TITLE 1.ADMINISTRATION

Part 7. STATE OFFICE OF ADMINISTRATIVE HEARINGS

Chapter 155. RULES OF PROCEDURES

1 TAC §§155.1, 155.3, 155.5, 155.7, 155.9, 155.11, 155.13, 155.15, 155.17, 155.19, 155.21, 155.23, 155.25, 155.27, 155.29, 155.31, 155.33, 155.35, 155.37, 155.39, 155.41, 155.43, 155.47, 155.49, 155.51, 155.53, 155.55, 155.57, 155.59

The State Office of Administrative Hearings (SOAH) adopts amendments to §155.1, Purpose and Scope; §155.3, Application and Construction of this Chapter; §155.5, Definitions; §155.7, Jurisdiction; §155.9, Request to Docket Case; §155.11, Seal; §155.13, Venue; §155.15, Powers and Duties of Judges; §155.17, Assignment of Judges to Cases; §155.19, Computation of Time; §155.21, Representation of Parties; §155.23, Filing Documents or Serving Documents on the Judge; §155.25, Service of Documents on Parties; §155.27, Notice of Hearing; §155.29, Pleadings; §155.31, Discovery; §155.33, Orders; §155.35, Certification of Questions to Referring Agency; §155.37, Settlement Conferences; §155.39, Stipulations; §155.41, Procedure at Hearing; §155.43, Making a Record of Contested Case; §155.47, Public Attendance and Comment at Hearing; §155.49, Conduct and Decorum; §155.51, Evidence; §155.53, Consideration of Policy Not Incorporated in Referring Agency's Rules; §155.55, Failure to Attend Hearing and Default; §155.57, Summary Disposition and Dismissal; and §155.59, Proposal for Decision. Sections 155.1, 155.3, 155.5,155.15, 155.19, 155.21, 155.23, 155.25, 155.29, 155.31, 155.43, 155.55, and 155.57 are adopted with changes to the proposed text as published in the October 19, 2001, issue of the Texas Register (26 TexReg 12719). Sections 155.7, 155.9, 155.11, 155.13, 155.17, 155.27, 155.33, 155.35, 155.37, 155.39, 155.41, 155.47, 155.49, 155.51, 155.53, and 155.59 are adopted without changes to the proposed text, and will not be republished.

SUMMARY OF THE BASIS FOR THE ADOPTED RULES

The primary purpose of the adopted amendments is to update, streamline, and improve the uniform procedural rules SOAH promulgated in 1997 pursuant to Texas Government Code §2003.050. The adopted amendments will further enhance SOAH's ability to provide for an efficient, just, fair, and impartial adjudication of the rights of the parties under a consistent set of procedures.

SECTION BY SECTION DISCUSSION

Adopted ( with changes to the proposed text ) §155.1 is amended to change the effective date from 1998 to 2001 of the Public Utility Commission and Texas Natural Resource Conservation Commission procedural rules adopted by reference. A new subsection (c) has been added concerning the procedural rules of the Employees Retirement System of Texas and the Railroad Commission of Texas.

Adopted ( with changes to the proposed text ) §155.3 is amended to change language in subsection (c) to track the language of Texas Government Code §2003.050; to add new subsection (h) to track the language of Texas Rule of Civil Procedure 3 and Texas Government Code §312.003; and to add new subsection (i) to track the language of Texas Government Code §311.011.

Adopted ( with changes to the proposed text ) §155.5 is amended to include temporary judges in the definition of Administrative Law Judge; to extend the definition of Alternative Dispute Resolution (ADR) to the hybrid and adaptive ADR processes employed by SOAH; to eliminate reference in the rules to the term "Office"; to clarify the Mediated Settlement Conference procedure; to define the acronym "SOAH"; and to add the acronym "RRC," which is the Railroad Commission of Texas.

Adopted ( without changes to the proposed text ) §155.7 is amended to add subsection (d) to clarify when the time in which a party is permitted or required to do something begins to run.

Adopted ( without changes to the proposed text ) §155.9 and §155.11 are amended to conform to consistent language.

Adopted ( without changes to the proposed text ) §155.13 is amended to allow the judge to consider all matters relevant to venue, and to place on an equal footing consideration of the costs to, and preferences of, all of the parties.

Adopted ( with changes to the proposed text ) §155.15 is amended to make explicit the judge's authority to pose questions to witnesses. Because Texas Government Code §2003.0421(a)(3) empowers a SOAH judge to sanction "failure to obey an order of the administrative law judge or of the state agency on behalf of which the hearing is being conducted," the proposed change to subsection (b)(11) has been deleted.

Adopted ( without changes to the proposed text ) §155.17 is amended to add new subsections (c) and (d) to track the recusal procedures set out in Texas Rule of Civil Procedure 18a, and to cause subsection (c) to be renumbered to new subsection (e) and modify its language to more accurately reflect the requirements of Texas Government Code §2001.062(c).

Adopted ( with changes to the proposed text ) §155.19 is amended to clarify that subsection (a) applies with equal force regardless of the source of the deadline or time period; to make subsection (a) consistent with Texas Rule of Civil Procedure 4; and to add new subsection (c) to track Texas Rule of Civil Procedure 5 and eliminate a process that does not require a motion or notice. New subsection (c) as adopted also provides that it does not apply to the ten- day reconsideration periods in §155.55(d) of this title (relating to Failure to Attend Hearing and Default), and §155.57(b) of this title (relating to Summary Disposition and Dismissal).

Adopted ( with changes to the proposed text ) §155.21 is amended to require all party representatives who are not licensed to practice law in Texas and whose authority is challenged, to demonstrate their authority to appear; to add new subsection (c), which is based on Texas Rule of Civil Procedure 8, to provide a default answer to the question of who is due service of pleadings and orders; and to renumber subsection (c) to be new subsection (d).

Adopted ( with changes to the proposed text ) §155.23 is amended to add language stating that pleadings in RRC cases be listed as exceptions in paragraph (1)(A), and to add a new subparagraph (D) to paragraph (1) that instructs parties to a case referred to SOAH by the RRC to file original pleadings with the RRC and copies with SOAH; to add new paragraph (3)(A), which is based on Texas Rule of Civil Procedure 191.4 and intended to cut down on the amount of unnecessary material filed with SOAH; to eliminate the part of paragraph (4) specifying a time for filing documents, to comport with local practice in both the state and federal courts; to eliminate the part of paragraph (4) that limited facsimile filings to a twenty page limit, to comport with local practice in the state courts; and to add new paragraph (5), which is based on Texas Rule of Civil Procedure 13 and intended to prohibit the filing of groundless or improper filings, and to replace the proposed word "attorney" with the adopted words "authorized representative."

Adopted ( with changes to the proposed text ) §155.25 is amended to change the SOAH presumption of receipt of mailed documents from five days to three days, consistent with the rules in state and federal courts in Texas and throughout the country; to change the proposed elimination of subsection (d)(4) to adopting a presumption that documents sent by facsimile after 5:00 p.m. are received the next day; and to eliminate a redundant phrase in subsection (e).

Adopted ( without changes to the proposed text ) §155.27 is amended to conform to consistent language.

Adopted ( with changes to the proposed text ) §155.29 is amended to correct a citation error in subsection (a)(7); to delete the mandatory requirement that "good cause" assertions be supported by affidavits or other proof; to delete the proposed language that made the certificate of conference requirement applicable to all motions; to delete the proposed language in subsections (f) and (g) which merged motions for continuance with motions for extension of time; and to add subsection (i), which explains that motions to set aside a default under §155.55(d) of this title (relating to Failure to Attend Hearing and Default), and motions for summary disposition and to set aside dismissal for failure to prosecute under §155.57 of this title (relating to Summary Disposition), shall be governed by the referenced sections.

Adopted ( without changes to the proposed text ) §§155.33, 155.35, and 155.37 are amended to conform to consistent language.

Adopted ( without changes to the proposed text ) §155.39 is amended to add legal and procedural matters as proper subjects for stipulations; to permit the filing of stipulations at prehearings; and to add new subsection (d), which tracks the language of Texas Rule of Civil Procedure 11.

Adopted ( without changes to the proposed text ) §155.41 is amended to conform to consistent language and to correct misspelled words.

Adopted ( with changes to the proposed text ) §155.43 is amended to specify that a court reporter will be provided by the referring agency for hearings scheduled for longer than one day. However, the proposed language has been changed to adopted language that enables the judge to grant an exemption from the requirement of a court reporter; the proposed language that placed responsibility for transcript costs on the referring agency has been changed to a more even-handed procedure for assessing costs; and, to improve the procedure for broadcasting or televising proceedings, language different from the proposed language has been adopted, requiring among other things, the consent of the parties, which is an element in Texas Rule of Civil Procedure 18(c).

Adopted ( without changes to the proposed text ) §155.47 is amended to conform to consistent language.

Adopted ( without changes to the proposed text ) §155.49 is amended to recognize the fact that the standards of conduct in the Texas Lawyers' Creed are aspirational, not mandatory.

Adopted ( without changes to the proposed text ) §155.51 is amended to conform to consistent language and to clarify that objections to written testimony from a witness may also be reduced to written form and filed prior to hearing.

Adopted ( without changes to the proposed text ) §155.53 is amended to add an additional factor for consideration.

Adopted ( with changes to the proposed text ) §155.55 is amended: to simplify the rule; to eliminate the word "judgment" as inapplicable and substitute the word "proceeding"; to require disclosure of the possibility of default in larger type; to eliminate the requirement of certified or registered mail notice; to eliminate original subsection (e) because it is superfluous; to add new subsection (d), now adopted as subsection (e), which recognizes that on occasion, parties miss hearings for good cause, and gives the judge a short time frame in which to exercise discretion to reopen a hearing under such circumstances; and to adopt a new subsection (d) that should enable each referring agency to use whatever default system is most efficient for it.

Adopted ( with changes to the proposed text ) §155.57 is amended: to add new subsections, based in part on the Texas Rules of Civil Procedure, that provide additional detail for the summary disposition procedure, including the requirements for separate fact statements, to simplify the judge's consideration of these motions; and to clarify and strengthen the procedure for dismissing cases for want of prosecution. Its proposed language has changed to adopted language that will provide additional flexibility as well as to promote procedural efficiency; the proposed time for filing a motion opposing dismissal has been increased to twenty days to ensure adequate response time is provided; and adopted language has been added at the end of subsection (b) to clarify that SOAH's dismissal for want of prosecution does not address the merits of the case.

Adopted ( without changes to the proposed text ) §155.59 is amended to add new subsection (c), which clarifies procedures regarding exceptions and replies, and makes explicit a judge's limited nunc pro tunc powers over proposals for decision.

HEARINGS AND COMMENTS

A public hearing was not held. Written comments were submitted by: the Railroad Commission of Texas (RRC); State Securities Board (SSB); Texas Department of Health (TDH); Texas Department of Insurance (TDI); Texas Lottery Commission (TLC); Texas State Board of Medical Examiners (TSBME); Texas State Board of Pharmacy (TSBP); Texas Workers' Compensation Commission (TWCC); and Will Wilson of Wilson & Varner, L.L.P. (W&V).

