Adopted Sections An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 1. ADMINISTRATION Part X. Department of Information Resources Chapter 201. Planning and Management of Information Resources Technologies 1 TAC sec.201.5 The Department of Information Resources adopts an amendment to sec.201.5, concerning agency planning, without changes to the proposed text as published in the January 17, 1992, issue of the Texas Register (17 TexReg 376). The adoption by reference materials has been changed to reflect the comments received. These changes provided further clarification of the instructions based on the suggestions made by the commentors. The changes do not materially alter or increase the planning and reporting requirements as set forth in the proposed rule change published January 17, 1992. Adoption of this section is necessary to implement the provision concerning procedures for submitting and evaluating agency operating plans in the Information Resources Act, Texas Civil Statutes, Article 4413(32j), sec.17. The amendment provides instructions and formats to be used by an agency in the preparation and submission of its initial and final operating plans. The department received numerous comments concerning the applicability and submission requirements, including estimated workload implications for the department, affected agencies, and universities. Questions were raised about the statutory basis for the proposed instructions. The comments received were primarily requesting clarification of the rules or provided suggestions for improvement to the rules. As part of their comments, several universities expressed concern that they are in a unique environment which did not lend itself to reporting in the new formats or in the level of detail being requested in the revised instructions. In addition, some agencies and universities commented that compliance with the proposed rules would require additional staff effort and cost. Agencies submitted comments which were neither for or against the proposed rules. The agencies and universities commenting on the proposed rules. The agencies and universities commenting on the proposed rules included: Office of the Attorney General; State Pension Review Board; Texas Department of Transportation; Texas State Board of Plumbing Examiners; Children's Trust Fund of Texas; Legislative Budget Board; The University of Texas Health Science Center at Houston; The University of Texas Health Science Center at San Antonio; Southwest Texas State University; Comptroller of Public Accounts; Texas Department of Human Services; The University of Texas Medical Branch at Galveston; The University of Texas M. D. Anderson Cancer; Texas Agricultural Extension Service; Texas A&M University; and Tarleton State University. The department has incorporated changes, based on commentors input, to the extent practicable. The department appreciates the participation of commentors toward making the adopted rules more practical, useful, and effective. The department disagrees with certain commentors regarding its statutory basis for the proposed instructions; the department believes it has ample statutory authority to adopt the rule, and that the level of detail will assure appropriate planning for information resources. The department understands the comments regarding additional costs to comply with the rules; however, the department believes the expenditures of these funds will ultimately prove cost- effective through better planning of state information resources dollars. The amendment is adopted under Texas Civil Statutes, Article 4413(32j), sec.9, which provide the Department of Information Resources with the authority to adopt rules as necessary to carry out its responsibility under this article. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 6, 1992. TRD-9205285 Ann S. Fuelberg Executive Director Department of Information Resources Effective date: May 6, 1992 Proposal publication date: January 17, 1992 For further information, please call: (512) 475-4714 TITLE 4. AGRICULTURE Part I. Texas Department of Agriculture Chapter 28. Texas Agricultural Finance Authority: Loan Guaranty Program 4 TAC sec.28.8 The Board of Directors of the Texas Agricultural Finance Authority (TAFA) of the Texas Department of Agriculture adopts an amendment to sec.28.8, concerning filing requirements and consideration of applications, without changes to the proposed text as published in the February 25, 1992, issue pf the Texas Register (17 TexReg 1493). The amendment is adopted to clarify requirements for the filing and processing of an application filed under the TAFA loan guaranty program and to increase board participation in the final approval process. The amendment as adopted places the authority for final approval of loan applicants with the full TAFA board; clarify procedures for notification to applicants of approval and/or denial of an application; and establish procedures for appeal of a denial of an application. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Agriculture Code, sec.58.023, which provides the TAFA board of directors with the authority to adopt rules to establish criteria for eligibility of applicants and lenders under the TAFA Guaranty Program; and sec.58.022 which provides the board with the authority to adopt rules and procedures for administration of the TAFA Loan Guaranty Program. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205429 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: May 8, 1992 Proposal publication date: February 25, 1992 For further information, please call: (512) 463-7583 TITLE 10. COMMUNITY DEVELOPMENT Part IV. Texas Department of Housing and Community Affairs Chapter 51. Housing Trust Rules 10 TAC sec.sec.51.1-51.15 The Texas Department of Housing and Community Affairs adopts new sec.sec.51. 1- 51.15, concerning housing trust rules. Section 51.10 is adopted with changes to the proposed text as published in the January 21, 1992, issue of the Texas Register (17 TexReg 447). Sections 51.1-51.9 and adopted without changes and will not be republished. The new sections are adopted to establish procedures for administrating the department's Housing Trust Fund. The new sections provide guidelines and procedures to provide, among other things, loans, grants, or other comparable forms of assistance to local units of government, public housing authorities, non-profit organizations, and income- eligible persons, families, and households to acquire, finance, rehabilitate, and develop decent, safe, and sanitary housing. Austin Housing Finance corporation questioned sec.sec.51.6, 51.9, and 51.10 on how capacity building applicants will be evaluated and what information will be required where "specific projects" may not have been designated. The department will propose rules to establish guidelines and a specific application form to address capacity building. Consumer Union, Member of the department's Advisory Committee, suggested that 80% of the fund be set aside for very low income persons, rather than to have the board adopt a best effort approach to use at least 70% of the fund to serve very low income persons. The department appreciates this suggestion, however, no change will be made in response to this comment at this time. The new sections are adopted under Texas Civil Statutes, Article 4413 (501), which provide the Texas Department of Housing and Community Affairs with the authority to adopt rules governing the administration of the department and its programs. sec.51.10. Criteria for Funding. (a) In considering applications 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 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 identifies housing need. This assessment will be based on statistical data, surveys, or other indicators of need as appropriate. (2) Evaluation factors. The board and development will consider applications for housing trust funds using the following system. (A) Application 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 representative, 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 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 of 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 the 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 applicants 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. (b) 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. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on March 19, 1992. TRD-9205380 Mario Aguilar Attorney Texas Department of Housing and Community Affairs Effective date: May 7, 1992 Proposal publication date: January 21, 1992 For further information, please call: (512) 474-2974 TITLE 13. CULTURAL RESOURCES Part VII. State Preservation Board Chapter 111. Rules and Regulations of the Board 13 TAC sec.111.21 The State Preservation Board adopts the repeal of sec.111.21, concerning fire protection policy, without changes to the proposed text as published in the October 29, 1991, issue of the Texas Register (16 TexReg 80). This section will allow the State Preservation Board to perform its duties as required by the Texas Government Code, Chapter 443.007, to preserve, maintain and restore the Capitol, the General Land Office Building, their contents and their grounds. The sections modifies existing Fire Protection Policy for concerns relating to construction during the Capitol Preservation project. No comments were received regarding adoption of the repeal. The repeal is adopted under the Texas Government Code, Chapter 443, which provides the State Preservation Board with the authority to adopt rules concerning the buildings, their contents, and their grounds. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on April 15, 1992. TRD-9205360 Dealey Herndon Executive Director State Preservation Board Effective date: May 7, 1992 Proposal publication date: October 29, 1991 For further information, please call: (512) 463-5495 The State Preservation Board adopts new sec.111.21, concerning fire protection policy, with changes to the proposed text as published in the October 29, 1991, issue of the Texas Register (16 TexReg 80). This section will allow the State Preservation Board to perform its duties as required by the Texas Government Code, Chapter 443.007, to preserved, maintain and restore the Capitol, the General Land Office Building, their contents and their grounds. To section functions by modifying his section will allow the State Preservation Board to perform its duties as required by the Texas Government Code, Chapter 443.007, to preserve, maintain and restore the Capital, the General Land Office Building, their contents and their grounds. To modify the existing Fire Protection Policy for concerns relating to construction during the Capitol Preservation project. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Government Code, Chapter 443, which provides the State Preservation Board with the authority to adopt rules concerning the buildings, their contents, and their grounds. sec.111.21. Fire Protection Policy. (a) Purpose. To establish guidelines for the protection from fire and smoke of the Texas Capitol, the Capitol Extension, and the General Land Office and their occupants. To create a safe environment for persons performing construction work in the buildings and for the public. (b) Oversight. The policy will be administrated by the Capitol Fire Marshal at the direction of the executive director. (c) Standard procedures. The Capitol Fire Marshal shall: (1) perform regular inspections of the premises to identify and correct conditions within the buildings which may create fire safety concerns; (2) oversee routine testing of all fire alarm systems, smoke management systems, and fire suppression systems. Such tests shall be performed at least annually and as often as needed to assure full operation of all systems in an emergency; (3) perform regular assessments of all fire evacuation plans and schedule regular training and drills for building occupants; (4) advise the board of any unsafe conditions which exist and cannot be routinely corrected; (5) assure that all trash receptacles are constructed of fire resistant material approved by the Underwriters Laboratory (UL) or Factory Mutual System (FM). (d) Fire watch procedures. (1) Purpose. To provide safety guidelines for state personnel and outside contractors who will be performing work involving open flames, sparks, generation of high temperature, or highly combustible materials within or near the buildings. (2) Guidelines. In instances in which construction or repairs involve open flames, sparks, or the use of highly combustible materials, a Fire Watch will be established. The most current fire safety procedures and standards will be applied. Personnel and contractor must meet the requirements established in NFPA 51-B as a minimum, but other currently accepted fire safety procedures shall also apply. Basic procedure shall include but are not limited to the following. (A) The area shall be cleared of all removable combustible materials. (B) The floor shall be swept clean within a minimum of 10 feet of the work area. (C) The wall and floor opening in the area will be appropriately sealed to prevent spread to adjacent areas. (D) The ducts to the areas will be sealed or shut down. (E) Fire Watchers shall have adequate fire extinguishing equipment readily available and shall be trained in their use. (F) Fire Watchers shall be trained in the use of the building alarm systems. They shall be familiar with the facilities and with the fire evacuation plan. (G) The Fire Watch shall be maintained after the completion of the work for a period of time adequate to assure that no risk remains. (H) The work site shall be inspected by the Fire Watcher(s) at two- hour and four-hour intervals following the completion of work. (3) Permits and supervision. (A) Projects and contracts of less than $100,000. The Capitol Fire Marshal shall issue a permit for any activity involving a potential fire hazard and shall implement appropriate Fire Watch procedures. A permit signed by the Fire Marshal shall serve as authorization to proceed. The Fire Marshal shall designate trained Fire Watchers to oversee the activity. (B) Contracts of $100,000 or more. The contractor shall submit a proposed Fire Protection Program for the review and approval of the Capitol Fire Marshal. The Program shall include Fire Watch procedures as well as routine fire prevention procedures in compliance with this policy and commonly accepted fire prevention standards. Upon approval of the Fire Protection Program by the Capitol Fire Marshal, the Contractor shall assume the responsibility for the implementation and oversight of the program with periodic review by the Fire Marshal. The contractor shall issue Fire Watch permits and assume responsibility for enforcing this policy. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205359 Dealey Herndon Executive Director State Preservation Board Effective date: May 7, 1992 Proposal publication date: October 29, 1991 For further information, please call: (512) 463-5495 13 TAC sec.111.26 The State Preservation Board adopts new sec.111.26, concerning use of gift shop funds, without changes to the proposed text as published in the October 29, 1991, issue of the Texas Register (16 TexReg 80). The section will allow the State Preservation Board to perform its duties as required by the Texas Government Code, Chapter 443.007, to preserve, maintain and restore the Capitol, the General Land Office Building, their contents and their grounds. To establish the use of gift shop funds for preservation projects which enhance or protect the Texas Capitol. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Government Code, Chapter 443, which provides the State Preservation Board with the authority to adopt rules concerning the buildings, their contents, and their grounds. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205358 Dealey Herndon Executive Director State Preservation Board Effective date: May 7, 1992 Proposal publication date: October 29, 1991 For further information, please call: (512) 463-5495 TITLE 16. ECONOMIC REGULATION Part II. Public Utility Commission of Texas Chapter 21. Practice and Procedure Examiner's Report and Proposal for Decision 16 TAC sec.21.144 The Public Utility Commission of Texas adopts new sec.21.144, concerning deadlines for filing documents before the commission in regard to cases noticed for consideration at a commission final order meeting, with changes to the proposed text as published in the February 18, 1992, issue of the Texas Register (17 TexReg 1375). The new section would establish a deadline for filing documents to be considered by the commissioners. The purpose of the rule is to provide each commissioner with ample time to consider all pleadings. It provides that except for good cause all documents relating to a case must be filed with the commission by 11 a.m. two business days prior to the final order meeting at which the case will be considered. The rule also provides for an exception where the parties are in settlement negotiations or where the documents are specifically requested by the commission. The following submitted comments in response to the February 18, 1992, Texas Register publication: Houston Lighting and Power, The City of El Paso, Fort Bend Telephone, and the Office of Public Utility Counsel. The comments received indicate support for the objectives of the new rule. There were no objections to the proposal. However, concern was expressed over several items in the proposal. Houston Lighting and Power suggested requiring the prefiling of any documents seeking affirmative action or related to requests for affirmative action by at least five working days prior to the final order meeting and the prefiling of any responsive documents no later than two working days prior to the final order meeting. The Office of Public Counsel commented that if the commissioners request that one or more parties provide them with certain material or answer certain questions, then the answers to the commissioners' inquiry should be given at a time that allows opposing parties to have a reasonable opportunity to review the material and to prepare an adequately substantive response. The City of El Paso also noted that a document specifically requested by a commissioner should not be considered by them if the parties have not had an opportunity to know what evidence and what arguments the commissioners are reviewing. In the interest of equity and in response to these comments a change has been made to the text published in the February 18, 1992 issue of the Texas Register This change adds language to subsection (a) stating that no party may be prejudiced by the timing of when the documents are filed. This change serves to protect parties who have not had opportunity to respond to the filing. The City of El Paso suggested distinguishing in the rule between evidentiary and argumentative documents. It asserted that evidentiary documents should not be introduced after the close of the hearing. Moreover, the City of El Paso proposed that argumentative documents should not be considered unless the party seeking to make the late filing obtains leave of the commission for filing outside of the schedule established by the examiner. Section 21.27(d) of the commission's procedural rules already prohibits the offering of evidence after the conclusion of the hearing, unless specifically directed by the presiding examiner, and then only after a copy of the exhibit has been served on all parties. As a result, including this suggestion would be repetitive. The Office of Public Counsel requested a clarification as the whether an untimely filed document is automatically stricken or whether a party has to file a motion to strike the document. Subsection (a) states that documents that are not filed before the deadline and do not meet one of the as follows exceptions below, will be considered to have not been timely filed. Consequently, if any party wishes to keep such documents from being considered it should file a motion to have them stricken. In response to comments by Fort Bend Telephone and the City of El Paso, a change has been made to the text published in the February 18, 1992 issue of the Texas Register . This change moves the cutoff time for filing documents to 11 a.m. This change was made to accommodate those companies who do not have offices or staff located in Austin and must send documents through overnight mail services. The amendment is adopted under the Public Utility Regulatory Act, sec.16(a), which provides the Public Utility Commission of Texas with the authority to make and enforce the rules reasonably required in the exercise of its powers and jurisdiction. sec.21.144. Filing Deadlines. (a) Except as provided in subsection (b) of this section, all documents addressed to the commissioners relating to any proceeding that has been placed on the agenda of a final order meeting shall be filed with the director of hearings no later than 11 a.m. two business days prior to the final order meeting at which the proceeding will be considered provided that no party is prejudiced by the timing of when the documents are filed. Documents that are not filed before the deadline and do not meet one of the exceptions in subsection (b) of this section, will be considered to have not been timely filed. (b) The deadline set out in subsection (a) of this section does not apply if one of the following situations exists: (1) where documents have been specifically requested by one of the commissioners; or (2) the parties are in the process of negotiating and such negotiation requires the filing of documents subsequent to the 48-hour deadline; (3) good cause for the filing exists. Good cause must clearly appear from specific facts shown by written pleading that compliance with the deadline was not reasonably possible and that failure to meet the deadline was not the result of the negligence of the party. The finding of the existence of good cause lies in the discretion of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205415 Mary Ross McDonald Secretary Public Utility Commission of Texas Effective date: May 8, 1992 Proposal publication date: February 18, 1992 For further information, please call: (512) 458-0100 Chapter 23. Substantive Rules General Rules 16 TAC sec.23.3 The Public Utility Commission of Texas adopts an amendment to sec.23.3 concerning definitions, without changes to the proposed text as published in the January 17, 1992, issue of the Texas Register (17 TexReg 376). The amendment recognizes changes made by the 72nd Legislature to the definition of public utility in the Public Utility Regulatory Act. Additionally, the rule clarifies that the intent of a recreational vehicle park owner to recover shortfalls, if future legislative changes allow such, will not be considered action that makes the recreational vehicle park owner a utility even though the legislation passed by the 72nd Legislature does not allow a surcharge to recover shortfalls in revenues. However, the recreational vehicle park owner is required to keep a record of shortfalls if he has such intent and otherwise comply with the requirements of Texas Civil Statutes, Article 1446d-2, Annotated. