Proposed Sections
Before an agency may permanently adopt a new or amended section, or repeal an 
existing section, a proposal detailing the action must be published in the Texas 
Register at least 30 days before any action may be taken. The 30-day time period 
gives interested persons an opportunity to review and make oral or written 
comments on the section. Also, in the case of substantive sections, a public 
hearing must be granted if requested by at least 25 persons, a governmental 
subdivision or agency, or an association having at least 25 members.
Symbology in proposed amendments. New language added to an existing section is 
indicated by the use of bold text. [Brackets] indicate deletion of existing 
material within a section.
TITLE 10. COMMUNITY DEVELOPMENT
Part IV. Texas Department of Housing and Community Affairs
Chapter 151. Housing Trust Fund Rules
10 TAC sec.sec.151.1-151.15
The Texas Department of Housing and Community Affairs proposes new sec.sec.151. 
1-151.15, concerning housing trust fund rules. The sections are proposed for 
adoption in final form to provide procedures for the allocation by the 
department of certain funds available under state laws to qualified public 
entities, non-profit organizations, and persons and families.
Richard A. Moya, acting executive director, has determined that for the first 
five-year period the sections are in effect there will be fiscal implications 
for state or local government as a result of enforcing or administering the 
sections. The effect on state government for the first five-year period the 
sections are in effect will be an estimated additional cost of $162,354 for fy 
1992; $243,530 for fy 1993; $250,835 for fy 1994; $265,885 for fy 1995; and 
$273, 861 for fy 1996. Estimated reduction in costs or estimated losses or 
increases in revenue are unable to be determined, if any. Local funds will be 
used to administer these rules. The department is unable to determine whether 
the administration of these rules will have any fiscal implication on local 
government. The department is unable to determine whether the administration of 
these rules will have any fiscal implications on small businesses.
Mr. Moya also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be to permit the adoption of new rules for the allocation of 
housing trust funds within the State of Texas to enhance the state's ability to 
provide affordable housing. The department is unble to determine whether the 
administration of these rules will have any fiscal implications on persons.
Comments on the proposal may be submitted to Richard A. Moya, Acting Executive 
Director, P.O. Box 13941, Austin, Texas 78711.
The new sections are proposed under Texas Civil Statutes, Article 4413(501), 
which provide the Texas Department of Housing and with the authority to adopt 
rules governing the administration of the department and its programs.
sec.151.1. Purpose.  This part describes policies and procedures applicable to 
the Housing Trust Fund authorized under Texas Civil Statutes, Article 4413(501), 
as amended.
sec.151.2. Program Goals and Objectives.
(a) The housing trust fund shall be used by the department to provide loans, 
grants, or other comparable forms of assistance to local units of government, 
the department, public housing authorities, community housing development 
organizations, non-profit organizations, and income-eligible persons, families, 
and households to finance, acquire, rehabilitate, and develop affordable, 
decent, safe, and sanitary housing.
(b) The housing trust fund shall be used by the department to provide assistance 
for persons and families of low- and very low-income in financing, acquiring, 
rehabilitating, and developing affordable, decent, safe, and sanitary housing.
(c) The housing trust fund shall be used by the department to provide technical 
assistance and capacity building to non-profit organizations, and community 
housing development organizations engaged in developing affordable housing for 
persons and families of low- and very low-income.
sec.151.3. Definitions.  The following words and terms, when used in this part, 
shall have the following meanings, unless the context clearly indicates 
otherwise.
 Act-Texas Civil Statutes, Article 4413(501), as amended.
 Affordable housing -Housing for which low- and very-low income families are not 
required to pay more than 30% of monthly adjusted income for the mortgage 
payment and utilities or rent and utilities, computed in accordance with the 
federal regulations for the sec.8 Existing Housing Program set forth in the Code 
of Federal Regulations, Title 24, Part 813.
 Board-The governing board of the Department.
 Capacity building -Educational and organizational support assistance to promote 
the ability of community housing development organizations and non-profit 
organizations to maintain, rehabilitate, and construct housing for low- and very 
low-income persons and families. This activity may include, but is not limited 
to:
(A) organizational support to cover expenses for training, technical, and other 
assistance to the board of directors, staff, and members of the non-profit 
organization or community housing development organization;
(B) program support including technical assistance and training related to 
housing development, housing management, or other subjects related to the 
provision of housing or housing services;
(C) studies and analyses of housing needs.
 Community housing development organizations-A non-profit organization (as 
defined in this section), that:
(A) has among its purposes the provision of decent housing that is affordable to 
low-income and very low-income persons, as evidenced in its charter, articles of 
incorporation, resolutions, or by-laws;
(B) maintains accountability to low-income community residents by:
(i) Maintaining at least one-third of its governing board's membership for 
residents of low-income neighborhoods, other low-income community residents, or 
representatives elected by low-income neighborhood organizations. For urban 
areas, "community" may be a neighborhood or neighborhoods, city, county, or 
metropolitan area; for rural areas, it may be a neighborhood or neighborhoods, 
town, village, county or multi-county area (but not the entire State), provided 
the governing board contains low-income residents from each county of the multi-
county area; and
(ii)  Providing a formal process for low-income, program beneficiaries to advise 
the organization in its decisions regarding the design, siting, development, and 
management of affordable housing;
(C) has demonstrated capacity for carrying out activities to be assisted with 
housing trust funds. An organization may satisfy this requirement by hiring 
experienced accomplished key staff members who have successfully completed 
similar projects, or a consultant with the same type of experience and a plan to 
train appropriate key staff members of the organization; and
(D) has a history of serving the community within which housing to be assisted 
with housing trust funds is to be located. In general, an organization must be 
able to show one year of serving the community (from the date the state provides 
housing trust funds to the organization). However, a newly created organization 
formed by local churches, service organizations, or neighborhood organizations 
may meet this requirement by demonstrating that its parent organization has at 
least a year of serving the community.
 Department-The Texas Department of Housing and Community Affairs.
 Eligible applicants -Local units of government, public housing authorities, 
community housing development organizations, non-profit organizations, the 
department, persons and families of low- and very low-income, and persons with 
special needs.
 Federal government -The United States of America or any department, division, 
agency, or instrumentality, corporate or otherwise, of the United States of 
America.
 Housing Development Costs-The total of all costs incurred in financing, 
creating, or purchasing any housing development, including, but not limited to, 
a single-family dwelling, which are approved by the department as reasonable and 
necessary. The costs may include, but are not limited to:
(A) the value of land and any buildings on the land owned by the sponsor or the 
cost of land acquisition and any buildings on the land, including payments for 
options, deposits, or contracts to purchase properties on the proposed housing 
sites;
(B) cost of site preparation, demolition, and development;
(C) fees paid or payable in connection with the planning, execution, and 
financing of the housing development, such as those to the architects, 
engineers, attorneys, accountants;
(D) cost of necessary studies, surveys, plans, permits, insurance, interest, 
financing, tax and assessment costs, and other operating and carrying costs 
during construction;
(E) cost of construction, rehabilitation, reconstruction, fixtures, furnishings, 
equipment, machinery, and apparatus related to the real property;
(F) cost of land improvements, including without limitation, landscaping and 
off-site improvements, whether or not the costs have been paid in cash or in a 
form other than cash;
(G) necessary expenses in connection with initial occupancy of the housing 
development;
(H) an allowance established by the department for contingency reserves and 
reserves for any anticipated operating deficits during the first two years of 
occupancy; and
(I) the cost of the other items, including tenant relocation, if tenant 
relocation costs are not otherwise being provided for, as the department shall 
determine to be reasonable and necessary for the development of the housing 
development, less any and all net rents and other net revenues received from the 
operation of the real and personal property on the development site during 
construction.
 Housing development and housing project-Include both single-family dwellings 
and multi-family dwellings in rural and in urban areas.
 Housing development or housing project-Any real or personal property, project, 
building, structure, facilities, work, or undertaking, whether existing, new 
construction, remodeling, improvement, or rehabilitation, which meets or is 
designed to meet minimum property standards consistent with those prescribed in 
the federal HOME program for the primary purpose of providing sanitary, decent, 
and safe dwelling accommodations for rent, lease, use, or purchase by persons 
and families of low- and very low-income and persons with special needs. The 
term may include buildings, structures, land equipment, facilities, or other 
real or personal properties which are necessary, convenient, or desirable 
appurtenances, such as, but not limited to, streets, water, sewers, utilities, 
parks, site preparation, landscaping, stores, offices, and other non-housing 
facilities, such as administrative, community, and recreational facilities the 
department determines to be necessary, convenient, or desirable appurtenances.
 Housing finance division-The division or divisions of the department 
responsible for programs authorized under the Act, Part 3.
 Local government -A county; an incorporated municipality; a special district; 
any other legally constituted political subdivision of the state; a public, 
nonprofit housing finance corporation created under the Local Government Code, 
Chapter 394, Texas Civil Statutes; or a combination of any of the entities 
described here.
 Low-income persons and families-Persons and families earning not more than 80% 
of the area median income as determined by the United States Department of 
Housing and Urban Development, with allowances for family size.
 Metropolitan and metro-Areas designated by the Bureau of the Census as 
metropolitan statistical areas (MSA) in the most recent decennial census.
 Nonmetropolitan and non-metro-Refers to all areas outside those areas 
designated as MSAs by the Bureau of the Census in the most recent decennial 
census.
 Nonprofit Organization -Any public or private, nonprofit organization that:
(A) is organized under state or local laws;
(B)  has no part of its net earnings inuring to the benefit of any member, 
founder, contributor, or individual;
(C) is neither controlled by, nor under the direction of, individuals or 
entities seeking to derive profit or gain from the organization. A nonprofit 
organization may be sponsored in part by a for-profit entity, but:
(i) the for-profit entity may not be an entity whose primary purpose is the 
development or management of housing, such as a builder, developer, or real 
estate management firm;
(ii) the for-profit entity may not have the right to appoint more than one-third 
of the membership of the organization's governing body. Board members appointed 
by the for-profit entity may not appoint the remaining two thirds of the board 
members; and
(iii) the organization must be free to contract for goods and services from 
vendors of its own choosing;
(D) has a tax exemption ruling from the Internal Revenue Service under the 
Internal Revenue Code of 1986, sec.501(c), as amended;
(E) does not include a public body (including the participating jurisdiction) or 
an instrumentality of a public body. An organization that is state or locally 
chartered may qualify as a nonprofit organization, however, the state or local 
government may not have the right to appoint more than one-third of the 
membership of the organization's governing body and no more than one-third of 
the board members can be public officials;
(F) has standards of financial accountability that conform to Attachment F of 
the Office of Management and Budget, Circular Number A-100 (revised) "Standards 
for Financial Management Systems"; and
(G) has among its purposes, the provision of decent housing that is affordable 
to low-income and very low-income persons, as evidenced its charter, articles of 
incorporation, resolutions, or by-laws.
 Person with special needs-A person or family of low or very low-income who:
(A) is considered disabled or handicapped under a state or federal law;
(B) is elderly;
(C) is designated by the board as experiencing a unique need for affordable, 
decent, safe housing that is not being met adequately by private enterprise.
 Predevelopment costs -Costs related to a specific eligible housing project 
including:
(A) expenses necessary to determine project feasibility (including costs of an 
initial feasibility study), consulting fees, costs of preliminary financial 
applications, legal fees, architectural fees, engineering fees, engagement of a 
development team, site control, and title clearance;
(B) preconstruction housing project costs that the board determines to be 
customary and reasonable, including, but not limited to, the costs of obtaining 
firm construction loan commitments, architectural plans and specifications, 
zoning approvals, engineering studies, and legal fees. Predevelopment costs do 
not include general operational or administrative costs.
 Public Housing Authority-A housing authority established under the Texas Local 
Government Code, Chapter 392.
 Real property-All land, including improvements and fixtures and property of any 
nature appurtenant, or used in connection therewith, and every estate, interest, 
and right legal or equitable therein, including leasehold interests, terms for 
years, and liens by way of judgement, mortgage, or otherwise.
 Recipient-Community housing development organizations, non-profit organization 
local units of government, and public housing authorities.
 State-The State of Texas.
 Total bonded indebtedness-All single family mortgage revenue bonds, (including 
collateralized mortgage obligations), multifamily mortgage revenue bonds, and 
other debt obligations issued or assumed by the department and outstanding as of 
August 31 of the year of calculation, excluding:
(A) all such bonds rated Aaa by Moody's Investors Service or AAA by Standard & 
Poor's Corporation for which the department has no direct or indirect financial 
liability from the department's unencumbered fund balances; and
(B) all other such bonds, whether rated or unrated, for which the department has 
no direct or indirect financial liability from the department's unencumbered 
fund balances, unless Moody's or Standard & Poors has advised the department in 
writing that all or a portion of the bonds excluded by this clause should be 
included in a determination of total bonded indebtedness.
 Unencumbered fund balances-
(A) The sum of the balances resulting at the end of each department fiscal year 
from deducting the sum of bond indenture and credit rating restrictions and 
liabilities from the sum of amounts on deposit in indenture funds and other 
tangible and intangible assets of each department housing bond program.
(B) Uncommitted amounts on deposit in each independent or separate unrestricted 
fund established by the housing finance division or its administrative component 
units.
 Very low-income persons and families-Persons and families earning not more than 
60% of the area median income as determined by the United States Department of 
Housing and Urban Development, with allowances for family size.
sec.151.4. Availability of Funds and Schedule.
(a) The housing trust fund consists of appropriations or transfers made to the 
fund, unencumbered fund balances, and public or private gifts or grants. Assets 
in the fund may be used only to carry out the purposes of this rule.
(b) An independent auditor shall annually conduct an audit to determine the 
amount of unencumbered fund balances of all housing finance division funds. The 
independent auditor shall submit the audit report to the board before January 1 
of each year. After the report has been received by the board, copies of the 
auditor's determination of unencumbered fund balances shall be made available to 
the public at the department's offices, without cost to the public.
(c)  Staff of the department's housing finance division shall, on or before 
January 1 of each year, compute the total bonded indebtedness of the department 
and shall prepare worksheets explaining the calculation of 2.0% of total bonded 
indebtedness. Copies of these worksheets shall be made available to the public 
at the department's offices, without cost to the public.
(d) Based on the audit report, the department board shall verify the 
computations made by housing finance division staff and, by resolution shall 
authorize the transfer, except as provided by subsections (e), (f), and (g) of 
this section, to the housing trust fund on or before January 10 of each year an 
amount equal to one-half of the housing finance division's unencumbered fund 
balances in excess of 2.0% of total bonded indebtedness.
(e) If, at the time any annual audit required by subsection (b) of this section 
is concluded, the housing finance division's unencumbered fund balances exceed 
4.0% of its total bonded indebtedness, the amount transferred on or before the 
next January 10 shall consist of all amounts in excess of that 4.0%.
(f) Notwithstanding subsection (e) of this section, if, at the time any annual 
audit required by subsection (b) of this section is concluded, a nationally 
recognized rating agency has recommended the housing finance division to 
maintain unencumbered fund balances in excess of the amount permitted by 
subsection (d) of this section to be maintained as unencumbered fund balances, 
as a condition to achieving or maintaining a rating of at least Aa/A+ on all or 
a portion of the bonded indebtedness of the housing finance division that is 
issued under an open indenture or an open flow of funds, the amount transferred 
on or before each January 10 shall consist of all funds in excess of the amount 
required by the rating agency to be held as unencumbered fund balances.
(g) Not withstanding subsection (e) of this section, if, at the time any annual 
audit required by subsection (b) of this section is concluded, a nationally 
recognized rating agency has recommended the housing finance division to 
increase the amount of its unencumbered fund balances to achieve or maintain a 
financially sound condition or to prevent a decrease in the long-term debt 
rating maintained on all or a portion of the bonded indebtedness, the department 
may not make further annual transfers to the housing trust fund until all 
requirements and conditions of the rating agency have been met.
(h) The housing trust fund provided for by this section is not subject to the 
Texas Trust Code (Property Code sec.111.001 et seq).
sec.151.5. Allocation of Housing Trust Funds.
(a) Funds shall be allocated to achieve a broad geographical distribution taking 
into account the number and percentage of low- and very low-income persons and 
families in different geographical areas of the state.
(b) In allocating funds under the housing trust fund, special attention shall be 
paid to equitably serving the housing needs of low- and very low-income persons 
and families residing in rural and nonmetropolitan areas.
(c) No more than 10% of the housing trust funds allocated each fiscal year shall 
be distributed to community housing development organizations and non-profit 
organizations for capacity building.
(d) At least 35% of the housing trust funds allocated each funding cycle shall 
be distributed to community housing development organizations. This 35% will be 
based on the amount of funds remaining after funds identified in subsection (c) 
of this section are allocated.
(e) The department shall utilize its best efforts to apply at least 70% of the 
housing trust funds allocated each funding cycle to nonmetropolitan areas of the 
state.
(f) No more than 10% of the yearly balance of the housing trust fund may be used 
by the department to acquire real property as described in the Act, sec.3.17.
(g) The department shall utilize its best efforts to apply at least 70% of the 
housing trust funds allocated each fiscal year to very low-income persons and 
families.
(h) The board reserves the right to revise the set-aside established in 
subsection (d) of this section if the department does not receive a sufficient 
number of applications meeting criteria established in sec.151.10 of this title 
(relating to Criteria for Funding).
(i) Bond indenture requirements governing expenditure of bond proceeds deposited 
in the housing trust fund shall govern and prevail over all other allocation 
requirements established in this section. However, the department shall 
distribute these funds in accordance with the requirements of this section to 
the extent possible.
sec.151.6. Basic Eligible Activities. The department shall make grants and loans 
from the housing trust fund to eligible applicants for purposes consistent with 
sec.151.2 of this title (relating to Program Goals and Objectives) . Eligible 
uses of trust funds include, but are not limited to, the following:
(1) to pay housing development costs for a housing project or to provide down-
payment assistance, credit enhancement, direct loans and interest rate reduction 
assistance to low- and very low-income persons and families, and persons with 
special needs;
(2) to provide predevelopment costs for eligible housing projects. Such 
assistance shall be provided in the form of a loan to be repaid to the housing 
trust fund from construction loan proceeds or other project income. The board 
may waive repayment of the loan, in whole or in part, if there are impediments 
to project development that the board determines are reasonably beyond the 
control of the applicant;
(3) to provide for capacity building for community housing development and non-
profit organizations that show sufficient evidence of having strong community 
support and a strong likelihood of producing housing for low- and very low-
income persons and families within two years of the date that assistance is 
provided. Where possible, the recipient of funds under this subsection will 
build in fees or other ongoing sources of income into the services that they 
provide so that repeated support will not be needed;
(4) to support department sponsored activities authorized under the Act, subject 
to the requirements of the housing trust fund and implementing regulations.
sec.151.7. Ineligible Activities and Restrictions. Any activity is ineligible 
for housing trust funds unless the activity will result in the financing, 
acquisition, rehabilitation, or development of affordable, decent, safe, and 
sanitary housing for low- and very low-income persons or families or will 
provide capacity building to community housing development organizations and 
non-profit organizations engaged in developing housing for low- and very low-
income persons and families.
(1) General government expenses. Housing trust funds may not be used to carry 
out the regular responsibilities of the unit of general local government.
(2) Political activities. Housing trust funds may not be used to finance the use 
of facilities or equipment for political purposes or to engage in other partisan 
political activities, such as candidate forums, voter transportation, or voter 
registration.
(3)  Prohibition against involuntary displacement. Housing trust funds shall not 
be utilized on a project that has the effect of permanently and involuntarily 
displacing low- and very low-income persons and families.
(4)  Restriction on affordability of multifamily housing. Any multifamily 
housing developed or rehabilitated with housing trust funds in whole or in part 
shall remain affordable to income-qualified households for at least 20 years.
sec.151.8. Maintenance of Effort.
(a) Housing trust funds shall not be used by local government to supplant or 
replace existing housing funds for housing for low- and very low-income persons 
and families.
(b) If other federal funds are available to a local government applicant for any 
proposed housing project, the local government applicant shall affirmatively 
show that it has undertaken reasonable efforts to secure such funding for the 
proposed housing project.
sec.151.9. Application Procedure and Requirements.
(a) The department shall, from time to time, solicit applications for loans and 
grants from eligible applicants.
(b) The applicant shall submit, in an application form and process prescribed by 
the department, project information including, but not limited to:
(1) a written description of the housing project including, but not limited to, 
the number of units, unit mix, proposed rents or mortgage payments, site 
location, the proposed program of services to occupants, and the availability of 
these services in the future, project amenities, names and addresses of all 
individuals with any financial interest in the proposed housing project, 
personal and organizational financial statements and audit reports, and any 
other information the board may require;
(2)  a statement of the housing project purpose indicating the housing type and 
tenants or homeowners to be housed and the length of time the units will be 
committed available for low- or very low-income households;
(3) a statement describing the need for the proposed housing development given 
existing housing and economic conditions in the service area;
(4) a projection of housing project expenses and income;
(5) grant or loan amount requested and total housing project development costs, 
including a description of all committed or anticipated project funding and 
funding sources and a statement describing efforts to secure other sources of 
funding including federal funds, and funds from private sources;
(6) a narrative describing the housing project sponsor/developer/owner/manager 
experience in developing and operating housing projects;
(7) a description of any temporary displacement resulting from the proposed 
housing project, including a statement whether the housing project has the 
effect of permanently and involuntarily displacing persons and families of low-
income;
(8) the geographical area of the state in which the project will occur;
(9) a narrative describing how the proposed project addresses each of the 
evaluation factors listed in sec.151.10 of this title (relating to Criteria for 
Funding);
(10) the affirmative marketing plan of the housing project sponsor on marketing 
to racial and ethnic minorities and person with special needs;
(11) project completion schedule; and
(12) nondiscrimination statements.
(c) An individual or family who is an eligible applicant shall submit a request 
for funding in an application form and process prescribed by the department to 
include the items listed in subsection (b) of this section that are relevant to 
individuals and persons applying for loans and grants.
sec.151.10. Criteria for Funding.
(a) The board shall review applications for funding of housing projects and 
approve the funding of all such projects.
(b) In considering application for funding, the department and board shall 
consider the following.
(1) Threshold criteria. To be considered for funding, a housing project must 
first demonstrate that it meets all the threshold criteria set forth as follows:
(A) the project is consistent with the requirements established in this rule;
(B) the applicant provides evidence of his or her ability to carry out the 
project in the areas of financing, acquiring, rehabilitating, developing, or 
managing affordable housing developments;
(C) the project addresses an identified housing need. This assessment will be 
based on statistical data, surveys, or other indicators of need as appropriate.
(2) Evaluation Factors. The board and department will consider applications for 
housing trust funds using the following system.
(A) Applications will be evaluated against the threshold criteria during each 
funding cycle. Applications not meeting the threshold criteria will be returned 
to the applicant without further review.
(B) Applications not meeting the threshold criteria may be revised and 
subsequently resubmitted for consideration.
(C)  Applications will then be ranked according to the criteria hereinafter set 
forth:
(i) leveraging of funds: the extent to which the project will leverage state 
funds with other resources, including federal resources, and private sector 
funds;
(ii) community involvement: the extent to which the project involves a broad 
range of community representatives, including low- and very low-income 
individuals who may expect to reside in the proposed housing project, in the 
design and development of the proposed housing project;
(iii) very low income targeting: the extent to which the project will provide 
safe, decent, and affordable housing to very low-income persons and families;
(iv)  long term affordability: the extent to which the project will ensure the 
longest possible use of assisted units as affordable housing for low- and very 
low-income persons and families;
(v) housing need: the geographical area of the state to be served and the extent 
to which there is a need for safe, decent, and affordable housing in this area;
(vi) special housing needs: the extent to which the project provides affordable 
housing and services for persons with special needs;
(vii) financial feasibility: the extent to which the project is financially 
feasible, taking into consideration the contribution of housing trust funds, as 
determined in accordance with generally accepted underwriting standards as 
promulgated by federal insurers or other similar guarantors of such projects;
(viii) need for funds: the extent to which other resources are not available in 
the locality to carry out the housing project;
(ix) minority participation: the extent to which the project has minorities 
and/or women participating in the ownership, development or management of the 
project;
(x) energy conservation: the extent to which the project design promotes energy 
and/or water conservation with the result of reducing residents' utility costs;
(xi) innovation: the extent to which the project involves a new or particularly 
innovative approach for meeting housing needs in the area being served;
(xii) services: the extent to which the project includes a program of services 
for occupants of the proposed housing including, but not limited to, programs 
that address home health care, mental health service, alcohol and drug 
treatment, job training, child care and case management, and provides for tenant 
involvement in the development and administration of the services;
(xiii) cost-effectiveness: the extent to which the project is cost-effective and 
provides the greatest number of affordable, decent, safe, and sanitary low- and 
very low-income housing units for the least amount of housing trust funds 
expended or committed;
(xiv) barriers to affordable housing: the extent to which the applicant proposes 
to eliminate or reduce barriers to affordable housing created by existing public 
policies, such as zoning regulations, building permit requirements, etc;
(xv) geographic balance: the extent to which the project will contribute to 
achieving a fair and equitable geographic distribution of housing trust funds.
(c) The department shall establish a system for assigning a weight to the 
preceding evaluation factors and giving priority to funding applications 
according to the weight assigned.
sec.151.11. Prohibition Against Discrimination.
(a) No person shall on the ground of race, color, family composition (reasonable 
occupancy standards are acceptable), national origin, or sex, be excluded from 
participation in, be denied the benefits of, or be subjected to discrimination 
under, any program or activity funded in whole or in part with housing trust 
funds made available under the Act.
(b) Whenever the department determines that a recipient of housing trust funds 
has failed to comply with paragraph (1) of this subsection, the department shall 
attempt to secure compliance. If within a reasonable period of time, the 
department fails to secure compliance, the department may:
(1) refer the matter to the state attorney general with a recommendation that an 
appropriate civil action be instituted; or
(2) take such other action as may be provided by law.
sec.151.12. Other Program Requirements.
(a) Employment opportunities.
(1) No person shall be discriminated against on the basis of race, color, 
handicap, religion, sex, or national origin in all phases of employment during 
the performance of contracts as assisted with housing trust funds made available 
under the Act.
(2) Contractors and subcontractors on housing trust funds assisted contracts 
shall take affirmative action to ensure fair treatment in employment, upgrading, 
demotion, or transfer, recruitment or recruitment advertising, lay off or 
termination, rates of pay, or other forms of compensation and selection for 
training or apprenticeship.
(3) In connection with the planning and carrying out of any project assisted 
under the Act, to the greatest extent feasible opportunities for training and 
employment shall be given to low- and very low-income persons residing within 
the unit of local government or the metropolitan area or nonmetropolitan county 
in which the project is located.
(b) Conflict of interest.
(1) Conflict prohibited. No person described in paragraph (2) of this subsection 
who exercises or has exercised any functions or responsibilities with respect to 
housing trust fund activities under the Act or who are in a position to 
participate in a decision-making process or gain inside information with regard 
to such activities, may obtain a personal or financial interest or benefit from 
a housing trust fund assisted activity, or have an interest in any housing trust 
fund contract, subcontract, or agreement or the proceeds thereunder, either for 
themselves or those with whom they have family or business ties, during their 
tenure or for one year thereafter.
(2)  Persons covered. The conflict of interest provisions of paragraph (1) of 
this subsection apply to any person who is an employee, agent, consultant, 
officer, elected official, or appointed official of the department or State of 
Texas. These provisions shall not however, restrict the department from 
utilizing trust funds as authorized under sec.151.6(d) of this title (relating 
to Basic Eligible Activities).
sec.151.13. Citizen Participation.
(a) The department shall hold at least one public hearing annually, and 
additional public hearings prior to consideration if any proposed significant 
changes to these rules, to solicit comments from the public, eligible 
applicants, and recipients on the department's rules, guidelines, and procedures 
for the housing trust fund.
(b) The department shall consider the comments it receives at the annual public 
hearings. The board shall annually review the performance, administration, and 
implementation of the housing trust fund in light of the comments it receives. 
At this time the board shall also review funding goals and set-asides 
established in sec.151.5 of this title (relating to Allocation of Housing Trust 
Funds).
(c) Applications for housing trust funds are public information and the 
department shall afford the public an opportunity to comment on proposed housing 
projects prior to making awards.
(d) The department shall establish appropriate written procedures to handle 
complaints from persons or community housing development organizations, local 
governments, or nonprofit organizations related to the housing trust fund. The 
department will provide a reasoned response to every written complaint in 
writing within 30 days of receipt of the complaint.
sec.151.14. Record to be Maintained.
(a) The department shall maintain the following records on projects assisted 
with housing trust funds:
(1) a copy of all applications submitted in response to a request for funding 
proposals;
(2) a copy of a written agreement with each recipient of housing trust funds 
indicating the total number of dwelling units which will be financed, 
rehabilitated, acquired, constructed, or assisted with housing trust funds;
(3) the total cost of the project, including both housing trust funds and other 
funds;
(4)  the agreement with the recipient on the affordability of the dwelling unit;
(5) the size and income of the household for each unit occupied by a low- or 
very low-income person or family;
(6) data on the extent to which each racial and ethnic group and single-headed 
households (by gender of household head) have applied for and benefitted from 
any project or activity funded in whole or in part with housing trust funds made 
available under the Act. These data shall be updated annually.
(b) The department shall also require, at least on an annual basis, a report 
from recipients of housing trust funds. This report shall provide information 
including, but not limited to:
(1) such information as may be necessary to determine whether a project funded 
with housing trust is benefiting low- and very low-income persons and families;
(2) the monthly rent or mortgage payment for each dwelling unit in each 
structure assisted with housing trust funds; and
(3) such information as may be necessary to determine whether recipients have 
carried out their housing activities in accordance with the requirements and 
primary objectives of the housing trust fund and implementing regulations.
sec.151.15. Public Access to Program Records.
(a) The department shall provide citizens with reasonable access to all records 
on use of housing trust funds made available under the Act, consistent with 
applicable state and local laws regarding privacy and obligations of 
confidentiality.
(b)  Notwithstanding privacy and confidentiality laws, the department shall 
provide citizens with access to all records necessary to determine whether 
dwelling units assisted with housing trust funds are in fact occupied by low- 
and very low-income persons and families.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 15, 1992.
TRD-9200619
Mario Aguilar
Attorney
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 474-2974
       