RESPONSE TO COMMENTS

General

COMMENT: W&V objected to the change from the acronym "ALJ" to the word "judge" throughout the rules because SOAH is not a court, and it believes the change will be confusing to lay persons who participate in hearings. Along with this general comment, W&V specifically asked that the proposed amendment to §155.5 of this title (relating to Definitions) deleting the acronym "ALJ" and substituting the word "judge" be stricken.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. A party certainly may choose to refer to the administrative law judge as "ALJ." However, the proposed change in the rules to the term "judge" is to reflect the standard practice in SOAH hearings and in pleadings filed at SOAH of referring to the administrative law judge as "judge." SOAH also believes that this change in terminology may help pro se litigants understand that they will be participating in formal, court-like proceedings.

Section 155.1--Purpose and Scope

COMMENT: RRC requested language stating that SOAH rules do not govern or otherwise apply to any matters that may be referred to SOAH by the RRC, unless authorized by rules promulgated by the RRC. All such matters would be governed, instead, by rules adopted by the RRC. In addition, the RRC suggested §155.3(a) and (c) of this title (relating to Application and Construction of this Chapter) should be modified by adding the words "Subject to the provisions of §155.1" at the beginning of each subsection.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. Any question as to which rules apply is governed by Texas Utilities Code §102.006(a), which states that an RRC hearing must be conducted in accordance with the rules and procedures adopted by the RRC. In addition, SOAH and the RRC have agreed in an interagency contract that SOAH procedural rules will apply in the absence of an RRC rule.

COMMENT: The RRC also requested the addition of the words "Railroad Commission of Texas (RRC)" at line two of subsection (b) of this section, just before the reference to the Public Utility Commission.

RESPONSE: SOAH declines to adopt this language. As noted, RRC rules apply to SOAH hearings by statute. For clarity, however, SOAH has added subsection (c) to this section, which states that, by statute, the rules of the RRC and the Employees Retirement System of Texas (ERS) apply to hearings at SOAH.

Section 155.3--Application and Construction of this Chapter

COMMENT: TSBME objected that subsection (c) of this section requires SOAH to consider only its own procedural rules rather than those of the agency requesting the hearing, and that this diminishes the authority of the referring agency's procedural rules. TSBME suggested stating that an agency's procedural rules may be considered by the judge if they are not in conflict with the APA or these rules.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH believes that the suggested language is unnecessary because it merely reiterates a provision in Texas Government Code §2003.050. In addition, the judge always has the discretion to consider the agency's position as expressed in its rules.

COMMENT: TSBME also asked that SOAH add the words "rules and" to proposed subsection (f) of this section (adopted at subsection (g) of this section), following the word "applicable" and before the word "policy." In TSBME's opinion, this would clarify that agency rules will also be considered in ruling on contested procedural issues.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. As explained in the following response, SOAH applies agency procedural rules that have not been adopted by reference only to procedural matters that are not addressed in SOAH's rules.

COMMENT: TDH, TSBME, and TWCC expressed concern about the applicability of their procedural rules in light of the wording in subsection (c) of this section.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH's rules pertain to events that occur in cases after referral to SOAH, and the referring agencies' rules pertain to events that occur before SOAH has jurisdiction over a case and after SOAH has lost jurisdiction over the case. The referring agencies' procedural rules also govern in areas not covered by the SOAH rules. For example, an agency's rules on the issuance of subpoenas and commissions is not affected because SOAH rules do not address those matters.

COMMENT: TWCC asked various questions about the applicability of some of its rules, which appear in Texas Administrative Code (TAC), Title 28 (Insurance), implying that they may be necessary for adjudicating cases it refers to SOAH. TWCC also wondered what procedure governs the issuance of subpoenas. Finally, TWCC noted that its Medical Review Division (MRD) will no longer be reviewing preauthorization and medical necessity cases prior to referral to SOAH, although it may still review pure fee disputes. Instead, the cases will initially be handled by an Independent Review Organization (IRO). Thus, in TWCC's opinion, 28 TAC §148.21 (relating to Evidence) and specifically subsection (j) of that section (relating to Record of commission's Medical Review Division in a review of a medical fee or a medical service), requiring TWCC to send the certified record to SOAH, will no longer apply to IRO- reviewed cases.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. With regard to 28 TAC §148.21 (relating to Evidence), specifically subsection (h) of that section (relating to Burden of proof), SOAH finds that Texas Labor Code §413.031, concerning medical appeals, states the burden is on the party seeking relief, thus obviating the need for a rule on that issue. SOAH notes that §155.31(e) of this title (relating to Discovery) states that requests for issuance of subpoenas or commissions shall be directed to the referring agency. The absence of any reference to subpoenas for witnesses at hearing means the referring agency's subpoena rules apply. Similarly, because the part of 28 TAC §148.21(j) (relating to Record of commission's Medical Review Division in a review of a medical fee or a medical service) on sending the certified record of the papers reviewed prior to the appeal to SOAH is not addressed in SOAH's procedural rules, that portion of 28 TAC §148.21(j) applies to SOAH hearings. However, because the rest of 28 TAC §148.21(j) discusses evidentiary issues, it is not applicable at SOAH because of §155.51 of this title (relating to Evidence). Likewise, §155.31(d) of this title (relating to Discovery) permits the taking of depositions, and proposed subsection (o) of that section (now adopted at subsection (n) of that section), concerns agreements at deposition. Thus, TWCC's deposition rule is not applicable to SOAH hearings.

Section 155.5--Definitions

RESPONSE: SOAH added a subparagraph defining the acronym "RRC" at the request of the Railroad Commission of Texas.

Section 155.13--Venue

COMMENT: RRC suggested adding language to SOAH's designation of a site for hearing that would except to this section if otherwise agreed between SOAH and the referring agency.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. It is our understanding that the RRC is concerned that a SOAH hearing room might not be available for hearing a case that is under a jurisdictional deadline. Agencies can be assured that no case under such a deadline will be delayed for want of a hearing room. If necessary, SOAH can designate an alternate hearing site if a SOAH hearing room is not available.

Section 155.15--Power and Duties of Judges

COMMENT: Three commenters addressed subsection (b)(11) of this section. First, the SSB commented that deleting a provision for the judge to sanction a party for violating an agency order would negatively impair SSB's powers under new legislation permitting the Commissioner to issue Emergency Cease & Desist Orders. Second, TDI found the change confusing and asked whether the word "rule" should be "ruling," or should "agency" be inserted after "applicable" and before "rule."

RESPONSE: SOAH has made changes to the proposed text in response to this comment. Based on the commenters' concerns, and because Texas Government Code §2003.0421(a)(3), empowers a SOAH judge to sanction "failure to obey an order of the administrative law judge or of the state agency on behalf of which the hearing is being conducted," the proposed change to subsection (b)(11) of this section has not been adopted.

COMMENT: Third, the RRC asked to be added to subsection (b)(11) of this section, along with the PUC and TNRCC, as one of the types of cases to which the rule does not apply.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. Unlike the PUC and TNRCC, the RRC has not promulgated rules addressing this issue.

Section 155.17--Assignment of Judges to Cases

COMMENT: TDI commented that subsections (c) and (d) of this section regarding recusal will increase untimely filing of motions and disputes about what was the "earliest practicable time." TDI suggested that the rule should follow more closely Texas Rule of Civil Procedure 18a, by using the two ten-day filing time periods called for in that rule. TDI also expressed concern that a recusal motion could be filed after commencement of the hearing. In addition, TDI contended that subsection (e) of this section should distinguish between the authority of substitute judges assigned because the presiding judge was unable to continue presiding over a hearing, and the authority of substitute judges appointed to issue a proposal for decision (PFD) after conclusion of the hearing. TDI contended the latter type of substitute judge should not have the authority to conduct further proceedings.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. Very few recusal motions are filed at SOAH, and we believe the adopted subsection is clear and necessarily flexible. A substituted judge needs to have full authority over the case, including the ability to reopen the proceeding, if necessary.

Section 155.19--Computation of Time

COMMENT: TDI thought subsection (a) of this section should be more consistent with Texas Rule of Civil Procedure 4. Time begins to run under Texas Rule of Civil Procedure 4 from the end of the next day that is not a Saturday, Sunday, or "legal holiday." Some holidays observed by federal agencies and parts of the private sector, like Columbus Day, are not granted to state agencies like SOAH. TDI believed that this section would be confusing if it were different from Texas Rules of Civil Procedure 4, and that it was unclear when SOAH would be closed other than on a legal or official state holiday.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. This section as adopted provides greater flexibility than Texas Rule of Civil Procedure 4, and this language as adopted has not caused any known confusion to date. In particular, the adopted language "another day on which SOAH is closed" gives parties flexibility when unexpected situations, such as inclement weather, make it impossible to take necessary actions.

COMMENT: TDI objected to subsection (c) of this section regarding Enlargement of Time, contending it should have at least the type of limitations on its application contained in Texas Rule of Civil Procedure 5, which does not allow enlargement of time relating to new trials, except under the parameters of the rules relating to new trials.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has rewritten subsection (c) of this section so that it does not apply to the two analogous situations in SOAH practice--the reconsideration periods found in §155.55(d) of this title (relating to Failure to Attend Hearing and Default), and §155.57(b) of this title (relating to Summary Disposition and Dismissal).

Section 155.21--Representation of Parties

COMMENT: TWCC sought clarification under subsection (b) of this section as to whether a challenge to the authority of one of its Ombudsmen would be sufficiently met by reference to the Labor Act's representative provisions.

RESPONSE: SOAH agrees that statutory authority should suffice.

COMMENT: SSB pointed out inconsistencies in the manner in which the rules reference party representatives. It noted that this section, §155.29 of this title (relating to Pleadings), and §155.31(l) of this title (relating to Discovery), (now adopted at subsection (k) of that section), use the term "authorized representative," but that §155.23(5) of this title (relating to Filing Documents or Serving Documents on the Judge) and also §155.31(m), (now adopted at subsection (l) of that section), seem to restrict party representation to that of attorneys.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH replaced the word "attorney" with the words "authorized representative" in §155.23(5) and in §155.31(l).

COMMENT: RRC suggested adding the following language after the first sentence of this section: "Staff for the referring agency may appear as representatives of the agency, in the capacity of a party to the proceeding or otherwise, without legal representation."

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH finds that this language is not necessary, since the authorized representative may include agency staff.

Section 155.23--Filing Documents or Serving Documents on the Judge

COMMENT: The RRC requested that pleadings filed in RRC cases be listed as exceptions in paragraph (1)(A) of this section. In addition, the RRC requested the addition of a new subparagraph (D) to paragraph (1) of this section that instructs parties to a case referred to SOAH by the RRC to file original pleadings with the RRC and copies with SOAH.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has rewritten paragraph (1) of this section in accordance with RRC's request.

COMMENT: With regard to paragraph (4) of this section (relating to Facsimile Filings), TWCC inquired about SOAH's reference to "local practice" in the preamble to the proposed rules. Also, while TWCC agreed with eliminating our 20-page limit, it asked that SOAH raise the limit to 30 pages or some other reasonable number because receipt of numerous facsimile documents is expensive, and unlimited facsimile documents could burden parties that do not have a machine dedicated just to receiving pleadings.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. The reference in the preamble was to practice in the Travis County district courts, which have neither time nor page limits for facsimile filings. SOAH declines to make the requested page limit change, because we find use of unlimited facsimile documents is the practice in the Travis County district courts, which handle most APA appeals in the state. In addition, the judge can set page limits on pleadings and briefs pursuant to §155.33 of this title (relating to Orders).