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 1446d, sec.16(a), which provide the Public Utility Commission of Texas with the authority to make and enforce the rules reasonably required in the exercise of its powers and jurisdiction. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205413 Mary Ross McDonald Secretary Public Utility Commission of Texas Effective date: May 8, 1992 Proposal publication date: February 17, 1992 For further information, please call: (512) 458-0100 Chapter 23. Substantive Rules Rate Design 16 TAC sec.23.23 The Public Utility Commission of Texas adopts an amendment to sec.23.23 to add a subsection relating to rate design for telephone local exchange companies, with changes to the proposed text as published in the February 25, 1992, issue of the Texas Register (17 TexReg 1499). The amendment states the applicability of the subsection and defines the terms used therein. The new subsection establishes general requirements for a local exchange company's access services tariffs and the structure of the access rates charged pursuant to the tariffs. Additionally, the new subsection establishes a transition mechanism for recovering pooled access revenues. The subsection requires local exchange companies to file revised tariffs in compliance with this subsection by June 1, 1992. Finally, the subsection delineates administrative provisions that must be contained in the local exchange companies' access tariffs. The following submitted comments in response to the February 25, 1992, Texas Register publication: the Association for the Advancement of Retired Persons (AARP), American Telco, Inc. (ATI), AT&T Communications of the Southwest, Inc. (AT&T), Capital Network System, Inc. (CNSI), Consumers Union, GTE Southwest Inc. and Contel of Texas, Inc. (GTE), the Texas Gray Panthers, Lufkin-Conroe Telephone Exchange, Inc. (LCTX), MCI Telecommunications Corporation (MCI), North Texas Telephone Company (NTT), the Office of Public Utility Counsel (OPC), Southwestern Bell Telephone Company (SWBT), Sprint Communications Company, L.P. (Sprint), the Steering Committee on the Intervening Cities in Southwestern Bell Docket No. 8585 (Cities), the Texas Association of Long Distance Telephone Companies (TEXALTEL), the Texas Payphone Association (TPA), and, jointly, the Texas Telephone Association, Texas Statewide Telephone Cooperative, Inc., Central Telephone Company, GTE, Kerrville Telephone Company, LCTX, San Marcos Telephone Company, SWBT, Sugar Land Telephone Company, and United Telephone Company (TTA). Reply comments were filed by AT&T, GTE, LCTX, MCI, OPC, Sprint, SWBT, TEXALTEL, TPA, and TTA. Several parties commented on possible legal impediments to the commission's adoption of the rule. Consumers Union, the Gray Panthers, OPC, and TPA commented that the rule constitutes ratemaking by rulemaking in violation of PURA and APTRA. These commenters contend that due process is thus denied because guarantees of procedural rights present in APTRA contested cases are absent. Specifically, the elimination of ICAC and the capping of certain access charges are alleged to be ratemaking activities. TPA asserts that other provisions of the rule also constitute ratemaking. AT&T, LCTX, MCI, and Sprint assert that the rule does not violate the ratemaking-by-rulemaking prohibition. The commission finds that the rule does not violate either PURA or APTRA. Neither of these statutes prohibit the commission from adopting a rule that affects rates. The Public Utility Regulatory Act, sec.37 empowers the commission "to fix and regulate rates of public utilities, including rules and regulations for determining the applicability of rates." The elimination of ICAC is a consequence of the commission's determination in this rule that this particular rate element is not in the public interest and therefore should not be applied by any utility subject to the commission's jurisdiction. In order to effectuate this policy, each utility currently charging ICAC must file an application with the commission to change its tariff by deleting the ICAC rate. The filing is necessary because the rate cannot be changed (i.e., eliminated) by rule. However, the APTRA contested case proceeding in which the rate is changed need not be the forum where the commission determines the policy governing the case. See State Board of Insurance v. Deffebach, 631 S.W. 2d 794 (Tex. Civ. App. -- Austin, 1982, writ ref'd n.r.e.). The contested case will be for the purpose of determining whether the requested tariff change properly implements the commission's policy as stated in this rule, and not for the purpose of considering anew what the commission's policy is or should be. Thus, the commission complies with the Public Utility Regulatory Act, sec.37 by adopting this rule to determine the applicability of a rate (i.e., ICAC is not applicable) and complies with other provisions of PURA and APTRA by requiring the actual rate change (i.e., the deletion of a portion of a tariff) to occur in an APTRA contested case proceeding. The commission finds that the composite rate structure set forth in the rule is rate-affecting, but is not a rate-changing mechanism and, therefore, is not required to be established in an APTRA contested case proceeding. Because the composite rates are not self-implementing but, rather, require APTRA contested case proceedings to either raise or lower any rate that is an element of the composite rate, the rule does not run afoul of the ratemaking-by-rulemaking prohibition. However, the text of the rule has been amended at paragraph (4)(A) and (B) to clarify that an LEC's composite rates are required to be just and reasonable, and thus, for good cause shown, may exceed the standards set as a matter of policy in this rule. The determination of whether any particular utility's terminating CCL rate is just and reasonable will be an issue in a proceeding on the utility's application to change the rate. The rule does not establish a rate for terminating CCL but, rather, establishes the range within which the commission finds that the rate could be just and reasonable. The range is defined by the commission, however, no rate within the range is self-executing. Rather, as with the composite rates, a company is required to justify its terminating CCL rate in an APTRA contested case proceeding; therefore, the rule does not constitute ratemaking by rulemaking. The question of whether the commission should impose such a rate structure, where any rate within the structure might have the effect of reducing a company's revenue stream to such an extent that it might require an increase in some other rate (or, as this section contemplates, assistance from the universal service fund) is a policy question and not a legal one. Because it is a policy matter, and because no legal requirement exists for the policy to be decided by any particular means, under the Court of Appeals' Deffebach decision the commission may choose to act either by contested case or by rulemaking. Similarly, and again because no rate is not self-implementing, a specific range of rates may be set by rule. OPC suggests that the commission may not act without evidentiary support, and TPA contends that the commission may not act without cost support for access rates. The commission's determination that just and reasonable rates could be found within a specific range is not subject to the same sort of scrutiny that would be required in a contested case. The commission may, for example, exercise its expertise in a rulemaking proceeding without introducing it into an evidentiary record since APTRA does not contemplate the existence of a contested case-type evidentiary record in a rulemaking. In a rulemaking, the commission thus may properly rely, and in this instance has relied, on the informed judgment of its staff of experts that a specific range of rates is appropriate and that a rate should be set within that range. There is no legal requirement that a commission policy decision that certain access rates should be within a specific range must be founded upon the sort of cost support contemplated by TPA. OPC also alleges that the effect of the rule is to shift the burden of proof from the utility in future rate cases. The commission finds that this argument is without merit. A utility must prove that its rates are just and reasonable and are in the public interest. See the Public Utility Regulatory Act, sec.2. The commission finds in this rule that access rates above the designated levels are not generally in the public interest, which is a policy decision that may be made by rule. The rule does not relieve the company of its obligation under the Public Utility Regulatory Act, sec.40 to show that its rates are just and reasonable. Furthermore, because the utility must show that its rates are just and reasonable, parties to the APTRA contested case proceeding where this determination is made will have the opportunity to show, in any particular case, that the public interest dictates higher rates. OPC also contends that the rule establishes a system of "piecemeal" regulation. OPC argues that the rule removes from consideration a large part of all future telephone rate cases, and prejudices the rights of parties who would contest the portion of LEC revenues that must be generated for services other than intrastate access. The commission agrees with AT&T that while certain access- related issues are removed from future rate cases, the issue of "how much is recovered from access rates versus local rates is left completely open." AT&T, LCTX, MCI, and TTA contend that the commission may limit the scope of the proceedings involving initial filings under the rule. TTA recommends that the rule be amended to include language establishing that the initial compliance application, in and of itself, would not put the utility's overall revenue requirement at issue unless the utility chose to do so. The commission finds that the requested language is ineffectual to accomplish TTA's intended result because it is a merely self-evident statement that unless the company puts its overall revenue requirement at issue in its application, the overall revenue requirement will not be an issue in that proceeding unless and until some other party raises it. The commission agrees that it has discretion to limit the scope of a hearing involving a rate reduction that is applicable to a particular class to the issue of the requested reduction. However, the commission does not believe that it is appropriate to limit by rule the scope of the proceedings on the initial filings because it is not yet known what issues may be asserted in such proceedings. Several parties objected to the adoption of the proposal for reasons of general policy. OPC, Consumers Union, the Gray Panthers, TPA, and AARP objected to the proposal on the grounds that there is no cost basis for the proposed rate caps. TPA implies that the current Interexchange Carrier Access Charge (ICAC) was based on some notion of cost. TPA describes the evidentiary record from Docket Number 5113, in which the ICAC was established, as having substantial testimony relating to costs of service and their proper allocation. GTE, MCI, and AT&T filed replies to these parties' objections. GTE asserts that requiring these rates to be founded upon cost studies would further delay setting any new access rates. Additionally, the rule's requirement to mirror the interstate rate structure implicitly establishes a cost basis for access rates because interstate rates are designed using Federal Communications Commission (FCC) cost rules. MCI states its preference for the adoption of costing procedures; however, it notes that, since the adoption of the ICAC, changes in FCC rules have allocated additional cost to the interstate jurisdiction for most Texas LECs. MCI further argues that one of the reasons for the commission's creation of the ICAC was the uncertainty associated with the direction of such jurisdictional cost shifts; this uncertainty is no longer a factor. AT&T points out that rates for Texas intrastate access have never been cost-based and that access rates have been adjusted without a cost basis since 1984. While the commission agrees that there is no cost basis for the range of rates, the commission notes that the current ICAC is not a cost-based rate. The ICAC was developed in Docket Number 5113 as a temporary rate element. Docket Number 5113 was initiated to establish charges for interexchange carrier (IXC) use of local networks to complete intrastate long distance traffic upon the divestiture of AT&T and the local Bell companies, e.g., SWBT. The commission set these rates by mirroring the rates that had been established by the FCC for the completion of interstate long distance calls. However, the application of the interstate rates to intrastate calling volumes left Texas LECs with a revenue deficit. The ICAC was expressly designed as a make-whole rate to recover that deficit. The commission finds significant public policy benefits, e.g., access rate uniformity and lower long distance rates, are to be gained through the elimination of the ICAC. The commission finds that these gains would not be outweighed by any benefits that might result from delaying the reductions until after the adoption of a cost allocation or determination scheme. Once a cost method is adopted, the benefits associated with lower access charges would be further delayed by still more rulemaking or litigation associated with implementing the costing scheme. OPC, Consumers Union, and Cities argued that the proposed rule inappropriately shifts revenue responsibility to local service from access. OPC states that if economic conditions lead to LEC revenue deficiencies, the commission will have no choice but to increase local rates. Consumers Union and Cities assert that access reductions without cost support necessitates higher local rates. Cities argue that the adoption of the proposed rule will lead to higher local rates for SWBT. OPC asserts that Contel, in its pending rate case, is requesting a local rate increase, and that the proposed local rate increase is predicated on the adoption of the access charge rule. AT&T, GTE, MCI, Sprint, and TTA replied to these comments. AT&T states that no LEC revenue requirements are affected; industry access revenues will decrease or remain constant. GTE states that SWBT's local rates have been capped for four years. Further, GTE indicates that Contel has not requested a local rate increase in the pending rate proceeding. MCI argues that there are several events that must first occur prior to any cost shift. First, LECs must lose revenues, which is not a necessary result of the adoption of the rule. Second, revenues are not equated with cost unless revenues are used to recover expenses or paid out as dividends. Finally, if the first two events occur, no shift can occur until an LEC requests and is granted a rate increase. MCI further notes that the rule does not limit the commission's discretion in a rate procedure. Sprint and TTA also note that a LEC must apply for any rate relief it may desire. The commission finds that the proposed rule does not mandate local rate increases, nor does it necessarily imply revenue reductions for the LECs. If an LEC experiences a revenue reduction after bringing its rates in compliance with the rule's provisions, the LEC may apply for high cost assistance. Alternatively, it may request a rate increase pursuant to PURA, sec.43. Nothing in the rule obviates the LEC's burden of proof in its attempts to demonstrate that higher local rates are just and reasonable. OPC, Consumers Union, and the Texas Gray Panthers claimed that there is no guarantee that lower access charges will result in lower long distance rates. These commenters concede that the commission has the authority to ensure that AT&T will flow through the access savings to its rates; however, they argued that the commission has no similar authority with respect to any other IXC. MCI and Sprint disputed the assertion that they could retain any access savings. MCI points to a commission finding in Docket Number 8585 that the degree of competition in long distance markets forces IXCs to reduce their rates to reflect lower access costs. As a result of the access rate reductions ordered in Docket Number 8585, MCI states that it reduced its toll rates by $4 million annually. Sprint agrees that the market is so competitive as to preclude the retention of such savings. The commission continues to believe that the markets for interexchange services are sufficiently competitive to ensure that IXCs cannot retain the savings that they will experience as a result of bringing LEC access rates into compliance with the rule. OPC comments that the rule is predicated on the implicit assumption that LECs are generally earning excessive returns and that revenue reductions are necessary for all LECs. OPC argues that the rule would divert these overearnings, in their entirety, to access charge reductions without any basis for determining that the overearnings derive exclusively from excessive access rates. GTE replies that there is no implicit assumption of LEC overearning. GTE points to the high cost provisions as a mechanism to assist those LECs that may experience a revenue reduction when their access rates are set in compliance with the rule. The commission finds that the rule is not a mechanism to divert LEC overearnings to access; rather, the rule establishes, as a matter of policy, a framework within which access rates shall be determined. Moreover, in the rule establishing high cost assistance, the commission creates a mechanism that expressly preserves access as a source of adequate revenue streams to the LECs that need assistance. OPC further argues that it is premature to eliminate the ICAC. OPC urges the commission to maintain the ICAC, perhaps in a different form, to retain the commission's discretion with respect to nontraffic sensitive (NTS) cost recovery. Cities also assert that the elimination of the ICAC is undesirable, as it is necessary to prevent the allocation of NTS costs to local service. MCI replied that the commission, in Docket Number 5113, adopted the ICAC to facilitate the transition to the post-divestiture environment. Additionally, MCI reiterated that the changes in jurisdictional cost allocation since divestiture have resulted in a shift of NTS costs to the interstate jurisdiction for many Texas LECs. Hence, as a result of the jurisdictional cost shift, the ICAC serves to twice recover NTS costs. The commission finds that the gradual elimination of the ICAC is in the public interest. As noted previously, the ICAC was intended to be an interim measure. ICAC was established as a revenue replacement rate; it was never designed to recover an LEC's NTS costs. Currently, Carrier Common Line (CCL) charges in the interstate and intrastate jurisdictions, the interstate subscriber line charge, and interstate high cost assistance are intended to defray those costs. As MCI points out, for many Texas LECs, an increasing share of the NTS costs is defrayed through the interstate jurisdiction. NTS cost recovery concerns are not sufficient to preserve the ICAC indefinitely. NTT notes that its financial condition is so weak that it cannot withstand any revenue reduction associated with access rates that comply with the proposed rule. NTT further expresses its desire to avoid seeking general rate increases. The commission anticipates that NTT will fully explore its options, including an application for high cost assistance, prior to requesting a rate increase. Cities assert that the adoption of the rule will result in higher local rates for SWBT customers. The assertion is incorrect. Rates set to comply with the rule will approach SWBT's access rate levels established for the fourth year in which the commission's order in Docket Number 8585 is in effect. SWBT's local rates cannot be increased during the effective period of the commission order. The parties also comment with respect to specific provisions of the proposed rule. MCI notes that language in subsection (d)(1) seems to create a new class of services and suggested the appropriate insertion of commas to clarify the commission's intent with respect to "new, experimental, promotional, or competitive services." The commission agrees, and so modifies the language. TTA notes that language in subsection (d)(2) should read "The following words and terms, when used within this subsection, shall have the following meanings unless the context clearly indicates otherwise." The commission concurs, and adds the word "within" to the published language. TEXALTEL and TPA, with MCI concurring on reply, suggested the deletion of proposed language that would preclude the consideration of an LEC as an access customer of itself. TEXALTEL argued that the commission should not foreclose the possibility of such an application by rule. GTE disagreed on reply, arguing that TEXALTEL had in fact argued that LECs should be required to impute access charges as a cost of providing intraLATA toll. GTE cites prior commission and judicial decisions rejecting imputation. The commission agrees with the recommendations of TEXALTEL and MCI. GTE misreads TEXALTEL's comments; TEXALTEL recognizes in their comments that the commission does not require the imputation of access charges in establishing intraLATA rates. The commission does not feel compelled to modify this policy at this time. However, the commission does not intend to bind its analysis of future issues related to intraLATA pricing by the adoption of this rule. The definition of access customer is therefore modified as per TEXALTEL'S recommendations. MCI proposed a revision of the definition of Interexchange Carrier Access Charge (ICAC). The published version defined ICAC as a rate associated with switched access usage. MCI noted that the ICAC is assessed with the CCL, but not necessarily with switched access usage. The commission agrees, and modifies the definition accordingly. TTA