TITLE 16. ECONOMIC REGULATION
Part I. Railroad Commission of Texas
Chapter 3. Oil and Gas Division
Conservation Rules and Regulations
16 TAC sec.3.29
(Note: Commissioner Robert Krueger believes that some of the proposals do not 
conform with existing statutes, but wishes to solicit public comment.)
The Railroad Commission of Texas proposes new sec.3.29, concerning the 
determination of demand, allowables, and production. The Railroad Commission 
takes no position on the merits of this proposed new section. The proposed new 
section defines terms, sets demand, adjusts demand, determines and adjusts 
allowables, sets allowables for new and existing wells, assigns allowables, sets 
requirements for gas wells in fields for which an allocation formula has been 
adopted, sets standards for suspension and reinstatement of allocation formulas, 
sets standards for the carry forward of underproduction and overproduction, sets 
priorities, sets curtailment standards, discusses ratability, and prior excess 
production.
Rita E. Percival, systems analyst for the oil and gas division, has determined 
that for the first five-year period the section is in effect there will be 
fiscal implications for state government as a result of enforcing or 
administering the section. The effect on state government for the first five-
year period the new section is in effect is an estimated cost of $97,000 in 
fiscal year 1992 and an estimated annual savings of $113,800 for fiscal years 
1993-1996. There will be no fiscal implications for local government.
Stephen Pacey, assistant director, oil and gas section, legal division, has 
determined that for each year of the first five years the section is in effect 
the public benefit anticipated as a result of enforcing the section will be 
increased understanding of gas proration; elimination of nominations; greater 
prevention of waste of oil and gas; better protection of correlative rights; and 
increased prevention of discrimination in the production and purchasing of 
natural gas. The effect on small businesses as a result of enforcing or 
administering the new section will be an estimated cost of $600 for each 
optional well test carried out under the provisions of the proposed new section. 
The net effect of the proposed new section will be a cost savings for small 
businesses as the optional test ($600) will only be performed when it is in the 
best economic interest of the small businesses. The optional ($600) test will 
replace a mandatory ($200) test. There is no anticipated economic cost to 
persons who are required to comply with the section as proposed.
Comments on the entire text of the proposal may be submitted to Peggy S. Gray, 
Hearings Examiner, Oil and Gas Section, Legal Division, Railroad Commission of 
Texas, P.O. Drawer 12967, Austin, Texas 78711-2967. The docket number for this 
proposal is 20-95,195. All comments must be submitted by 5 p.m. on February 20, 
1992.
The new section is proposed under the Texas Natural Resources Code, sec.sec.81. 
052, 85.046, 85.202, 86.012, 86.041, 86.042, and 86.081, which provides the 
Railroad Commission of Texas with the authority to adopt rules for the following 
purposes: to govern and regulate persons and their operations under the 
jurisdiction of the Railroad Commission; to prevent the waste of oil and gas in 
drilling and producing operations; to effectuate the provisions and purposes of 
the Natural Resources Code; Chapter 86; and to conserve and prevent waste of 
gas.
sec.3.29. Determination of Demand, Allowables, and Production.
(a) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise.
(1) Administrative special allowable well-A well which has been assigned an 
allowable equal to its deliverability because it has demonstrated by both 
deliverability and production data a daily deliverability of 100 mcf or less. To 
avoid the assignment of an administrative special allowable, the operator must 
notify the commission in writing prior to the assignment of the well's allowable 
for the production period.
(2) Special allowable well-A nonprorated well granted a fixed allowable by the 
commission after notice and hearing.
(3) Commission's representative-A commission employee authorized to act for the 
commission. Any authority given to a commission's representative is also 
retained by the commission. Any action taken by the commission's representative 
is subject to review by the commission.
(4) Deliverability-Shall be either the highest daily average volume of gas 
produced in the most recent 12 months of reported production or the volume of 
gas reported on a G-10 test taken within the past six months that has been 
independently witnessed and certified by a registered petroleum engineer, and 
approved by the commission, whichever is higher.
(5) Exempt allowable wells-Nonprorated wells in an exempt field which are 
assigned an allowable on a field-wide basis which allows the wells to produce at 
capacity.
(6)  Nonprorated well-A well for which an allowable is not determined by an 
allocation formula.
(7) Production period-A 12-month period beginning 7 a.m., September 1st, and 
ending 7 a.m., September 1st, of the following year.
(8) Production history-The volume of all gas produced during the preceding 
production period from a formation measured in Mcf regardless of disposition.
(9) Prorated field-A multiple well, non-associated gas field in which at least 
one well in the field produces over 200 mcf of gas per day and in which 
allowables are determined by an allocation formula.
(10)  Prorated well-A well for which an allowable is determined by an allocation 
formula.
(11) Seller-An entity or person, whether a working interest owner, royalty 
interest owner, or operator of a well that markets gas from a well.
(12) Statewide prorated field-A non-associated gas field with no special field 
rules, where gas well allowables are based on deliverability.
(13) Total past production-Aggregate production of gas in the state for the most 
recent 12 months of reported production.
(b) Determination of demand.
(1) On or before September 1st of each year, the Railroad Commission will:
(A) determine the market demand for gas for the succeeding production period. In 
making such determination the commission will:
(i) set such demand for the state at the total past production;
(ii) increase or reduce the total past production by an amount determined by the 
commission based on its findings of changes in market demand from credible 
information received from all sources including, but not limited to, 
representatives of pipelines, producers, and purchasers; and
(iii)  calculate the percentage which the annual demand, calculated in clause 
(ii) of this subparagraph, bears to the total past production, as set forth in 
clause (i) of this subparagraph;
(B) establish field market demand, which will be determined as follows:
(i) calculate the average of total past production as a percentage of total 
state prior year deliverability;
(ii) calculate the percentage of the total past production from each field as it 
bears to the prior year deliverability of all wells in each field. Rank fields 
according to their percentage of total past production to deliverability;
(iii) establish a factor each production period for each field considering all 
information available affecting gas markets, demand and production including, 
but not limited to: the relative field rankings in clause (ii) of this 
subparagraph; the production history of each field; decreases and/or increases 
in each fields deliverability; plus, full consideration of the state policies to 
prevent waste, promote equity, and eliminate unreasonable discrimination. This 
factor shall not have the effect of raising or lowering any field percentage of 
production to deliverability below or above the average percentage in clause (i) 
of this subparagraph;
(iv) allowables which are to be set by field on a month-by-month basis to 
coincide with the same month's production of the prior production period 
modified by multiplying said monthly production of each field times the 
percentage for the state calculated in subparagraph (A)(iii) of this paragraph 
times the individual field factor established in clause (iii) of this 
subparagraph.
(c) Determination of allowables.
(1) The commission will establish an allowable for each producing well in each 
field which shall be such well's pro rata share of the field demand as 
determined by the allocation formula applicable to such field. Monthly well 
allowables for nonprorated wells will be limited by the well's current 
deliverability.
(2) The sum of 12 monthly allowables shall be the total allowable assigned for 
the production period for each well.
(3) The total allowable for a field for gas from prorated wells for a month 
shall be determined by subtracting the total allowable assigned to nonprorated 
wells for the month from the total adjusted demand for that month for gas from 
all wells in the field.
(d) Adjustment for changed demand. The commission shall review production 
reports and records in order to track demand and production on a quarterly 
basis. The commission may, at any time, determine a change in gas demand based 
upon the factors in subsection (b) of this section.
(1) In the event of a determination of changed demand, the commission may adjust 
allowables of each and/or any field(s), and each well within such field.
(2) In the event there is a decrease in demand, the market demand as determined 
in subsection (b) of this section shall not be reduced by more than 10%, unless 
the commission determines that an emergency situation exists which requires 
further reduction. The allowable for an individual well shall not be reduced 
below the amount of gas which has been produced on or before the date of an 
allowable adjustment, provided it does not exceed the sum of the monthly 
allowables for the production period. In the event the commission determines 
there is an increase in demand, the commission will establish and publish new 
monthly allowables for the remainder of the production period. The amount of 
overproduction permitted to be carried into the subsequent production period 
without penalty shall not be increased beyond 5.0% of the total revised 
allowable amount for the production period.
(e) Changes in gas well allowables.
(1) A G-10 test may result in a change of the wells allowable not to exceed the 
top field allowable, effective not more than 15 days prior to the date the G-10 
test is received in the appropriate commission office.
(2) When a well is recompleted as a gas well in a different field, any 
production in excess of the production allowed under this section which has 
occurred in the old field must be made up before an allowable is assigned in the 
new field.
(3) When a well is reassigned, by commission action, to a different field any 
production allowed in the previous field under this section will be charged 
against the allowable assigned in the newly assigned field.
(f) New wells.
(1) Each new well brought into production after the beginning of a production 
period shall be assigned an allowable equal to its tested deliverability, 
adjusted according to the allocation formula applicable to the field in which 
such well is located. Such well may produce at that allowable rate for the 
remainder of the production period in which it begins production or until 
adjusted by the commission. Thereafter, its allowable shall then be determined 
in accordance with subsection (b) of this section.
(2) With respect to a multicompleted well, the allowable of the second and 
succeeding zones will be made effective no earlier than the date the last report 
or item necessary for the assignment of an allowable is received in the 
appropriate commission office.
(g)  Existing wells.
(1) Existing wells which have not been assigned an allowable, or which have been 
reentered under permit, may have their allowable set or adjusted not to exceed a 
top field allowable in accordance with subsection (f) of this section.
(2) Existing wells with allowables which are limited by deliverability may 
receive an increase in their allowable, upon commission approval of a certified 
form showing increased deliverability during a production period and the reasons 
therefore. This increase in allowable will not be effective more than 15 days 
prior to the date the G-10 test is received in the appropriate commission 
office.
(h) Assignment of allowables.
(1) Allowables of gas wells not currently assigned an allowable will not be made 
effective:
(A) prior to the well's completion or reclassification date; or
(B) more than 15 days prior to the date all reports or information necessary to 
the assignment of an allowable are received in the appropriate commission 
office.
(2) If a report or item of information required by the commission on an existing 
well is not filed on time, the allowable for the production period shall be 
revoked until the necessary documents are received. The commission will then 
reissue an allowable. There shall be a one-day allowable reduction for each day 
the report or information is late. The reduction in allowable will be taken from 
the month(s) following the assignment of the allowable.
(i) Requirements for gas wells in a field with special rules and for which an 
allocation formula has been adopted.
(1) Acreage factor. If acreage is a factor in the allocation formula, a 
certified plat showing the acreage assigned to the well for proration purposes 
shall be submitted. The plat must be accompanied by a statement that all of the 
acreage claimed can reasonably be considered productive of gas in that field, 
and that the distance limitations of the field rules have not been exceeded. If 
all of the acreage claimed is not contained in a single lease, a certificate of 
pooling authority must be submitted on the appropriate commission form. If the 
distance limitations of the field rules are shown to have been exceeded, the 
plat must show the number beyond the distance limitations. An operator may 
request an exception to the distance limitations which may be administratively 
approved by the commission or its authorized representative if all the acreage 
can be considered productive. If approval of the request is declined or protest 
is received, the request may be set for hearing. If all of the acreage cannot be 
considered productive, the plat must also show the productive limit of the 
acreage. If a plat shows acreage in the proration unit in excess of the maximum 
number of acres permitted by the field rules, it will not be accepted.
(2) Pressure factor. If bottom-hole or field pressure is a factor in the 
allocation formula, it shall be submitted on the appropriate commission form, 
and shall be measured at, or corrected to, the proper datum plane.
(3) Other factors. If any other information, data, or parameter is a factor in 
the allocation formula, it shall be submitted on the appropriate commission 
form.
(j) Requirements for gas wells in a field operating under statewide rules.
(1) Statewide prorated fields. Daily allowable production of gas from individual 
wells in a statewide prorated field shall be determined by allocating the 
allowable production among the individual wells in the proportion that each 
wells deliverability bears to the summation of the deliverabilities of all wells 
producing from the same field. The determination of the quantity of gas to be 
allocated to these fields shall be determined the same as for prorated fields as 
described in subsection (d) of this section.
(2) Exempt fields. Wells in statewide exempt fields shall be assigned allowables 
equal to their deliverability. A statewide exempt field is:
(A)  any non-associated gas field in which no well in the field has a current 
deliverability of greater than 200 mcf a day.
(B) an exempt field established by Railroad Commission order.
(k) Suspension and reinstatement of an allocation formula.
(1) The commission or it authorized representative may suspend the allocation 
formula for a particular gas field if:
(A) each first purchaser from that field has a market for one hundred percent of 
the deliverability available to that purchaser from the field;
(B) none of the operators or first purchasers from the field object to 
suspension of the formula; and
(C) suspension will not cause a pipeline limitation for any field.
(2) Suspension of the allocation formula may be initiated by the commission or 
its authorized representative, by one of the operators in the field, or by one 
of the first purchasers in the field.
(A) The commission or its authorized representative will determine which fields 
are appropriate for suspension utilizing the criteria of paragraph (1) of this 
subsection. The allocation formula may be suspended by the commission or its 
authorized representative if the applicant has given at least 21 days notice of 
intent to suspend the allocation formula for a particular field to each of the 
operators and first purchasers in the field and no protest has been made.
(B) If it is anticipated that suspension of the allocation formula will cause a 
pipeline limitation in a field, first purchasers in the field for which 
suspension of the allocation formula is requested shall notify the commission or 
its authorized representative within 21 days of the mailing date of the notice 
of the request to suspend the allocation formula.
(C) The allocation formula may be suspended by the commission or its authorized 
representative if the applicant has given at least 21 days' notice of their 
request to suspend the allocation formula for a particular field to each of the 
operators and first purchasers in the field and no protest has been made.
(3) Reinstatement of the allocation formula may be initiated by the commission 
or its authorized representative, by one of the operators in the field, or by 
one of the first purchasers in the field.
(A) If the market demand for gas from a field with suspended allocation drops 
below 100% of capacity at any time, the operators and/or first purchasers for 
the field shall immediately notify the commission or its authorized 
representative and give an explanation of the reduction in demand. The 
commission or its authorized representative will then make a determination of 
whether the allocation formula should be reinstated and may immediately 
reinstate the allocation formula.
(B) If a pipeline limitation occurs after suspension of the allocation formula, 
first purchasers in the field shall immediately notify the commission or its 
authorized representative. The commission or its authorized representative will 
than make a determination of whether the allocation formula should be reinstated 
and may immediately reinstate the allocation formula.
(C) An operator or first purchaser may request that the allocation formula for a 
field be reinstated. The request may be approved by the commission or its 
authorized representative if the applicant provides to the commission written 
waivers of objection from all operators and first purchasers for a field. If the 
applicant fails to secure all necessary waivers or if the commission or its 
authorized representative declines to approve the request, the operator may 
request a hearing as provided for in paragraph (4) of this subsection. If the 
matter is set for hearing, the allocation formula may be reinstated by the 
commission or its authorized representative pending the result of the hearing. 
The notice of request for reinstatement shall specify the date on which 
allocation again becomes effective.
(4) If the commission or its authorized representative denies a request to 
suspend or reinstate the allocation formula in a particular field, the applicant 
may request a hearing. In addition to the criteria set forth in paragraph (1) of 
this subsection, the commission will consider whether suspension or 
reinstatement is necessary to prevent waste or protect correlative rights.
(5) Suspension of the allocation formula will balance the field's production 
status at zero, at the beginning of the next production period or adjustment 
period, whichever is sooner, and provide for a capacity allowable.
(l) Underproduction and overproduction.
(1) Underproduction. If during the production period a gas well does not produce 
its total allowable as allocated to it by the commission, the well shall be 
permitted to carry 5.0% underproduction of its annual allowable forward to the 
next production period. Such carry forward shall be for one production period 
and shall be a quantity of gas available for production in excess of the annual 
allowable.
(2) Overproduction.
(A) Each well may produce no more than the total of monthly allowables during 
the production period plus accrued underproduction as provided in paragraph (1) 
of this subsection.
(B) Any production in excess of the total of monthly allowables for the 
production period will be overproduction.
(C) Overproduction in an amount not to exceed 5.0% of the well's total 
production period allowables shall be permitted. In the event a well is 
overproduced by 5.0% or less during any production period, then during the 
following production period the well shall be allowed to produce an amount equal 
to the amount of the well's production allowable minus the amount of 
overproduction which occurred during the preceding production period.
(D)  In the event a well is overproduced by more than 5.0% during any production 
period, then during the following production period the well shall be allowed to 
produce an amount equal to the amount of the well's production allowable minus 
the 5.0% overproduction from the preceding production year and twice the amount 
of overproduction exceeding 5.0% which occurred during the preceding production 
period.
(E) The operator of a gas well may produce the well up to twice the monthly 
allowable allocated to the well, without commission approval, subject to the 
restrictions in subparagraph (A) of this paragraph.
(F)  The commission may grant an operator of a gas well permission to produce 
the well at a rate in excess of twice its monthly allowable for two months in 
any six-month production period, if:
(i) the operator applies for and obtains commission approval prior to additional 
overproduction;
(ii)  the commission determines, based on data submitted by the operator, that a 
situation exists or is threatened that causes an increase in the demand for the 
gas from the field which cannot be otherwise satisfied from the field; and
(iii) the commission determines that such additional overproduction does not 
cause waste.
(G) The commission may, after notice and hearing, grant reduced production rates 
to producers who have overproduced their allowable during a production period.
(m) Priorities. In order to prevent wasteful production, protect correlative 
rights, and in order not to reduce or limit oil production, purchasers shall 
request and take, and operators shall produce gas according to the following 
priorities, in order.
(1)  First, operators shall produce gas from special allowable wells granted 
special allowable status to prevent waste or for other reasons.
(2) Second, operators shall produce casinghead gas, including gas produced from 
tertiary and secondary recovery projects approved by the commission. Also, 
second priority shall be given to gas recovered from a landfill or sewage 
process.
(3) Third, operators shall produce gas from wells classified under sec.3.49(b) 
of this title (relating to Gas-Oil Ratio) (Statewide Rule 49(b)), but only to 
the extent of one full allowable for multiple 49(b) wells.
(4) Fourth, operators shall produce gas from administrative special allowable 
wells, and to gas from special allowable wells granted that status by the 
commission after notice and hearing for other reasons than to prevent waste.
(5) Fifth, operators shall produce the remainder of gas well gas.
(n) Curtailments.
(1) If curtailment of any priority category is required on a particular gas 
system such curtailment shall be done as follows.
(A) Production from the lowest priority category wells shall be curtailed first. 
When production from the lowest priority category wells on a system is curtailed 
by 95% of the monthly allowable assigned to those wells, then the operators 
shall begin curtailment of the next highest priority category.
(B) When all priority category wells in subsection (m)(2), (3), (4), and (5) of 
this section, except first priority category in subsection (m)(1) of this 
section, are curtailed by 95% of assigned allowable, then priority categories in 
subsection (m)(2), (3), (4), and (5) will thereafter be further curtailed by the 
same percentage.
(2) Where an end-user has a one year or longer contractual right or obligation 
with a seller to purchase a specific supply from a specific well for the current 
production year, then the operator of such gas well shall not be required to 
limit such sales based upon priority demand of other gas.
(o) Ratability. All gas produced within a production year which does not exceed 
the total assigned allowable shall be deemed to be produced ratably, regardless 
of the rate of production, so long as it is in compliance with these rules. 
Purchasers shall be deemed to be taking ratably so long as the total annual 
allowable of any well is not exceeded and the purchaser is in compliance with 
the curtailment provisions of subsection (n) of this section.
(p) Hearings. In addition to any other provisions of this section, the 
commission may, upon complaint or upon its own motion, conduct a hearing and 
issue such orders as are necessary and reasonable to enforce ratable production, 
to protect correlative opportunities, to prevent waste, and to prevent 
unreasonable discrimination.
(q) Severability provision. If any provision of this section or its application 
to any person or circumstance is held invalid, the invalidity shall not affect 
other provisions or applications of the section which can be given effect 
without the invalid provision or application, and the provisions of the section 
are declared to be severable.
(r) Prior excess production. Any gas produced in excess of a well's assigned 
allowable during the balancing period preceding the effective date of any new 
rules shall be deducted from the well's assigned allowable for the first 
production period after adoption of such rules. There shall be no carrying 
forward of underproduction or overproduction from prior periods except as by 
rules.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 13, 1992.
TRD-9200606
Martha Swanger
Hearings Examiner-Gas Utilities Section
Railroad Commission of Texas
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 463-6941
       
