to participate in the program or modified program, expressed as a percentage of the total number of customers within that customer class in a utility's service area;

F. the customer classes expected to participate in the program or modified program; and

G. other facts and circumstances concerning a particular utility that are relevant to determining the overall importance of the investment in energy conservation improvements.

Subp. 2. Approval.

On determining that the proposed program or modified program will result in reasonable investments in and expenditures for energy conservation improvements, the commissioner shall approve the proposed or modified program.

Subp. 3. Disapproval and modification.

On determining that the proposed program or modified program will not result in reasonable investments in and expenditures for energy conservation improvements, the commissioner shall disapprove the proposed program or modified program and require a program that will result in reasonable investments in and expenditures for energy conservation improvements.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 13 SR 2282; 14 SR 2193; 22 SR 1402

Minn. R. 7690.1300 Decision

When the commissioner approves, disapproves, or modifies a program, project, or evaluation plan, the commissioner shall set forth the reasons in a written decision within 30 days from the date comments are due on the department staff's proposed decision specified under part 7690.1000. The commissioner's decision must include explicit participation, and energy-savings and demand-savings goals for each utility as applicable. If the commissioner's decision will not be issued within this 30-day period, the department shall notify the parties on the service list specified in part 7690.0800 of the date by which a decision will be issued.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; 14 SR 2193; 22 SR 1402

Minn. R. 7690.1400 Proposed Project Changes; Supplemental Procedures

Upon the commissioner's own motion or upon the motion of a utility or other person, the commissioner may add a new project or modify, expand, or terminate an existing conservation improvement program before the program's expiration date. The moving party must give notice of the motion to the parties on the service list for the affected utility's conservation improvement program. A change may be required to make a project more effective, to reach more participants, to reduce unnecessary or ineffective expenditures, to expand, change, or reduce the geographic area or target group that the project covers, or to change the time period during which the project would be in effect. For a new project modification or an existing project termination, whether by a utility or an interested party, the filing requirements and the review and decision process are specified in part 7690.1430. For other program changes, the department shall allow 15 days for written comments on the proposal. The time period allowed for written comments begins on the date that the proposed change is filed with the department. The department shall allow ten days from the filing of the comments for written reply comments. These proposed program changes, comments, and responses must be filed with the Public Utilities Commission, the department, and interested parties on the utility's conservation improvement service list. The commissioner shall issue a written decision, including the commissioner's reasons for the decision, within 35 days from the date reply comments are due.

History

Statutory Authority: MS s 216B.08; 216B.241
History: 10 SR 1266; 14 SR 2193; 22 SR 1402

Minn. R. 7690.1430 New Project Proposals; Ending Existing Projects

Interested persons, including political subdivisions and nonprofit and community organizations, may submit alternative projects for inclusion in a utility's conservation improvement program at any time. In addition, a utility may submit a proposal for a new project at times other than when the utility is required to submit its biennial conservation improvement program. Utilities or interested persons also may submit proposals to terminate an existing project. Proposals for alternative projects must follow the requirements of part 7690.0500, except for part 7690.0500, subpart 2, item D. Utility proposals for new projects must follow all the requirements of part 7690.0500. The party submitting the alternative or new proposal shall provide a copy of the alternative or new utility project proposal to any person, upon request. Department staff shall conduct a completeness review of alternative or new utility project proposals, or existing project termination proposals, in the time frame and manner specified in part 7690.0500, subpart 3. The department shall allow 15 days for written comments on the alternative or new utility project or existing project termination proposal. The time period allowed for written comments begins on the date that the department's finding of completion under part 7690.0500, subpart 3, is issued. The department shall allow 15 days from the filing of the comments for written reply comments. These alternative or new utility project or existing project termination proposals, comments, and reply comments must be provided to the Public Utilities Commission, the department, the utility to which they are addressed, and other parties on the affected utility's conservation improvement program service list.

The department staff's proposed decision must be issued no later than ten days after the reply comments described in this part are due. Written comments on the proposed decision are due 15 days from the date the proposed decision is issued. The commissioner shall issue a written decision, including the commissioner's reasons for the decision, within 30 days from the date comments are due on the department staff's proposed decision.

History

Statutory Authority: MS s 216B.241
History: 22 SR 1402

Minn. R. 7690.1440 Timelines for Different Program Filings

Subpart 1. Generally.