noted that the proposed definition of meet point was, in fact, a definition of billing percentages, the means by which LECs assess charges for jointly provided transport. As an alternative, TTA proposed a definition of meet point billing. As the rule establishes requirements for meet point billing, the commission believes that TTA's proposal has merit, and replaces the definition of meet point with the TTA proposal for meet point billing. CNSI proposed modifications to the definition of Percent Interstate Use, or PIU, so that only revenue-producing minutes would be reported. CNSI asserts that the proposed definition is inconsistent with the concept of charging customers for the services that they use and can recover from end users. The commission has not adopted such a concept as a basis for regulatory policy; rather, commission practice has been that access charges are assessed on those entities that use LEC access facilities. The commission declines to adopt CNSI's proposal. MCI proposed a revision to the proposed definition of switched access. To resolve ambiguity related to the assessment of switched access and common line charges, MCI proposed the insertion of language that would define switched access in terms of the use of LEC network switching or common line facilities. The commission agrees that the definition is clearer with the adoption of MCI's proposal, and so modifies the definition. TEXALTEL suggested the clarification or deletion of the reference to CCL minutes of use in the proposed definition of switched access demand. Again, as local switching charges are assessed on switched access usage where CCL charges may not be assessed, the commission adopts TEXALTEL's proposal. MCI stated that the term "Transitional ICAC Pool" is defined in the published rule, but the term is not subsequently used. MCI proposed that the definition be replaced with a definition of "Transitional ICAC." Because the former term is not used in the proposed rule and, because the latter is used extensively, the commission adopts MCI's proposed definition. With respect to subsection (d)(3), Sprint, TEXALTEL, and MCI filed comments proposing that the rule should expressly prohibit the use of customer-specific pricing in the provision of switched access. The use of such pricing schemes could result in unreasonably discriminatory access pricing. As an alternative, TEXALTEL and MCI proposed that all services provided to AT&T should be tariffed. AT&T, on reply, argued that customer-specific terms and conditions are discriminatory. The commission agrees with AT&T's assessment of the discriminatory result of requiring their access arrangements to be tariffed, while allowing other IXCs to purchase identical arrangements on a special assembly basis. The commission would further point to the statutory prohibition of pricing switched access on a customer-specific basis. The commission believes that the limits on special assembly offerings, as proposed, achieve the objective of ensuring that switched access and complementary LEC services are not priced in a discriminatory manner. The commission does not modify this paragraph. GTE proposed the deletion of the prohibition of intrastate end user charges. TEXALTEL agreed with the GTE proposal. GTE lists six reasons for supporting the use of such charges: aligning costs with the cost-causer; better maintenance of LEC competitiveness; at least six other states impose them; the interstate end user charge has not affected universal service; the charges hold down the total cost of telephone service; and they help prevent bypass. OPC opposes the deletion of the prohibition. OPC argues that end user charges impose costs on end users for access to IXCs regardless of whether the end user makes any long distance calls. OPC argues that the ICAC could be converted to a flat charge imposed on IXCs, thereby reducing the prospect for bypass. The commission is not persuaded by GTE's arguments. End user or subscriber line charges impose what amounts to a right-to-use fee. Assuming that an end user charge and some access charge recover the same LEC revenue stream, it is impossible for the charge to result in lower total bills, on balance. As OPC noted, there are other rate design strategies that reduce bypass incentives. One of these strategies, originating access rates that are lower than terminating rates, is a feature of this proposed rule. The commission declines to remove the prohibition. TTA filed comments describing what it perceives to be the intent of the proposed rule. It argues that the rule is to create guidelines for setting access rates that produce revenues equivalent to those that would be produced by the application of the Year 4 access rates that SWBT must charge pursuant to the commission's order in Docket Number 8585. TTA claims that, because each LEC has different transport and billing percentage characteristics, the SWB Year 4 rates will not generate revenues consistent with TTA's perceived policy goal. Moreover, the application of these rates would increase the difficulty of demonstrating compliance with the rule. To bring the rule into conformance with its perception of the rule's intent, TTA proposed language to modify subsection (d)(4)(A) and (B). AT&T disagreed with TTA's interpretation of the intent of the rule. AT&T argues that TTA's equating rate and revenue is contrary to the clear meaning of the term "rate." TTA's proposal would create the incentive to establish new meet points and billing percentages to maximize the revenues earned through the joint provision of transport. In conjunction with the incentives to establish new meet points, the TTA proposal could result in the deaveraging of originating access charges, because the magnitude of the charges would depend on the number of LECs that would share in the provision of transport. Moreover, the impact of these changes would be contrary to the commission's prior orders relating to meet point billing. Finally, AT&T argues that the TTA proposal would result in more difficult determination of LEC compliance with the rule. By adopting this rule, the commission establishes a benchmark for the evaluation of proposed access rates. The criteria for this evaluation are set forth in subsection (d)(4). If an LEC anticipates that rates that conform with those criteria do not yield sufficient revenues, the LEC may apply for high cost assistance or file a request for rate relief pursuant to the provisions of PURA. Additionally, the commission agrees with AT&T's discussion of the TTA proposal. That proposal would create incentives for the uneconomic use of facilities. Essentially, the TTA proposal requests the commission to exclude revenues for intermediate transport in determining whether the LEC's composite originating rate complies with the rule. While the originating LEC does not receive those revenues, the exclusion of these revenues from the calculation of the composite rate results in higher access charges than would be assessed by SWBT during year four of the commission order. The commission rejects the TTA proposal. TEXALTEL and MCI object to the use of terminating CCL as the make-whole rate element. As proposed, the rule would allow the rate for terminating CCL to be set as high as $.08 cents per minute to recover revenues that, prior to the approval of rates that comply with the rule, would have been recovered through ICAC. TEXALTEL and MCI argue that the proposed provisions would harm competition in interexchange markets. Both argue that AT&T would be the primary beneficiary of the proposal as AT&T's traffic volumes and relatively large number of points of presence (POPs) allow AT&T to be less reliant on LEC switched access. AT&T argues that there is no relationship between an IXC's number of POPs and its CCL usage. Additionally, AT&T, GTE, and OPC filed comments agreeing that bypass incentives are reduced by setting originating access rates that are lower than terminating rates. The rule's guidelines for setting access rates are consistent with that objective. Further, AT&T claims that rural competition will be aided by the reduction in the originating CCL and by lower access costs overall. Certainly the number of POPs owned by an IXC affects that IXC's access charges. Increasing the number of POPs should reduce the IXC's need for use of transport and, hence, the IXC's payments for transport. However, the commission is not convinced that there is a significant relationship between the number of an IXC's POPs and its CCL usage. Moreover, the commission is persuaded that rates set in conformance with the rule will serve to accomplish an important policy goal, i.e., reduced incentives for bypass. The commission does not amend subsection (d)(4)(A) and (C) based on TEXALTEL's comments. Several parties commented on provisions relating to premium rates. TTA suggested the insertion of a heading, "Premium rates," at the beginning of the subsection (d)(4)(D). The commission concurs, and modifies the rule accordingly. MCI, TEXALTEL, CNSI, and Sprint opposed the elimination of the discount for Feature Group B usage terminating in end offices that do not have equal access capability. TEXALTEL asserts that the elimination of the discount will also eliminate any LEC incentive to establish equal access capability in its unconverted end offices. CNSI argues that small IXCs can use nonpremium access and pass the lower access costs to the consumer. CNSI asserts that the commission must address the assessment of access charges on CNSI for its use of local exchange facilities in the completion of local calls. CNSI claims that if it pays access to complete local calls, it will pass those costs along to its customers. As a result of current practices, CNSI blames the commission for the number of complaints that the commission has received relating to CNSI rates. CNSI asserts that if access charges are assessed on local calls, AOS providers may move out of Texas with the resultant loss of jobs, commission authority, and LEC access revenues. AT&T proposes the immediate elimination of the discount. AT&T argues that, for terminating usage, Feature Group B and Feature Group D (equal access) are functionally equivalent. Moreover, while the discount was established to accommodate differences in access arrangements at divestiture, those differences have disappeared. Rather, the discounts are used to undercut AT&T pricing. AT&T proposes that the rule be clarified to ensure that the discount is also eliminated for originating access on 800 traffic. Finally, AT&T claims that the provisions excepting SWBT from the rule's requirements are unnecessary as the order in Docket Number 8585 allows revenue-neutral changes to access rates. The commission disagrees with TEXALTEL's argument relating to the discount and LEC incentives. The commission agrees with AT&T that all LECs must provide equal access if they receive a bona fide request for the conversion. The availability of the discount gives IXCs a disincentive to make such a request, and, as a result, the conversion to equal access is slower than necessary. The commission also disagrees with CNSI. It is the commission's policy to ensure that access rates are assessed in a nondiscriminatory manner. All IXCs pay access when they use LEC facilities in the same manner as CNSI. To do otherwise would be discriminatory and would create incentives for IXCs to configure the networks in manners to avoid the payment of access charges to the greatest extent possible. Each IXC must consciously set its rates to recover all of its costs, or it goes out of business. Many IXCs complete local calls, pay access charges for their usage, but do not charge rates that outrage their customers. If CNSI is the subject of numerous consumer complaints, the fault lies with their rates, not commission policy. An AOS provider that left the state because of such an access policy would not lower its access costs by moving. Local calls would remain within the commission's jurisdiction, and intrastate access charges would be assessed. The commission adopts no modifications to these provisions based on the comments of TEXALTEL, MCI, Sprint or CNSI. The commission is not persuaded that the immediate elimination of the discount serves a useful policy objective. The discount has served to nurture competition in rural Texas, and the commission must balance this objective with its goal of ensuring that rural Texas benefits from a technologically advanced telecommunications network. Equal access plays an important role in achieving that objective. The commission finds that the balance is best achieved by reducing the discount in the same manner as access charges are reduced. As a result, small IXCs may continue to benefit from lower access charges, although the rate differential between them and AT&T will also be reduced. The elimination of the discount will give AT&T's competitors an incentive to order equal access as the economic incentive to use nonpremium access is eliminated. The commission also rejects AT&T's requests for a modification of the rule with respect to the elimination of the discount for originating 800 traffic. The access treatment of originating 800 traffic should parallel that of traffic that terminates using switched access, therefore the commission does not incorporate AT&T's suggestion. Finally, the commission rejects AT&T's proposal that the provisions of subsection (d)(4) could apply to SWBT on a revenue-neutral basis without violating the commission's order in Docket Number 8585. The order specifically sets out the access rates that SWBT is authorized to charge while the order is in effect. A change of those rates is not contemplated by the order. TEXALTEL opposes the elimination of the current rate differential between the LS1 and LS2 rates for local switching. TEXALTEL asserts that the technical differences between premium and nonpremium services should be reflected in cost differences. TEXALTEL recommends that LECs be required to offer equal access from all end offices prior to the elimination of discounts for non-premium access. AT&T proposes the immediate elimination of the differential, noting that the discount is 4.0% for these rates in the interstate jurisdiction. Moreover, the differential is applied only in equal access end offices. The commission does not find a basis for adopting TEXALTEL's proposed changes, nor for adopting AT&T's proposal. The differential is applied in limited circumstances. The commission's reasoning for the gradual elimination of the Feature Group B discount applies to the elimination of the local switching rate differential, as well. TEXALTEL supports the insertion of language that would ensure that LEC access tariffs imposed an equal charge per unit of traffic. Currently, this requirement is applied in interstate access tariffs; however, the FCC is studying its elimination. MCI agrees with the imposition of the requirement, although MCI admits that requiring the mirroring of the interstate rate structure should accomplish that objective. AT&T and GTE claim that there is no reason to impose that requirement in the rule. Moreover, their comments are consistent with those of MCI regarding the effect of mirroring the interstate rate structure. The commission finds that there is no compelling reason to impose the equal charge requirement directly. However, to ensure that pending FCC action does not affect the current equal charge practice in Texas, the commission modifies subsection (d)(6) regarding the initial compliance filing. The initial filing must mirror the rate structure in each LEC's interstate access tariff that is in effect as of March 31, 1992. TTA proposes a modification of the ICAC phaseout described in subsection (d) (4)(G). The commission agrees that the published rule establishes a date that is inconsistent with subsequent provisions. The commission adopts the TTA proposal. TEXALTEL states that subsection (d)(4)(H) does not clearly limit the LECs to charging only those switched access rates that are specified in the LECs' tariffs. The commission agrees and adds language to preclude LECs from charging switched access rates that are not contained in the switched access tariffs. Several parties filed comments relating to the proposed calculation of the transitional ICAC. TTA proposed the one-time calculation of the benchmark level of transitional ICAC revenues. AT&T agreed with the TTA proposal in its reply comments. MCI stated that the published language is ambiguous, and would allow for annual recalculation of benchmark revenue. However, on reply, MCI expressed its preference for annual filings. Sprint pointed out that a one-time calculation will ensure that billing adjustments will be necessary; accordingly, MCI claimed that TTA's proposal to accommodate the adjustments is inadequate. Sprint's reply comments agreed with the TTA language with respect to the disposition of surplus revenues. Additionally, MCI and TEXALTEL suggested modifications in the calculation of the benchmark revenue levels to properly account for the effects of prior rate decisions. TTA agreed with the MCI proposal. The commission adopts the proposed TTA revisions regarding the one-time calculation of the ICAC phasedown. While the commission is not convinced that the annual filing of tariffs is unduly burdensome, the least costly alternative is the use of the initial filing in addition to TTA's proposed language in subsection (d)(5)(D). This proposal returns overcollections to the IXCs quarterly. The need for adjustments does not necessitate annual tariff filings, as the TTA proposal yields the efficient and prompt disposition of overcollections. TTA also proposed additional language for subsection (d)(5)(B) that would freeze the transitional ICAC revenue level for any LEC for which a rate proceeding that is initiated within 30 days of the compliance filing. The revenue level would remain frozen until an HCA requirement had been established for such a LEC upon the commission's final order in the rate proceeding. AT&T, MCI, and Sprint oppose the TTA proposal. Adopting the TTA proposal would create an incentive for LECs to file rate cases in anticipation of the freeze. Additionally, MCI argued that the TTA proposal would establish interim rates while lifting the burden of proof required to establish such rates. For the reasons delineated in the comments of AT&T, MCI, and Sprint, the commission rejects the TTA proposal. TTA and MCI suggested revisions to the published language in subsection (d)(5) (C), clarifying the phaseout of the transitional ICAC and the mechanism by which the phaseout is accomplished. The commission agrees that the subparagraph would benefit from clarification, and amends the initial language. TTA proposes the deletion of the last sentences of paragraph (5)(E). The sentences were necessary in the proposed rule to accommodate the annual calculation of the transitional ICAC revenues. As the calculation of the transitional ICAC revenue level will be performed for the initial filing, the language in paragraph (5)(E) is unnecessary. The commission agrees, and deletes the sentences. GTE proposed additional language for paragraph (6) that would allow the consideration of the compliance filing during a remand of a rate proceeding that had been filed pursuant to the Public Utility Regulatory Act, sec.43. OPC notes that the suggested provisions apply only to the remand of GTE's most recent rate case, Docket Number 5610, by the Third District Court of Appeals. OPC argues that the addition is impermissible. Initially, the commission's decision in that proceeding has been remanded only on specific issues that are independent of access rates. Since the remand is not related to access, the commission's order in that proceeding, as it relates to access charges, is final and cannot be reconsidered. The commission finds that the issue is governed by the doctrine of res judicata and cannot be reconsidered in the remand. The commission cannot by rule broaden the scope of the remand. GTE has not cited any authority by which the commission could adopt GTE's proposal. TTA objects to the proposed rule's reference to the possible order directing an LEC to file a rate filing package. TTA does not offer any particular justification for deleting that proposed language. The commission does not intend to abrogate by rule the due process rights of any potential party. The commission rejects the TTA proposal. TTA proposes an amendment to paragraph (6) that would ensure that any revenue reductions that an LEC may experience from compliance with the rule be recognized in subsequent proceedings where the LEC's revenues are at issue. The commission rejects the TTA proposal. In such a proceeding, the appropriate determination of an LEC's revenues is an evidentiary question. Several parties filed general comments relating to the PIU provisions. TEXALTEL supports the concept of establishing a PIU reporting framework in the rule. SWBT, AT&T, and TTA proposed the deletion of all PIU provisions except the rule's requirement that the LECs mirror the reporting requirements contained in SWBT's access tariff. The commission generally believes that it is desirable to establish a PIU reporting mechanism by rule. The requirements are necessary to ensure that the commission does not cede its interest in accurate access billing to the FCC. The proposed rule establishes general guidelines for PIU reporting, and the details are best left to narrower proceedings. However, the rule as adopted will give ample guidance to the industry as it proposes tariffs to further ensure accurate access billing. TEXALTEL proposes establishing a deadline for SWBT to file tariffs in compliance with the reporting provisions contained in the proposed rule. SWBT raises no strong objections, but prefers to file such tariffs in compliance with an anticipated order in an on-going proceeding. As the LECs will be required to mirror the reporting requirements contained in SWBT's tariff, it is reasonable to direct SWBT to file a tariff in compliance with the rule by date certain. The commission adds language to paragraph (7)(A), directing SWBT to file such a tariff within 60 days of the adoption of the rule. ATI and SWBT object to the rule authorization for an IXC to mirror its PIU associated with its facilities that are capable of determining the jurisdiction of usage. ATI argues that the usage in such locations may not be representative of the IXC's actual usage. SWBT states that such a provision may create incentives to install facilities in a manner that allows PIU manipulation. The commission deletes the mirroring provision as mirroring