16 TAC sec.3.50
The Railroad Commission of Texas proposes an amendment to sec.3.50, concerning 
requirements for approval and certification of expanded enhanced oil recovery 
(EOR) projects to receive a tax incentive pursuant to the Texas Tax Code, Title 
2, Chapter 202, Subchapter B, sec.202.052 and sec.202.054. On June 15, 1991, 
Senate Bill Number 1105 (relating to a reduced oil production tax rate) of the 
72nd Legislature, was signed into law, to become effective September 1, 1991. 
Senate Bill Number 1105 provides a reduced oil production tax rate for the 
incremental increase in oil produced from expanded EOR projects approved and 
certified by the Railroad Commission of Texas. The proposed amendment provides 
the procedure for implementing the Tax Code, sec.202.052 and sec.202.054, as 
amended by Senate Bill Number 1105. The amendment defines terms and sets the 
standard for qualification, approval and certification for the severance tax 
incentive. The Railroad Commission has not fully analyzed the potential 
severance tax implications. The existing language in this section was adopted by 
the Railroad Commission effective February 20, 1990, and was published in the 
February 6, 1990, issue of the Texas Register (15 TexReg 652).
Rita E. Percival, systems analyst, Oil and Gas Division, has determined that for 
the first five-year period the section is in effect there will be fiscal 
implications as a result of enforcing or administering it. The effect on state 
government for the first five-year period will be an estimated cost of $540 for 
fiscal year 1992; there will be no fiscal implications for state government for 
fiscal years 1993-1996. There will be no fiscal implications for local 
government. There will be no cost of compliance with the proposed rule revision 
for small businesses as a result of enforcing or administering the proposed rule 
revision.
Peggy S. Gray, hearings examiner, Legal Division, has determined for each year 
of the first five years the section is in effect the public benefit anticipated 
as a result of enforcing the section will be an increase in secondary and 
tertiary oil recovery projects. There is no anticipated economic cost to persons 
who are required to comply with the section as proposed.
Comments on the proposal may be submitted to Peggy Gray, Hearings Examiner, Oil 
and Gas Section, Legal Division, Railroad Commission of Texas, P.O. Drawer 
12967, Austin, Texas 78711-2967. The docket number for this proposal is 20-96, 
652. All comments must be submitted by 5 p.m. on February 20, 1992.
The amendment is proposed under the Texas Natural Resources Code, sec.sec.81. 
052, 85.046, 85.202 and the Texas Tax Code, sec.202.052 and sec.202.054, which 
provides the Railroad Commission of Texas with the authority to adopt rules for 
the following purposes: to govern and regulate persons and their operations 
under the jurisdiction of the Railroad Commission; to prevent the waste of oil 
in producing operations; to approve EOR projects; to designate the area to be 
affected by EOR projects; to certify positive production response; and to 
terminate EOR projects.
sec.3.50. Enhanced Oil Recovery Projects-Approval and Certification for Tax 
Incentive.
(a) Purpose. The purpose of this section is to provide a procedure by which an 
operator can obtain Railroad Commission approval and certification of enhanced 
oil recovery <nl>(EOR) <ol> projects pursuant to the Tax Code, Title 2, Chapter 
202, Subchapter B, sec.202.052 and sec.202.054.
(b) Applicability.
(1) This section applies to:
(A)  <nl>new EOR<ol> enhanced oil recovery (EOR)] projects [;] and [(B)] the 
change from secondary EOR projects to tertiary projects which qualify as new 
<nl>EOR<ol> projects, and which begin active operation on or after September 1, 
1989 [.] <nl>, and
<nl>(B) expansions of existing EOR projects.
(2) <nl>An EOR project may not qualify as an expansion if the project has 
qualified as a new EOR project under this section.<ol> [This section will not 
apply to the following types of EOR projects unless the operator is able to 
demonstrate by filings or in a hearing, that the project qualifies as a new and 
distinct EOR project:
[(A) an expansion of a project in active operation prior to September 1, 1989;
[(B) a change from one method of secondary recovery process to a different 
method of secondary recovery process;
[(C) a change from one method of tertiary recovery process to a different method 
of tertiary recovery process; or
[(D) a pressure maintenance process.]
(c) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise.
(1) Active operation-<nl>The start <ol> [commencement and continuation of 
<nl>a<ol> fluid injection <nl>program<ol> [programs] for a secondary or tertiary 
recovery  <nl>project to enhance<ol> [projects for enhancing] the displacement 
process in the reservoir. Applying for permits and moving equipment into the 
field alone are not considered active operations.
(2) (No change.)
(3) <nl>Commission representative -A commission employee authorized to act for 
the commission. Any authority given to a commission representative is also 
retained by the commission. Any action taken by the commission representative is 
subject to review by the commission.<ol> [Director-The director of the Oil and 
Gas Division or the director's delegate.]
<nl>(4)  Comptroller-The Comptroller of Public Accounts.
<nl>(5) [(4)] Enhanced oil recovery project (EOR)-The use of any process for the 
displacement of oil from the reservoir other than primary recovery and includes 
the use of an immiscible, miscible, chemical, thermal, or biological process.
<nl>(6)<ol>[(5)] <nl>Existing enhanced recovery project-An EOR project that 
began active operation before September 1, 1989, or began active operation 
between September 1, 1989, and September 1, 1991, but was not approved as a new 
EOR project. <ol> [Expansion-The enlargement of an EOR project. Production from 
projects or areas in which active operation was started prior to September 1, 
1989, will not qualify for the recovered oil tax rate unless approved pursuant 
to subsection (b)(2) of this section.]
<nl>(7) Expanded enhanced recovery project or expansion-The addition of 
injection and producing wells, the change of injection pattern or other 
commission approved operating changes to an existing enhanced oil recovery 
project that will result in the recovery of oil that would not otherwise be 
recovered.
<nl>(8)<ol>[(6)] Fluid injection -Injection through an injection well of a fluid 
(liquid or gaseous) into a producing formation as part of an EOR project.
<nl>(9) Incremental production-The volume of oil produced by an expanded 
enhanced recovery project in excess of the production decline rate established 
under conditions before expansion of an existing enhanced recovery project.
<nl>(10)<ol>[(7)] Oil recovery from an enhanced recovery project-The oil 
produced from the designated area the commission certifies to be affected by the 
project.
<nl>(11)<ol>[(8)] Operator-The person recognized by the commission as being 
responsible for the actual physical operation of an EOR project and the wells 
associated with the EOR project.
<nl>(12)<ol>[(9)] Positive production response-Occurs when the rate of oil 
production from wells within the designated area affected by an  <nl>EOR<ol> 
[enhanced recovery] project is greater than the rate that would have occurred 
without the project.
<nl>(13)<ol>[(10)] Pressure maintenance -The injection of fluid into the 
reservoir for the purpose of maintaining the reservoir pressure at or near the 
bubble point or other critical pressure.
<nl>(14)<ol>[(11)] Primary recovery -The displacement of oil from the reservoir 
into the well <nl>bore(s)<ol> [bores] by means of the natural pressure of the 
oil reservoir, including artificial lift.
<nl>(15)  Production decline rate-The projected future oil production from a 
project area as extrapolated by a method approved by the commission.
<nl>(16)<ol>[(12)] Recovered oil tax rate-The tax rate provided by the Tax Code, 
sec.202.052(b).
<nl>(17)<ol>[(13)] Secondary recovery project-An enhanced recovery project that 
is not a tertiary recovery project.
<nl>(18)<ol>[(14)] Termination-Occurs when the approved fluid injection program 
associated with an EOR project stops or is discontinued.
<nl>(19)<ol>[(15)] Tertiary recovery project-An <nl>EOR<ol> [enhanced recovery] 
project using a tertiary recovery method (as defined in the federal June 1979 
energy regulations referred to in the Internal Revenue Code of 1986, sec.4993, 
or approved by the United States secretary of the treasury for purposes of 
administering the Internal Revenue Code of 1986, sec.4993, without regard to 
whether that section remains in effect) including those listed as follows.
(A) Alkaline (or caustic) flooding-An augmented waterflooding technique in which 
the water is made chemically basic as a result of the addition of alkali metals.
(B) Carbon dioxide augmented waterflooding-Injection of carbonated water, or 
water and carbon dioxide, to increase waterflood efficiency.
(C) Cyclic steam injection-The alternating injection of steam and production of 
oil with condensed steam from the same well or wells.
(D) Immiscible carbon dioxide displacement-Injection of carbon dioxide into an 
oil reservoir to effect oil displacement under conditions in which miscibility 
with reservoir oil is not obtained.
(E) In situ combustion-Combustion of oil in the reservoir, sustained by 
continuous air injection, to displace unburned oil toward producing wells.
(F) Microemulsion, or micellar/emulsion, flooding-An augmented waterflooding 
technique in which a surfactant system is injected in order to enhance oil 
displacement toward producing wells. A surfactant system normally includes a 
surfactant, hydrocarbon, cosurfactant, an electrolyte and water, and polymers 
for mobility control.
(G) Miscible fluid displacement-An oil displacement process in which gas or 
alcohol is injected into an oil reservoir, at pressure levels such that the 
injected gas or alcohol and reservoir oil are miscible. The process may include 
the concurrent, alternating, or subsequent injection of water. The injected gas 
may be natural gas, enriched natural gas, a liquefied petroleum gas slug driven 
by natural gas, carbon dioxide, nitrogen, or flue gas. Gas cycling, i.e., gas 
injection into gas condensate reservoirs, is not a miscible fluid displacement 
technique nor a tertiary enhanced recovery technique within the meaning of this 
section.
(H) Polymer augmented waterflooding-Augmented waterflooding in which organic 
polymers are injected with the water to improve a real and vertical sweep 
efficiency.
(I)  Steam drive injection-The continuous injection of steam into one set of 
wells (injection wells) or other injection source to effect oil displacement 
toward and production from a second set of wells (production wells).
(d)  Application requirements. To qualify for the recovered oil tax rate the 
operator must:
(1) <nl>for a new EOR project,<ol> submit an application for approval on the 
appropriate form on or after September 1, 1989, and before January 1, 1994. 
<nl>For an expansion of an existing EOR project, submit an application for 
approval on the appropriate form on or after September 1, 1991, and before 
January 1, 1994.<ol> An application may be filed on or after <nl>the applicable 
date (September 1, 1989, or September 1, 1991) in this paragraph<ol> [September 
1, 1989], even if a separate application for approval of the project has already 
been filed prior to that date. All applications must be filed in Austin. [One 
copy of the form and the plats shall also be filed with the appropriate district 
office.] The form shall be executed and certified by a person having knowledge 
of the facts entered on the form. If an application is already on file under the 
Natural Resources Code, Chapter 101, Subchapter B, or for approval as a tertiary 
recovery project for purposes of the Internal Revenue Code of 1986, sec.4993, 
the operator may file a new application if the active operation of the project 
does not begin before the application under this section is approved by the 
commission;
(2)-(3) (No change.)
(4) submit an application on the appropriate form and obtain <nl>the 
necessary<ol> permits to conduct fluid injection operations pursuant to sec.3.46 
of this title (relating to Fluid Injection into Productive Reservoirs) 
(Statewide Rule 46), if such permits have not already been obtained.
(e)  Concurrent applications. The operator may apply concurrently or separately 
for:
(1) approval of a <nl>new or expanded EOR<ol> [proposed enhanced oil recovery] 
project under this section;
(2)-(3) (No change.)
(f) Opportunity for hearing. <nl>A commission representative<ol> [The director] 
may administratively approve the application. If the <nl>commission 
representative<ol> [director] denies administrative approval, the applicant 
shall have the right to a hearing upon request. After hearing, the examiner 
shall recommend final action by the commission.
(g) Approval and certification.
(1) Project approval. In order to be eligible for the recovered oil tax rate as 
provided in the Tax Code, sec.202.052(b), the operator must apply for and be 
granted commission approval of <nl>a new EOR<ol> [an enhanced oil recovery] 
project <nl>or an expansion of an existing EOR project <ol>, prior to commencing 
<nl>active<ol> operation of the <nl>new<ol> project <nl>or expanded project<ol>. 
For a project to be approved the operator must:
(A) <nl>for a new project <ol> prove that the project will begin active 
operation on or after September 1, 1989, <nl>or for the expansion of an existing 
project prove that the project will begin active operation on or after September 
1, 1991<ol>;
(B)-(D) (No change.)
(2) Positive production response certificate.
(A) The operator of an EOR project that meets the requirements of this section 
must demonstrate to the commission a positive oil production response before the 
operator can receive commission certification of such a positive production 
response. The certification date may be any date desired by the operator, 
subject to commission approval, following the date on which a positive oil 
production response first occurred. The operator must apply for a positive 
production response certificate within three years of project approval for 
secondary projects, and within five years of project approval for tertiary 
projects, to qualify for the recovered oil tax rate. The oil produced from the 
designated area  <nl>of a new EOR project or incremental oil produced from the 
designated area of an expanded EOR project <ol> after the date of certification 
of a positive production response is eligible for the recovered oil tax rate. 
The operator must apply to the comptroller pursuant to the Tax Code, sec.202.052 
and sec.202.054, to qualify for the recovered oil tax rate.
(B) The application for positive response certification shall include:
(i)  production graphs and data illustrating a positive production response and 
volumes of water or other substances that have been injected on the 
<nl>designated area<ol> [lease or unit] since the initiation of the <nl>new 
EOR<ol> [enhanced recovery] project  <nl>or the expanded EOR project<ol>;
(ii)-(iii) (No change.)
(C) The application for the positive production response certificate will be 
processed administratively. If the <nl>commission representative<ol> [director] 
denies administrative approval, the applicant shall have the right to a hearing 
upon request. After hearing, the examiner shall recommend final action by the 
commission.
(h) Annual reporting.
(1) The operator must file <nl>an annual report on the appropriate form, with 
the Oil and Gas Division, each year the project remains eligible for the reduced 
severance tax rate. This form must be filed within 30 days of the anniversary of 
the certification date of positive production response and annually 
thereafter.<ol> [a project report on the appropriate form, with the Oil and Gas 
Division each year within 30 days after the annual monitoring reports for the 
project's injection wells are due, except as provided herein.
[(2)  If the project is carried out under a unitization/secondary recovery 
order, the operator may make a written declaration to the director of the Oil 
and Gas Division that filing of the annual report required under this subsection 
replaces the annual report required in the unitization/secondary recovery order. 
In its declaration the operator shall select one of the following due dates:
[(A) 30 days after the individual wells annual monitoring reports are due; or
[(B) the due date stated in the unitization/secondary recovery order.
[(3) The operator shall adhere to the due date selected until the recovered oil 
tax rate expires or the project is terminated, whichever occurs first. If the 
recovered oil tax rate expires prior to termination of the project, the annual 
report requirements of the unitization/secondary recovery order shall apply.]
<nl>(2)<ol>[(4)] The report must contain the following:
(A)  <nl>commission certification date of positive production response<ol> [date 
injection started];
(B) monthly <nl>volume<ol> [volume(s)] of injected fluid(s);
(C) number of well(s) used for <nl>injection <ol> [injecting];
[(D) injection pressures;]
<nl>(D)<ol>[(E)] monthly production of oil, gas, and water;
<nl>(E)<ol>[(F)] number of active producing wells; and
<nl>(F)<ol>[(G)] any other relevant information requested by the Oil and Gas 
Division.
(i) Reduced or  <nl>enlarged<ol> [expanded] areas. The operator may apply for 
reduced or <nl>enlarged <ol> [expanded] project area certification if:
(1) (No change.)
(2) the application for reduction or <nl>enlargement <ol> [expansion] is 
received no later than three years after the original approval of a secondary 
recovery project or five years after the original approval of a tertiary 
recovery project.
(j) Termination and penalty. Upon approval by the commission and the 
comptroller, the recovered oil tax rate continues for a maximum of 10 years, 
unless the project is sooner terminated. If the project is terminated prior to 
the 10-year period, the operator must notify the commission and the comptroller 
in writing within 30 days after the last day of active operations. Failure to so 
notify may result in civil penalties, interest, and the tax due. If the 
commission determines a project has been terminated or there is action that 
affects the tax rate, it will notify the comptroller immediately in writing.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 13, 1992.
TRD-9200590
Martha V. Swanger
Hearings Examiner-Gas Utilities-LP Gas Section, Legal Division
Railroad Commission of Texas
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 463-6941
       