Parts 7690.0500 to 7690.1430 specify the process for the submission, review and approval, modification, or disapproval of various conservation improvement program filings. To both facilitate understanding and to serve as a reference guide, the timelines for completing the review and approval process of the various filings is summarized in subparts 2 to 4. See parts 7690.0500 to 7690.1430 for specific review and approval process requirements.

Subp. 2. Biennial program filings.

The timelines for biennial conservation improvement program (CIP) filings are summarized in this subpart. See parts 7690.0500 to 7690.1430 for specific review and approval process requirements.

Subp. 3. New project proposals; terminating existing projects.

The timelines for a new project proposal and for terminating an existing project are summarized in this subpart. See parts 7690.0500 to 7690.1430 for specific review and approval process requirements.

Subp. 4. Modifying or expanding existing project.

The timelines for modifying or expanding an existing project are summarized in this subpart. See parts 7690.0500 to 7690.1430 for specific review and approval process requirements.

History

Statutory Authority: MS s 216B.241
History: 22 SR 1402

Minn. R. 7690.1450 Timeline Modifications

The commissioner shall modify the filing dates and other due dates in this chapter if the commissioner finds that the person requesting the change has shown good cause for the modification.

History

Statutory Authority: MS s 216B.241
History: 14 SR 2193; 22 SR 1402

Minn. R. 7690.1500 Petition to Commission

Petitions to the Public Utilities Commission to modify or revoke a department decision to require a program are governed by Minnesota Statutes, section 216B.241, subdivision 2, and any rules adopted under that statute by the Public Utilities Commission.

History

Statutory Authority: MS s 216B.241
History: 14 SR 2193; 22 SR 1402

Minn. R. 7690.1600 Rule Variances

Subpart 1. When granted.

The commissioner shall grant a variance to parts 7690.0100 to 7690.1500 when the commissioner determines that the following requirements are met:

A. enforcement of the rule would impose an excessive burden upon the applicant or others affected by the rule;

B. granting the variance would not adversely affect the public interest; and

C. granting the variance would not conflict with standards imposed by law.

Subp. 2. Conditions.

A variance may be granted contingent upon compliance with conditions imposed by the commissioner.

Subp. 3. Duration.

Unless the commissioner orders otherwise, a variance automatically expires in one year. It may be revoked sooner due to changes in circumstances or due to failure to comply with requirements imposed as a condition of receiving the variance. A notice of intent to revoke a variance will be sent to the party holding the variance and others on the service list. A party will have ten days to respond.

Subp. 4. Notice and timelines.

A party requesting a rules variance must give notice of the motion to the parties on the service list for the affected utility's conservation improvement program. The request must state the variance requested and how the request meets the three requirements outlined in subpart 1. The timelines for variance requests are the same as the timelines for proposed changes to an existing project, as outlined in part 7690.1400 and summarized in part 7690.1440, subpart 4.

History

Statutory Authority: MS s 216B.241
History: 22 SR 1402

Chapter 8775 TELECOMMUNICATIONS ACCESS MINNESOTA

Minn. R. 8775.0100 Definitions

Subpart 1. Scope.

The terms used in this chapter have the meanings given them in this part.

Subp. 2. Applicable median income.

"Applicable median income" means the median gross income in Minnesota as estimated by the Bureau of the Census in the most recent annual announcement of the United States Department of Health and Human Services Family Support Administration, published in the Federal Register. These announcements are incorporated by reference.

Subp. 3. Appropriate communication device.

"Appropriate communication device" means a communication device that most efficiently allows access to the telephone system by a person who has a communication disability.

Subp. 4. Blind.

A person is "blind" if central visual acuity does not exceed 20/200 in the better eye with corrective lenses or, if greater than 20/200, visual acuity is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees.

Subp. 5. Board.

"Board" means the Telecommunication Access Minnesota Board established in Minnesota Statutes, section 237.51.

Subp. 6. Communication device.

"Communication device" means a device that when connected to a telephone enables a person with a communication disability to communicate with another person using the telephone system. A communication device includes a ring signaler, an amplification device, a telecommunications device for the deaf (TDD), a brailling device for use with the telephone system, and any other device the board considers necessary.

Subp. 7.

[Renumbered subp 16b]

Subp. 8. Deaf.

"Deaf" means a hearing loss of such severity that the individual must depend primarily upon visual communication such as writing, lip reading, sign language, and gestures. A deaf person requires use of a telecommunications device for the deaf (TDD) to communicate effectively on the telephone.

Subp. 9. Deafblind.