Section 155.25--Service of Documents on Parties

COMMENT: The TLC commented that by eliminating former subsection (d)(4) of this section, the rules are silent as to when SOAH will presume faxed documents are served on a party. TLC asked that we follow Texas Rule of Civil Procedure 21a, which states that a document faxed after 5:00 p.m. is deemed served on the following day. TLC also asked us to adopt the provision in Texas Rule of Civil Procedure 21a that adds three additional days to respond to a document served by facsimile.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has added the requested presumption regarding service of faxed documents. SOAH declines to add the requested three-day provision since it would not appear to serve any useful purpose in SOAH practice.

Section 155.27--Notice of Hearing

COMMENT: The RRC suggested adding language to subsection (a) of this section that states: "Unless applicable law or an agreement between SOAH and the referring agency provides otherwise . . .."

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH believes this language is unnecessary because the RRC procedural rules apply to RRC cases at SOAH. Notice provisions applicable to RRC cases should be included in RRC rules. Also, parties should not be required to review interagency contracts to determine applicable procedures.

Section 155.29--Pleadings

COMMENT: TWCC objected to the new requirement in subsection (c) of this section of a certificate of conference for all motions. The objection was based on several reasons, including the fact that it conflicts with the new telephone rule and, more importantly, there is nothing to be gained by conferencing on motions known to be contentious.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has deleted the proposed amendment.

COMMENT: TDI objected to proposed subsections (f) and (g) of this section, which merge motions for continuance with motions for extension of time. It noted that this combination is not seen in the Texas Rules of Civil Procedure because they are two very different pleadings.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has deleted the proposed amendment.

COMMENT: Referencing subsection (i) of this section, which notes that summary disposition motions and responses shall be governed by §155.57(b) of this title (relating to Summary Disposition and Dismissal), TDI asked that motions to set aside defaults in proposed §155.55(d) of this title (relating to Failure to Attend Hearing and Default) also be addressed.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has added that reference, as well as one to motions to set aside dismissals for failure to prosecute in §155.57(b)(2).

Section 155.31--Discovery

COMMENT: TSBME suggested changing subsection (a) of this section to recognize the referring agency discovery rules. TWCC sought a change in subsection (e) of this section, to make the SOAH judge, instead of the referring agency, responsible for issuing subpoenas.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH finds TSBME's requested change unnecessary. The parties already have the ability to use agency discovery rules until their case is referred to SOAH. SOAH declines to make the subpoena change at this time because the current system involving issuance of subpoenas at referring agencies appears to have worked fairly well. However, SOAH will study the matter further to determine if a different process should be adopted in the future.

COMMENT: SSB objected to subsection (l) of this section, (now adopted at subsection (k) of this section), which makes signatures of a party or an authorized representative on discovery pleadings mandatory and gives signatures the effect specified in Texas Rule of Civil Procedure 191.3(c). SSB suggested that language be added from Texas Rule of Civil Procedure 191.3(d), which provides unsigned discovery pleadings will be stricken.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH believes that while the signing requirement is a useful tool, adding the requested language would tend to make SOAH's discovery procedures needlessly complex.

COMMENT: TLC requested that SOAH add requests for disclosure as a discovery tool and make discovery objections and responses due within 20 days, rather than having objections due in 10 days. TWCC pointed out that proposed subsections (g), (i) and (j) of this section conflict and, like the TLC, TWCC prefers the 20-day objections deadline.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has deleted subsection (i) of this section, and left the language in subsection (g) of this section, and in subsection (j) of this section (now adopted at subsection (i) of this section), as proposed, so that objections and responses will both be due in 20 days.

COMMENT: TDI objected that proposed subsection (n)(3) of this section, (now adopted at subsection (m)(3) of this section), concerning sealing discovery records, tracks somewhat Texas Rule of Civil Procedure 76a, but fails to list the showings required by that rule for sealing. TDI also suggested striking the word "adequately," which is not used in Texas Rule of Civil Procedure 76a.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has revised the subsection accordingly.

Section 155.43--Making a Record of Contested Case

COMMENT: SOAH received a number of comments on subsections (b) and (e) of this section. The RRC suggested adding this exculpatory language to subsection (b): "Except as otherwise provided by agreement between SOAH and the referring agency."

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH declines to add this phrase because interagency agreements, which are usually negotiated annually, are not normally addressed in procedural rules.

COMMENT: TDI and TDH contended that the requirement of subsection (b) of this section stating that referring agencies provide a court reporter for hearings lasting more than one day is contrary to Texas Government Code §2001.059(c), which states that a state agency is not limited to a stenographic record of proceedings. TWCC notes that under its rule, 28 TAC §148.20 (relating to Recording the Hearing), any party who wishes may bring a court reporter to the hearing. TWCC states that its staff attorneys seldom participate in medical necessity hearings, and TWCC predicts a trend toward more sophisticated hearings at SOAH with participation by many more parties represented by attorneys. Thus, it believes hearings lasting more than one day will be more common, and it would unduly burden the agency to arrange for court reporter services in the instances where TWCC staff is not participating.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has adopted modifications to proposed subsection (b) of this section to enable the judge to grant an exemption from the court reporter requirement. SOAH notes that the vast majority of hearings held at SOAH last one day or less. In most instances, therefore, the referring agency will not be limited to a stenographic record of proceedings. In addition, SOAH believes that the purpose of Texas Government Code §2001.059(c) was to give the agency that is conducting the hearing the option of using a non-stenographic record of proceedings when it believes a stenographic record is not needed. In SOAH's experience, it has found hearings lasting longer than one day need a transcript prepared by a court reporter in order to assure the parties and the judge that the record from which a decision or proposal for decision is prepared is accurate, and to facilitate the expeditious preparation of the decision or proposal for decision. As for TWCC's concerns about the medical necessity hearings, SOAH notes that, as of yet, it is still very rare for TWCC hearings to last longer than a day. However, whether or not TWCC's staff is participating in the TWCC hearings, TWCC's docket clerk should know the proposed length of each hearing when the case is referred to SOAH. TWCC should be able to fine-tune any added information it needs from the parties about a hearing's probable length prior to the referral, making its duty to obtain a court reporter, when necessary, reasonable. If action in the case, such as consolidation, makes it likely that the hearing will exceed one day, TWCC may be asked to provide a court reporter.

COMMENT: Seven agencies commented on the proposed changes to subsection (e) of this section. TDI and TDH argued that placing responsibility for transcript costs on referring agencies is contrary to Texas Government Code §2001.059(b), which specifies that a state agency may pay the cost of a transcript or may assess the cost to one or more parties. TDI also contended the rule conflicts with Texas Government Code §2001.177, which permits an agency to assess an appealing party the costs of preparation of the agency record for the appeal. Furthermore, TDI, TDH, TWCC, TSBP, and TSBME contended it is not equitable that the referring agency, and by inference the taxpayers, should have to pay for a transcript, if only the judge or opposing party orders one. The agencies argued the cost burden should be placed on the one requesting the transcript, pursuant to accepted practice, the common procedure in referring agencies' rules, and the Texas Rules of Civil Procedure. They further stated that until an agency adopts rules to assess costs to opposing parties, there will be no reason for those parties not to request transcripts. TDI referenced the comments SOAH made in its 1997 rulemaking, which said a judge would not routinely request preparation of a transcript when no party does so; indicated that Texas Government Code §2001.059 gave referring agencies power to assess transcript costs; agreed it was reasonable for all parties to share costs when the judge alone requests a transcript; and that, absent an interagency contract addressing the matter, SOAH would defer to the referring agency's decision regarding assessment of costs. In addition, TDI complained that making an agency pay for costs it did not incur and then attempt to collect the money would burden agency budgets. Some agencies, according to TDI, are not authorized to pay such costs. TDI requested that SOAH revive prior subsections (e)(1) and (e)(3) of this section. Thus, when only the judge requests a transcript, the cost would be handled according to the interagency contract between SOAH and the referring agency and, absent an applicable contract term, SOAH would bear the cost, unless the referring agency agreed to pay the cost or assessed the cost as provided for in former subsection (e)(1) of this section. Finally, the RRC requested a special exception to former subsection (e)(1) of this section for RRC cases.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH first notes that Texas Government Code §2001.177 is irrelevant, as it concerns the costs of preparing a transcript on appeal to district court. SOAH reiterates that a judge will not routinely request preparation of a transcript when no party does so. Because the number of interagency contracts between referring agencies and SOAH is decreasing over time, referencing provisions in such contracts would have little impact and would not produce a uniform practice easily accessible to all concerned. In response to the comments, the proposed subsection has been rewritten to identify the common practice that whichever party requests a transcript should pay for it. It also is noted that the referring agency has the ability through its rules or policies to recover transcript costs under Texas Government Code §2001.059(b). The changes to subsection (e) of this section may be viewed as an exercise of SOAH's own authority as a state agency under Texas Government Code §2001.059(b). Finally, SOAH declines to add the special exception the RRC requested. Language related to the use of court reporters in RRC matters is a matter that may be addressed in the RRC's procedural rules.

SOAH appreciates the referring agencies' concerns about transcript costs. However, SOAH does not currently have funds appropriated for transcript preparation but will explore the possibility of future funding through legislative action.

COMMENT: In addition to the foregoing points, several agencies commented on subsection (h) of this section regarding the broadcasting or televising of proceedings. TDH stated that the subsection should also address whether the hearing involves confidential health information; such hearings, in TDH's opinion, should not be broadcast or televised. SSB commented that the subsection also needs to address the chilling effect broadcasting/televising might inflict on an otherwise reluctant or uneasy witness. In SSB's opinion, this could cause such witnesses to refuse to testify, or make their testimony so stilted that it would be worthless. TDI noted that the subsection is not as limited as Texas Rule of Civil Procedure 18c which, among other things, requires consent of the parties, and it asked SOAH to make consent an essential element.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH notes that it holds many open hearings in which confidential information (patient names, for example) is protected through the use of initials and other means. Hearings which are closed to the public by statute, such as TWCC hearings, would not be broadcasted. However, because of the concerns expressed, SOAH has revised the subsection to require the consent of the parties and address SSB's concerns.

Section 155.51--Evidence

COMMENT: TSBME commented on subsection (c) of this section, which addresses prefiled, written testimony. TSBME felt it further expands a judge's power in this area and considers it a process that may be of help to the judge, but is so costly that it is not in the overall interest of the public. Furthermore, TSBME contended such a procedure has an adverse impact on its ability to recruit expert witnesses. In its opinion, the decision of whether to use prefiled testimony should be left to the parties.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH notes that subsection (c) of this section relating to prefiled testimony has been in effect for several years, and that the ability of the judge to order prefiled testimony has been beneficial to the efficiency and accuracy of the hearings process. It is not uncommon in the more complex SOAH hearings for parties to use prefiled, written testimony, and it often results in shorter and more efficient hearings that are less costly to the referring agencies. This practice is sanctioned by the APA and usually welcomed by most SOAH parties.