TITLE 22. EXAMINING BOARDS
Part XXII. Texas State Board of Public Accountancy
Chapter 515. Licenses
22 TAC sec.515.5
The Texas State Board of Public Accountancy proposes an amendment to sec.515. 5, 
concerning reinstatement of license. The amendment will cite to the current 
statute and will reflect the fact that licenses are processed on a biennial 
basis.
William Treacy, executive director, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section.
Mr. Treacy also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be that the rule will reflect the fact that licenses are processed 
on a biennial basis. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the section 
as proposed.
Comments on the proposal may be submitted to J. Randel (Jerry) Hill, General 
Counsel 1033 La Posada, Suite 340, Austin, Texas 78752-3892.
The amendment is proposed under Texas Civil Statutes, Article 41a-1, sec.6(a), 
which provides the Texas State Board of Public Accountancy with the authority to 
promulgate rules relating to the reinstatement of licenses.
sec.515.5. Reinstatement.
(a) A licensee whose <nl>biennial<ol> [annual] license has been cancelled for 
failure to pay the <nl>biennial<ol> [annual] renewal fee on or before December 
31 may secure reinstatement of the license at any time within the next calendar 
year upon payment of the delinquent license fee, together with a penalty <nl>as 
set forth in the Public Accountancy Act of 1991, sec.9(c).<ol> [of $20].
(b) After expiration of the next calendar year, a licensee whose license has 
been cancelled for failure to timely pay the <nl>biennial<ol> [annual] renewal 
fee may secure reinstatement of a [his] license only upon application and 
examination satisfactory to the board together with the payment of delinquent 
fees and a penalty to be assessed by the board. An application for reinstatement 
shall be made under oath and shall state that the licensee has never been 
charged or convicted by any court or other body of any crime, misdemeanor, or 
discreditable act of which the board has not been notified. The application 
shall also include a statement explaining why the licensee failed to timely 
obtain <nl>a biennial<ol> [an annual] license.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 8, 1992.
TRD-9200484
William Treacy
Executive Director
Texas State Board of Public Accountancy
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 450-7066
       