"Deafblind" means the conditions of a person who is (1) deaf or has a severe to profound hearing loss and (2) blind or visually impaired. A person affected by these conditions requires use of a brailling device for use with the telephone system or other specially designed system to communicate effectively on the telephone.

Subp. 10. Division.

"Division" means the Deaf and Hard of Hearing Services Division of the Minnesota Department of Human Services.

Subp. 11. Economic hardship.

"Economic hardship" means an economic condition or level of subsistence on a household income that is at or below 60 percent of the applicable median income in the state.

Subp. 12. Hard-of-hearing.

"Hard-of-hearing" means a hearing loss resulting in a functional limitation, but not to the extent that the individual must depend primarily upon visual communication. Some of the effects of hearing loss can be overcome with proper amplification. A person that is hard-of-hearing may require a communication device to communicate effectively on the telephone.

Subp. 13.

[Repealed, 19 SR 1666]

Subp. 14. Household criteria.

For determining priority when initially distributing equipment or receiving more than one communication device, "household criteria" means the higher priority given for a household having more than one person with a communication disability or for a household with a person who has a communication disability living alone.

Subp. 15. Household income.

"Household income" means the total income of a person with a communication disability and immediate family living in the same residence. The immediate family includes spouse and minor children. The income of a minor child must be included when the dependent minor child is under 15 years of age and residing with the parents or custodial parent. If the person with a communication disability is a minor child, then parents and siblings residing with the minor are immediate family.

Subp. 16. Income.

"Income" means money received in the preceding calendar year from each of the following sources:

A. money, wages, or salary;

B. net income from nonfarm employment as defined for federal tax purposes;

C. net income from farm self-employment as defined for federal taxes;

D. income from any social security program;

E. supplemental social security income;

F. public assistance or welfare payments;

G. interest on savings or other investments that pay interest;

H. dividend income from estates or trusts, or net rental income;

I. veterans' payments, unemployment compensation payments, and workers' compensation payments;

J. private or public employee pensions; and

K. alimony, child support, regular contributions from persons not living in the household, and other periodic income. This definition of income comes from that of the Bureau of the Census and is interpreted according to its standards as published in "Consumer Income," series P-60, No. 156, Money, Income of Households, Families and Persons in the United States: 1985. These standards are incorporated by reference, are not subject to frequent change, and are located in the government publications reference department of the University of Minnesota and in the Minitex interlibrary loan system.

Subp. 16a. Mobility impairment.

"Mobility impairment" means a motor skill condition that significantly impedes a person's ability to use standard customer premises telephone equipment. A person with a mobility impairment may require the use of a communication device with auxiliary equipment to communicate on the telephone.

Subp. 16b. Person with a communication disability.

"Person with a communication disability" means a person determined by the division to be deaf, deafblind or hard-of-hearing, to have a mobility impairment, or to have a speech disability as defined by subparts 8, 9, 12, 16a, and 20.

Subp. 17. Resident of Minnesota.

"Resident of Minnesota" means an individual who lives in Minnesota or who has moved to Minnesota and intends to remain in Minnesota.

Subp. 18. Significant visual impairment.

"Significant visual impairment" means a visual disability that does not constitute legal blindness but which constitutes a substantial handicap to employment or limits the person's ability to live independently, perform self-care activities, or grow and develop.

Subp. 19. Special needs.

"Special needs" means the needs of an eligible person that may require that the person be given priority when initially distributing the equipment or be given more than one communication device because of severity of communication disability or presence of multiple disabilities.

Subp. 20. Speech disability.

"Speech disability" means a condition that renders a person physically incapable of speaking clearly. The severity of the disability may vary; however, it renders speech on an ordinary telephone unintelligible or impossible and requires a communication device to communicate effectively on the telephone.

Subp. 21. TAM.

"TAM" means Telecommunications Access Minnesota.

History

Statutory Authority: MS s 237.51
History: 14 SR 848; 19 SR 1666; L 2004 c 228 art 1 s 74; L 2013 c 62 s 32

Minn. R. 8775.0200 Purpose and Construction

The purpose of this chapter is to develop and implement a statewide program to distribute telephone communication devices to eligible persons with a communication disability for improving access to telephone communications services for persons who have a communication disability. This chapter is to be liberally construed to further these purposes.

History

Statutory Authority: MS s 237.51
History: 14 SR 848; L 2013 c 62 s 32

Minn. R. 8775.0300 Eligibility for Tam Services

Subpart 1. Information provided.