Section 155.55--Failure to Attend Hearing and Default

COMMENT: TSBME suggested adding a provision automatically allowing the referring agency a continuance when the respondent, who has not answered, unexpectedly shows up at hearing. The concern is that, if the staff goes to the expense of bringing witnesses, exhibits, etc., and the respondent fails to appear, it is a waste of agency time and resources; on the other hand, if the staff assumes the respondent will not appear and does not prepare, the staff will not be ready to proceed if the respondent makes an appearance. TDH felt subsection (a) of this section is unnecessarily complex. TDH thought that having to wait for a default PFD would cause undue delay and extra costs for the referring agency. TDH wants SOAH to do something which would have the same effect as if the hearing had never been requested, such as the judge issuing an order of default or an order dismissing the case immediately and ending SOAH's involvement without addressing the merits. TDH would then take the case back and prepare an internal default order. TDI states that it is required to finalize 80% of its contested cases within 180 days of issuance of the notice of hearing. TDI is concerned that there will be delay resulting in a failure to meet this efficiency requirement, if SOAH does not allow TDI (after parties fail to show up at hearing) to abate/continue proceedings so TDI can then use its in-house default rule to dispose of the cases by TDI Commissioner orders.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH notes that default practices vary by agency, and its goal is to try to accommodate each agency's needs while assuring all parties due process. In an attempt to accomplish this, SOAH has added new subsection (d) to this section, which should enable each agency to use whatever default system is most efficient for it.

COMMENT: TDI next argued that the section should specify the notice requirements contemplated in it. In addition, TDI suggested subsection (b)(2) of this section should require the agency also to give notice--"If you do not file a response within xx days of the hearing, the Agency will cancel the hearing, and the Commissioner (or Board, etc.) will issue an order deeming the allegations in the notice of hearing true."

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH finds that setting out such notice requirements is unnecessary since each referring agency must issue proper notice under APA standards. We also decline to make the change to subsection (b)(2) of this section. Whether to require responses is a matter for each referring agency and, in many SOAH cases ( e.g. , TWCC and ERS), responses may not be appropriate.

COMMENT: Two agencies objected to SOAH's reference to the "party who does not have the burden of proof." TDH noted the burden can change from time to time during a proceeding, and argued the resulting confusion would add another ground for appeal to the courts. TDI suggested omission of that language because it has no statute, rule or policy specifying which party has the burden of proof at SOAH. TDI proposed that if the missing party was the "subject" of the notice of hearing, SOAH could enter a default proposal for decision, and if the missing party "issued" the notice of hearing, SOAH could dismiss for failure to prosecute.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. In response to TDH's concerns, SOAH notes the issue will be who has the burden of proof at the start of the proceeding. TDI's proposal will not work because SOAH deals with many different types of cases and agencies. For example, in TWCC medical necessity proceedings, the agency issues the notice of hearing but rarely appears as a party; thus, both participating parties are subjects of the notice of hearing, but only the one aggrieved by the decision of TWCC's Medical Review Division has the burden of proof.

COMMENT: Finally, comments were received about the ten-day look-back period created in proposed subsection (d) of this section, (now adopted at subsection (e) of this section). TDH argued the look-back period will result in different treatment of hearing participants depending upon the case and the judge. It contended that, if the judge acts quickly in issuing an order or proposal for decision, a party will not have the right to ask for the default to be set aside at SOAH, whereas other parties in other cases will have such a right when the judge does not order a default quickly enough. TDH suggested if a party fails to appear, the judge should just end SOAH's involvement and leave post-default actions up to the discretion of the referring agency. TDI also argued that the provision is like a motion for new trial, which only the agency issuing the final decision can grant.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH notes the subsection is a middle ground by which, for a short period of time, the judge, who has the neutral perspective, can make the decision. After that short period, a party would need to seek action at the referring agency in conformance with APA motion for rehearing practice. At that stage, the agencies could take whatever action they deem appropriate, including remanding a defaulted case to SOAH based on whatever showing they want to then require.

COMMENT: TDI suggested that §155.19(c) of this title (relating to Computation of Time) be amended, to make sure judges do not have any discretion to enlarge the ten-day period.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH has amended §155.19(c) of this title (relating to Computation of Time) as requested.

COMMENT: TDI also objected to subsection (d) of this section, (now adopted at subsection (e) of this section), for due process reasons, arguing SOAH should amend the subsection to require the judge to inform parties about the ten-day "set aside" right in a cover letter.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. For efficiency reasons, SOAH has eliminated the use of most cover letters. However, SOAH judges will include a paragraph describing this right in their orders and proposals for decision issued under the default section.

COMMENT: TDI also objected to SOAH's proposed "good cause" standard. TDI preferred the standard described in Craddock v. Sunshine Bus Lines, Inc. , 133 S.W.2d 124 (Tex. 1939), which held the defaulting party must prove: the failure to appear was not intentional or due to indifference but due to a mistake or accident; the party is likely to prevail on the merits; and a new hearing will not be unduly injurious to the other party.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH rejects this suggested standard as unduly restrictive in SOAH's administrative proceedings.

COMMENT: TDH also asked SOAH to incorporate by reference four of its procedural rules located at: 25 TAC §1.21 (relating to Purpose and Scope); §1.23 (relating to General Provisions); §1.25 (relating to Parties to the Hearing); and §1.27 (relating to Depositions) that were written to supplement the rules in this chapter.

RESPONSE: SOAH has made changes, in part, to the proposed text in response to this comment. SOAH declines to incorporate the TDH rules. SOAH believes it is important and efficient that its rules provide uniform procedures to be followed in its hearings. However, in response to comments from TDH and other agencies, SOAH has added a provision to this section, which incorporates by reference certain agency procedural rules related to default proceedings.

Section 155.57--Summary Disposition and Dismissal

COMMENT: Two agencies objected to subsection (b) of this section, (regarding Failure to Prosecute). TWCC said it was unclear whether the party must respond within ten days of notice of the intent to dismiss, or within ten days of the notice that the dismissal has occurred. It recommended the following language instead: "A response to the notice of intent to dismiss for failure to prosecute shall be filed with the judge within ten days of the issuance of the notice of intent to dismiss." TDI noted under Texas Rules of Civil Procedure 165a, which it urged SOAH to copy, a court may dismiss for want of prosecution, but before doing that must provide a party notice of its intent and the date and place of a dismissal hearing. At the dismissal hearing, the court can dismiss. In TDI's view, SOAH would actually dismiss right after the hearing, and only give the dismissed party the opportunity to seek reopening of the record. TDI also argued SOAH would exceed its authority by dismissing any case in which its only authority was to issue a proposal for decision.

RESPONSE: SOAH has made changes to the proposed text in response to this comment. SOAH is aware of the need for a party to have notice before such a dismissal becomes final. SOAH has rewritten the proposed subsection to provide additional flexibility as well as to promote procedural efficiency. In order to avoid a protracted, two-step proceeding, a judge may issue a conditional order of dismissal that notifies the party the case will be finally dismissed, unless it files a timely, meritorious motion to set aside the dismissal. Alternatively, the judge may issue a notice of intent to dismiss that sets a dismissal hearing at which the party may present its opposition to dismissal. SOAH believes that whether the notice and dismissal are done in two separate steps or simultaneously, due process is served so long as the dismissed party has notice and an opportunity to avoid dismissal. The time to file a motion opposing dismissal has been changed to twenty days to ensure adequate response time is provided. SOAH disagrees that it cannot dismiss cases in which its only authority is to issue a proposal for decision. As in court proceedings, SOAH's dismissal for want of prosecution does not address the merits of the case. In order to clarify that point, however, SOAH added that explanation to the end of subsection (b) of this section (relating to Failure to Prosecute).

Section 155.59--Proposal for Decision

COMMENT: SSB commented that subsection (c) of this section establishes a procedure that considerably increases the risk of ex parte communication. Because of the significant consequences of that, SSB suggested amending the subsection to require that exceptions and replies be filed exclusively with SOAH.

RESPONSE: SOAH has made no changes to the proposed text in response to this comment. SOAH declines to take that step because Texas Government Code §2001.062 requires exceptions and replies to be filed with the officials who are to render the decision.

STATUTORY AUTHORITY

The amended sections are adopted under Texas Government Code Annotated, Chapter 2003, §2003.050, which authorizes the State Office of Administrative Hearings to conduct contested case hearings and requires adoption of hearings procedure rules, and Texas Government Code Annotated, Chapter 2001, §2001.004, which requires agencies to adopt rules of practice setting forth the nature and requirements of formal and informal procedures.

The adopted amendments affect Texas Government Code Annotated, Chapters 2001 and 2003.

§155.1.Purpose and Scope.

(a) Unless otherwise provided by statute or by the provisions of this chapter, this chapter will govern the processes followed by the State Office of Administrative Hearings (SOAH) in handling all matters referred to SOAH, including contested cases under the Administrative Procedure Act (APA), Tex. Gov't Code, Chapter 2001. Administrative License Suspension cases initiated by the Department of Public Safety are governed by Chapter 159 of this title (relating to Rules of Procedure for Administrative License Suspension Hearings). Arbitration procedures for certain enforcement actions of the Department of Human Services are governed by Chapter 163 of this title (relating to Arbitration Procedures for Certain Enforcement Actions of the Department of Human Services).

(b) Subject to further review and possible modification or deletion of this subsection, SOAH adopts by this reference those procedural rules of the Public Utility Commission of Texas (PUC) and Texas Natural Resource Conservation Commission (TNRCC) in effect on July 1, 2001, which address the formal contested case process in matters referred by those agencies, and which are not inconsistent with applicable law. This adoption does not include any PUC or TNRCC rules addressing the use of Alternative Dispute Resolution (ADR) processes at SOAH, which processes will be governed by the Governmental Dispute Resolution Act (GDRA), Tex. Gov't Code, Chapter 2009; SOAH rule provisions pertaining to ADR; and interagency contracts, memoranda of understanding, or other written agreements with referring entities.

(c) Under Tex. Util. Code §102.006(a) and Tex. Gov't Code §815.102, the procedural rules of the Railroad Commission of Texas (RRC) and the Employees Retirement System of Texas (ERS) govern the formal contested case process in matters referred by those agencies to SOAH.

§155.3.Application and Construction of this Chapter.

(a) Administrative hearings in cases conducted by SOAH shall be conducted in accordance with the APA, when applicable, and with this chapter; provided that the administrative law judge may, by order, modify and supplement the requirements of this chapter to promote the fair and efficient handling of the case and to facilitate resolution of issues, if doing so does not prejudice the rights of any person or contravene applicable statutes.

(b) If there is any conflict between an agency's rules or prior decisions and statutory provisions applicable to the case, and the rules or decisions cannot be harmonized with the statute, the statute controls.

(c) The procedural rules of the state agency on behalf of which the hearing is conducted govern procedural matters that relate to the hearing only to the extent that these rules adopt the agency's procedural rules by reference, or as otherwise required by law.

(d) If there is any conflict between these rules and the procedural rules of the TNRCC adopted in §155.1 of this title (relating to Purpose and Scope), TNRCC's rules will control.

(e) If there is any conflict between these rules and the procedural rules of the PUC adopted in §155.1 of this title, the PUC's rules will control.

(f) If there is any conflict between these rules and the procedural rules of the RRC and ERS referenced in §155.1 of this title, the rules of the RRC and ERS will control.