Part XXIV. Texas Board of Veterinary Medical Examiners
Chapter 571. Licensing
Examinations
22 TAC sec.571.3
The Texas Board of Veterinary Medical Examiners proposes an amendment to 
sec.571.3, concerning eligibility of students to sit for the state board exam. 
This rule revision would allow senior veterinary students to sit for the state 
board examination during December rather than waiting until the spring 
examination.
Mr. Buddy Matthijetz, executive director, has determined that for the first 
five-year period the section is in effect there will be no fiscal implications 
for state or local government as a result of enforcing or administering the 
section.
Mr. Matthijetz also has determined that for each year of the first five years 
the section is in effect there will be no public benefit anticipated as a result 
of enforcing the section. There will be no effect on small businesses. There is 
no anticipated economic cost to persons who are required to comply with the 
section as proposed.
Comments on the proposal may be submitted to Texas Board of Veterinary Medical 
Examiners, 1946 South IH-35, Suite #306, Austin, Texas 78704.
The amendment is proposed under Texas Civil Statutes, Article 8890, sec.7(a), 
which provide the Texas Board of Veterinary Medical Examiners with the authority 
to ".... make, alter, or amend such rules and regulations as may be necessary or 
desirable to carry into effect the provisions of this Act."
sec.571.3. Licensing Examinations Eligibility.
(a) To be eligible to participate in the state board licensing examination, 
applicants must be certified by the dean of the college from which they are 
expected to graduate that they are in the final year [last 60 days] of their 
veterinary college education and are expected to graduate. In the absence of a 
diploma or transcript certifying award of the DVM degree, the dean must submit a 
letter stating the applicant did in fact graduate before the applicant is 
eligible to obtain a license, providing all other requirements have been met.
(b) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 10, 1992.
TRD-9200479
Buddy Matthijetz
Executive Director
Texas Board of Veterinary Medical Examiners
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 447-1183
       