would likely result in inaccuracies and manipulation. MCI and TEXALTEL note that the proposed rule does not require the LEC tariffs to establish a reporting date. MCI, TEXALTEL, and Sprint indicate that the rule does not prohibit frequent audits of IXC records, nor does the rule establish a time limit for correcting billing for inaccurate PIU reporting. The commission finds that the rule need not direct the LEC to include such a date in the tariff. The LEC tariff must provide for monitoring and auditing self-reported PIUs. The details of the tariff should be left to the proceeding in which these questions will be at issue. However, the commission finds that the rule should establish some limits to the length of the period for which the IXCs and LECs are liable for over- and under-billing based on inaccurate PIUs. The commission limits the liability to 12 months of access service bills. MCI, SWBT, and CNSI argue that the rule precludes reporting with greater than annual frequency. These commenters agree that more frequent reporting would result in greater accuracy. The commission agrees, and deletes the language requiring reporting on a annual basis. Other provisions of the rule allow for more frequent reporting. SWBT proposes the deletion of the language imposing on the LEC responsibility for the accuracy of the PIU reports. The commission notes that the LEC is responsible for the accuracy of these reports when the IXC does not self-report, i.e., where the LEC has the technical capability of determining calling jurisdiction. Where the LEC has such capability, it has the responsibility for rendering accurate bills. The commission retains the language. CNSI proposes the modification of the provisions dictating the conditions for IXC self-reporting where the LEC has no capability to determine the jurisdiction of access usage. Specifically, CNSI proposes that the tariff set forth guidelines that, if met, allow self-reporting. CNSI argues that the rule, as proposed, would allow LECs to discriminate among customers. SWBT argues that it is improper to allow self-reporting in the event of a dispute. The commission adopts language similar to that suggested by CNSI. Where the LEC is incapable of making a jurisdictional determination, an audit will be the only way to arrive at an accurate determination. As the rule establishes criteria for self- reporting, LECs have a mechanism to ensure the accuracy of its access billing. The amendment is proposed under Texas Civil Statutes, Article 1446c, sec.16, which provide the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; and sec.18 which grants the commission the authority to adopt rules to protect the public interest and to provide equal opportunity in a competitive telecommunications market place. sec.23.23. Rate Design. (a)-(c) (No change.) (d) Telephone. (1) General. Local exchange company (LEC) rates for intrastate access services shall be established in accordance with the provisions of this subsection. Nothing in this subsection precludes an LEC from offering new, experimental, promotional, or competitive services in accordance with other provisions of this part authorizing such offerings. (2) Definitions. The following words and terms, when used within this subsection, shall have the following meanings, unless the context clearly indicates otherwise. (A) Access customer-Any user of services which are obtained from an LEC access service tariff. (B) Access services- LEC services which provide connections for or are related to the origination or termination of intrastate telecommunications services that are generally, but not limited to, interexchange services. (C) Equal access-LEC access which is provided to access customers on a tariffed basis, which is equal in type, quality, and price to Feature Group C, and for which the rates are unbundled. From an end user's perspective, equal access is characterized by the availability of 1-plus dialing with the end user's interexchange carrier of choice on interLATA calls. (D) High cost assistance (HCA)-A program administered by the commission in accordance with the provisions of sec.23.53(d) of this title (relating to Universal Service Fund). (E) Interexchange carrier (IXC)-A carrier other than an LEC providing any means of transporting intrastate telecommunications messages between local exchanges, but not solely within local exchanges, in the State of Texas. An entity is not an IXC solely because of: (i) the furnishing, or furnishing and maintenance of a private system, (ii) the manufacture, distribution, installation, or maintenance of customer premises equipment; (iii) the provision of services authorized under the FCC's Public Mobile Radio Service and Rural Radio Service rules; or (iv) the provision of shared tenant service. (F) Interexchange carrier access charge (ICAC)-A usage-sensitive rate that is usually assessed in conjunction with carrier common line (CCL) usage. The revenues from the assessment of the ICAC are pooled and distributed to LECs pursuant to commission order. The ICAC is to be phased down and eliminated pursuant to the provisions of this subsection. During the phasedown, the ICAC will be referred to as the transitional ICAC. (G) Intrastate-Refers to communications which both originate and terminate within Texas state boundaries. An LEC access billing arrangement for services to access customers when local transport is jointly provided by more than one LEC. (I) Percent interstate usage (PIU)-An access customer-specific ratio or ratios determined by dividing interstate access minutes by total access minutes. The specific ratio shall be determined by the LEC unless the LEC's network is incapable of determining the jurisdiction of the access minutes. A PIU establishes the jurisdiction of switched access usage for determining rates charged to switched access customers and affects the allocation of switched access revenue and costs by LECs between the interstate and intrastate jurisdictions. (J) Switched access- Access service that is provided by LECs to access customers and that requires the use of LEC network switching or common line facilities generally, but not necessarily, for the origination or termination of interexchange calls. (K) Switched access demand- Switched access minutes of use, or other appropriate measure where not billed on a minute of use basis, for each switched access rate element, normalized for out of period billings. For the purposes of this section, switched access demand shall include minutes of use billed for the local switching rate element. (L) Switched access minutes or access minutes of use -The measured or assumed duration of time that LEC network facilities are used by access customers. Access minutes are measured for the purpose of calculating access charges applicable to access customers. (M) Transitional ICAC-A rate, calculated pursuant to paragraph (5) of this subsection. (3) Access services. Each LEC's tariff must include the recurring and nonrecurring charges for all access services offered by the LEC. An LEC is not required to include in its access tariff any access service that its network is technologically incapable of providing. An LEC must include in its access tariff any access service which is provided on a special assembly basis if the service is provided to more than three customers or if the service is provided at more than three locations. LECs are prohibited from charging intrastate end user common line charges, intrastate subscriber line charges, or similar intrastate end user charges. (4) Access rates. The structure and rates for all LECs' intrastate switched access services shall be established in accordance with the following requirements. (A) Originating rate. Each LEC shall calculate its composite originating switched access rate, excluding the transitional ICAC rate. If such composite switched access rate is calculated to be greater than $.0461 per premium originating access minutes of use, the LEC must show good cause to charge such rate in its initial compliance application filed pursuant to paragraph (6) of this subsection, and must include in such filing a showing that the PIUs of its access customers are reasonable. For purposes of calculating the composite originating switched access rate, each LEC shall incorporate its weighted average local transport rate and an effective per minute rate for all recurring rate elements. The requirements of this subparagraph apply to Southwestern Bell Telephone Company effective December 14, 1993, unless otherwise ordered by the commission. (B) Terminating rate. Each LEC shall calculate its composite terminating switched access rate, excluding terminating CCL and the transitional ICAC rate. If such composite terminating switched access rate is calculated to be greater than $.0183 per premium terminating access minutes of use, the LEC must show good cause to charge such rate in its initial compliance application filed pursuant to paragraph (6) of this subsection, and must include in such filing a showing that the PIUs of its access customers are reasonable. For purposes of calculating the composite terminating switched access rate, each LEC shall incorporate its weighted average local transport rate and an effective per minute rate for all recurring rate elements. The requirements of this subparagraph apply to Southwestern Bell Telephone Company effective December 14, 1993, unless otherwise ordered by the commission. (C) Terminating CCL. In the initial compliance filing, each LEC's terminating CCL may be residually priced to produce the equivalent amount of revenues defined by paragraph (5)(A)(i) of this subsection, except that the terminating CCL rate shall not exceed $.08 per premium terminating rated access minute of use in the initial filing nor in any subsequent filing. (D) Premium rates. The requirements of this subparagraph apply to Southwestern Bell Telephone Company effective December 14, 1994, unless otherwise ordered by the commission. Premium access rates shall apply only to those switched access minutes that: (i) terminate via Feature Group B, provided, however, any existing discounts for termination via Feature Group B shall be phased out in accordance with the schedule for the phase down of the transitional ICAC revenue requirement as set forth in paragraph (5)(B) of this subsection; (ii) originate or terminate via Feature Group C; (iii) originate from an equal access end office via any switched access feature group; (iv) terminate to an equal access end office via any switched access feature group; or (v) originate from a nonequal access end office and are routed over Feature Group D tandem connections. (E) Local switching. The rate differential between the LS1 and LS2 local switching rate elements shall be phased into one premium local switching rate element in accordance with the schedule for the phase down of the transitional ICAC revenue requirement as set forth in paragraph (5)(B) of this subsection. The requirements of this subparagraph apply to Southwestern Bell Telephone Company effective December 14, 1994, unless otherwise ordered by the commission. (F) Local transport. Local transport rates shall not contain unreasonable distance sensitivity. (G) ICAC. The ICAC rate shall be phased down and eliminated by March 1, 1995, in accordance with paragraph (5) of this subsection. (H) Lower rates. Nothing in this paragraph prevents an LEC from charging a lower rate for any rate element than the amount specified herein; however, no LEC shall charge any rate for switched access that is not contained in its switched access tariff. (I) Rounding. The rates for all access services shall be assessed using conventional rounding of fractional units of applicable billing units, i.e., a fraction equal to or greater than .5 of one unit will be rounded up to the next higher whole unit, while fractions less than .5 of one unit will be rounded down to the next lower whole unit, except that local transport mileage may be rounded up to the next whole mile. (5) ICAC transition. If the rates established in conformity with paragraph (4) of this subsection are not sufficient to yield a level of revenues equivalent to an LEC's base level of switched access revenues, as defined subparagraph (A)(i) of this paragraph, and the LEC has not established an HCA requirement under sec.23.53(d) of this title, then the LEC shall be entitled to receive transitional ICAC revenues as provided herein. (A) Transitional ICAC revenues. Each LEC's benchmark level of transitional ICAC revenues shall be calculated as follows. (i) 1991 switched access demand shall be multiplied by rates in effect as of August 31, 1992, for each switched access rate element including any applicable access credits, and added to 1991 booked ICAC revenues minus billed ICAC revenues to determine the base level switched access revenues. However, for any LEC which has a PURA, sec.42 proceeding completed between January 1, 1992 and September 1, 1992, 1991 booked ICAC revenues shall be adjusted in accordance with the commission's final order in that sec.42 proceeding. (ii) 1991 switched access demand shall be multiplied by the LEC's switched access rates to be effective September 1, 1992, in compliance with paragraph (4) of this subsection (excluding the transitional ICAC rate) to determine the LEC's initial compliance level of switched access revenues. In no event shall a terminating CCL rate of less than $.08 be used for purposes of this calculation. (iii) Each LEC's benchmark level of transitional ICAC revenues shall be equal to its base level switched access revenues, determined in accordance with clause (i) of this subparagraph, less its initial compliance level of switched access revenues determined in accordance with clause (ii) of this subparagraph. (B) Phaseout. For the purposes of establishing a benchmark level for phasing out the transitional ICAC revenues, each LEC's authorized level of transitional ICAC revenues established in accordance with subparagraph (A) of this paragraph shall be such LEC's benchmark level of transitional ICAC revenues. Each LEC's transitional ICAC revenues shall be phased down from its benchmark and eliminated in accordance with provisions of this paragraph. Except as provided in subparagraph (F) of this paragraph, the phaseout shall be accomplished as set out in clauses (i) and ii) of this subparagraph. (i) For LECs with less than 75,000 access lines as of January 1, 1992, the effective date and percentage of phaseout are as follows: September 1, 1992-25%; September 1, 1993-60%; March 1, 1995-100%. (ii) For LECs with 75, 000 or more access lines as of January 1, 1992, the effective date and percentage of phaseout are as follows: September 1, 1992-25%; September 1, 1993-60%; September 1, 1994-100%. The applicable phaseout percentage shall be applied to the LEC's benchmark level of transitional ICAC revenues determined in accordance with subparagraph (A) of this paragraph. The applicable phaseout percentage shall be applied to the LEC's benchmark level of transitional ICAC revenues determined in accordance with subparagraph (A) of this paragraph; (C) Transitional ICAC rate. Effective September 1, 1992, each LEC shall include in its access tariff a transitional ICAC rate set to yield the total level of transitional ICAC revenues established for all LECs in accordance with this paragraph. The transitional ICAC rate shall be a uniform statewide rate element charged by all LECs except as otherwise provided in subparagraph (F) of this paragraph. The transitional ICAC rate shall be reduced effective September 1, 1993 and September 1, 1994, and shall yield the level of transitional ICAC revenues established for all LECs for the next phasedown period. The transitional ICAC rate shall be eliminated effective March 1, 1995. The transitional ICAC for these subsequent periods shall be established as part of the initial compliance filing. The reduction in the transitional ICAC rate will reflect the reductions in each LEC's transitional ICAC revenue requirement as described in subparagraph (B) of this paragraph. The transitional ICAC rate shall be determined by dividing the total amount of transitional ICAC revenues for the relevant period by 1991 switched access demand. (D) Revenue collection and disbursement. Monthly, each LEC shall forward to the association, established pursuant to sec.23.17 of this title (relating to Administration of IntraLATA Compensation and Interexchange Carrier Access Charge Revenues), all revenues collected pursuant to its tariffed transitional ICAC rate. Each month, the association will disburse to each LEC 1/12 of its authorized level of transitional ICAC revenues for the then-applicable 12-month phasedown period. However, for the six-month phasedown period beginning September 1, 1994, the association will disburse monthly to each LEC 1/6 of the authorized level of transitional ICAC revenues. Any surplus over the approved level of transitional ICAC revenues for all LECs pursuant to subparagraphs (A) and (B) of this paragraph shall be distributed quarterly to access customers based on each access customer's proportionate share of total transitional ICAC minutes of use for the 12-month period ending three months prior to the beginning of the quarter during which the surplus was accumulated. Effective January 1, 1994, any surplus over the approved level of transitional ICAC revenues shall be distributed based on each access customer's proportionate share of total transitional ICAC minutes of use. (E) High cost assistance. Any LEC which establishes an HCA requirement pursuant to sec.23.53(d) of this title shall no longer be entitled to receive transitional ICAC revenues. (F) Holdover cases. Any LEC which has not had its rates adjusted in conformity with this subsection as of September 1, 1992, shall continue to bill its tariffed ICAC rate until such time as its access rates are brought into compliance with this subsection. Such rate shall be deemed its transitional ICAC rate for the period during which it remains in effect. All ICAC revenues collected by such LECs shall be forwarded to the association and used to fund the transitional ICAC Pool. The level of ICAC revenues that such LECs receive from the transitional ICAC pool will not be affected by the adoption of this section until such time as the access rates charged by such LECs are brought into compliance with this subsection. (6) Initial compliance filing. Existing rates for access services shall remain in effect until changed by subsequent order of the commission. On or before June 1, 1992, each LEC shall file an initial application to bring its access rates into compliance with the provisions of paragraphs (4) and (5) of this subsection. Except as otherwise required by this subsection or commission order, the terms and conditions of each LEC's intrastate switched access tariff proposed in the initial compliance filing shall mirror the terms and conditions for the usage-sensitive rate elements of its interstate switched access tariff as of March 31, 1992. The requirements of this paragraph are not applicable to Southwestern Bell Telephone Company. The initial compliance tariff for each LEC shall become effective September 1, 1992, unless otherwise ordered by the commission. The initial compliance filing shall be supported by sufficient information to fully demonstrate compliance with the requirements of this subsection. However, the initial filing shall not be considered a major change of rates as defined by PURA, sec.43 unless the LEC's aggregate revenues will increase more than the greater of $100,000 or 2.5%. The LEC shall not be required to submit a rate filing package unless the initial filing constitutes a major rate change or unless the LEC is otherwise ordered to do so. The commission may review the initial compliance application: (A) in any PURA, sec.42 proceeding underway on the effective date of this section; (B) in a PURA, sec.42 proceeding initiated against an individual company after the effective date of this rule; or (C) in a PURA, sec.43 or sec.43B proceeding initiated by the company after the effective date of this rule. (7) Administrative provisions. (A) Percent interstate usage (PIU). Within 60 days of the adoption of this subsection, Southwestern Bell Telephone Company shall file its compliance tariff regarding PIU provisions. Within 30 days of adoption by the commission of amended percent interstate usage (PIU) reporting, auditing, and backbilling procedures for Southwestern Bell Telephone Company, all independent LECs must file administrative revisions to their intrastate access service tariffs to mirror the PIU provisions in the intrastate access service tariff of Southwestern Bell Telephone Company. The intrastate access service tariff of all LECs must contain, at a minimum, the requirements stated in clauses (i)-(iii) of this subparagraph. (i) Jurisdictional determination capability. If the LEC possesses the network capability to determine the jurisdiction of an access service, a monthly PIU, based upon the actual jurisdictional determination of access services used by the access customer, must be calculated by the LEC and applied to the monthly bill for each access customer. (ii) No jurisdictional determination capability. If an LEC's network facilities are incapable of making a determination of the jurisdiction of an access service, such LEC shall establish guidelines in its access tariff that permit an access customer to self-report. PIUs may be self-reported by access customers to LECs if all of the requirements of subclauses (I)-(VI) of this clause are met. (I) An LEC must request and receive written representation from the self- reporting access customer that the access customer possesses a network technology or has established other reasonable methods which it can accurately determine the jurisdiction of each access service used by the access customer. (II) The LEC must request and receive a written representation from the access customer that the access customer calculates self-reported PIUs based upon the actual jurisdiction of each access service used by the access customer. (III) The LEC must request and receive from the access customer, at a minimum, an annual report supporting the self-reported PIUs. (IV) The LEC's intrastate access tariff must establish a monitoring procedure for the annual monitoring of all self-reported PIUs and an auditing procedure for timely auditing of questionable self-reported PIUs. (V) The LEC's intrastate access service tariff must contain an adjustment procedure for the correction of up to 12 months of access service bills which were based upon an erroneous PIU as determined through a PIU audit. (VI) The LEC's intrastate access tariff must specify that the LEC is responsible for verifying the accuracy of the PIU report and the access customer is responsible for the accuracy of self-reported PIUs. (iii) Default PIU. If the LEC's network facilities are incapable of determining call jurisdiction and the access customer fails to exercise its self-reporting option under clause (ii) of this subparagraph, the LEC must provide written notice to the access customer by certified mail that, if the customer fails to exercise one of its options within 30 days of receipt of such notice, a PIU will be established at 50%. Nothing in this paragraph prohibits the LEC from auditing such access customer. If such an audit is conducted, the results of such audit will be used to determine that access customer's PIU. (B) Meet point billing. The provisions in this subparagraph pertain to access services which are required to be meet point billed. (i) Tariffs. LECs must file administrative tariff amendments to reflect compliance with the most current "Multiple Exchange Carrier Access Billing (MECAB)" and "Multiple Exchange Carrier Ordering and Design (MECOD)" guidelines within 60 days after acceptance of these guidelines or acceptance of revisions to these guidelines by the Federal Communications Commission. If the Federal Communications Commission accepts the "Small Exchange Company Access Billing (SECAB)" guidelines pertaining to meet exchange companies may file tariff amendments within 60 days after acceptance by the Federal Communications Commission to reflect compliance with MECAB through the implementation of SECAB. (ii) Compensation. For any an LEC is authorized to receive compensation for its portion of the jointly-provided access service. If an LEC receives compensation above the amount associated with the provision of its portion of a jointly- provided access service, the LEC must immediately file an administrative tariff amendment with the commission to recover only its portion of the jointly- provided service and, within 30 days after approval of the required tariff amendment, must refund the surplus amount received with interest to each affected customer. Additionally, LECs are prohibited from filing tariff amendments that result in a jointly-provided access service billed amount which exceeds charges for 100% of the jointly-provided service. (C) Equal access. Beginning January 1, 1993, LECs must file with the commission, on January 1 of each odd-numbered year, a report which describes the LEC's 10- year forecasted plan and schedule for implementation of equal access technology in Texas. Reports filed on and after January 1, 1995, must include a description of all changes to the information provided in the prior biennial report, along with detailed explanations for such changes. However, when an LEC implements equal access in 100% of the areas for which the LEC is certificated to provide local exchange service, the LEC shall file a final equal access report with the commission. In such report, the LEC will affirm that the LEC will notify the commission if it no longer provides equal access to 100% of its certificated area and will resume reporting in compliance with the provisions of this subparagraph. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205352 Mary Ross McDonald Secretary of the Commission Public Utility Commission of Texas Effective date: May 7, 1992 Proposal publication date: February 25, 1992 For further information, please call: (512) 458-0100 Customer Service and Protection 16 TAC sec.23.51 The Public Utility Commission of Texas adopts an amendment to sec.23.51 concerning utility submetering, without changes to the proposed text as published in the January 31, 1992, issue of the Texas Register (17 TexReg 779). The proposed amendment will allow elderly and chronically ill submetered tenants living on fixed incomes, to choose to participate in the level and average bills plans, to choose to participate in the level and average billing plans, in order to avoid high summer and winter electric bills. The proposed plan is similar to the level and average payment plans set out in sec.23.45(e)(1) (B). This method is encouraged of utilities and should be extended to residents of submetered dwelling units. Under the average payment plan requested the 12-month averaging of bills would come from the tenant's history in each individual dwelling unit and would be updated with each months billing. On the anniversary date of each lease, the account would be brought up-to-date and then automatically start over with lease renewal. Alternately, under a level payment plan eligible tenants would pay on a monthly basis a fixed billing rate one-twelfth of that tenant's estimated annual consumption at the appropriate rates, with provisions for quarterly adjustments as may be determined based on actual usage. Utilization of the proposed plan would be optional to both the owner and to each individual resident within the complex. Additionally, no interest charges would be included in the billings; any seasonal overcharges or undercharges would be carried by the owner of the complex. The method of bill calculation will remain unchanged. This will insure tenants against fluctuating electric bill. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 1446d, which provide the Public Utility Commission of Texas with authority to make and enforce the rules reasonably required in the exercise of its powers and jurisdiction over submetering. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205414 Mary Ross McDonald Secretary Public Utility Commission of Texas Effective date: May 8, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 458-0100 16 TAC sec.23.53 The Public Utility Commission of Texas an adopts amendment to sec.23.53(d) concerning a High Cost Assistance Program, with changes to the proposed text as published in the February 25, 1992, issue of the Texas Register (17 TexReg 1496). The amendment provides for the creation and operation of the high cost assistance program under the universal service fund and establishes a procedure for the determination and collection of assessments on all telecommunications utilities to provide money for the fund. The amendment also establishes the procedure for disbursements from the fund to qualifying local exchange companies. Comments on the proposed amendment were received through March 9, 1992 from the Texas Telephone Association (TTA); Capital Network System, Inc. (CNSI), Southwestern Bell Telephone (SWBT); General Telephone of the Southwest, Inc. and CONTEL of Texas (GTE-SW); Lufkin-Conroe Telephone Exchange, Inc.; the Texas Payphone Association (TPA); Consumers Union; Steering Committee of Intervening Cities re: Dkt. No. 8585 (the Cities); MCI Telecommunications Corporation; AT&T; the Texas Gray Panthers; the Office of Public Utility Counsel (OPUC); the Texas Association of Long Distance Telephone Companies (TEXALTEL); North Texas Telephone Company; American Telco, Inc.; US Sprint; and Texas Statewide Telephone Cooperative, Inc (TSTCI). Reply comments were received through March 16, 1992, from TTA; SWBT; GTE-SW; Lufkin-Conroe; TPA; MCI; AT&T; OPUC; TEXALTEL; Sprint. Most comments were in general support of the rule. However, the Texas Gray Panthers, TPA, and Consumers Union had general concerns regarding implications for local rates subsidizing access which they contend will result from the creation of a High Cost Assistance (HCA) requirement if such a requirement is set for a local exchange carrier as a result of revenue shortfalls resulting from compliance with a new sec.23.23(d) regarding rate design. As this issue is more appropriately directed toward the implementation of a new sec.23.23(d), a discussion of the commission's findings can be found in the preamble to that subsection. OPUC commented that the proposed amendment did not establish any guidelines "to determine LECs' eligibility for the funds and to guide the commission in modifying the level of HCAF (sic) revenues on a case-by-case basis." They state further that "implementation of more specific guidelines for drawing upon HCAF revenues is a necessary prerequisite to the operation of the access charge rule in its present form." The commission finds that the amendment provides the commission with the appropriate flexibility necessary for determining each LEC's HCA requirement at such time that the LEC if found to be in need of added revenues. When a LEC asks the commission to establish an HCA requirement in a PURA, sec.42, sec.43, or sec.43(B) proceeding, the LEC will be responsible for presenting evidence that such a revenue shortfall has resulted from the LEC's compliance with a new sec.23.23(d); and at such time, all intervenors and other parties to the case will be provided with an opportunity to develop and evidentiary basis for their preferred method of recovering the revenue shortfall. The Consumers Union commented that the commission has abdicated its responsibility to monitor and audit the HCA program by turning such duties over to the industry. The commission is authorized under PURA, sec.98(e) to do all things necessary and convenient to implement and administer the universal service fund (USF). Therefore, the commission authorized the appointment of an administrator to perform the ministerial functions of administering the USF pursuant to subsection (c)(1)(A). Further, such functions are performed by virtue of a contractual agreement between the commission and the administrator and are, therefore, monitored by the commission. TTA commented that the amendment should contain an inseverability clause linking subsection (d) with the adoption of new sec.23.23(d): "This section takes effect when proposed Substantive Rule 23.23(d) becomes effective. If proposed Substantive Rule sec.23.23(d) is not approved by the commission or does not become effective, this section will not become effective." They suggested that unless both rules are adopted and become effective simultaneously, there will be significant economic costs to the companies. The commission disagrees that there will be any significant economic costs to the companies should the amendment to subsection (d) become effective without simultaneous adoption of sec.23.23(d), however paragraph (2) of subsection (d) effectively provides an inseverability clause by stating that "any HCA requirement established pursuant to this paragraph shall be effective concurrently with the effective date of the switched access rates approved pursuant to the initial filing requirements of sec.23.23(d) of this title (relating to Rate Design). TTA also commented that language be added to proposed subsection (d)(2) stating that "this condition is considered to have been met by those LECs that have completed a PURA, sec.42 proceeding between July 1, 1990, and the effective date of this rule." The commission finds that such clarification is unnecessary as such information will already be part of the record for such LECs. Commenters also suggested clarifying language in paragraph (2)(C) with respect to when the HCA requirement would be eliminated for those LECs with 75, 000+ access lines as of January 1, 1992. The amendment has been revised to clarify its intent. AT&T commented that paragraph (5)(D) should provide for the IXCs that have paid into the fund be refunded any reserves in 1995. The commission finds that such clarification is unnecessary as the amendment provides for the reserves to be paid to all telecommunications utilities that paid into the fund in 1994, and as such would appropriately include those IXCs that had paid into the fund in 1994. Those comments concerning the definition of "switched access demand" were addressed by a change in such definition as that exact change for the exact definition was addressed in the preamble of new sec.23.23(d). Those comments concerning the exclusion of the ICAC rate from the calculation set out in paragraph (2)(A) were addressed in a change to such text as that exact change for the exact text set out in sec.23.23(d)(5)(A)(i) was addressed in the preamble of new sec.23.23(d). The amendment is adopted under Texas Civil Statutes, Article 1446c, sec.16, which provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; sec.18, which grants the commission the authority to adopt rules to protect the public interest and to provide equal opportunity in a competitive telecommunications market place; and sec.98 which authorizes the commission to adopt and enforce rules requiring local exchange companies to establish a universal service fund to assist local exchange companies in providing basic local exchange service at reasonable rates in high cost rural areas. sec.23.53. Universal Service Fund. (a) (No change.) (b) Definitions. The following words and terms, when used in this section shall, have the following meanings unless the context clearly indicates otherwise. (1)-(5) (No change.) (6) Switched access demand-Switched access minutes of use, or other appropriate measure where not billed on a minute of use basis, for each switched access rate element, normalized for out of period billings. For the purposes of this section, switched access demand shall include minutes of use billed for the local switching rate element. (c) (No change) (d) High cost assistance (HCA). (1) Purpose. This section establishes guidelines for financial assistance to local exchange carriers (LECs) that serve the high cost and rural areas of the state so that these carriers may provide basic local exchange service at reasonable rates. (2) Establishment of an HCA Requirement. Any LEC may request that the commission establish an HCA requirement in a PURA, sec.42, sec.43, or sec.43(B) proceeding completed after the effective date of this subsection. Before receiving an HCA requirement, a LEC must be able to show that the PIUs of its access customers are reasonable. Any LEC involved in a pending PURA, sec.42, sec.43, or sec.43(B) proceeding as of the effective date of this subsection in which the LEC's overall revenue requirement is at issue, and in which the LEC elects to file to bring its rates into compliance with sec.23.23 of this title (relating to Rate Design), may request that the commission establish an HCA requirement in that proceeding. Receipts from the interstate Universal Service Fund will be applied to the LEC's overall intrastate revenue requirement in any proceeding in which an HCA requirement is to be established. Once an HCA requirement is established for a LEC, that LEC's HCA requirement shall remain the same until adjusted in a subsequent PURA, sec.42, sec.43, sec.43(B) proceeding. Any LEC that has had a PURA, sec.42 proceeding completed after July 1, 1990, and prior to the effective date of this subsection in which its overall revenue requirement was at issue shall have its HCA requirement calculated as set out in subparagraphs (A)-(C) of this paragraph, and such HCA requirement shall be effective concurrently with the effective date of the switched access rates approved pursuant to the initial filing requirements of sec.23.23(d) of this title. (A) 1991 switched access demand by rate element shall be multiplied by the LEC's rates in effect as of August 31, 1992 for each switched access rate element, including any applicable access credits, and added to 1991 booked interexchange carrier access charge (ICAC) revenues minus billed ICAC revenues to determine the base level switched access revenues. However, for any LEC that has a PURA, sec.42 proceeding completed between January 1, 1992, and the effective date of this subsection, the 1991 booked ICAC revenues shall be adjusted in accordance with the commission's final order in that sec.42 proceeding. (B) 1991 switched access demand by rate element shall be multiplied by the LEC's switched access rates to be effective September 1, 1992, in compliance with sec.23.23 of this title, excluding the transitional ICAC rate, to determine the LEC's initial compliance level of switched access revenues. In no event shall a terminating CCL rate of less than $.08 be used for purposes of this calculation. (C) Such LEC's initial level of HCA requirement shall be equal to its base level switched access revenues, determined in accordance with subparagraph (A) of this paragraph, less its initial compliance level of switched access revenues determined in accordance with subparagraph (B) of this paragraph. Such LEC's HCA requirement shall remain at this level until changed in a subsequent PURA, sec.42, sec.43, or sec.43 (B) proceeding. However, any such LEC with more than 75,000 access lines as of January 1, 1992, shall have its HCA requirement eliminated effective September 1, 1996, unless such LEC has had a new HCA requirement established in a sec.42, sec.43, or sec.43(B) proceeding completed subsequent to the effective date of this rule and before September 1, 1996, or unless otherwise ordered by the commission. (3) Reporting. Each LEC shall be responsible for reporting to the administrator, as defined in subsection (c)(1)(A) of this section, any change in the LEC's HCA requirement. (4) Recovery of Costs through the universal service fund. (A) An LEC will be reimbursed from the universal service fund for any HCA requirement established for that LEC pursuant to paragraph (2) of this subsection. Each month the Administrator shall disburse to each such LEC 1/12 of its established HCA requirement. Disbursements from the universal service fund will be made each month only upon receipt from the LEC of the monthly reports required by paragraph (5)(C)(iii) of this subsection. Disbursements may also be subject to such other limitations or conditions as determined by the commission to be just and reasonable. (B) The commission and the administrator will be reimbursed from the universal service fund for those costs incurred as a result of the implementation and administration of the HCA program. The commission shall submit reports to the administrator showing the costs incurred for the previous reporting period. The administrator will verify such reports and issue reimbursements within 30 days after the due date of such reports. (5) Universal service fund assessment. (A) Cost. The cost of the HCA program is the sum of: (i) any HCA requirements established pursuant to paragraph (2) of this subsection; (ii) any costs associated with the implementation and administration of the HCA program incurred by the commission (including the costs incurred by the administrator on behalf of the commission); and (iii) any amount established as a reserve for such contingencies as late payments and uncollectibles. (B) Funding. Beginning with the effective date of this subsection and continuing through February 28, 1995, the cost of the HCA program shall be assessed to all telecommunications utilities, except local exchange carriers. Effective March 1, 1995, the cost of the HCA program shall be assessed to all telecommunications utilities, including local exchange carriers. (C) Division of assessment among telecommunications utilities. (i) The administrator shall establish an assessment rate to apply to all telecommunications utilities, excluding or including LECs as described in subparagraph (B) of this paragraph. This rate shall be calculated by dividing the cost identified in subparagraph (A) of this paragraph for the current period by the appropriate total access MOU as set forth in subclauses (I) and (II) of this clause. (I) Through February 28, 1995, the appropriate total access MOU shall be the intrastate local switching access MOU as described in subsection (c)(3)(A) of this section. (II) Effective March 1, 1995, the appropriate total access MOU shall be the sum of intrastate local switching access MOU as described in subsection (c)(3)(A) of this section, plus LEC intrastate equivalent access minutes of use as described in subsection (c)(3)(B) of this section. (ii) The assessment to each telecommunications utility, excluding or including LECs as described in subparagraph (B) of this paragraph, shall be the amount of that utility's total access MOU multiplied by the assessment rate for the current period calculated pursuant to clause (i) of this subparagraph. The administrator may develop a methodology to allow each LEC to net its HCA requirement against its assessment and forward the difference to the administrator. The assessment shall be treated as an access charge for purposes of sec.23.25 of this title (relating to Long Distance Rates). However, monthly changes to the assessment as a result of volume fluctuations or factors other than a change in the overall HCA requirements, shall not require a separate flow through filing more than once annually. (iii) LECs shall submit monthly reports to the administrator showing the appropriate total access MOU. Telecommunications utilities other than LECs shall submit monthly reports to the administrator showing additional data that is required by the administrator to calculate the assessments. (D) Reserves. Any amount established as a reserve pursuant to subparagraph (A)(iii) of this paragraph that exists as of February 28, 1995, shall be distributed to all telecommunications utilities that paid assessments in 1994. The distribution amount shall be based on each utility's proportionate share of total access MOU for the 12-month period ending August 31, 1994. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205353 Mary Ross McDonald Secretary Public Utility Commission of Texas Effective date: May 7, 1992 Proposal publication date: February 25, 1992 For further information, please call: (512) 458-0100 16 TAC sec.23.57 The Public Utility Commission of Texas adopts new sec.23.57, concerning telecommunications privacy issues, with changes to the proposed text as published in the October 18, 1991, issue of the Texas Register (16 TexReg 5763). The commission adopts the new section after finding that privacy issues are becoming increasingly relevant in the emerging advanced telecommunications infrastructure and that customers may be unaware of the extent of the accumulation and dissemination of customer information by local exchange carriers. Changes to the proposed rule affect every subsection and are generally in the nature of clarifying the rule's intent. These changes are explained in the summary of comments. The adopted section will function to educate customers of local exchange carriers about the transmission of Automatic Number Identification (ANI) on 800 and 900 telephone calls, ensure that customer proprietary network information compiled by and available to local exchange carriers will be released under controlled circumstances, and require local exchange carriers to identify and address privacy concerns before introducing any new service. Comments were received for 30 days and reply comments for an additional 30 days. Parties commenting on the proposed rule were: the Texas Association of Telephone Answering Services, Inc. (TATAS), the Texas Telephone Association (TTA) , Consumers Union, the Texas Gray Panthers, Central Telephone Company of Texas (CENTEL), the A.C.L.U. of Texas, the Office of Public Utility Counsel (OPUC), AT&T, GTE-Southwest Incorporated and Contel of Texas, Inc. (GTE-SW), Southwestern Bell Telephone Company (SWBT), United Telephone Company of Texas, Inc., MCI Telecommunications Corporation, Crime Stoppers, the Texas Association Against Sexual Assault (TAASA), and the Texas Council on Family Violence. CENTEL's comments were in the form of a cover letter concurring with the comments submitted by TTA. Reply Comments were received from GTE-SW, US Sprint Communications Company Limited Partnership (Sprint), SWBT, and the Texas Department of Human Services (DHS). SWBT commented that the proposed telecommunications privacy rule is "untimely, unnecessary and detrimental to consumers," suggesting that the balloting requirements imposed by the CPNI provision of the rule would confuse customers and provide no incentive for LECs to offer new services. United commented that "it has not been demonstrated that LEC customers are concerned about the treatment of CPNI by LECs." Inasmuch as privacy issues are becoming increasing relevant in the emerging advanced telecommunications infrastructure and that customers may be unaware of the accumulation and dissemination of customer information by the LECs, the commission finds that a rule addressing such concerns is both timely and necessary. Those provisions of the rule that address balloting of customers provide a local exchange carrier with 180 days to compose a clear, concise ballot informing the customer of his options with respect to the release of CPNI. SWBT's comment regarding the LECs' lack of incentive to offer new services will be addressed below in the discussion on the CPNI provisions of the rule. TTA and SWBT dispute the deputy general counsel's statement in the preamble to the proposed rule that "there is no anticipated economic cost to persons who are required to comply with the section as proposed." TTA specifically claims that "anytime a ballot or bill insert is required, the cost of postage alone negates the statement." The commission finds that, to the extent an economic cost has been identified for persons who are required to comply with the section as proposed, the public benefit resulting from such compliance outweighs the cost. All of the LECs that commented stated that the definitions of "supplemental services" and "optional calling features or plans (OCFPs)" were confusing and that the distinction between them was unclear. Further, the LECs commented that the provision of the proposed rule addressing OCFPs subsection (b)(5) would tie the LEC's hands in marketing its own regulated monopoly services. TATAS commented that the definition of "supplemental services" should state that any service offered on an untarriffed basis by a local exchange carrier is a "supplemental service," and further that voice messaging services should be included in the definition as a "supplemental service." GTE-SW commented that "basic service," which is used in the definition of "supplemental services" is not defined and, therefore, the definition is itself ambiguous. The commission agrees that the provisions on OCFPs are unnecessarily burdensome on the LECs' ability to market regulated monopoly services, therefore, all definitions and provisions of the rule addressing "optional calling features or plans" have been deleted. The intent of the distinction in the definitions between OCFPs and "supplemental services" was to clearly identify what services would constitute "supplemental services" for the purpose of releasing customer- specific CPNI for the use of local exchange carrier personnel marketing such "supplemental services." The definition of "supplemental services" is still necessary and relevant to the rule and remains in the rule; however, it has been revised in consideration of comments and to clarify the rule's intent. The published version of the proposed rule referenced "current privacy expectations" in a general statement addressing customer privacy at subsection (a). Several commenters noted that "current privacy expectations" is an undefined term in need of definition. TTA commented that "current privacy expectations" is somewhat ambiguous and that the rule should be modified to clarify the standard and to allow for the standard to change. Similarly, OPUC and Consumers Union commented that the rule lacked standards and a definition for "current privacy expectations." Consumers Union stated that in lacking a definition for "current privacy expectations," the rule contained no standards for the commission to use to determine whether the LEC is in compliance with the intent of the rule. OPUC suggested that the LECs may be able to alter the standard each time an application is approved. GTE-SW commented that the proposed rule "presumes that any loss of privacy is harmful" and that it also "assumes that the affected individual desires that the loss of privacy be restored." GTE-SW ventures on to state that "in any free society, a reasonable balance must be drawn between the expectations of individuals and the overall benefits to society that result from some form of change. In some cases, the benefits to society may be sufficient to warrant the associated loss of individual privacy." The commission agrees that the reference to "current privacy expectations" is ambiguous and has thus deleted that reference from the rule. The commission clarifies the rule's intent with the addition of a definition for "privacy issue" in subsection (a)(4). Further, subsections (b) and (c) clearly set forth factors for the commission to consider in determining privacy issues in any LEC application to offer a new service or feature. Subsection (c) of the proposed rule was clearly misinterpreted by commenters. Both industry and consumers groups alike stated that they interpreted the subsection on new service applications to mean that a LEC would bring in an application, state what the LEC considered to be the privacy concerns with the new service - if any, - and that the application would then be approved. In particular, commenters stated that the proposed rule de facto approved caller identification services for the state. TTA stated that the rule "as rewritten would allow LECs the flexibility needed to offer Caller ID." Consumers Union stated that "under this rule, all the commissioners can do is ensure that all subjective statements required (by the LECs) in the application have been filed. By adopting this rule the commission will completely abdicate its responsibility to the public on issues of privacy." The Texas Council on Family Violence stated that the rule "would allow the telephone company to determine its own approaches to creating a market for Caller ID. We believe the Public Utilities Commission must continue its involvement in this process." Proposed subsection (c) was intended merely as an information gathering tool to be utilized by the commission in reviewing all applications for new services or new features to existing services. The criteria set out in the subsection were not intended to be inclusive of the privacy issues the commission would examine, nor would the submission of an application listing such criteria guarantee commission approval of such an application. The proposed rule is not intended to be a caller ID rule and was not drafted to preclude or endorse the introduction of such services in Texas, but rather to provide a mechanism for commission review of privacy issues in all applications. However, given the extent of comments on this subsection, the rule has been revised to clarify the review process for new services applications in subsections (b) and (c). These subsections provide for the LEC to list what it believes to be the privacy concerns, if any, in its application. Due to rapidly evolving telecommunications technologies, it is necessary for the commission to review each new service application for privacy concerns on a case by case basis. Rather than set explicit standards for each new service application in order to meet concerns about customer privacy, the rule, as clarified in revision, allows the commission the flexibility to examine the issues as technology develops and customer expectations change. The commission reserves the authority to deny or modify any new service application if it should determine that a privacy issue has not been adequately resolved by the LEC. Consumers Union also commented that the exception in the rule for "good cause" was a back door for the LECs to avoid addressing privacy concerns. They stated that non-subscribers to a service should never be "worse off" so that someone else can enjoy a service. Again, the commission has a responsibility to ensure that Texas enjoys the benefits of a developing telecommunications infrastructure. Each application must be examined individually to determine the applicable privacy concerns. The rule addresses good cause in order to allow an LEC to provide explanation for not restoring a lost degree of privacy - the commission determines whether good cause has been shown, however, not the LEC. Consumers Union requested that the commission withdraw the rule and hold the promised workshops to examine privacy issues. They suggested that the commission invite balancing interests such as battered women's shelters, hotlines, law enforcement, etc. OPUC called for full evidentiary hearings before adopting any rule on privacy in order to fully examine all the issues. The commission held a workshop in May of 1991 to examine privacy issues and, in addition to the industry, invited a host of balancing interests, including battered women's shelters, hotlines, law enforcement, and the Consumers Union. Virtually no parties other than the industry attended the workshop, therefore, the commission did not hold subsequent workshops on the issue. In the event an LEC application to offer new services is docketed, the commission will hold full evidentiary hearings as required and, thereby, provide for a focused examination of the issues as they arise on a case-by-case basis. Commenters addressing the Automatic Number Identification ANI provision in the proposed rule were TTA, the ACLU of Texas, OPUC, and AT&T. Sprint and SWBT commented on reply. TTA stated that the rule should target all services that pass ANI, not just 800 services, and that the IXCs (and any other telecommunications carrier that passes ANI) should be required to provide the same kind of billing insert. Additionally they suggested that the billing insert language be changed to read "your telephone number may be passed by your long distance company to the company you have called." SWBT concurs in reply with TTA on the IXC requirement for billing inserts. The ACLU of Texas stated that the ANI should be blocked because it serves as a key to unlock databases of information. However, Sprint argued in reply that businesses use ANI to improve efficiency of business operations, not because they have a privacy interest in seeing the number before they answer the phone, and further, that the ANI does not carry with it any data at all. Sprint stated that "under no circumstances, (does the ANI) unlock data that is not otherwise already in the possession of the receiving party." OPUC commented that the ANI should be restricted to billing and collections or for the commission to consider on-line warnings to subscribers alerting them to the transfer of their telephone number to 800 customers. However, SWBT argues in reply that on-line warnings would frighten the calling party. AT&T suggested that the reference to ANI in subsection (e)(3) (B) be modified to state that "a local exchange carrier must provide ANI to interexchange carriers, where it has the technical capability." Sprint concurs with AT&T on reply. The commission agrees with TTA's suggestion regarding expanding the scope of the notice to include 900 numbers and the rule has been revised to reflect the change. However, the commission rejects TTA's suggested language changes with respect to long distance carriers as an LEC could technically transmit the ANI (or other calling number identification) on intraLATA 800 calls with the implementation of SS7 technology. Further, the notice is clear in its purpose of notifying the caller that the telephone number may be available to the 800 customer regardless of how it is carried. The commission cannot require the IXCs to provide billing inserts due to the commission's limited jurisdiction over IXCs. Similarly, while the commission understands the concerns of the ACLU of Texas, the commission has limited jurisdiction in restricting the IXCs' use of the ANI, and moreover, cannot order the LECs to block transmission of the ANI to the IXCs because the law (Modified Final Judgement) requires such transmissions for billing purposes. The commission finds that on-line warnings would be costly and unnecessary and that consumers may find such warnings confusing and alarming. The purpose of the ANI provision in the rule is to inform the consumer of the possible transmission of his telephone number to 800 or 900 customers and, thereby, afford such consumer the opportunity to make an informed decision before placing the call. The commission finds that written notification accomplishes this goal most efficiently. The most extensive comments on the rule were regarding the CPNI provisions. GTE- SW repeatedly stated that the proposed rule is not a privacy rule, but rather deals inappropriately with anti-competitive concerns. GTE-SW stated that the rule is inappropriate because GTE-SW does not use CPNI to market supplemental services, but rather uses other outside data readily available from a variety of sources. TTA commented that "LECs purchase consumer demographic and target market informations from the same sources that competitors use." SWBT included with their comments a variety of articles emphasizing the availability of personal information from sources other than local exchange carriers. The commission finds that the rule appropriately addresses the dispensation of customer-specific information by requiring customer authorization before the LEC can release such information to third parties or use the information themselves to market supplemental services. Further, since the LECs claim that they do not use CPNI for marketing purposes, they should have no concerns with a rule that restricts such activity. The commission agrees that the privacy rule does address anti-competitive concerns, but that it does so justifiably in order to ensure that information that is authorized for release is provided in a fair and reasonable manner so as to encourage competition and the development of an economically efficient and technologically advanced telecommunications infrastructure. TTA, GTE-SW, SWBT, and United commented that the Computer III remand proceeding which produced FCC Order, CC Docket Number 90-623 (November 21, 1991), preempted the proposed privacy rule's prior authorization provision. An earlier FCC order had required the BOCs to obtain prior authorization only from multiline business customers before releasing CPNI to third parties, however the BOCs reserved the right to use such information themselves. In the remand proceeding, the FCC determined that there were competitive advantages afforded the BOCs by virtue of not being required to obtain prior authorization on these customers. The FCC stated that "this advantage is of particular importance with respect to large business customers, as their CPNI is most likely to be of competitive value, due to the volume and nature of business involved." Therefore, the FCC changed its decision to require the BOCs to obtain prior authorization, from customers with 20 lines or more, before using or releasing CPNI. Additionally, the order issued on the remand proceeding stated there was a "practical impossibility of complying with state safeguards (requiring prior authorization from all customers) while simultaneously integrating interstate basic and enhanced services." It further stated that "if prior authorization rule were applied to all customers, only the largest business customers would be able to enjoy the one-stop-shopping benefits of the integrated marketing of basic and enhances services" because "applying a prior authorization rule for other than the largest customers likely would require a BOC to establish separate enhanced and basic service marketing forces for those customers. If a customer has restricted CPNI, whether through action or inaction, then for basic services that customer must deal with network-services-only personnel, i.e., those with no involvement with enhanced service marketing or sales, because only those personnel are permitted under the commission's (FCC's) CPNI rule to have access to restricted CPNI." GTE-SW argued in comments that the proposed rule would require separate marketing channels for supplemental services in direct conflict with FCC orders. They further argued that the "increase in cost and the administrative burden created would make the provision of these services unattractive to GTE-SW and other LECs. LECs operating only in Texas may not choose to offer the service at all, while LECs with multi-state operations may shift investments to other states which encourage the introduction of new services." SWBT stated that the rule would "effectively eliminate the residence and business product promotion centers, the direct marketing center, and service centers (business offices) as viable sales channels and/or sales agents for supplemental services in the State of Texas." SWBT also stated that multi-line business customers would get two ballots under the rule-the FCCs and the states. The commission concurs with the FCC's federal policy goal of pursuing an economically efficient and technologically advanced telecommunications infrastructure. However, the LECs' assertion that the FCC preempted this commission's prior authorization rule is misleading. The FCC preempted prior authorization requirements where such prior authorization was necessary before the BOCs could release information to its own personnel marketing enhanced services. The FCC correctly concluded that such prior authorization would be practically impossible without separate marketing personnel for basic and enhanced services since the LEC would already have effectively released the information to all personnel by virtue of its daily basic service operations. The intent of Texas's proposed rule was to restrict LEC release of customer- specific CPNI to third parties, but also to restrict the use of such information by LEC personnel marketing supplemental services. Accordingly, the rule has been revised to clarify that the use of such information by LEC personnel is restricted. The rule has been further amended to provide exceptions to the prior authorization requirements should a residential customer contact the LEC and request information about supplemental services, thereby encouraging one-stop- shopping benefits at the customer's request. The rule does not expressly or effectively require any separate marketing centers or personnel in order for the LEC to market supplemental services, but rather restricts the LEC's use of customer-specific CPNI to do such marketing. The LEC can offer information on supplemental services to any subscriber, at any time, using any marketing method, and any LEC personnel provided they do not use customer-specific CPNI to do so without prior authorization. What the rule expressly prohibits is for the LEC to use customer-specific CPNI for direct and focused marketing campaigns against residential customers, targeted for such marketing by virtue of their CPNI characteristics, without such customers' consent. Therefore, the commission is not in conflict with the FCC's federal policy objectives. Rather, this commission's approach to prior authorization, in fact, encourages the development of an economically efficient infrastructure by allowing the LECs to market supplemental services to all residential customers using existing sales channels; and promotes a technologically advanced telecommunications infrastructure by fostering competition through a fair exchange of authorized customer information among all providers of telecommunications services and products. Further, as the rule applies only to residential customers, the balloting requirements will not conflict or cause duplication with FCC balloting requirements. TATAS and the Texas Gray Panthers did not want the LECs to be able to market supplemental services at the time a customer contacts the LEC to establish new services. The Texas Gray Panthers asserted that a customer is most vulnerable to sales pitches at the time he is establishing service, and that such one-time shot is unfair to other telecommunications vendors. However, GTE-SW commented that a customer expects to get full service from his local exchange carrier and should be allowed to receive such information from the LEC at any time. The proposed rule would have required the new customer to complete an authorization ballot prior to being told about supplemental services; however, the commission finds that a customer should be afforded the opportunity to obtain information about supplemental services at the time he initiates service provided that the LEC is required to inform the customer that such services may be available from a vendor other than the LEC. The rule has been amended generally as outlined previously to restrict the LECs use of CPNI, but has also been revised to provide for such specific situations as new customer service. GTE-SW, SWBT, and TTA commented that the definition of customer-specific CPNI is too restrictive in including a customer's name, address, and telephone number. Such information is readily available on published customers in the telephone directory and should, therefore, not be considered proprietary. The commission agrees that such information cannot to be considered proprietary for those customers that do not have unlisted or unpublished directory information. The definition was intended to distinguish customer-specific CPNI from aggregate CPNI by the inclusion of information that identified the specific customer with specific network information. The definition has been revised to clarify that CPNI is customer-specific when the customer's name, address, or telephone number is matched up with such customer's network information. SWBT argued that the provision in the rule requiring the LEC to provide names, addresses, and telephone numbers to any party requesting such information was contrary to the rule's purported goal of protecting the privacy rights of the customer. The commission finds that, to the extent such information is not unlisted or unpublished, the LEC must be required to provide such information upon request in order to assure equitable distribution of accurate information to all parties. AT&T and Sprint commented that IXCs should have a separate line on the ballot for customers to authorize release of information as some customers may not realize that certain information would be restricted from their own presubscribed IXC. The rule has been revised to allow for a separate line on the ballot for customers to specifically authorize such release. GTE-SW and SWBT commented that the manner in which customer-specific or aggregate CPNI may be provided upon authorization may result in a LEC having to provide its competitors with the results of the LEC's proprietary marketing data runs. AT&T suggested that third parties may want to get the information in a different form than as compiled by the LEC. The rule has been revised to alleviate both of these concerns. GTE-SW commented that the provision in the proposed rule addressing directory listings had nothing to do with customer privacy and that the effect would be to diminish contribution levels. The provision was in the proposed rule to except directory listings from the CPNI restrictions. Since the CPNI definition has been revised to clarify when customer names, addresses, and telephone numbers are included, this provision is no longer necessary and has, therefore, been removed. TAASA and Crime Stoppers' comments were directed at caller ID services and were not relevant to the proposed rule. DHS was concerned that the rule does not address the release of the names of callers to 800 numbers by 800 customers who receive such information on their telephone bills for 800 service. The commission has no jurisdiction to prohibit a customer from releasing information received on a telephone bill. The new section is adopted under Texas Civil Statutes, Article 1446c, sec.16, which provide the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. sec.23.57. Telecommunications Privacy. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Automatic number identification (ANI)-The automatic transmission by the local switching system of the originating billing telephone number to an interexchange carrier or other communications carrier in the normal course of telephone operations. (2) Aggregate CPNI-A configuration of CPNI that has been collected by a local exchange carrier and organized such that none of the information will identify an individual customer. (3) Customer proprietary network information (CPNI), Customer-specific-Any information compiled on a customer by a local exchange carrier in the normal course of providing telephone service that identifies any individual customer by matching such information with the customer's name, address, or calling or originating billing telephone number. This information includes, but is not limited to, line type(s), technical characteristics (e.g., rotary service), class of service, current telephone charges, long distance billing record, local service billing record, directory assistance charges, usage data, and calling patterns. (4) Privacy issue-An issue that arises when a telecommunications utility proposes to offer a new telecommunications service or feature that would result in a change in the outflow of information about a customer. (5) Supplemental services-Telecommunications features or services offered by a local exchange carrier for which analogous services or products may be available to the customer from a source other than a local exchange carrier. Supplemental services shall not be construed to include optional extended area calling plans that a local exchange carrier may offer pursuant to sec.23.49 of this title (relating to Telephone Extended Area Service), or pursuant to a final order of the commission in a PURA, sec.42, sec.43 or sec.43(B) proceeding. (b) Privacy considerations. Local exchange service customers should be permitted to control the outflow of information about themselves. Any local exchange carrier proposing to offer a new service or a new feature to an existing service under the provisions of sec.23.24 of this title (relating to Form and Filing of Tariffs), or sec.23.26 of this title (relating to New and Experimental Services) for which the commission finds a privacy issue, as that term is defined in subsection (a)(4) of this section, and for which the local exchange carrier has not shown good cause pursuant to subsection (c)(2)(ii) and (4) of this section, must, in a manner ordered by the commission: (1) provide a means of restoring the lost degree of privacy at no charge to the public; and (2) educate the public as to the means by which the lost degree of privacy can be restored. (c) New services or features. Staff shall review all applications submitted by a local exchange carrier under the provisions of sec.23.24 of this title or sec.23.26 of this title for privacy issues. The application must identify all circumstances under which a customer of the local exchange carrier may experience a lost degree of privacy as a result of the implementation of the new service or feature proposed in the application, including, but not limited to, whether a customer's name, address, or telephone number will be provided to a called party or to any other third party, and for each such circumstance identified: (1) state whether the lost degree of privacy can be restored by the affected customers and how such customers can restore it; (2) state whether the local exchange carrier will charge the affected customers for restoring the lost degree of privacy and, if applicable: (A) what such charge will be; and (B) show good cause for such charge; (3) state how the local exchange carrier will educate the affected customers as to the implications for privacy and, if applicable, the means by which such customers can restore the lost degree of privacy; and (4) show good cause, if applicable, for not offering the affected customers a means by which the lost degree of privacy can be restored. (d) Automatic number identification. The local exchange carriers shall print in the white pages of their telephone directories, and send as a billing insert annually to all of their customers, the statement: "When an 800 or 900 number is dialed from your telephone, your telephone number may be transmitted to the company you have called and may be available to that company's service representative before your call is answered." The statement must appear in all telephone directories published for the local exchange carrier subsequent to the effective date of this section. The statement must appear as a billing insert for each local exchange carrier within 60 days of the effective date of this section and annually thereafter. (e) Customer proprietary network information (customer-specific). Unless otherwise provided by this section, a local exchange carrier must ensure that all customer-specific CPNI that has been authorized for release by the customer to a third party is offered to such third parties, under the same terms, conditions, and prices as such or similar data is made available for use to all other businesses affiliated with the local exchange carrier and local exchange carrier personnel marketing supplemental services, provided that the third party must specify the type and scope of the customer-specific CPNI requested. A local exchange carrier must, upon request, provide such customer-specific CPNI to a third party under any other just, alternative terms, conditions, or prices that are just and reasonable under the circumstances and that are not unreasonably preferential, prejudicial, or discriminatory. (1) Except as provided in paragraph (5) of this subsection, local exchange carrier personnel may not use customer-specific CPNI to market supplemental services to residential customers without written authorization from such residential customers as set out in paragraph (3) of this subsection. (2) A local exchange carrier may not release customer-specific CPNI to any third party, including, but not limited to, providers of supplemental services and any businesses affiliated with the local exchange carrier without written authorization from such customers as set out in paragraph (3) of this subsection. (3) A ballot requesting customer authorization for the use or release of customer-specific CPNI shall be sent to all residential customers of the local exchange carrier at least one time. The ballot shall be reviewed by the staff of the Telephone Utility Analysis Division before it is sent to the customer. The staff shall notify the general counsel of any concerns it may have with the proposed ballot, and the general counsel shall notify the local exchange carrier within 10 days of submission if the proposed ballot may not be distributed. The ballot must be distributed to all residential customers of the local exchange carrier within 180 days of the effective date of this section. (A) The ballot must describe specifically what information is to be released to third parties or used by local exchange carrier personnel to market supplemental services if authorization is granted. The ballot must also state that no such information will be used or released by the local exchange carrier if the ballot is not returned. (B) If the authorization is to be requested for categories of information, the specific information contained in each category must be listed and the ballot must allow the customer to authorize each category of information separately. (C) The ballot must allow the customer the option of listing only specific third parties for the local exchange carrier to which information may be released. (D) The ballot must allow the customer the option of releasing information to the interexchange carrier to which the customer has presubscribed. (E) The ballot must allow the customer the option of releasing information to any other interexchange carrier. (F) The ballot may allow the customer the choice of releasing the information to any businesses affiliated with the local exchange carrier or to be used by local exchange carrier personnel marketing supplemental services only. (G) The ballot may allow the customer the choice of releasing the information to any party. (H) The ballot must state that there will be no charge to the customer for restricting or releasing any of the information listed on the ballot. (4) A local exchange carrier may provide customer-specific CPNI to third parties without obtaining prior written authorization from the residential customer as provided in subparagraphs (A)-(D) of this subsection. (A) A local exchange carrier may provide ANI to a provider of emergency services. (B) A local exchange carrier must, where it has the technical capability, provide ANI to interexchange carriers or to other common carrier access customers. (C) A local exchange carrier must provide ANI if otherwise required by law. (D) The local exchange carrier must provide names, addresses, and telephone numbers of customers, other than those customers that have requested that such information be unlisted or unpublished for the purpose of directory publication, to any entity requesting such information. (5) Local exchange carrier personnel may use customer-specific CPNI to market supplemental services to residential customers without obtaining prior written authorization from such customers as set out in subparagraphs (A) and (B) of this paragraph. (A) If a new residential customer contacts a local exchange carrier to initiate local exchange service and such customer inquires about supplemental services, the local exchange carrier personnel must inform the new residential customer, prior to marketing the local exchange carrier's supplemental services to that customer, that similar services or products may be available to the customer from a vendor other than the local exchange carrier. (B) If a residential customer contacts the local exchange carrier to inquire about supplemental services offered by the local exchange carrier and such residential customer has not authorized the local exchange carrier personnel to use his customer-specific CPNI to market supplemental services, the local exchange carrier personnel must ask the customer for verbal authorization to use such CPNI at that time. Such verbal authorization must be received each time such residential customer contacts the local exchange carrier to inquire about supplemental services. (f) Aggregate CPNI. If a local exchange carrier compiles and uses aggregate CPNI for marketing purposes or provides aggregate CPNI to any business associated with the local exchange carrier for marketing purposes, it must also provide aggregate CPNI to any third party upon request. A local exchange carrier must offer to provide aggregate CPNI under the same terms and conditions and at the same price as it is made available to all businesses affiliated with the local exchange carrier and to local exchange carrier personnel marketing supplemental services, provided that the third party must specify the type and scope of the aggregate CPNI requested. A local exchange carrier must, upon request, provide such aggregate CPNI to a third party under any other just, alternative terms, conditions, or prices that are just and reasonable under the circumstances and that are not unreasonably preferential, prejudicial or discriminatory. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205354 Mary Ross McDonald Secretary Public Utility Commission of Texas Effective date: May 7, 1992 Proposal publication date: October 18, 1991 For further information, please call: (512) 458-0100 TITLE 22. EXAMINING BOARDS Part XXIII. Texas Real Estate Commission Chapter 533. Practice and Procedure 22 TAC sec.sec.533.10, 533.18, 533.25 The Texas Real Estate Commission adopts amendments to sec. sec.533.10, 533.18, and 533.25, concerning the commission's rule of practice and procedure, without changes to the proposed text as published in the February 25, 1992, issue of the Texas Register (17 TexReg 1502). The amendments conform the sections with the agency's enabling statute, Texas Civil Statutes, Article 6573a, as amended by the 72nd Legislature, and conform the sections with the agency's current practices in contested cases. The amendment to sec.533.10 removes a reference to legislative oversight previously contained in Texas Civil Statutes, Article 6573a, sec.5. The statutory provision was repealed in 1991 by the adoption of Senate Bill 432. The amendment also clarifies that 30 days' notice is not required for emergency rulemaking. The amendment to sec.533.18 clarifies the authority of the chairman or member designated to preside by the chairman and authorizes the presiding member to enter orders which have been approved by the full commission. The amendment to sec.533.25 conforms the section with the agency's current practice of making an electronic recording in most contested case proceedings. The 72nd Legislature removed language in the agency's enabling statute which required stenographic notes to be taken. No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 6573a, sec.5(e), which provide the Texas Real Estate Commission with the authority to make and enforce all rules and regulations necessary for the performance of its duties. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205337 Mark A. Moseley General Counsel Texas Real Estate Commission Effective date: May 7, 1992 Proposal publication date: February 25, 1992 For further information, please call: (512) 465-3900 Chapter 535. Provisions of the Real Estate License Act The Commission 22 TAC sec.535.41 The Texas Real Estate Commission adopts an amendments to sec.sec.535.41, concerning the procedure of the commission, with changes to the proposed text as published in the February 25, 1992, issue of the Texas Register (17 TexReg 1502). The amendments conform the section with the new provision in Texas Civil Statutes, Article 6573a, requiring the governor to designate the chairman of the commission. The amendment also clarifies the procedures to be followed in contests case proceedings before the commission. On adoption, a change was made on the suggestion of commission staff to specify that the chairman serves in that capacity at the pleasure of the governor and that elected officers serve until their successors are elected. No comments were received regarding adoption of the amendment. The amendments are adopted under Texas Civil Statutes, Article 6573a, sec.5(h), which provide the Texas Real Estate Commission with the authority to make and enforce all rules and regulations necessary for the performance of its duties. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205335 Mark A. Moseley General Counsel Texas Real Estate Commission Effective date: May 7, 1992 Proposal publication date: February 25, 1992 For further information, please call: (512) 465-3900 Suspension and Revocation of Licensure 22 TAC sec.535.141 The Texas Real Estate Commission adopts an amendments to sec.sec.533.141, concerning initiation of investigations, without changes to the proposed text as published in the February 25, 1992, issue of the Texas Register (17 TexReg 1502). The amendment removes references to verified complaints and is necessary to conform the section with the agency's enabling statute, Texas Civil Statutes, Article 6573a. Verified or sworn complaints are no longer required for the commission to initiate an investigation. No comments were received regarding adoption of the amendment. The amendments are adopted under Texas Civil Statutes, Article 6573a, sec.5(h), which provide the Texas Real Estate Commission with the authority to make and enforce all rules and regulations necessary for the performance of its duties. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205336 Mark A. Moseley General Counsel Texas Real Estate Commission Effective date: May 7, 1992 Proposal publication date: February 25, 1992 For further information, please call: (512) 465-3900 TITLE 25. HEALTH SERVICES Part I. Texas Department of Health Chapter 229. Food and Drug Licensing of Wholesale Distributors of Drugs-Including Good Manufacturing Practices TAC sec.sec.229. 251-229.254 The Texas Department of Health (department) adopts amendments to sec.sec.229.251-229.254. Section 229.252 and sec.229.253 are adopted with changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1183). Section 229.251 and sec.229.254 are adopted without changes and will not be republished. The amendments will enable the department to better license and regulate wholesale distributors of drugs by requiring them to comply with the requirements in Senate Bill Number 873, 72nd Legislature, 1991, and the Federal Prescription Drug Marketing Act of 1987 (Act). The amendments establish criteria for the regulation of wholesale distributors of drugs and also establish licensing requirements for in-state and out-of-state wholesale drug distributors pursuant to the requirements of the Act. The department received the following comments. COMMENT: Concerning sec.229.252(a) and (d), a commenter expressed concern that the department requires separate licensing for each place of business within the state and not for out-of-state places of businesses. RESPONSE: The department disagrees since the sections address out-of-state places of business the same as in-state places of business. If an out-of-state wholesale distributor operates more than one place of business, the wholesale distributor shall license each place of business separately. COMMENT: Concerning sec.229.252(g), two commenters stated that the department should exempt retail pharmacies that sell less than 5.0% of their prescription drugs at wholesale from the provisions of these rules. RESPONSE: The department agrees, but the federal and state laws do not provide for such an exemption. Accordingly, the department has made no change to sec.229.252(g) in response to this comment; however, the department has addressed this question by amending final sec.229.253(a) to add a provision that, under the minimum standards in these rules, the policies of the U.S. Food and Drug Administration's Compliance Policy Guides as they apply to human prescription drugs shall be the policies of the department. COMMENT: Concerning sec.229.252(i) and (j), a commenter said that these subsections should be under paragraph (3) as subparagraphs (A) and (B) because this is the appropriate location for the subject matter. RESPONSE: The department agrees and has made the change. COMMENT: Concerning sec.229.253(b), a commenter expressed concern about existing current good manufacturing practices as they pertain to wholesale drug distributors versus manufacturers and requested clarification of the subsection. RESPONSE: The department agrees and has made an appropriate change in sec.229. 