(g) This chapter shall be construed to ensure the just and expeditious determination of every matter referred to SOAH. Not all contested procedural issues will be susceptible to resolution by reference to the APA and other applicable statutes, this chapter, and case law. When they are not, the presiding judge will consider applicable policy of the referring agency documented in the record in accordance with §155.53 of this title (relating to Consideration of Policy Not Incorporated in Referring Agency's Rules), the Texas Rules of Civil Procedure as interpreted and construed by Texas case law, and persuasive authority established in other forums, in order to issue orders and rulings that are just in the circumstances of the case.

(h) Unless otherwise expressly provided, the past, present, or future tense shall each include the other; the masculine, feminine, or neuter genders shall each include the other; and the singular and plural number shall each include the other.

(i) Words and phrases shall be read in context and construed according to the rules of grammar and common usage. Words and phrases that have acquired a technical or particular meaning, whether by legislative definition or otherwise, shall be construed accordingly.

§155.5.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Administrative law judge or judge--An individual appointed by SOAH's chief administrative law judge under Tex. Gov't Code, Chapter 2003, §2003.041. The term shall also include any temporary administrative law judge appointed by the chief administrative law judge pursuant to Tex. Gov't Code §2003.043.

(2) Alternative Dispute Resolution or ADR--Processes used at SOAH to resolve disputes outside of, or in connection with, formal contested case hearing processes, including, but not limited to, mediation, mediated settlement conferences, mini-trials, early neutral evaluation, and arbitration.

(3) APA--The Administrative Procedure Act (Tex. Gov't Code, Chapter 2001).

(4) Arbitration--A form of ADR, governed by an agreement between the parties or special rules or statutes providing for the process, in which a third-party neutral issues a decision after a streamlined and simplified hearing. Arbitrations can be binding or non-binding, depending on the agreement, statutes, or rules. ( See Chapter 163 of this title (relating to Arbitration Procedures for Certain Enforcement Actions of the Department of Human Services) for procedural rules specifically governing the arbitration of certain nursing home enforcement cases referred by the Texas Department of Human Services).

(5) Authorized representative--An attorney authorized to practice law in the State of Texas or, if authorized by applicable law, a person designated by a party to represent the party.

(6) Business day--A weekday on which state offices are open.

(7) Chief Judge--The chief administrative law judge of SOAH.

(8) Contested case--A proceeding, including, but not restricted to, ratemaking and licensing, in which the legal rights, duties, or privileges of a party are to be determined by an agency after an opportunity for adjudicative hearing.

(9) Final decision maker--The person or persons authorized by law or delegation to render the final decision in a contested case.

(10) Law--The United States and Texas Constitutions, state and federal statutes, rules and regulations, and relevant case law.

(11) Mediated settlement conference or MSC--A type of mediation during the pendency of a contested case at SOAH which allows the parties to explore settlement possibilities in a confidential setting, with the assistance of one or more third-party neutrals.

(12) Mediation--A confidential, informal dispute resolution process in which an impartial person, the mediator, facilitates communication between or among the parties to promote reconciliation, settlement, or understanding among them.

(13) Party--A person or agency named, or admitted to participate, in a case before SOAH.

(14) Person--Any individual, representative, corporation, or other entity, including any public or non-profit corporation, or any agency or instrumentality of federal, state, or local government.

(15) Pleading--A written document submitted by a party, or a person seeking to participate in a case as a party, which requests procedural or substantive relief, makes claims, alleges facts, makes legal argument, or otherwise addresses matters involved in the case.

(16) PUC--The Public Utility Commission of Texas.

(17) RRC--The Railroad Commission of Texas.

(18) Referring Agency--A state board, commission, department, agency, or other entity that refers a contested case or other dispute to SOAH for process.

(19) SOAH--The State Office of Administrative Hearings.

(20) TNRCC--The Texas Natural Resource Conservation Commission.

§155.15.Powers and Duties of Judges.

(a) The judge shall have the authority and duty to:

(1) conduct a full, fair, and impartial hearing;

(2) take action to avoid unnecessary delay in the disposition of the proceeding; and

(3) maintain order.

(b) The judge shall have the power to regulate prehearing matters, the hearing, and the conduct of the parties and authorized representatives, including the power to:

(1) administer oaths;

(2) take testimony, including the power to question witnesses;

(3) rule on questions of evidence;

(4) rule on discovery issues;

(5) issue orders relating to hearing and prehearing matters, including orders imposing sanctions;

(6) admit or deny party status;

(7) limit irrelevant, immaterial, and unduly repetitious testimony and reasonably limit the time for presentations;

(8) rule on motions of parties or the judge's own motion, including granting or denying continuance;

(9) request parties to submit legal memoranda, proposed findings of fact, and conclusions of law;

(10) issue proposals for decision pursuant to APA §2001.062, and where authorized, final decisions;

(11) for contested cases referred by an agency other than the PUC or the TNRCC, and filed at SOAH on or after September 1, 1997, impose appropriate sanctions against a party or its representative for:

(A) filing a motion or pleading that is groundless and brought:

(i) in bad faith;

(ii) for the purpose of harassment; or

(iii) for any other improper purpose, such as to cause unnecessary delay or needless increase in the cost of the proceeding;

(B) abuse of the discovery process in seeking, making, or resisting discovery; or

(C) failure to obey an applicable rule or an order of the judge or of the state agency on behalf of which the hearing is being conducted; and

(12) where appropriate and justified by party or representative behavior described in paragraph (11) of this subsection, and after notice and opportunity for hearing, issue an order:

(A) disallowing further discovery of any kind or of a particular kind by the offending party;

(B) charging all or any part of the expenses of discovery against the offending party or its representatives;

(D) refusing to allow the offending party to support or oppose a designated claim or defense or prohibiting the party from introducing designated matters in evidence;

(E) disallowing in whole or in part requests for relief by the offending party and excluding evidence in support of those requests; and

(F) striking pleadings or testimony, or both, in whole or in part.

§155.19.Computation of Time.

(a) Unless otherwise required by statute, in computing time periods prescribed by applicable statute, this chapter, or by judge order, the day of the act, event, or default on which the designated period of time begins to run is not included. The last day of the period is included, unless it is a Saturday, Sunday, an official State holiday, or another day on which SOAH is closed, in which case the time period will be deemed to end on the next day that SOAH is open. When these rules specify a deadline or set a number of days for filing documents or taking other actions, the computation of time shall be by calendar days rather than business days, unless otherwise provided by applicable law, this chapter, or judge order. However, if the period specified is five days or less, the intervening Saturdays, Sundays, and legal holidays are not counted, except for purposes of §155.25(d)(3) of this title (related to Service of Documents on Parties).

(b) Disputes regarding computation of time for periods not specified by this chapter or judge order will be resolved by reference to applicable law and upon consideration of agency policy documented in accordance with §155.53 of this title (relating to Consideration of Policy Not Incorporated in Referring Agency's Rules).

(c) When by these rules or judge order an act is required or allowed to be done at or within a specified time, the judge may, for cause shown, order the period enlarged if application therefor is made before the expiration of the specified period. In addition, where good cause is shown for the failure to act within the specified period, the judge may permit the act to be done after the expiration of the specified period. The judge may not enlarge the period for taking any action under the rules relating to default, §155.55 of this title (relating to Failure to Attend Hearing and Default), and to the failure to prosecute, §155.57(b) of this title (relating to Summary Disposition and Dismissal), except as stated in those rules.

§155.21.Representation of Parties.

(a) An individual may represent himself or herself, or may appear by authorized representative.

(b) A party's authorized representative shall enter an appearance with SOAH. If the party's representative is not licensed to practice law in Texas, and the authority of the representative to appear is challenged, the representative must show authority to appear as the party's representative.

(c) On the occasion of a party's first appearance through counsel, the attorney whose signature first appears on the initial pleading for a party shall be the attorney in charge for that party, unless another attorney is specifically designated. The designation of attorney in charge shall be changed only by written notice to SOAH and all parties. Unless otherwise ordered by the judge, all communications sent by SOAH or other parties regarding the matter shall be sent to the attorney in charge.

(d) A party's attorney of record shall remain the attorney of record in the absence of a formal request to withdraw and an order of the judge approving the request.

§155.23.Filing Documents or Serving Documents on the Judge.

The following requirements govern the filing or service on the judge of documents in contested cases pending before SOAH unless modified by order of the judge.

(1) Place for Filing Original Materials.

(A) Contested Cases Generally. The original of all pleadings and other documents requesting action or relief in a contested case, except contested cases referred to SOAH by the PUC, the RRC, and the TNRCC, shall be filed with SOAH once it acquires jurisdiction under §155.7 of this title (relating to Jurisdiction). Pleadings, other documents, and service to SOAH shall be directed to: Docketing Division, State Office of Administrative Hearings, 300 West 15th Street, Room 504, P. O. Box 13025, Austin, Texas 78711-3025. The time and date of filing shall be determined by the file stamp affixed by SOAH. Unless otherwise ordered by the judge, only the original and no additional copies of any pleading or document shall be filed. Unless otherwise provided by law, after a proposal for decision has been issued, originals of documents requesting relief, such as exceptions to the proposal for decision or requests to reopen the hearing, shall be filed with the referring agency, and a copy shall be filed with SOAH.

(B) Cases Referred by the PUC.

(i) Except for exhibits offered at a prehearing conference or hearing, the original of all pleadings and documents in a contested case referred to SOAH by the PUC shall be filed with the clerk at the PUC in accordance with the rules of the PUC.

(ii) The time and date of filing these materials shall be determined by the file stamp affixed by the clerk.

(iii) The party filing a document with the clerk at the PUC (except documents provided in the discovery process that are not the subject of motions filed in a discovery dispute) shall serve a copy of the document on the judge by delivery on the same day as the filing.

(iv) The court reporter shall serve the transcript and exhibits in a proceeding on the judge at the time the transcript is provided to the requesting party. SOAH shall maintain the transcript and exhibits until they are released to the PUC by the judge. If no court reporter is requested by a party, SOAH shall maintain the recording of the hearing and the exhibits until they are released to the PUC by the judge.

(i) Except for exhibits offered at a prehearing conference or hearing, the original of all pleadings and documents in a contested case referred to SOAH by the TNRCC shall be filed with the chief clerk at the TNRCC in accordance with the rules of the TNRCC.

(ii) The time and date of filing these materials shall be determined by the file stamp affixed by the chief clerk, or as evidenced by the file stamp affixed to the document or envelope by the TNRCC mail room, whichever is earlier.

(iii) The party filing a document with the chief clerk at the TNRCC (except documents provided in the discovery process which are not the subject of motions filed in a discovery dispute) shall serve a copy of the document on the judge by delivery on the same day as the filing.

(iv) The transcript and exhibits in a proceeding shall be served on the judge at the time the transcript is provided to the requesting party. SOAH shall maintain the transcript and exhibits until they are released to the TNRCC by the judge. If no court reporter is requested by a party, SOAH shall maintain the recording of the hearing and the exhibits until they are released to the TNRCC by the judge.

(D) Cases Referred by the RRC.

(i) Except for exhibits offered at a prehearing conference or hearing, the original of all pleadings and documents in a contested case referred to SOAH by the RRC shall be filed with the Office of General Counsel, Docket Services, at the RRC in accordance with the rules of the RRC.

(ii) The time and date of filing these materials shall be determined by the file stamp affixed in Docket Services.

