TITLE 16.ECONOMIC REGULATION

Part 4. TEXAS DEPARTMENT OF LICENSING AND REGULATION

Chapter 60. TEXAS COMMISSION OF LICENSING AND REGULATION

Subchapter B. ORGANIZATION

16 TAC §60.64

The Texas Department of Licensing and Regulation ("Department") adopts amendments to §60.64 concerning the duration of advisory committees/boards/councils governed by the Texas Commission of Licensing and Regulation and the Executive Director of the Texas Department of Licensing and Regulation as published in the December 7, 2001 issue of the Texas Register (26 TexReg 10004) with changes. The changes to the rule section from what was proposed deletes the proposed language regarding the time period for which each advisory body has been and will be continued. This change is made for clarification. The Department also removed the Vehicle Protection Product Warrantor Advisory Board from this schedule. The statute governing vehicle protection product warrantors, Texas Civil Statutes, Article 9035, provides that Texas Government Code, Chapter 2110 does not apply to this advisory board.

The amendments to §60.64 continue the existence of the advisory committees/boards/councils to the Commission and Executive Director and set September 1, 2006 as the automatic abolishment dates for them. The Commission relies on these advisory bodies to provide technical knowledge of their respective programs and industries, and receives expert advice from them on matters critical to the Commission's protection of public health, safety, and welfare.

One comment was received from representatives of the National Vehicle Protection Association (NVPA) stating that the advisory board for vehicle protection product warrantors should not have an abolishment date set because the statute governing these warrantors, Texas Civil Statutes, Article 9035, provides that Texas Government Code, Chapter 2110 does not apply to this advisory board. The Department agrees with this comment and believes that this advisory board is not subject to the provisions of Texas Government Code, Chapter 2110 which govern the other advisory bodies.

The amendments will function to enhance the administration and enforcement of state statutory requirements related to the respective advisory bodies and duties applicable to these advisory bodies.

The amendments to §60.64 are adopted under Texas Occupations Code, Chapter 51, §51.203 which authorizes the Department to adopt rules as necessary to implement this Chapter and any other law establishing a program regulated by the Department and Government Code, §2110.008 which authorizes an agency to continue the existence of an advisory committee beyond this section's four-year period following the date of creation of the committee.

The statutory provisions affected by the adoption are those set forth in Texas Occupations Code, Chapter 51; Texas Civil Statutes, Article 9102; Texas Civil Statutes, Article 8861; Texas Occupations Code, Chapter 1802; Health and Safety Code, Chapter 755; Texas Health and Safety Code, Chapter 754; Texas Government Code, Chapter 57; Texas Civil Statutes, Article 8886; Texas Civil Statutes, Article 9034; Texas Water Code, Chapters 32 and 33; and Senate Bill 1175, Article 1, 77th Texas Legislative Session. No other statutes, articles, or codes are affected by the adoption.

§60.64.Duration of Advisory Committee/Boards/Councils.

In accordance with Texas Government Code Annotated, §2110.008 the Commission establishes the following periods during which the advisory committee/boards/councils listed will continue in existence. The automatic abolishment date of each advisory committee/board/council will be the date listed for that committee/board/council unless the Commission subsequently establishes a different date:

(1) Architectural Barriers Advisory Committee - 09/01/2006;

(2) Air Conditioning - 09/01/2006;

(3) Auctioneer Education Advisory Board - 09/01/2006;

(4) Board of Boiler Rules - 09/01/2006;

(5) Elevator Advisory Board - 09/01/2006;

(6) Licensed Court Interpreter Advisory Board - 09/01/2006;

(7) Property Tax Consultants Advisory Council - 09/01/2006;

(8) Service Contract Providers Advisory Board - 09/01/2006;

(9) Water Well Drillers Advisory Council - 09/01/2006; and

(10) Weather Modification Advisory Committee - 09/01/2006.

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 March 7, 2002.

TRD-200201440

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: March 27, 2002

Proposal publication date: December 7, 2001

For further information, please call: (512) 463-7348


Chapter 65. BOILER DIVISION

16 TAC §§65.10, 65.20, 65.80

The Texas Department of Licensing and Regulation adopts amendments to §§65.10, 65.20 and 65.80 concerning boilers as published in the October 26, 2001 issue of the Texas Register (26 TexReg 8448) without changes, and will not be republished. The amendments as adopted reflect the changes in the Law as revised by the 76th Legislative Session, HB 2296; to conform to the current edition of the National Board Inspection Code and addenda; and delete all references to the registration of boiler installers.

The changes in §65.10 add, amend, delete, and renumber definitions to reflect the changes in the law as revised by the 76th Legislative Session. The changes in §65.20 delete references to the fee for the Texas Boiler Law and Rules manual because the fee for the manual was deleted in a prior rule adoption. The change in §65.80 delete references to the American Petroleum Institute (API) examination because the Department no longer administers this examination.