TITLE 28. INSURANCE
Part I. Texas Department of Insurance
Chapter 1. General Administration
Subchapter K. Equivalent Coverage
Definition
28 TAC sec.1.2002
State Board of Insurance of the Texas Department of Insurance proposes new 
sec.1.2002, concerning the adoption of rules to define equivalent coverage as 
provided in the Insurance Code, Article 5.13-2, sec.8(e), for policy forms filed 
by individual insurers for commercial property and general liability insurance 
and as provided in 28 TAC sec.5.9101,(g)(5) for policy forms filed by individual 
insurers for commercial multi-peril insurance. This rule is necessary in order 
to establish the acceptable coverage that must be provided in policy forms filed 
by an individual insurer.
Anderson, deputy commissioner, property division, has determined that for the 
first five-year period the new section is in effect there will be no fiscal 
implications to state or local government as a result of enforcing or 
administering the section.
Anderson, also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be the provision of insurance coverage similar to the coverage 
currently in effect under promulgated policy forms, for any new policy form or 
endorsement filed by an insurer pursuant to new Article 5.13-2, for commercial 
property, general liability, and commercial multi-peril insurance.
on the proposal may be submitted to Lyndon Anderson, Deputy Commissioner, 
Property Division, 333 Guadalupe, P.O. Box 149104, Austin, Texas 78714-9104.
new section is proposed under the Insurance Code, Article 1.04(b), which 
authorizes the State Board of Insurance to adopt rules; Article 5.13-2, which 
requires that policy forms submitted by insurers for approval in general 
liability lines and commercial property lines must provide coverage equivalent 
to that provided in the policy forms used for those lines on the effective date 
of Article 5.13-2; Article 5.81, which authorizes the State Board of Insurance 
to approve forms for multi-peril policies of insurance and to adopt rules to 
carry out the purposes of that article; and Article 5.98, which authorizes the 
State Board of Insurance to adopt rules to accomplish the purposes of the 
Insurance Code, Chapter 5, Subchapter L.
sec.1.2002. Equivalent Coverage.
(a) The term "equivalent coverage" as provided in the Insurance Code, Article 
5.13-2, sec.8(e), for policy forms filed by individual insurers for commercial 
property and general liability insurance and as provided in sec.5.9101, (g)(5) 
of this title (relating to Multi-Peril Policies) for commercial multi-peril 
policy forms for commercial property, general liability, boiler and machinery, 
commercial crime, commercial glass, and commercial inland marine insurance shall 
be subject to the standards set forth in subsections (b)-(h) of this section.
(b) The term "policy form(s)" in these rules shall include printed endorsements 
and other related forms as set forth in the Insurance Code, Article 5.13-2.
(c) Whether coverage is deemed to be equivalent by the Texas Department of 
Insurance shall be based on comparisons of like or similar policy forms that 
were approved by the State Board of Insurance prior to and in effect on October 
1, 1991, to those policy forms filed by individual companies under this rule. 
For example, named peril policy will be compared to named peril policy, all risk 
policy will be compared to all risk policy, commercial liability policy will be 
compared to commercial liability policy.
(d) All filings of policy forms submitted to the State Board of Insurance must 
contain a statement signed by an officer of the company attesting in a good 
faith belief that the filed policy forms provide equivalent coverage, as defined 
in subsection (e) of this section, to those policy forms approved by the State 
Board of Insurance prior to and in effect on October 1, 1991.
(e) Equivalent coverage shall mean the following.
(1) Policy forms filed for approval must, taken as a whole, provide coverage 
that is at least equal in value to coverage provided under policy forms approved 
by the State Board of Insurance prior to and in effect on October 1, 1991. The 
insurer submitting such policy forms for approval shall submit:
(A) a comparative evaluation of the filed policy forms to like or similar policy 
forms that were approved by the State Board of Insurance prior to and in effect 
on October 1, 1991; and
(B) an expressed disclosure form to be signed by the policyholder and attached 
to the initial policy if a designated limit applying to a specific type of 
property or to a specific coverage within the filed policy form is less than the 
limit for the same or similar coverage in the comparable policy form approved by 
the State Board of Insurance prior to and in effect on October 1, 1991.
(2) Policy forms filed for approval must include all provisions and conditions 
required by the Texas Insurance Code, including any specific notices to a 
policyholder.
(3) Except as provided in subsections (f) and (g) of this section, policy forms 
filed for approval must contain substantially the same coverage provided under 
policy forms approved by the State Board of Insurance prior to and in effect on 
October 1, 1991 for:
(A) debris removal;
(B) pollution (all lines of insurance);
(C) defense costs;
(D) punitive damages;
(E) liquor liability;
(F) collapse of building peril;
(G) any other coverage the State Board of Insurance, by rule, may determine to 
be necessary as a matter of public policy.
(f) Policy forms filed for approval may contain exclusions and/or limitations 
which have previously been approved by the State Board of Insurance for use on 
an individual basis, and must be accompanied by:
(1) an explanatory memorandum setting forth the proposed application of and 
reasons for the exclusion and/or limitation;
(2) a disclosure and election form to be signed by the policyholder and attached 
to a policy indicating the policyholder and the insurer have negotiated and 
agreed to the coverage to be provided in the policy.
(g) Policy forms filed for approval and designated as policy forms for use with 
"large risks" shall not be subject to the requirements for equivalent coverage 
set out in this rule except subsections (e)(2) and (h) of this section. Such 
filed policy forms shall be considered to provide equivalent coverage if the 
coverage is negotiated between the insurer and policyholder. The filing of 
policy forms for "large risks" must be accompanied by:
(1) an explanatory memorandum;
(2) a disclosure and election form to be signed by the policyholder and attached 
to a policy indicating the policyholder and the insurer have negotiated and 
agreed to the coverage to be provided in the policy.
(h) The term "large risk" means any of the following:
(1) an insured that has total insured property values of $10 million or more;
(2) an insured that has been provided an engineering and/or inspection service 
that meets standards approved by the Texas Department of Insurance;
(3) an insured that has total annual gross revenues of $20 million or more; or
(4) an insured that has a total premium of $50,000 or more for property 
insurance or $50,000 or more for general liability insurance, or $100,000 or 
more for multi-peril insurance.
(i) The negotiation of the coverage to be provided a policyholder, including the 
consenting of a policyholder to exclusions of coverage shall be fair and 
reasonable and subject to the applicable provisions of the Texas Insurance Code.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 15, 1992.
TRD-9200610
Linda K. von Quintus-Dorn
Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 463-6327
       
Part II. Texas Workers' Compensation Commission
Chapter 126. Benefits-General Provisions Applicable to All Benefits
28 TAC sec.126.7
The Texas Workers' Compensation Commission proposes an amendment to sec.126. 7, 
concerning the injured employee's choice of doctor. The amendment establishes a 
presumption that the first doctor to provide health care to a workers' 
compensation claimant, with certain exceptions, is the claimant's initial choice 
of doctor; and deletes references to the doctor's duty to file an initial 
medical report. The amendment is proposed to clarify the concept of "choice of 
doctor," and disassociate it from the reporting requirement.
Andrew Thigpen, associate director, financial management, has determined that 
for the first five-year period the section is in effect there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering the section. There is no anticipated impact on employment, locally 
or statewide, as a result of implementing the amended section.
Mr. Thigpen also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be greater understanding of, and compliance with, the Texas 
Workers' Compensation Act. There will be no effect on small businesses. There is 
no anticipated economic cost to persons who are required to comply with the 
section as proposed.
Comments on the proposal may be submitted to Ernest Boardman, Acting General 
Counsel, Texas Workers' Compensation Commission, 4000 South IH-35, Austin, Texas 
78704. Comments will be accepted for 30 days after publication of this proposal 
in the Texas Register.
The amendment is proposed under Texas Civil Statutes, Article 8308-2.09(a), 
which authorize the commission to adopt rules necessary to administer the Texas 
Workers' Compensation Act.
sec.126.7. Injured Employee's Choice of Doctor.
(a)-(b) (No change.)
(c) <nl>Except as provided in subsections (d), (e) and (f) of this section, 
the<ol> [The] first doctor, as defined in the Act, sec.1.03(17)<nl>, who 
provides health care to an injured employee shall be presumed to be the injured 
employee's initial choice of treating doctor.<ol> [to administer non-emergency 
health care shall submit to the commission a completed TWCC Form 61, Initial 
Medical Report, and shall be known as the injured employee's treating doctor, as 
defined in the Act, sec.1.03(46). Although a doctor who renders emergency 
treatment shall also file a completed TWCC Form 61, that doctor shall not be 
considered the injured employee's initial choice of doctor, except as stated in 
subsection (d) of this section.]
(d)-(k) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 15, 1992.
TRD-9200613
Ernest Boardman
Acting General Counsel
Texas Workers' Compensation Commission
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 440-3972
       
Chapter 133. Medical Benefits-General Medical Provisions
Subchapter B. Required Reports
28 TAC sec.133.101
The Texas Workers' Compensation Commission proposes an amendment to sec.133. 
101, concerning the initial medical report required to be filed by health care 
providers after treating workers' compensation claimants. The proposed amendment 
relieves the doctor of the requirement to complete and file the report when the 
injured worker does not lose more than one full day or shift from work. The 
amendment expressly provides that the doctor must submit the report upon 
request, and requires that the clinical notes be adequate for this purpose. The 
amendment additionally deletes the list of items to be included in the report, 
since form TWCC-61, developed after the rule was originally adopted, contains 
all these items. The amendment is proposed pursuant to a rule-making petition 
submitted by a health care provider.
Andrew Thigpen, associate director, financial management, has determined that 
for the first five-year period the section is in effect there will be fiscal 
implications for state and local government as a result of enforcing or 
administering the section. The effect on the state will be a decrease in 
administrative costs due to a reduction in the number of reports filed with the 
commission, estimated at between 10,000 and 20,000 per year. As self-insured 
employers, the state and local governments will experience decreased 
administrative costs due to the reduction in the number of reports filed; they 
will additionally be relieved of the $15 payment to the doctor for each report. 
There is no anticipated impact on employment, locally or statewide, as a result 
of implementing the amendment.
Mr. Thigpen also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be reduced paperwork and cost to the workers' compensation system 
as a whole. Small insurance companies and health care providers will experience 
decreased administrative costs due to the reduced number of reports filed; 
insurance companies will additionally be relieved of the $15 payment to the 
doctor for each report. The impact on small businesses compared with large 
businesses should be proportionately the same, based on market share. There is 
no anticipated economic cost to persons who are required to comply with the 
section as proposed.
Comments on the proposal may be submitted to Ernest Boardman, Acting General 
Counsel, Texas Workers' Compensation Commission, 4000 South IH-35, Austin, Texas 
78704. Comments will be accepted for 30 days after publication of this proposal 
in the Texas Register.
The amendment is proposed under Texas Civil Statutes, Article 8308-2.09(a), 
which authorize the commission to adopt rules necessary to administer the Texas 
Workers' Compensation Act.
sec.133.101. Initial Medical Report.
<nl>(a) The treating doctor shall complete  <nl>Form TWCC-61,<ol> [an] Initial 
<nl>Medical<ol> Report, <nl>for every occupational disease, and every accidental 
injury resulting in loss of more than one full day or one full shift from 
work,<ol> [in the form and manner prescribed by the commission,] and submit it 
to the carrier, the commission, and the <nl>injured employee<ol> [claimant] or 
<nl>his/her <ol> [the injured claimants's] representative within 10 days of the 
initial visit. [The report shall include:
[(1) history of occupational injury or occupational disease (including any 
emergency medical care);
[(2)  findings of a clinical assessment, including the following:
[(A)  physical examination findings;
[(B) laboratory test results;
[(C) radiographic and imaging findings; and
[(D) other pertinent tests;
[(3) type of treatment rendered at time of visit;
[(4) specific diagnosis(es) with appropriate International Classifications of 
Disease-9-Clinical Manifestations (ICD-9-CM) code(s);
[(5) treatment plan which may include the following:
[(A)  physical or occupational therapy orders. The orders shall include:
[(i) clear and concise language, explaining specific treatments to be performed;
[(ii) frequency of treatments; and
[(iii)  provision of reevaluation by the treating doctor within 60 days, if 
physical or occupational therapy shall be continued;
[(B) referrals given to the claimant;
[(C) medications or durable medical equipment ordered; and treatment.
[(D) other pertinent information involving future treatment;
[(6) anticipated date the injured employee may:
[(A) return to a limited type of work;
[(B) achieve maximum medical improvement; and
[(C) return to full time work;
[(7)  prognosis of the claimant.]
<nl>(b) The treating doctor is not required to complete and submit Form TWCC-61 
Initial Medical Report, for an accidental injury if, at the time of the initial 
visit, the treating doctor:
<nl>(1) knows that the injured employee has not lost more than one full day or 
one full shift of work prior to the visit;
<nl>(2) does not anticipate that the employee will lose more than one full day 
or one full shift of work after the visit; and
<nl>(3) releases the injured worker to return to work with no restrictions.
<nl>(c) A treating doctor exempted from the reporting requirement by subsection 
(b) of this section must complete and submit Form TWCC-61. Initial Medical 
Report, upon receipt of a request from the carrier, the commission, or the 
injured worker or representative. Accordingly, the doctor's clinical notes from 
the initial visit must be adequate for this purpose.
<nl>(d) Nothing in this rule relieves a doctor from the requirement of filing 
Form TWCC-69. Report of Medical Evaluation, as provided by sec.130.1 of this 
title (relating to Reports of Medical Evaluation: Maximum Medical Improvement 
and Permanent Impairment), when certifying maximum medical improvement or 
assigning an impairment rating.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 15, 1992.
TRD-9200611
Ernest Boardman
Acting General Counsel
Texas Workers' Compensation Commission
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 440-3972
       