On request, the division shall offer to a person an application form developed by the division and a brochure that describes the TAM eligibility requirements and application process.

Subp. 2. Application process.

The applicant shall complete the application form and return it to the division's regional service center for people who are deaf and hard-of-hearing. An application may be made by the applicant, the applicant's spouse, or a person authorized by the applicant to act in the applicant's behalf. All documentation must be provided within 30 days of the first interview with the division. The applicant shall provide medical documentation of hearing loss or communication disability on request.

Subp. 3. Documenting, verifying, and reviewing eligibility.

The division shall verify the applicant's household income, age, and access to telephone service, and that the applicant is a person with a communication disability. If the division becomes aware that a condition of eligibility has changed, the division may redetermine eligibility:

A. Within 30 days, an applicant shall document income or authorize the division to verify the income. The division shall help an applicant or recipient obtain documents that the applicant does not possess and cannot obtain. Information previously verified and retained by the division need not be verified again unless the information no longer applies to current circumstances.

B. The division shall not request information about an applicant for or recipient of TAM services that is not of public record from a source other than within the division without the applicant's or recipient's previous written consent. The division may request information about an applicant or recipient that is not of public record from the telephone companies by obtaining the applicant's or recipient's previous written consent on an application or redetermination form. The division shall not provide third parties with access to information about an applicant's eligibility status or other case record information without the previous written consent of that applicant or recipient, except when access to specific case information is granted to agencies designated by the Minnesota Government Data Practices Act, Minnesota Statutes, chapter 13. Information designated as confidential by the Minnesota Government Data Practices Act may only be made available to agencies granted access under that law and must not be provided to an applicant, recipient, or third party.

C. The division shall inform the recipient of the recipient's responsibility to report permanent changes in circumstances that affect eligibility within ten days of each change.

Subp. 4. Eligibility criteria.

To be eligible for the TAM program, a person must:

A. be at least five years of age;

B. have a communication disability;

C. be a resident of Minnesota;

D. be a resident in a household at or below the applicable median income in the state, except that a deafblind person applying for a brailling device for use with the telephone system may reside in a household that has a median income no more than 150 percent of the applicable median household income in the state; and

E. have or have applied for telephone service and been assigned a telephone number. A person who at the time of application does not have telephone service, but meets all other eligibility requirements, will be declared "conditionally eligible" and, in order to be declared "eligible," must apply for telephone service and be assigned a telephone number.

Subp. 5. Persons not eligible.

Persons who are residents of a residential or treatment facility that directly or indirectly receives federal funding and is required to be fully accessible to all residents by the Rehabilitation Act of 1973, United States Code, title 29, section 774, and the Americans with Disabilities Act of 1990, United States Code, title 42, section 12101, et seq., and are eligible for and can obtain communication devices through federal provisions are not eligible to receive TAM services under this chapter.

Subp. 6. Notification of eligibility.

Within 30 days of the receipt of the application and the necessary documentation the division shall notify the applicant in writing whether the applicant is found eligible and, if the applicant is denied, the reasons for denial.

Subp. 7. Determination of appropriate communication device.

The division shall determine the appropriate communication device for a recipient.

History

Statutory Authority: MS s 237.51
History: 14 SR 848; 19 SR 1666; L 2004 c 228 art 1 s 74; L 2013 c 62 s 32

Minn. R. 8775.0400 Communication Devices; Initial Distribution Priority

Subpart 1. First priority: deafblind.

The first in priority are those eligible, deafblind persons having special needs, experiencing economic hardship, or meeting the household criteria standards.

Subp. 2. Second priority: deaf.

The second in priority are those eligible, deaf persons having special needs, experiencing economic hardship, or meeting the household criteria standards.

Subp. 2a. Third priority: speech disabilities or mobility impairments.

The third in priority are those persons with speech disabilities or mobility impairments having special needs, experiencing economic hardship, or meeting the household criteria standards.

Subp. 3. Fourth priority: speech disabilities.

The fourth in priority are those eligible persons with speech disabilities having special needs, experiencing economic hardship, or meeting the household criteria standards.

Subp. 3a. Fifth priority: mobility impairments.

The fifth in priority are those eligible persons with mobility impairments having special needs, experiencing economic hardship, or meeting the household criteria standards.

Subp. 4. Sixth priority: hard-of-hearing.

The sixth in priority are those eligible, hard-of-hearing persons having special needs, experiencing economic hardship, or meeting the household criteria standards.