Additionally, General Counsel determined that the Boiler Law did not give the Department the authority to register boiler installers, therefore, the definition of installer in §65.10, the references to the registration of boiler installers in §65.20 and the fee for a boiler installer registration in §65.80 were deleted.

No comments were received regarding adoption of the amendments.

The amendments should enhance the future administration and enforcement of the Boiler Division program.

The amendments are adopted under Texas Occupations Code, Chapter 51, §51.203 and Texas Health and Safety Code, Chapter 755, §755.032. The Department interprets §51.203 as authorizing the Executive Director to adopt rules as necessary to implement this chapter and any other law establishing a program regulated by the Department. The Department interprets §755.032 as authorizing the Commissioner to adopt and enforce rules concerning boilers to assure compliance with the intent and purpose of the code.

The statutory provisions affected by the adoption are Texas Occupations Code, Chapter 51, and Texas Occupations Code, Chapter 755. No other statutes, articles, or codes are affected by the adoption.

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 March 7, 2002.

TRD-200201437

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: March 27, 2002

Proposal publication date: October 26, 2001

For further information, please call: (512) 463-7348


Chapter 70. INDUSTRIALIZED HOUSING AND BUILDINGS

16 TAC §§70.23, 70.70, 70.71

The Texas Department of Licensing and Regulation (Department) adopts amendments to §§70.23, 70.70, and 70.71 concerning industrialized housing and buildings. The amendments to §70.23 are adopted with changes to the proposed text as published in the October 26, 2001 issue of the Texas Register (26 TexReg 8451). The amendments to §70.70 and §70.71 are adopted without changes to the proposed text as published in the October 26, 2001 issue of the Texas Register (26 TexReg 8451) and will not be republished.

The amendments to §70.23 add new energy inspector certification criteria to the criteria for approval of third party inspectors. The justification for the change is the passage of legislation requiring energy inspections of new construction to be performed by code certified inspectors. The change to the text from what was published in the proposal adds the word "as" to §70.23(2)(C) for clarification.

The amendments to §70.70 and §70.71 amend the seismic zone requirement to a seismic design category requirement. The justification for the change is that the 2000 International Codes adopted by the Texas Industrialized Building Code Council require buildings to be assigned a seismic design category, not a seismic zone.

One comment was received from the Southern Building Code Congress International, Inc. in favor of the proposed amendments.

The amendments will function by increasing program integrity.

The amendments are adopted under the Texas Occupations Code, Chapter 51, §51.203 and Texas Revised Civil Statutes Annotated, Article 5221f-1 §6. The Department interprets §51.203 as authorizing the Executive Director to adopt rules as necessary to implement this chapter and any other law establishing a program regulated by the Department. The Department interprets §6 as authorizing the Commissioner to adopt rules as appropriate to implement actions, decisions, interpretations and instructions of the council.

The statutory provisions affected by the adopted amendments are Texas Occupations Code, Chapter 51, and Texas Revised Civil Statutes Annotated, Article 5221f-1. No other statutes, articles, or codes are affected by the adoption.

§70.23.Criteria for Approval of Third Party Inspection Agencies and Inspectors.

An agency seeking council approval as a third party inspection agency shall submit a written application to the commissioner. The application will indicate the agency name, address, and telephone number of each office through which third party inspections will be coordinated. The application will include the following information:

(1) an organizational chart showing the names of managerial and technical personnel responsible for in-plant and on-site construction inspections;

(2) a resume for each person listed in the organizational chart indicating academic and professional qualifications, experience in related areas, and specific duties within the agency. Certification expiration dates must also be submitted. The minimum personnel requirements and qualifications are as follows. An agency seeking council approval as a third party inspection agency shall submit a written application to the commissioner. The application will indicate the agency name, address, and telephone number of each office through which third party inspections will be coordinated. The application will include the following information:

(A) The manager or chief executive officer shall have a minimum of five years experience in building code enforcement or compliance control of building systems, a minimum of one year experience in responsible technical project planning and management, and registration as a professional engineer or architect in the State of Texas. (note: the applicant's registration number must be included on the resume).

(B) The supervisor of inspections shall have a high school diploma or equivalent; a minimum of five years experience as an inspector in manufactured buildings or related compliance control or equivalent; and certification as a residential energy inspector as granted by ICBO, SBCCI, or BOCA, as a commercial energy inspector as granted by ICBO, SBCCI, or BOCA and as:

(i) a combination dwelling inspector as granted by ICBO; or

(ii) a one and two family dwelling inspector as granted by either SBCCI or ICBO, or a one and two family dwelling combination inspector as granted by BOCA; or

(iii) a building inspector, mechanical inspector, electrical inspector, and plumbing inspector (the applicant must have certifications in all four areas) as granted by either SBCCI, ICBO, or BOCA. The certifications in the four areas of inspection are not required to be from the same certification agency. For example, an applicant may be certified as a Building Inspector and a Mechanical Inspector by SBCCI and certified as an Electrical Inspector and a Plumbing Inspector by ICBO; or

(iv) a combination commercial inspector as granted by BOCA.