(iii) The party filing a document with Docket Services (except documents provided in the discovery process that are not the subject of motions filed in a discovery dispute) shall serve a copy of the document on the judge by delivery on the same day as the filing.

(iv) The court reporter shall serve the transcript and exhibits in a proceeding on the judge at the time the transcript is provided to the requesting party. SOAH shall maintain the transcript and exhibits until they are released to the RRC by the judge. If no court reporter is requested by a party, SOAH shall maintain the recording of the hearing and the exhibits until they are released to the RRC by the judge.

(2) Confidential Materials.

(A) Filings Generally. A party filing materials made confidential by law shall file them in an enclosed, sealed, and labeled container, accompanied by an explanatory cover letter. The cover letter shall identify the docket number and style of the case and explain the nature of the sealed materials. The container shall identify the docket number, style of the case, and name of the submitting party, and be marked "CONFIDENTIAL & UNDER SEAL" in bold print at least one inch in size. Each page of the confidential material shall be marked "confidential."

(B) Materials Submitted for In Camera Review . A party submitting materials for in camera review by the judge shall supply them to the judge in an enclosed, sealed, and labeled container, accompanied by an explanatory cover letter copied to all parties. The cover letter, addressed to the judge, shall identify the docket number, style of the case, explain the nature of the sealed materials, and specify the relief sought. The container, addressed to the judge, shall identify the docket number, style of the case, and name of the submitting party, and be marked " IN CAMERA REVIEW " in bold print at least one inch in size. Each page for which a privilege is asserted shall be marked "privileged." Said materials will not be received for filing by SOAH unless the judge so orders. Unless otherwise ordered by the judge, materials reviewed in camera will be returned to the party that submitted them.

(3) Discovery Requests and Documents Produced in Discovery.

(A) Discovery requests and deposition notices to be served on parties and responses and objections to discovery requests shall not be filed with SOAH or served on the judge, except as provided in subparagraph (C) of this paragraph.

(B) Documents produced in discovery shall be served upon the requesting parties and notice of the service shall be given to all parties, but neither the documents produced nor the notice of service shall be filed with SOAH or served on the judge, except by order of the judge. The party responsible for service of the discovery materials shall retain a true and accurate copy of the original documents and become their custodian.

(C) Motions requesting relief in a discovery dispute shall be accompanied by only those portions of discovery materials relevant to the dispute.

(D) If documents produced in discovery are to be used at hearing or are necessary to a prehearing motion that might result in a final order on any issue, only the portions to be used shall be filed with SOAH or offered into evidence.

(4) Facsimile Filings. Documents may be filed with SOAH, or in PUC, RRC, or TNRCC cases served on the judge, by facsimile transmission according to the following requirements:

(A) The quality of the original hard copy shall be clear and dark enough to transmit legibly.

(B) The first sheet of the transmission shall indicate the number of pages being transmitted, and shall contain a telephone number to call if there are problems with the transmission.

(D) The sender shall maintain the original of the document with the original signature affixed.

(E) The date imprinted by SOAH's facsimile machine on the transaction report that accompanies the document will determine the date of filing or of service on the judge. Documents received on a Saturday, Sunday or other day on which SOAH is closed shall be deemed filed the first business day thereafter.

(5) Effect of Signing Pleadings. The signatures of parties or authorized representatives constitute their certification that they have read the pleading and that, to the best of their knowledge, information, and belief formed after reasonable inquiry, the pleading is neither groundless nor brought in bad faith.

§155.25.Service of Documents on Parties.

(a) Service on all parties. Any person filing a document with SOAH in a case shall, on the same date as the document is filed, provide a copy to each party or the party's authorized representative by hand-delivery; by regular, certified or registered mail; by electronic mail, upon agreement of the parties; or by facsimile transmission; provided however, when a party files a business record affidavit, pursuant to Texas Rules of Evidence 902(10), or a transcript, the party may give notice of the filing without the necessity of providing a copy to each party. By order, the judge may exempt a party from serving other documents upon all parties.

(b) Certificate of service. The person filing the document shall include a certificate of service that certifies compliance with this section. If a filing does not contain a certificate of service or otherwise show service on all other parties, and on the judge if applicable, SOAH may:

(1) return the filing;

(2) send notice of noncompliance to all parties, stating the filing will not be considered until all parties have been served; or

(3) send a copy of the filing to all parties.

(c) Service of notice of hearing. Unless otherwise required by law, service of notice of hearing shall be made by the referring agency in the manner required by the APA.

(d) Presumed time of receipt of served documents. The following rebuttable presumptions shall apply regarding a party's receipt of documents served by another party:

(1) If a document was hand-delivered to a party in person or by agent, the judge shall presume that the document was received on the date of filing at SOAH.

(2) If a document was served by courier-receipted delivery, the judge shall presume that the document was received no later than the day after filing at SOAH.

(3) If a document was sent by regular mail, certified mail, or registered mail, the judge shall presume that it was received no later than three days after mailing.

(4) If a document was served by facsimile transmission or by electronic mail before 5:00 p.m. on a business day, the judge shall presume that the document was received on that day; otherwise, the judge shall presume that the document was received on the next business day.

(e) Electronically transmitted documents. Documents may be served on parties by electronic mail according to the following requirements.

(1) With the exception of documents produced pursuant to a discovery request, the sender shall also file the original of the document with SOAH.

(2) The sender has the burden of proving date and time of receipt of the document.

§155.29.Pleadings.

(a) Content generally. All requests for relief in a contested case not made on the record at a prehearing conference or hearing shall be typewritten or printed on paper 8 1/2 inches wide and 11 inches long, and timely filed at SOAH. Photocopies are acceptable, provided all copies are clear and legible. All pleadings shall contain or be accompanied by the following:

(1) The name of the party seeking relief;

(2) The docket number assigned to the case by SOAH;

(3) The style of the case;

(4) A concise statement of facts relied upon by the pleader;

(5) A clear statement of the type of relief, action, or order desired by the pleader, and identification of the specific grounds supporting the relief requested;

(6) An indication whether a hearing is needed on the relief sought;

(7) A certificate of service, as required by §155.25(b) of this title (related to Service of Documents on Parties);

(8) Any other matter required by statute or rule;

(9) A certificate of conference, if required; and

(10) The signature of the submitting party or the party's authorized representative.

(b) Purpose and effect of motions. To change a setting or obtain a ruling, order, or any other procedural relief from the judge, a party is required to file a motion. Where the provisions of statute or rule do not automatically establish a needed procedure, the party seeking to amend or supplement the procedure should file a written motion. The mere filing or pendency of a motion, even if uncontested, does not alter or extend any time limit or deadline established by statute, rule, or order, or any setting by SOAH or the judge.

(c) General requirements for motions. Except as provided in this section or chapter, for motions seeking to intervene or be granted party status, to amend a party's pleadings, for summary disposition, to file a motion to set aside a default or dismissal for failure to prosecute, or to continue a scheduled conference or hearing, all motions shall:

(1) be filed no later than seven days before the date of the hearing; except, for good cause demonstrated in the motion, the judge may consider a motion filed after that time or presented orally at a hearing; and,

(2) if seeking an extension of an established deadline,

(A) include a proposed date; and

(B) indicate that the movant has contacted all parties and state whether there is opposition to the proposed date, or describe in detail the movant's attempts to contact the other parties.

(d) Responses to motions generally. Except as provided in this subsection or chapter, responses to motions described in subsection (c) of this section shall be in writing, and filed on the earlier of:

(1) five days after receipt of the motion; or

(2) the date and time of the hearing. However, responses to written motions late-filed (for good cause shown) on the date of the hearing may be presented orally at hearing.

(e) Motions to intervene. Motions for party status shall be filed no later than twenty days prior to the date the case is set for hearing. Responses to such motions shall be filed no later than seven days after the motion is served on or otherwise received by other parties.

(f) Motions for Continuance. Motions for continuance shall:

(1) make specific reference to all other motions for continuance previously filed in the case by the movant, and shall set forth the specific grounds upon which the party seeks the continuance;

(2) be filed no later than five days before the date of the hearing, except, for good cause demonstrated in the motion, the judge may consider a motion filed after that time or presented orally at the hearing;

(3) indicate that the movant has contacted all parties and state whether there is opposition to the motion, or describe in detail the movant's attempts to contact the other parties;

(4) if seeking a continuance to a date certain, include a proposed date or dates (preferably a range of dates) and indicate whether the parties contacted agree on the proposed new date(s); and

(5) be served on the other parties according to applicable filing and service requirements, except that a motion for continuance filed five days or less before the date of the hearing shall be served by hand or facsimile delivery on the same date it is filed with SOAH, or by overnight delivery on the next day, unless the motion demonstrates or the record shows such service is impracticable.

(g) Responses to written motions for continuance. Responses to written motions for continuance shall be in writing, except responses to written motions for continuance filed on the date of the hearing may be presented orally at the hearing. Written responses to motions for continuance shall be filed on the earlier of:

(1) three days after receipt of the motion; or

(2) the date and time of the hearing.

(h) Amendment of Pleadings. A party may amend its pleadings by written filing if the amendment does not unfairly surprise other parties; provided that any pleading which substantially affects the scope of the hearing may not be filed later than seven days before the date the hearing actually commences, except by agreement of all parties and consent of the judge.

(i) Motions to set aside a default under §155.55(e) (relating to Failure to Attend Hearing and Default), for summary disposition and to set aside a dismissal for failure to prosecute, under §155.57 (relating to Summary Disposition and Dismissals), shall be governed by the referenced sections.

§155.31.Discovery.

(a) In contested cases, parties shall have the discovery rights provided in the APA, the referring agency's statute, and these rules. For cases not adjudicated under the APA, discovery shall be allowed as ordered by the judge.

(b) Parties may obtain discovery regarding any matter not privileged or exempted by the Texas Rules of Civil Procedure (Tex. R. Civ. P.), the Texas Rules of Evidence (Tex. R. Evid.), or other rule or law, that is relevant to the subject matter of the proceeding.

(c) Discovery may commence when SOAH acquires jurisdiction under §155.7 of this title (relating to Jurisdiction). No discovery may be sought after the commencement of the contested case hearing on the merits unless permitted by the judge upon a showing of good cause.

(d) Parties may obtain discovery by: requests for disclosure, as described by Tex. R. Civ. P. 194; oral or written depositions; written interrogatories to a party; requests of a party for admission of facts and the genuineness or identity of documents or things; requests and motions for production, examination, and copying of documents and other tangible materials; motions for mental or physical examinations; and requests and motions for entry upon and examination of real property.

(1) Unless the judge directs otherwise, each party may serve no more than two sets of interrogatories to any other party and the number of questions, including subsections, in a set of interrogatories shall be limited so as not to require more than thirty answers.

(2) A party may serve upon any other party, no later than twenty days before the end of the discovery period or the date of hearing if no discovery period has been established, a written request for the admission of the truth of any matters within the scope of subsection (b) of this section that relate to statements or opinions of fact or of the application of law to fact, including the genuineness of any documents described in the request. Copies of the documents shall be served with the request unless they have been or are otherwise furnished or are made available for inspection and copying. Service shall be in accordance with §155.25 of this title (relating to Service of Documents on Parties).