Chapter 160. Workers' Health and Safety-General Provisions
28 TAC sec.160.2
The Texas Workers' Compensation Commission proposes new  s160.2, concerning non-
subscribing employers' reports of injury. The section references the statutory 
reporting requirements for employers who do not carry workers' compensation 
insurance (employers of 150 employees or more must report as of January 1, 1992; 
employers of 50 employees or more, as of January 1, 1992; and employers of four 
employees or more, as of January 1, 1994). The new section additionally 
establishes procedures and deadlines for reporting, and requires use of a 
prescribed form. The new section is proposed to implement the provisions of the 
Texas Workers' Compensation Act requiring that non-subscribers report injuries 
for review by the commission's Division of Workers' Health and Safety.
Andrew Thigpen, associate director, financial management, has determined that 
for the first five-year period the section is in effect there will be fiscal 
implications for state government. These include the costs of handling the 
reports filed by non-subscribers, and of developing, printing, and mailing 
notices of the new reporting requirements to non-subscribers, estimated as 
follows: 1992-$4,025; 1993-$6,178; 1994-$54,780; 1995-0 (no notices requires); 
1996-0 (no notices required). There will be no fiscal implications for local 
government as a result of enforcing or administering the section. There is no 
anticipated impact on employment, locally or statewide, as a result of 
implementing the new section.
Mr. Thigpen also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be implementation of the Texas Workers' Compensation Act, and 
reduction of work-related injuries, due to the commission's increased ability to 
identify and monitor work-related injuries. The cost of compliance for a small 
business will be the minimal cost of first class postage to file the report, no 
more frequently than once a month. The impact on small businesses compared to 
large businesses should be proportionately the same, based on market share. 
There is no anticipated economic cost to persons who are required to comply with 
the section as proposed.
Comments on the proposal may be submitted to Ernest Boardman, Acting General 
Counsel, Texas Workers' Compensation Commission, 4000 South IH-35, Austin, Texas 
78704. Comments will be accepted for 30 days after publication of this proposal 
in the Texas Register.
The new section is proposed under Texas Civil Statutes, Article 8308-2.09(a), 
which authorize the commission to adopt rules necessary to administer the Texas 
Workers' Compensation Act.
sec.160.2. Non-Subscribing Employer's Report of Injury.
(a) A non-subscribing employer, as defined by Texas Civil Statutes, Article 
8308-7.01(d), and sec.164.13 of this title (relating to Applicability), shall 
file a written report for each death, each occupational disease, and each injury 
that results in more than one day's absence from work for the injured employee.
(b) The report of injury shall be filed on a form prescribed by the commission.
(c) A report of all injuries that have occurred during a calendar month shall be 
filed with the commission not later than the seventh day of the following month. 
For purposes of this section, a report is filed when personally delivered or 
postmarked. All reports will be filed with the commission at Texas Workers' 
Compensation Commission, Southfield Building, 4000 South IH-35, Austin, Texas 
78704-7491.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 15, 1992.
TRD-9200612
Ernest Boardman
Acting General Counsel
Texas Workers' Compensation Commission
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 440-3972
       
TITLE 34. PUBLIC FINANCE
Part I. Comptroller of Public Accounts
Chapter 3. Tax Administration
Subchapter O. State Sales and Use Tax
34 TAC sec.3.286
The Comptroller of Public Accounts proposes an amendment to sec.3.286, 
concerning seller's and purchaser's responsibilities. The amendment is the 
result of changes to the Tax Code, Chapter 151, made by the 72nd Legislature, 
1991, First Called Session.
One change is to subsection (a)(1)(F) and (G) where the definition of "engaged 
in business" was expanded effective October 1, 1991.
The second change because of legislation affects the sales tax permit fee that 
will no longer be required on or after October 1, 1991. Subsection (c) was 
amended to reflect this change.
The third change due to legislation was the addition of subsection (l), which 
covers the cancellation of an inactive permit.
The last change due to legislation is to subsection (h)(2)(B). Taxes that become 
delinquent on or after September 1, 1991, draw interest at the rate of 12%, 
compounded monthly.
Subsection (a)(4) was amended to include all local taxing jurisdictions governed 
by the County Sales and Use Tax Act in the definition of special purpose 
district. The change was made to specifically include those taxes imposed under 
Title 3, Chapter 324.
Tom Plaut, chief revenue estimator, has determined that for the first five-year 
period the section is in effect there will be no significant revenue impact on 
the state or local government as a result of enforcing or administering the 
section.
Dr. Plaut also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be in providing for more efficient tax administration. This section 
is adopted under the Tax Code, Title 2, and does not require a statement of 
fiscal implications for small businesses. There is no anticipated economic cost 
to persons who are required to comply with the proposed section.
Comments on the proposal may be submitted to Lucy Glover, Manager, Tax 
Administration Division, P.O. Box 13528, Austin, Texas 78711.
The amendment is proposed under the Tax Code, sec.111.002, which provides the 
comptroller with the authority to prescribe, adopt, and enforce rules relating 
to the administration and enforcement of the provisions of the Tax Code, Title 
2.
sec.3.286. Seller's and Purchaser's Responsibilities.
(a) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise.
(1) Engaged in business-A retailer is engaged in business in Texas if the 
retailer is:
(A)-(E) (No change.)
(F) <nl>engaging in regular or systematic solicitation of sales of taxable items 
in this state by the distribution of catalogs, periodicals, advertising flyers, 
or other advertising, by means of print, radio, or television media, or by mail, 
telegraphy, telephone computer data base, cable, optic, microwave, or other 
communication system for the purpose of effecting sales of taxable items. <ol> 
[soliciting orders for taxable items by means of advertising that is broadcast 
from, printed at, or distributed from, a location in this state if the 
advertising is intended for consumers in this state and is only secondarily 
disseminated to bordering jurisdictions. Advertising will be considered to be 
intended for Texas consumers if 75% or more of the recipients are located in 
Texas;]
<nl>(i)<nl> Advertising means messages by which a retailer solicits sales of 
taxable items.
<nl>(ii)<nl> Regular or systematic solicitation means three or more separate 
transmittances of any advertisement during a testing period.
<nl>(iii)<nl> Solicitation means offering, by advertisement, to make a taxable 
sale with a destination in Texas, or inviting offers to purchase tangible 
personal property for delivery in Texas.
[(G) soliciting orders for taxable items by mail if:
[(i)  the solicitations are substantial and recurring; and
[(ii)  the retailer uses any banking, financing, debt collection, 
telecommunication, or marketing activities occurring in Texas, or benefits from 
a location in Texas of authorized installation, servicing, or repair facilities. 
A retailer located outside the state who is not otherwise engaged in business in 
this state will not be considered as engaging in business in this state by 
merely placing a request for financing, telecommunication, banking, marketing or 
debt collection services at an out-of-state location of a service provider even 
though the service is performed in whole or in part in Texas.]
<nl>(G) <ol>[(H)] allowing a franchisee or licensee to operate under its trade 
name if the franchisee or licensee is required to collect Texas sales or use 
tax; or
<nl>(H)<ol>[(I)] soliciting orders for taxable items by mail or other media and 
federal law permits the State of Texas to require the retailer to collect Texas 
sales or use tax.
(2)-(3) (No change.)
(4) Special purpose district-A district <nl>or other local taxing jurisdiction 
<ol> funded by a sales tax that is governed by the County Sales and Use Tax Act, 
Chapter 323.
(b) (No change.)
(c) Obtaining a permit.
(1) An application will be furnished by the comptroller and must be filled out 
completely. After the application is filled out and returned to the comptroller, 
together with whatever bond or other security is required by sec.3.327 of this 
title (relating to Taxpayer's Bond or Other Security), a separate permit under 
the same account will be issued to the applicant for each place of business. The 
permit [fee] is <nl>issued without charge<ol> [$25].
(2) Each legal entity (corporation, partnership, sole proprietor, etc.) must 
apply for its own permit. The permit cannot be transferred from one owner to 
another. It is valid only for the person to whom it was issued and for the 
transaction of business only at the address shown on the permit. [The permit 
must be renewed yearly on the date of issuance or renewal. The fee for renewal 
is $25 for each place of business.] If a person operates two or more types of 
business under the same roof, only one permit is needed. [It is the seller's 
responsibility to send an application for renewal and the permit fee to the 
comptroller no later than the 30th day before the expiration date shown on the 
permit. Failure to renew causes automatic expiration on the renewal date and the 
seller is considered to be operating without a permit which is a criminal 
offense.]
(3)-(4) (No change.)
(d)-(g) (No change.)
(h) Prepaying the tax; discounts.
(1) (No change.)
(2) A taxpayer who makes a prepayment based upon an estimate of tax liability 
may retain an additional 1.25% of the amount due. The prepayment must be made on 
or before the 15th day of the second month (February, May, August, and November) 
of the quarter for which the tax is due. Monthly prepayments are due on or 
before the 15th day of the month and are also entitled to the additional 1.25% 
deduction.
(A) (No change.)
(B) If a taxpayer does not file a quarterly or monthly return together with 
payment on or before the due date, the taxpayer forfeits all discounts and 
incurs a mandatory 5.0% penalty. After the first 30 days delinquency, an 
additional mandatory penalty of 5.0% is assessed against the taxpayer, and after 
the first 60 days delinquency, interest begins to accrue at the rate of <nl>12% 
compounded monthly<ol> [10% per annum].
(i)-(k) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 15, 1992.
TRD-9200594
Martin Cherry
Chief, General Law Section
Comptroller of Public Accounts
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 463-4028
       
34 TAC sec.3.320
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Comptroller of 
Public Accounts or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The Comptroller of Public Accounts proposes the repeal of sec.3.320, concerning 
ice and dry ice. This section is being repealed in order that a substantially 
revised section dealing with the same subject matter may be adopted.
Tom Plaut, chief revenue estimator, has determined that for the first five-year 
period the repeal is in effect there will be no significant revenue impact on 
the state or local as a result of enforcing or administering the repeal.
Dr. Plaut also has determined that for each year of the first five years the 
repeal is in effect the public benefit anticipated as a result of enforcing the 
repeal will be in providing new information regarding tax responsibilities. This 
repeal is promulgated under the Tax Code, Title 2, and does not require a 
statement of fiscal implications for small businesses. There is no anticipated 
economic cost to persons who are required to comply with the repeal as proposed.
Comments on the repeal may be submitted to Lucy Glover, Manager, Tax 
Administration Division, P.O. Box 13528, Austin, Texas 78711.
The repeal is proposed under the Tax Code, sec.111.002, which provides the 
comptroller with the authority to prescribe, adopt, and enforce rules relating 
to the administration and enforcement of the provisions of the Tax Code, Title 
2.
sec.3.320. Ice and Dry Ice.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 15, 1992.
TRD-9200593
Martin Cherry
Chief, General Law Section
Comptroller of Public Accounts
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 463-4028
       