(C) The inspector shall have a high school diploma or equivalent; a minimum of one year experience in building code enforcement, compliance control inspection, or building experience; and certification as a residential energy inspector as granted by ICBO, SBCCI, or BOCA, as a commercial energy inspector as granted by ICBO, SBCCI, or BOCA, and as:

(i) a combination dwelling inspector as granted by ICBO; or

(ii) a one and two family dwelling inspector as granted by either SBCCI or ICBO, or as a one and two family dwelling combination inspector as granted by BOCA; or

(iii) a building inspector, mechanical inspector, electrical inspector, and plumbing inspector as granted by either SBCCI, ICBO, or BOCA. The certifications in each of the four areas of inspection are not required to be from the same certification agency. Additionally, one inspector is not required to have certifications in all four areas of inspection. However, all four areas of certification must be represented unless the agency employs inspectors who are certified in accordance with clauses (i) and (ii) of this subparagraph. For example, the agency may employ one inspector certified as a building inspector by SBCCI, one certified as a mechanical inspector by ICBO, one certified as an electrical inspector by ICBO, and one certified as a plumbing inspector by SBCCI. Each inspector may only inspect in the area for which they are certified, i.e., a mechanical inspector inspects mechanical, an electrical inspector inspects electrical, etc.; or

(iv) a combination commercial inspector as granted by BOCA.

(D) In lieu of a registration number issued by the Texas State Board of Registration for Professional Engineers, an applicant currently registered in some other state and applying for registration in Texas under the provisions of the Texas Engineering Practice Act, §20(a) and (b), may satisfy the requirement by providing a copy of an application for registration and a letter from the board acknowledging receipt and authorizing interim practice;

(3) complete documentation to substantiate the agency's ability to perform in-plant and on-site construction inspections and follow-up inspections to determine the compliance of a building manufacturer with the standards and rules. The application will include a formal description of the agency's supervision and training program for inspectors, performance records of manufacturers, examples of inspection reports, agreements or contracts with manufacturers, and any other pertinent information;

(4) a properly notarized statement of certification signed by the agency manager or chief executive officer that:

(A) its board of directors, as a body, and its managerial and inspection personnel, as individuals, are free to exercise independence of judgment in the performance of their duties within the agency;

(B) its activities pursuant to the discharge of responsibilities as a third party inspection agency will not result in financial benefit to the agency via stock ownership or other financial interests in any producer, supplier, or vendor of products involved, other than through standard fees for services rendered;

(C) the agency will consistently and uniformly implement the policies and determinations of the council with regard to interpretations of the standards and rules;

(D) the agency will not provide design services or prepare compliance control manuals for manufacturers for whom it acts as a third party inspection agency;

(E) all information contained in the application for approval as a third party inspection agency is true, timely, and correct; and

(F) all future changes will be immediately communicated to the department;

(5) a list of states in which the agency is currently approved to provide product certification or validation or third party inspection services and a complete description of each system and program involved.

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 March 8, 2002.

TRD-200201455

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: March 28, 2002

Proposal publication date: October 26, 2001

For further information, please call: (512) 463-7348


Chapter 75. AIR CONDITIONING AND REFRIGERATION CONTRACTOR LICENSE LAW

16 TAC §§75.10, 75.21, 75.22, 75.24, 75.30, 75.40, 75.70, 75.80, 75.100

The Texas Department of Licensing and Regulation adopts amendments to §§75.10, 75.21, 75.22, 75.24, 75.30, 75.40, 75.70, 75.80, and 75.100, concerning air conditioning contractors, as published in the January 4, 2002, issue of the Texas Register (27 TexReg 25). Sections 75.21, 75.22, 75.24, 75.30, 75.40, 75.70, and 75.80 are adopted without change and will not be republished. Sections 75.10 and 75.100 are adopted with changes.

A public hearing was held on January 23, 2002. Comments were received from the Texas Association of Builders, Southern Building Code Conference International, and an air conditioning and refrigeration contractor. The Texas Association of Builders commented in favor of the proposed changes respective to §75.100. The Southern Building Code Conference International commented in favor of the proposed changes respective to §§75.10 and 75.100; however, they did submit recommended changes in the wording. The air conditioning and refrigeration contractor was opposed to the changes respective to §75.30 and in favor of the changes respective to §75.100.

The amendment to §75.10 adds a definition of "Executive Director" and amends "Business affiliation" to make the definition easier to understand. The Department received a comment pointing out that the published text contained an error in paragraph (21) because it deviated from the current rule and from the amendments to the Act passed by the 77th Legislature. The Department agrees with the comment and has amended the proposed paragraph.

The amendments to §75.10 are to conform the rules to the statute, provide clarification to industry and promote understanding of the terms used in this Chapter.