(A) Each matter of which an admission is requested shall be separately set forth. The matter is admitted without necessity of an order of the judge unless the party to whom the request is directed timely serves upon the party requesting the admission a written answer or objection addressed to the request, signed by the party or the party's attorney. If objection is made, the reason for the objection shall be stated. The answer shall specifically deny the matter or set forth in detail the reasons that the answering party cannot truthfully admit or deny the matter. A denial shall fairly meet the substance of the requested admission, and when good faith requires that a party qualify its answer and deny only a part of the matter of which an admission is requested, the party shall specify so much of it as is true and qualify or deny the remainder. An answering party may not give lack of information or knowledge as a reason for failure to admit or deny unless it states that it has made reasonable inquiry and that the information known or easily obtainable by it is insufficient to enable it to admit or deny. A party who considers that a matter of which an admission is requested presents a genuine issue for hearing may not, on that ground alone, object to the request; it may, subject to the provisions of Tex. Gov't Code §2003.0421, deny the matter or set forth reasons why the party cannot admit or deny it.

(B) Any matter admitted under this section is conclusively established as to the party making the admission unless the judge on motion permits withdrawal or amendment of the admission. Subject to the duty to supplement discovery under this section, the judge may permit withdrawal or amendment of responses and deemed admissions upon a showing of good cause for such withdrawal or amendment or in the interest of justice, if the judge finds that the parties relying upon the responses and deemed admissions would not be unduly prejudiced and that the presentation of the merits of the action will be subserved thereby. Any admission made by a party under this section is for the purpose of the pending action only and neither constitutes an admission by the party for any other purpose nor may be used against the party in any other proceeding.

(e) Requests for issuance of subpoenas or commissions shall be directed to the referring agency. Any such requests shall comply with the APA and the applicable agency procedure, if any, regarding issuance of subpoenas or commissions. Disputes over whether a request complies with applicable law shall be resolved by the judge.

(f) Written interrogatories, requests for admission, requests and motions for production, and requests for entry upon and examination of real property shall initially be directed to the party from which discovery is being sought. Copies of discovery requests and answers to those requests shall not be filed with SOAH unless directed by the judge or when in support of a motion to compel, motion for protective order, or motion to quash.

(g) The judge may establish deadlines as necessary for discovery requests and responses. If the judge does not establish a deadline, responses to discovery requests, except for notices of depositions, shall be made within twenty days after receipt. Except where specifically prohibited, the procedures and limitations set forth in these rules pertaining to discovery may be modified by agreement of the parties in accordance with §155.39 of this title (relating to Stipulations); or by the judge on the motion of a party, if the parties are unable to agree; or on the judge's own initiative if the interest of justice requires. If such motion is timely filed by a party, it shall be captioned "Request for Discovery Control Plan" and may include a request for:

(1) the setting of a date for the hearing on the merits;

(2) dates for prehearing conferences;

(3) the establishment of a time period for the completion of all discovery or an appropriate phase of it;

(4) the establishment of limits on the amount or forms of discovery permitted;

(5) a schedule for completion of prehearing procedures; and

(6) any other matter that will promote the efficient and just disposition of the matter.

(h) A responding party is under a continuing duty to reasonably supplement its discovery responses under the circumstances specified in the Tex. R. Civ. P. An amended or supplemental response must be made reasonably promptly after the party discovers the necessity for such a response. It is presumed that an amended or supplemental response made less than fifteen days before the hearing was not made promptly. Where such a presumption arises, or pursuant to order issued by the judge, the supplementing party shall provide an affidavit identifying the date and the manner in which the party learned of the need to supplement its answer and such additional facts necessary to meet a contention that the need to supplement reasonably should have been discovered earlier.

(i) The objections to discovery requests shall be a separate written pleading filed within the time for response. The discovery request to which an objection is being filed shall be stated and the specific grounds for the objection shall be separately stated for each question. If an objection pertains to only part of a question, that part shall be clearly identified. All arguments upon which the objecting party relies shall be presented in full in the objection. A party must comply with as much of the request to which the party has no objection unless it is unreasonable under the circumstances to do so before obtaining a ruling on the objection. An objection that is not made in the time required, that is obscured by numerous unfounded objections, or otherwise fails to comply with the requirements of this paragraph is waived unless the judge excuses the waiver for good cause shown.

(j) An objection founded upon a claim of privilege or exemption shall be governed by the procedures set forth in Tex. R. Civ. P. 193.3 and 193.4.

(k) Every disclosure, discovery request, notice, response, and objection must be signed by the party's authorized representative or the party, if the party is not represented. The signature of the party or the party's authorized representative shall have the effect specified by the Tex. R. of Civ. P. 191.3.

(l) The party seeking discovery shall file a motion to compel within ten days of receipt of the pertinent objection or alleged failure to comply with discovery. Absence of a motion to compel filed by the party seeking discovery will be construed as an indication that the parties have resolved their discovery dispute. The parties and their authorized representatives are expected to cooperate in discovery and to make any agreements reasonably necessary for the efficient disposition of the case. Therefore, all discovery motions shall include a certificate of conference:

(1) averring the parties conferred, negotiated in good faith, and were unable to resolve the dispute prior to submitting the dispute to the judge for resolution; or

(2) averring the movant has made reasonable, but unsuccessful, attempts to contact the opposing parties and succinctly describing the attempts made.

(m) The judge may issue any order in the interest of justice necessary to protect the person or party seeking relief from undue burden, unnecessary expense, harassment or annoyance, or invasion of personal, constitutional, or property rights. Any person or party from whom discovery is sought may file a motion within the time permitted for response to the discovery request for a protective order, specifying the grounds for the protective order. A person should not move for protection when objection or assertion of privilege is appropriate, but a motion does not waive the objection or assertion of privilege. Motions and responses may include affidavits, discovery pleadings, or other pertinent documents. The judge's authority as to such orders extends to, but is not limited by, any of the following.

(1) The judge may order that requested discovery not be sought in whole or in part, or that the extent or subject matter of discovery be limited, or that it not be undertaken at the time or place specified.

(2) The judge may order that the discovery be undertaken only by such method or upon such terms and conditions or at the time and place directed by the judge.

(3) SOAH records are presumed to be open. The judge may order them sealed only upon a showing of all of the following:

(A) a specific, serious and substantial interest that clearly outweighs this presumption of openness; and

(B) any probable adverse effect that sealing will have upon the general public health or safety; and

(C) no less restrictive means than sealing the records will adequately and effectively protect the specific interest asserted. Any order under this paragraph shall be made in accordance with the APA, the referring agency's statute, and other applicable rule or law.

(n) An agreement affecting a deposition upon oral examination is enforceable if the agreement is recorded in the deposition transcript. Unless the judge orders otherwise, the parties may, by written agreement:

(1) provide that depositions be taken at any time or place, upon any notice, and in any manner and when so taken may be used like other depositions; and

(2) modify the procedures provided by these rules for other methods of discovery.

§155.43.Making a Record of Contested Case.

(a) A record of all contested case proceedings will be made. At the judge's discretion and order, the making of a record of a prehearing conference may be waived, and the actions taken at the conference may instead be reflected in a written order issued after the conference. For any proceeding in a docket set to last no longer than one day, SOAH is responsible for making a tape recording of the hearing or prehearing conference.

(1) A referring agency that prefers to arrange for a stenographic recording of all docketed proceedings on a regular basis may do so by filing a statement of intent to do so. The statement shall be filed with the Director of Hearings and shall remain in effect for all proceedings conducted by SOAH on behalf of the referring agency unless the statement is revoked in writing. The referring agency shall make arrangements for stenographic recording of all proceedings while the statement is effective, unless the judge waives the requirement for a prehearing conference or as provided in subsection (b) of this section.

(2) A referring agency that prefers to make arrangements to videotape all docketed proceedings on a regular basis may file a statement of intent to do so, as specified in paragraph (1) of this subsection. If a docketed proceeding is set to last longer than a day, a referring agency nevertheless is subject to subsection (b) of this section.

(b) Unless otherwise ordered by the judge, the referring agency shall provide a court reporter for any proceeding in a docket set to last longer than one day. The court reporter shall prepare a stenographic record of the proceeding but shall not prepare a transcript unless a party or the judge so requests.

(c) The tape recording made by SOAH under subsection (a) of this section, the videotape made by the referring agency under subsection (a) of this section if a statement is on file, or the stenographic recording prepared under subsection (b) of this section is the official record of the proceeding for purposes of all actions within SOAH's jurisdiction. The judge may order a different means of making a record if circumstances so require and may designate that record as the official record of the proceeding.

(d) Any party may use a means of making an unofficial record of the proceeding that is in addition to the means specified in the rules or by the judge.

(1) The party shall file and serve a notice of intent to use an additional means at least two days before the proceeding.

(2) The party shall make all arrangements associated with the additional means.

(3) The judge may order that the additional means not be used or that it cease being used if it may cause or is causing disruption to the proceeding.

(4) At the proceeding the judge may order that the additional means sought to be used shall be the method of preparing the official record of the proceeding and dispense with any other means required by this section, unless there is a timely objection at the beginning of the proceeding.

(e) On the written request to the referring agency by a party to a contested case or on request of the judge, a written transcript of all or part of the proceedings shall be prepared by a court reporter from the means used to make the official record of the proceeding. If the proceeding has been taped or video recorded, the referring agency shall inform SOAH of the need to deliver the original recording to a court reporter, selected by the referring agency, for preparation of the transcript.

(1) Costs of a transcript ordered by any party ordinarily shall be paid by that party. If permitted by the referring agency's statute, rules, or policy, the cost of the transcript may be assessed to one or more parties.

(2) When only the judge requests a transcript, the referring agency may bear that cost or assess the cost as provided for in paragraph (1) of this subsection.

(3) Paragraphs (1) and (2) of this subsection do not preclude the parties from agreeing to share the costs associated with the transcript.

(4) The original of any transcript prepared shall be filed with SOAH.

(5) Proposed written corrections of purported errors in a transcript shall be filed with SOAH and served on the parties and the court reporter within a reasonable time after discovery of the error. The judge may establish deadlines for the filing of proposed corrections and responses. The transcript will be corrected only upon order of the judge.

(6) A transcript prepared according to these procedures becomes the official record of the proceedings for purposes of all actions within SOAH's jurisdiction.

(f) The judge shall maintain any exhibits admitted during the proceeding and the official record of the proceeding, other than a stenographic record. However, the judge may allow the court reporter to retain the exhibits and the tape or video recording of the proceeding, if applicable, while a transcript is being prepared. The exhibits and transcript or recording will be sent to the referring agency after issuance of the order or proposal for decisions and consideration of any exceptions to the proposal for decision and replies. The judge may retain the exhibits and transcript or recording to prepare for presentation of the proposal for decision to the referring agency, if a presentation is requested by the referring agency, or SOAH may seek temporary return of the exhibits and transcript or recording to enable the judge to prepare for that presentation if the materials have already been sent to the referring agency.

(g) The referring agency shall contract with and pay for an interpreter for deaf or hearing impaired parties and subpoenaed witnesses in accordance with §2001.055 of the APA and shall provide reader services or other communication services for blind and sight impaired parties and subpoenaed witnesses. Any party, including the referring agency, who needs a certified language interpreter for presentation of its case shall be responsible for arranging for the interpreter to be present. The referring agency may pay the cost of the certified language interpreter or may assess the cost on one or more parties in accordance with the referring agency's statute or rules.