Subp. 5. Seventh priority: others without special needs.

The seventh in priority are those eligible persons with a communication disability having no special needs, not experiencing economic hardship, and not meeting the household criteria standards.

Subp. 6. Use of priority system.

Initially, the priority system must be used to determine the priority of eligible applicants for receiving telecommunication devices, for example, to establish a waiting list of eligible applicants. Only if allotted program money is insufficient to provide all eligible applicants with needed equipment may the priority system be used to determine which individuals will receive equipment.

History

Statutory Authority: MS s 237.51
History: 14 SR 848; 19 SR 1666; L 2013 c 62 s 32; L 2014 c 275 art 1 s 138

Minn. R. 8775.0500 Households Eligible to Receive Several Devices

Subpart 1. Deaf.

A person who is deaf is eligible for a telecommunications device for the deaf (TDD) and a ring signaler.

Subp. 2. Deafblind.

A person who is deafblind is eligible to receive a telecommunications device for the deaf (TDD) or brailling device for use with the telephone system with auxiliary equipment approved by the board and necessary for efficient communication.

Subp. 3. Two or more eligible persons.

If a household contains more than one eligible person with a communication disability, the board or its designee may approve more than one telephone device as necessary for efficient communication.

Subp. 4. Hard-of-hearing.

A person who is hard-of-hearing is eligible for a ring signaler and amplification device if more than one device is necessary for efficient communication.

Subp. 5. Mobility impairment.

A person who has mobility impairment that makes it difficult to use telecommunications equipment is eligible for a speakerphone or similar device with auxiliary equipment that the board or its designee deems necessary.

Subp. 6. Speech disability or mobility impairment.

A person who has a speech disability or mobility impairment that makes it difficult to use telecommunications equipment is eligible for a speakerphone or similar device, or telecommunications device for the deaf (TDD) and any auxiliary equipment approved by the board.

History

Statutory Authority: MS s 237.51
History: 14 SR 848; 19 SR 1666; L 2013 c 62 s 32

Minn. R. 8775.0600 Training and Maintenance

The commissioner of human services shall maintain the communication devices until the warranty period expires at which time the board shall decide whether to repair or replace defective units. The commissioner shall provide training, without charge, to first-time users of the devices.

History

Statutory Authority: MS s 237.51
History: 14 SR 848

Minn. R. 8775.0700 Ownership

Communication devices distributed under this chapter are and must remain the property of the state of Minnesota.

History

Statutory Authority: MS s 237.51
History: 14 SR 848

Minn. R. 8775.0800 Appeals

Subpart 1. Aggrieved party.

An aggrieved party may appeal a decision of the division. An aggrieved party is an applicant:

A. who is determined ineligible for TAM service under part 8775.0300, subpart 4;

B. who disagrees with the division's determination regarding the appropriate communication device under part 8775.0300, subpart 6;

C. who disagrees with the division's decision regarding priority for initial distribution of communication devices under part 8775.0400; or

D. whose TAM service is terminated.

Subp. 2. Procedure.

Requests for appeal must be made within 30 calendar days of receiving notice of adverse action or, for good cause shown, within 60 calendar days of receiving the notice. Requests for appeal can be made through written, telephone, or face-to-face contact with a designated representative of the regional service center for deaf and hard-of-hearing people.

Subp. 3. Conciliation conference.

Within 30 calendar days of receiving a request for appeal, a representative of the regional service center for deaf and hard-of-hearing people shall meet with the aggrieved party and attempt to resolve informally the matter leading to the appeal. Within ten calendar days of the conciliation conference, the representative shall prepare a written summary of the issues addressed at the conciliation conference and shall send a copy of the written summary to the aggrieved party and to the board.

Subp. 4. Formal hearings.

If still dissatisfied after receiving a copy of the conciliation conference summary, the aggrieved party may request a hearing before the board by making written, telephone, or face-to-face contact with a designated representative of the regional service center for deaf and hard-of-hearing people. A hearing before the board must be scheduled within 90 days. At the hearing, the aggrieved party may introduce evidence relevant to the issues on appeal. An aggrieved party may be represented by legal counsel or a lay advocate at the hearing.

Subp. 5. Service pending appeal.

Termination of TAM services must be stayed pending an appeal.

History

Statutory Authority: MS s 237.51
History: 14 SR 848; 19 SR 1666; L 2004 c 228 art 1 s 74