The amendments proposed to §75.30 exempt persons who perform air conditioning contracting on boats used for pleasure from licensure requirements, and define the exemption from licensing for general contractors. The justification is that pleasure boats are considered to be similar to recreation vehicles, which are considered motor vehicles and are exempt from licensure in the Act, and clarify the exemption from licensure for general contractors.

The Department received one comment on the amendments to §75.30 objecting to exempting of anyone doing air conditioning and refrigeration work, since the purpose of the law is to protect property and citizens, and an exemption is a loophole for unlicensed people. The Department believes the rules on exemptions explain and interpret exemptions contained in the statute and do not increase the number of people already exempt under the Act.

The amendments to §75.100 change the adoption of standards to require the most current edition of codes rather than the 2000 edition, state that the Department considers the International Mechanical Code and the Uniform Mechanical Code to be equal in strictness, and specify that, in areas where no code has been adopted by a municipality, the contractor performing the work must choose one of the codes to follow. The justification is that the amendment will provide a reasonable way for contractors to determine which code must be followed in a specific location.

The Department received three comments on §75.100. One comment questioned the authority of the Department to interpret the statute less strictly, but approved the common-sense approach. The Department agrees with the comment that the rule reflects a common-sense approach, but disagrees with the comment that it is interpreting the statute less strictly than it should, because the Department has determined that the International Mechanical Code and the Uniform Mechanical Code, taken as a whole, are equally strict in their standards.

Another comment requested addition of the International Fuel Gas Code, to be used with the International Mechanical Code, because the subject matter of both correspond to the subject matter encompassed by the Uniform Mechanical Code, and approved the concept of the rule change. The Department concurs with the comment requesting addition of the International Fuel Gas Code and is adopting this section with that change. Another comment approved the amended rule section.

The amendments are adopted under Texas Civil Statutes, Article 8861 and Texas Occupations Code, Chapter 51, §51.203 which authorizes the Department to adopt rules as necessary to implement this Chapter and any other law establishing a program regulated by the Department.

The statutory provisions affected by the adoption are those set forth in Texas Civil Statutes, Article 8886 and Texas Occupations Code, Chapter 51. No other statutes, articles, or codes are affected by the adoption.

§75.10.Definitions.

The following words and terms have the following meanings:

(1) Advertising or Advertisement -- Any commercial message which promotes the services of an air conditioning and refrigeration contractor.

(2) Air conditioning and refrigeration subcontractor -- A person or firm who contracts with a licensed air conditioning contractor for a portion of work requiring a license under the Act. The subcontractor contracts to perform a task according to his own methods, and is subject to the contractor's control only as to the end product or final result of his work.

(3) Air conditioning or heating unit -- A stand-alone system with its own controls that conditions the air for a specific space and does not require a connection to other equipment, piping, or ductwork in order to function.

(4) Assumed name -- As defined in the Business and Commerce Code, Title 4, Chapter 36, Subchapter A, Section 36.02.

(5) Biomedical Remediation -- The treatment of ducts, plenums, or other portions of air conditioning or heating systems by applying disinfectants, anti-fungal substances, or products designed to reduce or eliminate the presence of molds, mildews, fungi, bacteria, or other disease-causing organisms.

(6) Boiler -- As defined in the Health and Safety Code, Title 9, Subtitle A, Chapter 755.Boilers.

(7) Business affiliation -- The business organization to which a licensee elects to assign his or her license.

(8) Cheating -- Attempting to obtain, obtaining, providing, or using answers to examination questions by deceit, fraud, dishonesty, or deception.

(9) Commissioner -- As used in Texas Civil Statutes, Article 8861, and in these rules, has the same meaning as Executive Director.

(10) Contracting -- Agreeing to perform work, either verbally or in writing, or performing work, either personally or through an employee or subcontractor.

(11) Cryogenics -- Refrigeration that deals with producing temperatures ranging from:

(A) -250 degrees F to Absolute Zero (-459.69 degrees F);

(B) -156.6 degrees C to -273.16 degrees C;

(C) 116.5 K to 0 K; or

(D) 209.69 degrees F to 0 degrees R.

(12) Design of a system -- making decisions on the necessary size of equipment, number of grilles, placement and size of supply and return air ducts, and any other requirements affecting the ability of the system to perform the function for which it was designed.

(13) Direct personal supervision -- Directing and verifying the design, installation, construction, maintenance, service, repair, alteration, or modification of an air conditioning, refrigeration, process cooling, or process heating product or equipment for compliance with mechanical integrity.

(14) Employee -- An individual who performs tasks assigned him by his employer. The employee is subject to the deduction of social security and federal income taxes from his pay. An employee may be full time, part time or seasonal. Simultaneous employment with a temporary employment agency, a staff leasing agency, or other employer does not affect his status as an employee for the purpose of this Act.

(15) Employer -- One who employs the services of others, pays their wages, deducts the required social security and federal income taxes from the employee's pay, and directs and controls the employees performance.

(16) Executive Director -- as used in Texas Civil Statutes, Article 8861, and in these rules, has the same meaning as Commissioner.