(h) If existing technology allows, and upon consent of the parties, a judge may permit broadcasting or televising of proceedings, provided the judge determines that doing so: serves the public interest in accessibility to the proceedings; will not unduly interfere with the efficiency of the proceedings; will not distract, intimidate, or otherwise adversely affect the participants; and will not impair the dignity of the proceedings.

§155.55.Failure to Attend Hearing and Default.

(a) If a party who does not have the burden of proof fails to appear on the day and time set for hearing, the judge may proceed in that party's absence on a default basis and issue a proposal for decision or order, where provided by law, against the defaulting party. In the proposal for decision or order, the factual allegations against that party in the notice of hearing will be deemed admitted.

(b) Any default proceeding under this section requires adequate proof of the following:

(1) proper notice under Tex. Gov't Code, Chapter 2001 and §155.27 of this title (relating to Notice of Hearing) was provided to the defaulting party; and

(2) such notice included disclosure, in at least twelve-point, bold-face type, that upon failure of the party to appear at the hearing, the factual allegations in the notice could be deemed admitted, and the relief sought in the notice of hearing might be granted by default.

(c) This subsection applies to cases where service of the notice of hearing on a defaulting party is shown only by proof that the notice was sent to the party's last known address as shown on the referring agency's records, with no showing of actual receipt by the defaulting party or the defaulting party's agent. Under that situation, the default procedures described in subsection (b) of this section may be used only when the following circumstances are shown to exist:

(1) the referring agency's statute or rules authorize service of the notice of hearing by sending it to the party's last known address as shown by the referring agency's records; and

(2) there is credible evidence that the notice of hearing was sent by first class mail to the defaulting party's last known address as shown on the referring agency's records.

(d) SOAH may enforce the procedural rule of any referring agency that provides, in essence, either:

(1) that the failure of a respondent to timely enter an appearance or answer to the notice of hearing of the contested case shall entitle the agency's staff to a continuance at the time of the contested case hearing for such reasonable period of time as determined by the judge; or

(2) that the failure of respondent to appear at the time of hearing of the contested case shall entitle the agency's staff to move either for dismissal of the case from the SOAH docket, or to request issuance of a default proposal for decision or order by the judge.

(e) No later than ten days after the date of the hearing, if a dismissal, proposal for decision, or an order deciding the case has not been issued, a party may file a motion to set aside a default and reopen the record. The judge may grant the motion, set aside the default, and reopen the hearing for good cause shown.

(f) This section does not preclude the referring agency from informally disposing of a case by default under the agency's statute or rules in the event the respondent fails to file a timely written response or other responsive pleading required by the referring agency's statute or rules. A party may request entry of an order by the judge abating or continuing the proceedings to pursue informal disposition at the referring agency.

§155.57.Summary Disposition and Dismissal.

(a) Summary Disposition. In response to a party's motion or after a judge notifies the parties of an intent to dispose of a case by summary disposition and allows time for responses, the judge may issue a proposal for decision, or where authorized by law a final order, resolving a contested case without evidentiary hearing if the pleadings, affidavits, materials obtained by discovery, admissions, matters officially noticed, stipulations, or evidence of record show there is no genuine issue as to any material fact and that a party is entitled to a decision in its favor as a matter of law.

(1) A motion for summary disposition shall state the specific grounds therefor.

(A) A party may move with or without supporting affidavits for summary disposition upon all or any part of a contested case.

(B) The motion shall include a separate statement setting forth plainly and concisely all material facts that the moving party contends are undisputed. Each of the material facts stated shall be followed by a reference to the supporting evidence. The failure to comply with the requirement of a separate fact statement may, in the judge's discretion, constitute sufficient grounds for the denial of the motion.

(2) Any opposition to a motion for summary disposition shall be filed within twenty days of receipt of the motion. The opposition papers shall include a separate statement that responds to each of the material facts contended by the moving party to be undisputed, indicating whether the opposing party agrees or disagrees that those facts are undisputed. The statement also shall set forth plainly and concisely any other material facts that the opposing party contends are disputed. Each material fact claimed by the opposing party to be disputed shall be followed by a reference to the supporting evidence. Failure by the opposing party to comply with the requirement of a separate fact statement may constitute sufficient grounds, in the judge's discretion, for granting the motion.

(3) Discovery products not on file with SOAH may be relied upon to support or oppose a motion for summary disposition, if copies of the products are filed with the motion or opposition and copies of or a notice containing specific references to the discovery products are served on all parties.

(b) Failure to Prosecute. A contested case may be dismissed for want of prosecution, on failure of a party seeking affirmative relief to appear for any hearing or prehearing conference of which the party had notice, or for the party's failure to prosecute the case in accordance with a requirement of statute, rule, or order of the judge. Dismissal under this rule removes the case from the SOAH docket and does not propose or make any decision on the merits of the case.

(1) Notice of potential dismissal for want of prosecution of a case and an opportunity to contest the dismissal will be provided by the judge to the parties in one of the following ways:

(A) The judge may issue a conditional order of dismissal, which explains the party's failure; informs the party of an opportunity to contest the dismissal; and states the order of dismissal will become final upon the expiration of twenty days from the date it is signed, unless a motion to set aside the dismissal and reopen the record that specifies the bases for the motion is filed with the judge within twenty days of the date the order is signed.

(B) In the alternative, the judge may issue a notice of intent to dismiss the case, which explains the party's failure; notifies the party of the date, time, and place of a dismissal hearing; and requires the party to file a motion to retain within twenty days of the date the notice is signed specifying the party's reasons for opposing dismissal and indicating that the party will appear at the dismissal hearing.

(2) The judge may grant a motion referenced in paragraph (1)(A) or (B) of this subsection for good cause shown.

(c) Other Dismissal Actions. In response to a party's motion or after a judge notifies the parties of an intent to dismiss a case and allows time for responses, the judge may dismiss a case, or a portion of the case, from SOAH's docket for:

(1) lack of jurisdiction over the matter by the referring agency;

(2) lack of statute, rule, or contract authorizing SOAH to conduct the proceeding;

(3) mootness of the case;

(4) failure to state a claim for which relief can be granted; or

(5) unnecessary duplication of proceedings.

(d) If a moving party withdraws its entire claim or parties settle all matters in controversy, a judge may dismiss a matter from SOAH's docket by order with or without prejudice. The judge may order a withdrawn or settled matter severed before dismissal, if other related matters in the docket remain in controversy.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 8, 2002.

TRD-200202169

Paul Elliot

Director of Hearings

State Office of Administrative Hearings

Effective date: April 28, 2002

Proposal publication date: October 19, 2001

For further information, please call: (512) 475-4931

Part 13. TEXAS INCENTIVE AND PRODUCTIVITY COMMISSION

Chapter 273. STATE EMPLOYEE INCENTIVE PROGRAM

1 TAC §§273.1, 273.3, 273.7, 273.9, 273.27

The Texas Incentive and Productivity Commission adopts amendments to Commission rules §§273.1, 273.3, 273.7, 273.9, and 273.27, concerning the administration of the State Employee Incentive Program. The rule amendments are adopted without changes to the proposed text as published in the October 5, 2001, issue of the Texas Register (26 TexReg 7663).

Most of the proposed amendments to the rules are being made to reflect the modifications to Chapter 2108 of the Government Code which were enacted during the 2001 legislative session. House Bill 2492 modifies the eligibility requirements of the program and increases the threshold amount of savings to a state agency that must be realized from a suggestion in order for an employee or state employee group to be eligible to receive an award or bonus. The bill also authorizes the Commission to solicit donations. Section 273.9 clarifies the statutory provision on eligibility of high level employees to reflect that employees that have decision-making authority to implement a suggestion made under the program are not eligible to receive awards. This clarification is deemed necessary to interpret the statutory provision in a manner that is consistent with the purpose of the law as a whole to reward employees that make suggestions over and above their job duties and not to reward certain high-level or policy-making employees whose job duties include the development and implementation of solutions to make their respective agencies more efficient and cost effective. The changes to the rules were made for clarification purposes only as result of inquiries by the participating state agencies.

No comments were received in response to the proposed rule amendments.

The amendments are adopted under the Texas Government Code, §2108.004(b) which authorizes the Commission to adopt rules to carry out Chapter 2108 of the Code.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 4, 2002.

TRD-200202126

Ed Bloom

Executive Director

Texas Incentive and Productivity Commission

Effective date: April 24, 2002

Proposal publication date: October 5, 2001

For further information, please call: (512) 475-2393

Part 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION

Chapter 392. PROCUREMENTS BY HEALTH AND HUMAN SERVICES COMMISSION

Subchapter J. HISTORICALLY UNDERUTILIZED BUSINESSES

1 TAC §392.100

The Health and Human Services Commission ("Commission") adopts new Chapter 392, Subchapter J, §392.100, relating to its historically underutilized business ("HUB") program with changes to the proposed text as published in the December 14, 2001, issue of the Texas Register (26 TexReg 10193).

No comments were received regarding the adoption of this subchapter.

The purpose of the new chapter, subchapter, and section is to comply with Government Code, Title 10, Subtitle D, Chapter 2161, §2161.003, which requires state agencies to adopt the Texas Building and Procurement Commission ("TBPC") rules governing their HUB programs for construction projects and purchases of goods and services paid for with state-appropriated funds.

The TBPC rules are found at 1 Texas Administrative Code ("TAC"), Chapter 111 Executive Administration Division, Subchapter B Historically Underutilized Business Program, §§111.11-111.16 and §§111.26-111.28.

The rules as proposed identified the General Services Commission, which was succeeded by the Texas Building and Procurement Commission by the 77th Legislature. The adopted rules include a nonsubstantive change to identify the successor agency.

There is no anticipated impact on local economies, because there are no additional burdens imposed by the adopted rules.

The adopted rules are administrative and do not impose any new regulatory requirements. The adopted rules are reasonably taken to fulfill requirements of state law.

These rules are adopted under authority granted to the Commission by Government Code section 531.033, which authorizes the commissioner of health and human services to adopt rules necessary to implement the Commission's duties, and under Government Code, Title 10, Subtitle D, Chapter 2161, §2161.003, which directs state agencies to adopt TBPC's rules under §2161.002 as the agency's own rules. Those rules apply to agencies' construction projects and purchase of goods and services paid for with appropriated money.

The new subchapter implements Government Code, Title 10, Subtitle D, Chapter 2161, §2161.003.

§392.100.Historically Underutilized Business Program.

(a) HHSC adopts by reference the Texas Building and Procurement Commission rules found at 1 TAC, Title 1 Administration, Part 5 Texas Building and Procurement Commission, Chapter 111 Executive Administration Division, Subchapter B Historically Underutilized Business Program, §§111.11-111.16 and §§111.26-111.28, relating to the Historically Underutilized Business Program, with the additions set forth in subsection (b) below.

(b) For purposes of this §392.100:

(1) "Commission" refers to the Texas Building and Procurement Commission.

(2) "State agency" refers to the Health and Human Services Commission.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on April 8, 2002.

TRD-200202159

Marina S. Henderson

Executive Deputy Commissioner

Texas Health and Human Services Commission

Effective date: April 28, 2002

Proposal publication date: December 14, 2001

For further information, please call: (512) 424-6630