The Comptroller of Public Accounts proposes new sec.3.320, concerning ice and 
dry ice. Because of substantial changes, the current sec.3.320 is being proposed 
for repeal. The new section removes the exemption for ice and dry ice used as 
packaging material by someone other than manufacturers or processors. The 
exemption was removed from the Tax Code, Chapter 151, by the 72nd Legislature, 
1991, First Called Session, and is effective October 1, 1991.
Tom Plaut, chief revenue estimator, has determined that for the first five-year 
period the proposed section is in effect there will be no significant revenue 
impact on the state or local government as a result of enforcing or 
administering the section.
Dr. Plaut also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be in providing for more efficient tax administration. This section 
is adopted under the Tax Code, Title 2, and does not require a statement of 
fiscal implications for small businesses. There is no anticipated economic cost 
to persons who are required to comply with the proposed section.
Comments on the new section may be submitted to Lucy Glover, Manager, Tax 
Administration Division, P.O. Box 13528, Austin, Texas 78711.
The new section is proposed under the Tax Code, sec.111.002, which provides the 
comptroller with the authority to prescribe, adopt, and enforce rules relating 
to the administration and enforcement of the provisions of the Tax Code, Title 
2.
sec.3.320. Ice and Dry Ice.
(a) Manufacturers and processors. See sec.3.300 of this title (relating to 
Manufacturing; Custom Manufacturing; Fabricating; Processing) for the definition 
of manufacturing and processing.
(1) Sales or use tax is not due on ice used during processing or manufacturing 
if the ice is necessary and essential to the process.
(2) Sales or use tax is not due on ice used by manufacturers and processors 
inside or outside a package in order to shape, form, preserve, stabilize, or 
protect the contents of the manufactured product.
(b) Agriculture.
(1) Sales or use tax is not due on ice used to remove field heat from 
agricultural products.
(2) Sales or use tax is not due on bunker ice, top ice, or any ice placed on 
transportation facilities by growers. For example, ice used inside or outside 
crates of lettuce to cool the lettuce while being shipped is exempt.
(3) Sales or use tax is due on the subsequent icing after the initial icing for 
the purpose of preservation prior to sale except by the original grower.
(c) Commercial fishing boats. Sales or use tax is not due on ice exclusively 
used by commercial fishing boats in the storing of aquatic species, such as 
shrimp and other crustaceans, finfish, mollusks, and other similar creatures.
(d) Food and drinks ready for immediate consumption. Sales or use tax is not due 
on ice purchased for use as a part of a drink or food product to be sold in the 
regular course of business. Ice used to maintain food for immediate consumption 
in a cool state prior to sale is taxable.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 15, 1992.
TRD-9200595
Martin Cherry
Chief, General Law Section
Comptroller of Public Accounts
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 463-4028
       
TITLE 37. PUBLIC SAFETY AND CORRECTIONS
Part III. Texas Youth Commission
Chapter 85. Admission and Placement
Placement Planning
37 TAC sec.85.37
The Texas Youth Commission (TYC) proposes an amendment to sec.85.37, concerning 
discharge. The amendment provides for informing youth as discharged of 
instructions for sealing their records.
John Franks, director of fiscal affairs, has determined that for the first five-
year period the section is in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the section.
Mr. Franks also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be a system to ensure that appropriate information is provided. 
There will be no effect on small businesses. There is no anticipated economic 
cost to persons who are required to comply with the section as proposed.
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar Boulevard, P.O. Box 4260, 
Austin, Texas 78765.
The amendment is proposed under the Human Resources Code, sec.61.075, which 
provides the Texas Youth Commission with the authority to discharge committed 
youth.
sec.85.37. Discharge.
(a) (No change.)
(b) Rules.
(1)-(5) (No change.)
(6) Notification.
(A) As soon as the discharge date is determined, but not more than 30 days prior 
to the discharge date, the program to which the youth is assigned shall send a 
letter of discharge to the youth. <nl>The youth is informed of the procedure for 
sealing records, LS-301.
(B) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 10, 1992.
TRD-9200543
Ron Jackson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 483-5244
       
Chapter 87. Treatment
Program Planning
37 TAC sec.87.1
The Texas Youth Commission (TYC) proposes an amendment to sec.87.1, concerning 
case planning. The amendment will add instructions to include a projected 
discharge date to each youth's case plan.
John Franks, director of fiscal affairs, has determined that for the first five-
year period the section is in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the section.
Mr. Franks also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be additional information provided regarding numbers of youth on 
caseloads. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the section as 
proposed.
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar Boulevard, P.O. Box 4260, 
Austin, Texas 78765.
The amendment is proposed under the Human Resources Code, sec.61.075, which 
provides the Texas Youth Commission with the authority to determine a youth's 
treatment.
sec.87.1. Case Planning.
(a) (No change.)
(b)  Rules.
(1)-(4) (No change.)
(5) Requirements for youth at home on parole.
(A) (No change.)
(B) Parole objectives are developed for youth on parole by the parole officer in 
consultation with the youth, the sending primary service worker, and when 
available, the parents. The ICP <nl>contains the condition of release and<ol> 
consists of the youth's plan for work, school, training or specialized 
treatment, <nl>projected date of discharge,<ol> and any <nl>other<ol> special 
conditions.
(C) (No change.)
(D) ICP objectives may be reviewed more often in accordance with changes in a 
youth's <nl>behavior,<ol> need<nl>,<ol> and circumstance.
(6)  (No change.)
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 10, 1992.
TRD-9200542
Ron Jackson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 483-5244
       
Chapter 93. General Provisions
Records, Reports, Forms
37 TAC sec.93.57, sec.93.59
The Texas Youth Commission (TYC) proposes amendments to  s93.57 and sec.93. 59, 
concerning access to youth records and masterfile records. The amendments will 
provide direction of accessing and moving committed youth files.
John Franks, director of fiscal affairs, has determined that for the first five-
year period the sections are in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the 
sections.
Mr. Franks also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be a more efficient use of staff time in organizing records. 
There will be no effect on small businesses. There is no anticipated economic 
cost to persons who are required to comply with the sections as proposed.
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar Boulevard, P.O. Box 4260, 
Austin, Texas 78765.
The amendments are proposed under the Human Resources Code, sec.61.073, which 
provides the Texas Youth Commission with the authority to keep written records 
on each child.
sec.93.57. Access to Youth Records.
(a) (No change.)
(b) Rules.
(1) Each program administrator is responsible for ensuring that files or records 
on individual youth are open to inspection only by those given access under the 
Texas Family Code, Title 3 as interpreted by TYC.
(A) Files are open to the professional staff or consultants of the agency or the 
institution <nl>who are considered, for purposes of this policy, TYC staff <ol>.
<nl>(i)<nl> This includes <ol> [Interpretation: TYC interprets this to include,] 
on a need-to-know basis, residential contract programs and programs providing 
nonresidential and special services. Discretion to make available the 
information needed by non-TYC professional staff is granted to the employee 
securing the services. Electronically encoded information about TYC population 
is appropriately viewed only by authorized TYC staff. Approval of supervisor[,] 
<nl>and<ol> department head[, and deputy executive director] constitute 
authorization. The management information systems department is responsible for 
implementing security measures, and for the archiving of records.
<nl>(ii)<nl> Access to sealed records is available for the purposes of research, 
and only after personal identification information (name, social security 
number, and address) has been removed. <ol> [Access is permitted according to 
the following status.]
[(i)  Active-current commitments. TYC staff members with authorized access have 
unlimited viewing privilege of an active youth electronic file.
[(ii)  Discharged-discharged for reasons other than majority reached. Brownwood 
Reception Center and the records custodian have access to records of discharged 
youth for the purpose of identification. The research and planning department 
has unlimited access to records of discharged youth for the purpose of research.
[(iii) Ineligible-discharged for majority age reached. Records custodian has 
unlimited access to records of ineligible youth for purposes of identification. 
The research and planning department has access to records of ineligible youth 
for the purpose of research.
[(iv)  Record is available only to the research and planning department, only 
for purposes of research, and only after personal identification information 
(name, social security number, and address) has been removed.]
(B)  Files are open to the judge, probation officers, and professional staff or 
consultants of the juvenile court. <nl>This means<ol> [Interpretation: TYC 
interprets this to mean] that only the juvenile court that committed the youth 
to TYC and its probation officers, professional staff, or consultants have 
access to a youth's records. <nl>Once<ol> [This is limited, however, in that if] 
a juvenile court certifies a youth <nl>for criminal trial,<ol> [as an adult and 
then tries to obtain the records itself or through its probation officers, 
professional staff, or consultants as an adult criminal court,] a subpoena is 
required from <nl>the criminal<ol> [that] court for [it to have] access to the 
youth's records.
(C) Files are open to an attorney for the youth. [Interpretation:] The youth's 
attorney may view the original file under supervision of a TYC employee and may 
copy the information at the attorney's expense but may not take possession of 
any original material on file.
(D)  Files are open, with leave of the juvenile court, to any other person, 
agency, or institution having a legitimate interest in the work of the agency or 
institution. [Interpretation:] TYC will provide the name of the committing court 
judge to those not granted access by statute. Authorization must be in the form 
of a signed letter specifying the information to be released; phone calls do not 
constitute authorization.
(E) Files are open to the Texas Department of Corrections (TDC) to the extent 
provided in the Family Code, sec.51.14(b), Texas Civil Statutes. 
[Interpretation:] All requests from TDC are forwarded to TYC's records 
custodian.
(2) (No change.)
(3) With the exception of school transcripts, GED scores, and medical records 
under conditions specified in paragraphs (4) and (5) of this subsection, 
<nl>a<ol> youth <nl>has no right of<ol> [do not have] access to any confidential 
files<nl>,<ol> even on becoming an adult. Likewise, a youth has no authority to 
grant access to another party.
(4) (No change.)
(5) Medical records are considered confidential  <nl>(Texas Civil Statutes, 
Article 4495b,<ol> [Public Health Code,] Title 71, sec.5.08) and may only be 
released upon receipt of a  <nl>written consent to<ol> [notarized "]release of 
medical <nl>records<ol> [information"] form which specifies the following:
(A) the [information or] medical records to be covered by the release;
(B)-(C) (No change.)
(D) that the release is authorized by <nl>the youth or<ol> the youth's parent or 
guardian<nl>, if<ol> [or by] the youth <nl>is under 18 years of age<ol> [if age 
18 or older].
<nl>(6) A prosecuting attorney may obtain a copy of a youth's adjudication for a 
felony-grade offense pursuant to the Human Resources Code, sec.61.095. Requests 
under this paragraph are directed to the custodian of records.
<nl>(7)<ol>[(6)] The program administrator is responsible for maintaining a 
record in each file of people other than TYC staff who see information from a 
youth file, items seen or copied by each, and a copy of the authorization for 
access.
<nl>(8)<ol>[(7)] Requests for information on discharged youth should be referred 
to the records custodian in central office.
<nl>(9)<ol>[(8)] The records custodian is responsible for responding to requests 
in accordance with current laws and TYC policies regarding confidentiality of 
such records.
<nl>(10)<ol>[(9)] If a record has been sealed by court order the records 
custodian states that TYC has no record of the youth.
sec.93.59. Youth Masterfile Records.
(a) Policy. Texas Youth Commission (TYC) staff maintain a [youth] masterfile for 
each youth containing accurate and complete records of commitment documents, 
assessment reports, and significant decisions and events regarding the youth. 
Files are stored and transported in a manner that ensures security and 
confidentiality. Youth masterfiles shall remain in the custody and control of 
authorized [TYC] personnel at all times and follow the youth as specified in the 
rules of this section. <nl>Authorized personnel are TYC staff or probation staff 
under contract with TYC to provide parole services.<ol> The masterfile is the 
official set of records maintained for each youth. It physically consists of two 
separate file folders called the casework subfile, and medical subfile. All 
staff as specified on child care forms (CCF) or form instructions are 
responsible for completing, dating, signing, and filing all required 
documentation. See General Operating Policy (GOP) 75.07, sec.93.57 of this title 
(relating to Access to Youth Records). See GOP.75.13, sec.93.63 of this title 
(relating to Youth Record Disposition).
(b) Rules.
(1) Location.
(A) The casework and medical subfiles are initiated by the statewide reception 
center [or the mobile diagnostic unit] for each youth.
(B) The masterfile follows the youth to the TYC staffed residential facility 
(<nl>TYC operated high restriction<ol> [institution] or halfway house) to which 
he or she is assigned or to the  <nl>appropriate<ol> regional  <nl>or district 
office where the staff who supervise a youth<ol> [office of the region in which 
the youth is assigned placement] at home or in a non-TYC operated program  
<nl>are located<ol>. [Masterfiles are not maintained in district offices unless 
authorized by the deputy executive director.]
(C) (No change.)
(2) Storage of records. <nl>Youth masterfiles are stored in lockable cabinets 
which are locked during nonworking hours; the files are each marked 
"confidential" as are the cabinets.
<nl>(3)  Transportation of records.
(A) A TYC staff member transporting a youth from one program to another also 
transports the masterfile between authorized placements [or designated drop-off 
points].
(B) If a youth is being transported by public transportation or any other non-
TYC staff, his masterfile must be transported <nl>simultaneously<ol> to the 
<nl>new<ol> [appropriate] location by a TYC staff member or sent certified mail 
[so that the file arrives] within 24 hours of the <nl>youth's departure <ol> 
[youth].
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 10, 1992.
TRD-9200541
Ron Jackson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 483-5244
       
37 TAC sec.93.63
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Youth 
Commission or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The Texas Youth Commission (TYC) proposes the repeal of  s93.63, concerning 
disposition of youth records. The section is being repealed because it contains 
bureaucratic procedures which do not constitute a rule.
John Franks, director of fiscal affairs, has determined that for the first five-
year period the repeal is in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the repeal.
Mr. Franks also has determined that for each year of the first five years the 
repeal is in effect the public benefit anticipated as a result of enforcing the 
repeal will be greater administrative efficiency. There will be no effect on 
small businesses. There is no anticipated economic cost to persons who are 
required to comply with the repeal as proposed.
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar Boulevard, P.O. Box 4260, 
Austin, Texas 78765.
The repeal is proposed under the Human Resources Code,  s61.034, which provides 
the Texas Youth Commission with the authority to make rules to provide the 
proper accomplishment of its functions.
sec.93.63. Youth Record Disposition.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on January 10, 1992.
TRD-9200544
Ron Jackson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: February 21, 1992
For further information, please call: (512) 483-5244