(17) Filed -- a document is deemed to have been filed with the department on the date that the document has been received by the department or, if the document has been mailed to the department, the postmark date of the document.

(18) Full time employee -- An employee who is present on the job 40 hours a week, or at least 80% of the time the company is offering air conditioning and refrigeration contracting services to the public, whichever is less.

(19) Licensee -- An individual holding a license of the class and endorsement appropriate to the work performed under the Act and these rules.

(20) Permanent office -- Any business location at which contractual agreements to perform work requiring a license under the Act are arranged and where supervising control for those contracts originate. Temporary construction sites or other locations at which employees of a licensee work under contract to provide service, maintenance and repair work are not permanent offices.

(21) Primary process medium -- a refrigerant or other primary process fluid that is classified in the current ANSI/ASHRAE Standard 34 as Safety Group A1, A2, B1, or B2. Safety Groups A3 and B3 refrigerants are specifically excluded.

(22) Proper installation -- installing air conditioning and refrigeration equipment in accordance with:

(A) applicable municipal ordinances and codes adopted by a municipality where the installation occurs;

(B) the current Uniform Mechanical Code or the current International Mechanical Code and International Fuel Gas Code, in areas where no code has been adopted;

(C) the manufacturer's instructions; and

(D) all requirements for safety and the proper performance of the function for which the equipment or product was designed.

(23) Repair work -- diagnosing and repairing problems with air conditioning, commercial refrigeration, or process cooling or heating equipment, and remedying or attempting to remedy the problem. Repair work does not mean simultaneous replacement of the condensing unit, furnace and evaporator coil.

§75.100.Technical Requirements.

(a) Electrical Connections.

(1) On new construction of environmental air conditioning, commercial refrigeration, and process cooling or heating systems, licensees shall connect the appliance to the electrical line or disconnect that is provided for that purpose.

(2) Licensees may replace and reconnect environmental air conditioning, commercial refrigeration, process cooling or heating systems, or component parts of the same or lesser amperage. On replacement environmental air conditioning, commercial refrigeration, process cooling or heating systems where the electrical disconnect has not been installed and is required by the current National Electrical Code, the licensee may install a disconnect directly adjacent to or on the replacement system and reconnect the system.

(3) Control wiring of 50 volts or less may be installed and serviced by a licensee.

(4) All electrical work shall be performed in accordance with standards at least as strict as that established by the current National Electrical Code.

(b) Piping.

(1) Fuel gas piping for new or replaced environmental air conditioning, commercial refrigeration, or process cooling or heating systems may be installed by a licensee. Fuel gas piping by a licensee is limited to the portion of piping between the appliance and the existing piping system, connected at an existing shut-off valve for such use. Existing piping systems, stops, or shut-off valves shall not be altered by a licensee.

(2) Drain piping associated with environmental air conditioning, commercial refrigeration, or process cooling or heating systems may be installed by a licensee if it terminates outside the building. If the piping terminates inside the building, a licensee may make the connection if the connection is on the inlet side of a properly installed trap. Such drain piping shall be installed in accordance with applicable plumbing and building codes.

(3) Mechanical piping associated with environmental air conditioning, commercial refrigeration, or process cooling or heating systems shall be installed by a licensee.

(c) Duct cleaning.

(1) Duct cleaning and air quality testing, including biomedical testing may be performed by an unlicensed person or company if:

(A) the task is limited to the air distribution system, from the discharge of the unit to the inlet of the unit;

(B) no cuts are made to ducts or plenums;

(C) no changes are made to electrical connections;

(D) the only disassembly of any part of the system is opening or removal of access panels or doors, return air grills, or registers that are removable without cutting or removing any other part of the system; and

(E) coils are cleaned in place and can be accessed without cutting or disassembly of any part of the system and no biomedical remediation is performed.

(2) Biomedical testing may be performed by an unlicensed person or company. Biomedical remediation requires a license.

(d) Process Cooling and Heating.

(1) Process cooling and heating work does not include cryogenic work.

(2) Process cooling and heating is limited to work performed on piping and equipment in the primary closed loop portions of processing systems containing a primary process medium. Once a primary closed loop process system has been deactivated and rendered inert, a non-licensed person may perform repairs on piping, heat exchangers, and vessels.

(e) Standards

(1) The standard for the practice of air conditioning and refrigeration in a municipality is the code the municipality adopted by ordinance, provided that the ordinance does not make the code less strict than the current edition of the code adopted.

(2) The Department has determined that, for the purpose of subsection 3(a) of the Act, the provisions of the International Mechanical Code and the Uniform Mechanical Code, taken in their entirety, are equally strict. The standard for the practice of air conditioning and refrigeration in an area where no code has been adopted shall be either the most current edition of the International Mechanical Code and the International Fuel Gas Code or the Uniform Mechanical Code, to be chosen by the contractor performing the work.

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 March 7, 2002.

TRD-200201441

William H. Kuntz, Jr.

Executive Director

Texas Department of Licensing and Regulation

Effective date: March 27, 2002

Proposal publication date: January 4, 2002

For further information, please call: (512) 463-7348


Part 9. TEXAS LOTTERY COMMISSION

Chapter 401. ADMINISTRATION OF STATE LOTTERY ACT

Subchapter D. LOTTERY GAME RULES

16 TAC §401.307

The Texas Lottery Commission adopts amendments to 16 TAC §401.307 relating to "Pick 3" on-line game with changes to the proposed text as published in the January 25, 2002, issue of the Texas Register (27 TexReg 551). The changes are non-substantive in nature and are to clarify that references to the "Director" are references to the "Executive Director". Specifically, the changes are to subsections (d)(1), (e)(2), and (i)(1).

The amendments provide for additional draws to be conducted during the day as "day" draws. These draws will be in addition to the existing evening draws. The amendments also clarify that a Pick 3 ticket can not be cancelled if during an on-line game promotion that Pick 3 ticket purchase generates a free promotional ticket for any of the commission's on-line games. The amendments also eliminate language that indicates unclaimed prizes go to the prize reserve fund. Pursuant to Government Code, §466.4075, unclaimed prize money shall be deposited to the credit of the Texas Department of Health state-owned multicategorical teaching hospital account or the tertiary care facility account as prescribed in §466.4075.

The amendments offer additional draws to lottery players and additional sales and revenue. Retailers will benefit because they will be receiving additional monies from the additional Pick 3 sales. The State of Texas will receive additional revenue from the additional Pick 3 sales.

Written comments were received. The Commission conducted a hearing to receive comment on the proposed amendments. The hearing was properly noticed for February 8, 2002, at 9:00 a.m. at the Commission auditorium, 611 East Sixth Street, Austin, Texas. No persons attended the hearing and no comment was received at the hearing. Many of the commenters made the same comments since the comments were submitted in a "form" format. These commenters are opposed to a twice daily drawing for Pick 3. The commenters indicate that regardless of the number of draws, they only have so much money they can "allocate to gambling". These commenters state they resent having to play twice a day out of fear that their favorite numbers may be drawn. The Commission disagrees with the comments because players should spend only what they can afford regardless of the number of draws. Players should not feel that they have to play twice a day. Players should play as many times a day or week as they feel comfortable. Like all of the Commission's other games, Pick 3 is intended to be fun and entertaining. Because of the way Pick 3 is played, it doesn't matter if a player's favorite numbers were drawn and the player didn't play those numbers. Each number has the same chance of being selected regardless of the number of draws. Since the game isn't pari-mutual and doesn't roll to the next draw, whether a player didn't play the set of numbers that matched is irrelevant. It is statistically possible for the same exact numbers to be selected two draws in a row. The commenters are opposed to the twice daily Pick 3 unless the Commission improves the odds of winning at the Pick 3 game. The Commission disagrees with comment because the game is playing the way it was designed.

One commenter is concerned that she will not know which set of numbers are being played when both games are played during the same day. The Commission is redesigning the playslip to help players with this possible area of confusion. Additionally, the Commission is creating "How to Play" information to distribute to players to educate them on the change. The tickets that will be generated are very clear as to which draw(s) day or night or both are being played. The commenter also believes that poor people make up the majority of people playing the lottery and the Commission should conduct an investigation regarding unethical conduct in violation of a code of professional responsibility. The Commission conducts periodic demographic studies that indicate what the commenter suggests is not accurate.

One commenter suggests that if the Commission has a drawing twice a day, the Commission's "major players" will "back off". The commenter believes that lotteries over the country are falling short of their goals and that the Commission should be grateful for what it has. The commenter believes that if the Commission was Las Vegas, it would be shut down because the odds are too great. The Commission has held meetings with retailers and players and the concept of twice a day draws has tested well in that it was favorably received. The Commission must constantly explore and implement opportunities to respond to market requests and keep the lottery games fun for the players. Other states that have implemented day draws have been successful in increasing sales.

Other comments submitted by a commenter are E-mail messages to that commenter. The following is a summary of those comments and Commission response. Using the same machine for both Pick 3 draws makes playing Pick 3 harder. The Commission doesn't understand the comment because it should make no difference if the same machine is being used so long as the machine in combination with ball sets has been certified by the Commission's independent statistician to act randomly. "The players only have so much money and increasing the number of games won't bring out any more unless they take the food off the table and milk from their baby's bottle." The Commission wants players to spend only what they can afford. "Getting back to basics is the best way to increase revenues-service, honesty, and fair play for the merchants." The Commission believes that it operates the games fairly and honestly. "Pick 3 twice a day would be bad for the number crunchers. It is exploitive of the regular players and an easy way to avoid the cost of starting a Pick 4 game." The Pick 3 game is a game, not an occupation, and played for fun. One person indicated he/she plays every night and will cut his/her playing money in half to play both draws but will not increase the expenditure. The commenter indicates that in most states the "afternoon" Pick 3 does not generate the sales as does the "nightly" Pick 3. The commenter believes the Commission is shooting itself in the foot. The Commission is responding to market information that indicates that at this time in the life of the lottery introducing a day draw is appropriate. One commenter wants the Commission to start paying for pairs and this commenter won't play a second game. The Commission disagrees with changing the game at this time to pay for pairs. The Commission may, at a later date, review this idea. The Commission believes the best way to modify the existing game is to introduce a day draw and not complicate the way the game is played. One commenter is opposed because it will "screw this game up like Cash 5" when Cash 5 draws increased from two to four per week. Cash 5 responded well to an increase from two to four draws per week. One commenter believes that Pick 3 is the only game where sales have increased each and every year. The commenter will cease playing Pick 3 if the number of draws per week is increased. One commenter believes the increase in sales and revenue as a result of increasing the number of draws per week will be short-lived. The Commission's research indicates otherwise. One commenter indicated that the only change he/she would agree with is the Pick 3 twice daily.

One group or association, The Lotto Report, is opposed to the rule amendments.

The amendments are adopted under Government Code, §466.015 which authorizes the Commission to adopt all rules necessary to administer the State Lottery Act and to adopt rules governing the establishment and operation of the lottery, and under Government Code, §467.102 which authorizes the Commission to adopt rules for the enforcement and administration of the laws under the Commission's jurisdiction.

The amendments implement Government Code, Chapter 466.

§401.307."Pick 3" On-Line Game Rule.

(a) Pick 3. A Texas Lottery on-line game to be known as "Pick 3" is authorized to be conducted by the executive director under the following rules and under such further instructions and directives as the executive director may issue in furtherance thereof. If a conflict arises between this section and §401.304 of this title (relating to On-Line Game Rules (General)), this section shall have precedence.

(b) Definitions. In addition to the definitions provided in §401.301 of this title (relating to General Definitions), and unless the context in this section otherwise requires, the following definitions apply.

(1) Advance play--A player may purchase a Pick 3 ticket for any of the eleven Pick 3 drawings immediately following the current drawing. Example: On Monday, before the day drawing, a Pick 3 ticket can be purchased for the Monday night drawing, the Tuesday day or night drawing, the Wednesday day or night drawing, the Thursday day or night drawing, the Friday day or night drawing, or the Saturday day or night drawing.

(2) Multidraw--A player may purchase a Pick 3 ticket for 12 consecutive day and night drawings beginning with the current draw, 12 consecutive day drawings beginning with the current day drawing or 12 consecutive night drawings beginning with the current night drawing.

(3) Number--Any play integer from 0 through nine inclusive.

(4) Play--The three numbers selected on each play board and printed on the ticket.

(5) Play board--An area of a playslip which is marked by the player to select the type of play, the numbers to play, and the amount of the play.

(6) Playslip--An optically readable card issued by the Texas Lottery used by players of Pick 3 to select plays. There shall be five play boards on each playslip identified as A, B, C, D, and E. A playslip has no pecuniary value and shall not constitute evidence of ticket purchase or of numbers selected.

(c) Price of ticket. The price of each Pick 3 play shall be a minimum of $.50. A player may play $.50, $1.00, $2.00, $3.00, $4.00, or $5.00 on each play. A player may purchase up to five plays on one ticket.

(d) Play for Pick 3.

(1) Type of play. A Pick 3 player must select three numbers, each from 0 through nine, for each play. The Texas Lottery reserves the right, at the discretion of the executive director, to allow or discontinue any of the following play types.

(A) Exact Order. A three-digit number selected by the player which shall match the three-digit number drawn by the Texas Lottery in the exact order.

(B) Any Order 3-way. A three-digit number selected by the player with two numbers the same, such as 122, which shall match the three-digit number drawn by the Texas Lottery in any order.

(C) Any Order 6-way. A three-digit number selected by the player with all three numbers different, such as 789, which shall match the three-digit number drawn by the Texas Lottery in any order.

(D) Exact/Any Order 3-way. A three-digit number selected by the player with two numbers the same, such as 377, which shall match the three-digit number drawn by the Texas Lottery in the exact order or in any order.

(E) Exact/Any Order 6-way. A three-digit number selected by the player with all three numbers different, such as 159, which shall match the three-digit number drawn by the Texas Lottery in the exact order or in any order.

(F) Combo 3-way. A three-digit number selected by the player with two numbers the same, such as 466, which shall match the three-digit number drawn by the Texas Lottery in any of the three possible exact order combinations.

(G) Combo 6-way. A three-digit number selected by the player with all three numbers different, such as 872, which shall match the three-digit number drawn by the Texas Lottery in any of the six possible exact order combinations.

(2) Method of play. The player may use playslips to make number selections. The on-line terminal will read the playslip and issue ticket(s) with corresponding plays. If a playslip is not available, the on-line retailer may enter the selected numbers, play type, draw time (day or night) and play amount via the keyboard. However, the retailer shall not accept telephone or mail-in requests to manually enter selected numbers through the keyboard. A player may leave all number selections to a random number generator operated by the computer, referred to as Quick Pick.

(3) One prize per play. The holder of a winning ticket may win only one prize per play in connection with the winning numbers drawn.

(e) Prizes for Pick 3.

(1) Prize amounts. The prize amounts, for each drawing, paid to each Pick 3 player who selects a matching combination of numbers will be guaranteed amounts. Prize amounts are set forth in subsection (f) of this section.

(2) At the discretion of the executive director, a prize amount may be altered temporarily for marketing or promotional purposes.

(3) Prize pool. The prize pool for Pick 3 prizes shall be 50% of Pick 3 sales. The prize payout may vary since all prize amounts are guaranteed.

(4) Prize reserve fund.

(A) In the event any player who has a valid winning ticket does not claim the prize within 180 days after the drawing in which the prize was won, the prize amount shall be deposited to the credit of the Texas Department of Health state-owned multicategorical teaching hospital account or the tertiary care facility account as prescribed in Government Code, §466.4075.

(B) The prize reserve fund may be increased or decreased by any amounts paid to winners, due to the guaranteed prize amounts. For example, money may be allocated from the prize reserve fund to the Pick 3 prize pool if the prize liability is greater than the 50% prize pool.

(f) Odds of winning. The following table sets forth the odds of winning in each prize category, based upon the total number of possible combinations of three numbers played in a field of 1,000 combinations. The prize amount for a $.50 play in any of the listed prize categories is half as much as the prize amount for a $1.00 play.

Figure: 16 TAC §401.307(f) (No change.)

(g) Ticket purchases.

(1) Pick 3 tickets may be purchased only at a licensed location from a lottery retailer authorized by the lottery director to sell on-line tickets.

(2) Pick 3 tickets shall show the player's selection of numbers, play type, play amount, play boards played, draw time(s) (day or night), drawing date(s), and serial numbers.

(3) It shall be the exclusive responsibility of the player to verify the accuracy of the player's selection(s), amount, draw date(s) and other data printed on the ticket. A ticket is a bearer instrument until signed.

(4) Except as provided in subsection (d)(2) of this section, Pick 3 tickets must be purchased using official Pick 3 playslips. Playslips which have been mechanically completed are not valid. Pick 3 tickets must be printed on official Texas Lottery paper stock and purchased at a licensed location through an authorized Texas Lottery retailer's on-line terminal.

(h) Cancellations.

(1) A Pick 3 ticket may be canceled by the selling retailer only if the following occur:

(A) the retailer has the actual Pick 3 ticket in their possession;

(B) the Pick 3 ticket is canceled at the selling retailer;

(C) the ticket is canceled no later than 60 minutes since the ticket was purchased;

(D) the ticket is canceled before the next draw break on the day the ticket was purchased;

(E) the ticket is canceled before midnight on the day the ticket was purchased. A Pick 3 ticket can not be canceled if during an on-line game promotion that Pick 3 ticket purchase generates a free promotional ticket for any of the commission's on-line games.

(2) The canceled receipt that is produced by the terminal when a ticket is canceled shall be kept with the original Pick 3 ticket that was canceled and retained by the retailer for at least 30 days.

(i) Drawings.

(1) The Pick 3 drawings shall be held each week on Monday, Tuesday, Wednesday, Thursday, Friday, and Saturday twice daily, the day drawing at 12:27 p.m. Central Time and the night drawing at 9:59 p.m. Central Time except that the drawing schedule may be changed by the executive director, if necessary.

(2) Pick 3 tickets will not be sold during the draw breaks for the Pick 3 game on Monday, Tuesday, Wednesday, Thursday, Friday, and Saturday.

(3) The drawings will be conducted by lottery officials.

(4) Each drawing shall determine, at random, three winning numbers in accordance with Pick 3 drawing procedures. Any numbers drawn are not declared winning numbers until the drawing is certified by the lottery in accordance with the drawing procedures. The winning numbers shall be used in determining all Pick 3 winners for that drawing.

(5) Each drawing shall be witnessed by an independent certified public accountant. All drawing equipment used shall be examined by at least one lottery security representative, the drawing supervisor, and the independent certified public accountant immediately prior to a drawing and immediately after the drawing.

(6) A drawing will not be invalidated based on the financial liability of the lottery.

(j) Announcement of incentive or bonus program. The executive director shall announce each incentive or bonus program prior to its commencement. The announcement shall specify the beginning and ending time, if applicable, of the incentive or bonus program and the value for the award(s).

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 March 7, 2002.

TRD-200201420

Kimberly Kiplin

General Counsel

Texas Lottery Commission

Effective date: April 28, 2002

Proposal publication date: January 25, 2002

For further information, please call: (512) 344-5113