253(a) and not to sec.229.253(b). COMMENT: Concerning sec.229.253(c), a commenter suggested that the department adopt the policies of the United States Food and Drug Administration as they relate to human prescription drugs to ensure uniformity of rule application. RESPONSE: The department agrees and, as previously mentioned, has made the appropriate change to sec.229.253(a) and not to sec.229.253(c). The department also has made minor editorial changes to sec.229.252 for purposes of clarity. The commenters were the Texas Pharmaceutical Association, the Service Wholesale Druggist Association of Texas, the Bergen Brunswig Corporation, and the Dermatological Products Company. None of the commenters were totally for or against the sections, but they had concerns, recommendations, and questions. The amendments are adopted under the Health and Safety Code, sec.431.241, which provides the department with the authority to adopt necessary regulations pursuant to the enforcement of this chapter; and sec.12.001, which provides the Texas Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Texas Board of Health, the Texas Department of Health, and the commissioner of health. sec.229.252. Licensing Fee and Procedures. (a) License fee. All wholesale distributors of drugs who sell drugs in Texas shall obtain a license annually on or before September 1 with the Texas Department of Health (department) and shall pay a licensing fee for each wholesale distribution place of business operated as follows: (1) $500 per wholesale distributor having a gross annual volume of $0- $19,999,999.99; (2) $750 per wholesale distributor having a gross annual volume greater than or equal to $20 million; and (3) $750 per out-of-state wholesale distributor, unless an audited statement is provided which demonstrates a gross annual volume of less than $20 million which would require a licensing fee of $500. (b) License forms. Licensing forms may be obtained from the Texas Department of Health, Division of Food and Drugs, 1100 West 49th Street, Austin, Texas 78756. (c) License statement. The wholesale distributors' licensing statement shall be signed and verified, shall be made on the department furnished license form, and shall contain the following information: (1) the legal name under which the business is conducted; (2) the address of each place of business that is licensed; (3) if a proprietorship, the name and residence address of the proprietor; if a partnership, the names and residence addresses of all partners; if a corporation, the date and place of incorporation and name and address of its registered agent in the state; or if any other type of association, then the names of the principals of such association; (4) the names and residence addresses and valid driver's license (if not applicable, a social security number) of those individuals in an actual administrative capacity which, in the case of proprietorship, shall be the managing proprietor; partnership, the managing partner; corporation, the officers and directors; or those in a managerial capacity in any other type of association; (5) for each place of business, the residence addresses of the individuals in charge thereof; and (6) a list of categories which must be marked and adhered to in the determination and paying of the fee. (d) Two or more places of business. If the wholesale distributor operates more than one place of business, the wholesale distributor shall license each place of business separately. (e) Pre-licensing inspection. The applicant shall cooperate with any pre- licensing inspection by the department of the wholesale distributor's facilities. The department may accept reports from authorities in other jurisdictions to determine the extent of compliance with the minimum standards in this chapter for applicants located out-of-state. (f) Issuance of license. The department may license a wholesale distributor of drugs who meets the requirements of this section and sec.229.253 of this title (relating to Minimum Standards for Licensing). (g) Exemption from licensing. Persons who engage only in the following types of wholesale drug distribution are exempt from the licensing requirements of this undesignated head, to the extent that it does not violate provisions of the Texas Dangerous Drug Act, Health and Safety Code; or the Texas Controlled Substances Act, Health and Safety Code: (1) intracompany sales; (2) the purchase or acquisition by a hospital or other health care entity that is a member of a group purchasing organization of a drug for its own use from the group purchasing organization or from other hospitals or health care entities that are members of such organizations; (3) the sale, purchase, or trade of a drug or an offer to sell, purchase, or trade a drug by a charitable organization, as described in the Internal Revenue Code of 1986, sec.501(c)(3), to a nonprofit affiliate of the organization to the extent otherwise permitted by law; (4) the sale, purchase, or trade of a drug or an offer to sell, purchase, or trade a drug among hospitals or other health care entities that are under common control. For the purpose of this subsection, "common control" means the power to direct or cause the direction of the management and policies of a person or an organization, whether by ownership of stock, voting rights, contract, or otherwise; (5) the sale, purchase, or trade of a drug or an offer to sell, purchase, or trade a drug for emergency medical reasons. For purposes of this section, "emergency medical reasons" includes transfers of prescription drugs by a retail pharmacy to another retail pharmacy to alleviate a temporary shortage; (6) the sale, purchase, or trade of a drug, an offer to sell, purchase, or trade a drug, or the dispensing of a drug pursuant to a prescription; (7) the distribution of drug samples by manufacturers' representatives or distributors' representatives; or (8) the sale, purchase, or trade of blood and blood components intended for transfusion. (h) Renewal of license. (1) Each year, the wholesale distributor of drugs shall renew its license following the requirements of this section and sec.229.253 of this title (relating to Minimum Standards for Licensing). (2) The application for renewal and fee for each place of business shall be submitted to the department on or before September 1 in accordance with department procedures in this section. (3) Failure to submit the renewal prior to September 1 may subject the wholesale distributor of drugs to the enforcement provisions under the Health and Safety Code, Chapter 431 and also to the provision of sec.229.254 of this title (relating to Refusal, Revocation, or Suspension of License). (A) Amendment of license. A license that is amended, including a change of ownership or a notification of a change in the location of a licensed place of business required under the Health and Safety Code, sec.431.206, will require submission of fees as outlined in subsection (a) of this section. (B) Notification of change of location of place of business. Not fewer than 30 days in advance of the change, the licensee shall notify the commissioner of health (commissioner) or the commissioner's designee in writing of the licensee's intent to change the location of a licensed place of business. The notice shall include the address of the new location, and the name and residence address of the individual in charge of the business at the new location. Not more than 10 days after the completion of the change of location, the licensee shall notify the commissioner or the commissioner's designee in writing to verify the change of location, the address of the new location, and the name and residence address of the individual in charge of the business at the new address. Notice will be deemed adequate if the licensee provides the intent and verification notices to the commissioner or the commissioner's designee by certified mail, return receipt requested, mailed to the Texas Department of Health, 1100 West 49th Street, Austin. sec.229.253. Minimum Standards for Licensure. (a) Minimum standards. All wholesale distributors of drugs not engaged in manufacturing, processing, packing, or holding of drugs shall comply with the minimum standards specified in subsection (c) of this section in addition to the existing statutory standards contained in the Texas Health and Safety Code, Chapter 431. All wholesale distributors of drugs engaged in manufacturing, processing, packing, or holding of drugs shall comply with subsections (b) and (c) of this section in addition to the existing statutory standards contained in the Texas Health and Safety Code, Chapter 431. For the purpose of this section, the policies described in the United States Food and Drug Administration's Compliance Policy Guides as they apply to human prescription drugs shall be the policies of the Texas Department of Health (department). (b) Current good manufacturing practices in manufacturing, processing, packing, or holding of drugs. The department adopts by reference Title 21, Code of Federal Regulations, Part 210, sec.sec.210.1-210.3, as amended, titled "Current Good Manufacturing Practices in Manufacturing, Processing, Packing, or Holding of Drugs;" and Part 211, sec.sec.211.1-211.208, as amended, titled "Current Good Manufacturing Practice for Finished Pharmaceuticals." Copies are indexed and filed in the office of the Division of Food and Drugs, Texas Department of Health, 1100 West 49th Street, Austin, Texas 78756 and are available for inspection during normal working hours. (c) Guidelines for licensing of wholesale prescription drug distributors. The department adopts by reference Title 21, Code of Federal Regulations, Part 205, sec.sec.205.1-205.50, as amended, titled "Guidelines for State Licensing of Wholesale Prescription Drug Distributors." Copies are indexed and filed in the office of the Division of Food and Drugs, Texas Department of Health, 1100 West 49th Street, Austin, Texas 78756 and are available for inspection during normal working hours. To the extent these sections conflict with Title 21, Code of Federal Regulations, Part 205, this section shall prevail. Prescription drug means any drug, human or veterinary, required by federal law or regulation to be dispensed only by a prescription, including finished dosage forms and active ingredients subject to the Federal Food, Drug, and Cosmetic Act, sec.503(b). (d) Buildings and facilities. All manufacturing, processing, packing or holding of drugs shall take place in buildings and facilities described in, Title 21, Code of Federal Regulations, Part 211, Subpart C, as amended. No manufacturing, processing, packing, or holding of drugs shall be conducted in any personal residence. (e) Drug labeling. If a person, firm, or corporation labels a drug, the label shall meet the requirements of the Texas Health and Safety Code, Chapter 431. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 17, 1992. TRD-9205398 Robert A. MacLean, M.D. Deputy Commissioner Texas Department of Health Effective date: May 8, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 458-7248 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part III. Texas Air Control Board Chapter 114. Control of Air Pollution From Motor Vehicles 31 TAC sec.114.11 The Texas Air Control Board (TACB) adopts an amendment sec.114.11, concerning alternative fuel requirements for transit authorities, without changes to the proposed text as published in the November 5, 1991 Texas Register (16 TexReg 6277). The amendment extends the definition of alternative fuels to include methanol or methanol/gasoline blends of 85 percent (M85) or greater. This amendment was proposed in response to petitions for rule-making to use methanol as an approved alternative fuel, as specified in Senate Bill (Senate Bill) 769, 71st Texas Legislature. The old sec.114.11 defined an alternative fuel as one of the following: natural gas, liquified petroleum gas, or electricity. Any other candidate alternative fuel must be shown to be comparable to compressed natural gas in terms of emissions of volatile organic compounds, oxides of nitrogen, carbon monoxide, or particulates, either singularly or in any combination. TACB has assumed a neutral position regarding this issue and solicited information in support of and/or against the petition, specifically relating to the comparison of the emissions from vehicles using methanol fuels to vehicles using natural gas and other air quality impacts of using methanol as a motor vehicle fuel. A public hearing was held on December 5, 1991, in Austin to receive testimony regarding this proposal. A total of 21 written statements and two oral presentations were entered into the hearing record during the comment period. Seventeen commenters favored the proposed amendments: Hercules Engines, Inc.; Beaumont Methanol Corporation (BMC); Diamond Shamrock; ICI Products; M.W. Kellogg Company; Motor Vehicle Manufacturers Association (MVMA); Hoechst Celanese Corporation; American Methanol Institute (AMI); Tenneco Methanol, U.S. Environmental Protection Agency (EPA); V. John White Associates (VJW); General Motors Corporation (GMC); Detroit Diesel, Corporation (DDC); California Air Resources Board (CARB); MG Petrochemicals Corporation (MGPC); Ford Motor Company (Ford); and the Natural Resources Defense Council (NRDC). Four commenters opposed the proposal: The Lone Star Chapter of the Sierra Club (Sierra Club), Lone Star Energy Company (Lone Star), and two individuals. Two commenters, Lone Star and one individual, expressed doubts that methanol could reduce the ozone forming potential of motor vehicle emissions. While some of the references cited indicated that studies have predicted limited ozone reductions as a result of methanol use, increased emissions of highly reactive emissions, such as formaldehyde, were not fully considered. In addition, 85% blends of methanol do not eliminate the gasoline emissions which also contribute to ozone formation. Several commenters, including AMI and EPA, claimed that emissions of photochemically reactive hydrocarbons are similar to those with the use of compressed natural gas, particularly when compared to dual-fueled natural gas vehicles. GMC and VJW indicated that methanol evaporative emissions are essentially nonreactive and that total emissions are definitely better than those for gasoline. MVMA, GM, Ford, and NRDC advocated a fuel-neutral position contingent upon the vehicles satisfying specific emission standards. These standards are set by the EPA and the manufacturer should be able to satisfy these standards with any combination of fuels and pollution controls. The ozone formation potential of any motor vehicle fuel (gasoline, diesel, compressed natural gas, or methanol) is dependent upon the quality of the fuel, the type of engine, the design and installation of aftermarket retrofit kits, and the working condition of the pollution control devices (e.g., catalytic converter). Since Senate Bill 769 specifies that affected fleet vehicles only be capable of using an alternative fuel, dual-fuel and flexible-fuel vehicles are acceptable. Aftermarket conversions of gasoline and diesel engines, rather than original manufacturer equipment (OEM), also are acceptable. Any comparison of the vehicular emissions of candidate alternative fuels to natural gas must take into account that such aftermarket conversions generally have significantly higher emissions of ozone-producing compounds than dedicated-fueled OEM vehicles. By corollary, emissions for M85 are similar emissions for dual-fuel compressed natural gas. Lone Star, Mobil Oil Company, and the American Petroleum Institute opposed any policy that would require mandatory use of any single fuel. While the legislation clearly advocates the use of natural gas, any other fuel, excluding reformulated gasoline or diesel, may be considered for comparison. The testimony provides a reasonable basis to accept that reactive emissions from methanol- fueled vehicles are comparable to those from dual-fueled vehicles with aftermarket retrofit kits that use compressed natural gas. AMI, Tenneco Methanol, VJW, and MGPC suggested that the use of methanol may reduce emissions of nitrogen oxides (NO[sub]x[sub]) to lower levels than those emitted using compressed natural gas. The Sierra Club and MVMA highlighted the problems with controlling NO[sub]x[sub] emissions from natural gas vehicles. In addition, ICI Products offered documentation that one methanol blend (Avocet, a 97 methanol percent blending with special additives) reduced NO[sub]x[sub] without having to use expensive catalytic "traps" to capture and burn off excess NO[sub]x[sub]. Current information shows that natural gas vehicles, especially dual-fuel aftermarket conversions, can result in dramatically increased NO[sub]x[sub] emissions. The testimony indicates that NO[sub]x[sub] emissions from methanol vehicles are significantly lower in many cases, and therefore, must be considered comparable to natural gas. The Sierra Club, Lone Star, and one individual expressed the concern that the use of methanol might lead to levels of formaldehyde three to five times higher than with gasoline. Formaldehyde is a highly reactive compound that contributes to ozone formation and is a probable human carcinogen. However, four other commenters, AMI, GMC, DDC, and Ford, noted that formaldehyde emissions from methanol vehicles are similar to those with the use of compressed natural gas. They further noted that formaldehyde emissions are included in the organic materialhydrocarbon equivalent (OMHCE) index, which is a requirement to be controlled for EPA chassis-engine certification. AMI, EPA, CARB, and Ford contended that methanol use actually lowers ambient formaldehyde levels by reducing secondary reactions in the atmosphere. This reduction is expected to offset any anticipated increase in direct emissions from vehicle exhaust. EPA noted that methanol use would result in a net decrease in human exposure, not only to formaldehyde, but to other carcinogens such as benzene in gasoline and diesel particulates. The testimony indicates that, while an increase in aldehyde emissions from motor vehicles may result from methanol fuel use, control requirements for certification of methanol vehicles will significantly minimize this impact. Furthermore, since ambient levels of formaldehyde and other carcinogens are expected to decrease if methanol is used as a vehicle fuel, the environmental benefits appear positive. The Sierra Club and one individual pointed out that evaporativeemissions of methanol from vehicles and from bulk fuel handling exceed those of natural gas. However, a proponent of methanol, VJW, supplied data that the Reid vapor pressure (RVP), (a measure of liquid fuel volatility) of 100% methanol is significantly lower than gasoline; approximately four psia compared to the seven to nine psia of gasoline. Ford further supported the use of methanol by stating that any new methanol-powered engines must satisfy standards that include limits on evaporative losses of methanol. Evaporative losses include those from fuel left in the air mixer (hot soak emissions) from unburned fuel during engine start-up (cold start emissions), from any leakage in the fuel delivery system (running loss emissions), and from vapors leaking from the fuel tank (purge control emissions). Since natural gas vehicles must use closed, pressurized fuel systems, they will have lower evaporative emissions than methanol vehicles. However, methanol emissions have very low reactivity and do not contribute significantly to ozone formation. VJW cited a California study that showed that reductions of greenhouse gases from the use of methanol and natural gas vehicles were comparable. NRDC recommended that TACB adopt a global view, including the overall greenhouse emissions from motor vehicles. No negative testimony was received regarding any potential greenhouse gas impacts from the use of methanol as amotor fuel, but the issue needs to be addressed because greenhouse gases such as carbon dioxide, methane, and nitrous oxide have been implicated with global warming. The TACB staff is aware of one study performed by the California Energy Commission, which shows that alternative fuels such as methanol and natural gas reduce greenhouse gases. Methanol produced from natural gas has a global warming impact between gasoline and compressed natural gas, but the global warming factor for the high methane emissions from compressed natural gas engines is uncertain. Methanol derived from coal will have the highest global warming impact, but the Texas methanol suppliers are not expected to utilize this extraction method. One individual strongly objected to the use of methanol, expressing concerns that the public exposure to methanol fuels could cause catastrophic ailments such as permanent blindness or long-term systemic disorders. However, EPA and VJW document that the use of methanol could lead to lowered cancer rates for humans because methanol does not contain benzene or organic particulates, which have been shown to bioaccumulate in organisms. The TACB staff acknowledges that methanol has been documented to cause toxicity, usually due to accidental ingestion and high long-term exposure. However, methanol can not be considered more toxic than gasoline or diesel. The TACB Health Effects Division has determined that under the expected conditions of exposure, methanol reduces the potential conditions of adverse human exposure for health effects, since gasoline contains mutagenic and toxic compounds such as benzene, xylene, and toluene. Handling of methanol may be subject to stationary source regulations, which are outside the scope of this rulemaking. Lone Star objected to the use of methanol because the fueling infrastructure is under-funded, over-priced, and is mostly produced in foreign countries. Supporting commenters, Hercules Engines, Inc.; Beaumont Methanol Corporation; ICI Products; M.W. Kellogg Company; Hoechst Celanese; Tenneco Methanol; VJW; DDC; and MGPC reported that the engine technology is available and that supply and support infrastructure is securely in place in Texas. These commenters also provided information regarding the economic viability and business benefits to be gained by the approval of methanol as an alternative fuel. While the staff recognizes that the availability of methanol fuels and the economic benefits of introducing a market for methanol in Texas are important issues in developing an industry in Texas, they are not relevant to the consideration of methanol as an alternative fuel under Senate Bill 769. Available information indicates that methanol fuel technology currently exists which can be demonstrated to be comparable to natural gas technology in terms of overall emission rates. Specifically, the testimony indicated such technology is available for heavy-duty diesel and transit applications which must be addressed in order to comply with the conversion requirements of the legislation. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 17, 1992. TRD-9205477 Lane Hartsock Deputy Director Texas Air Control Board Effective date: May 11, 1992 Proposal publication date: November 5, 1991 For further information, please call: (512) 908-1451 Part X. Texas Water Development Board Chapter 355. Research and Planning Fund Subchapter B. Economically Distressed Areas Facility Engineering 31 TAC sec.sec.355.70-355.73 The Texas Water Development Board (the Board) adopts amendments to sec.sec.355. 70-355.73, the repeal of sec.sec.355.74-355.77, and the adoption of new sec.sec.355. 74-355.76, concerning funding for economically distressed areas facility engineering under the research and planning fund. sec.355.71 is adopted with changes to the proposed text as published in the January 31, 1992, issue of the Texas Register (17 TexReg 837). The amendments to sec.355.70, 355.72, and 355.73 , the repeals and new sec.sec.355.74-355.76 are adopted without changes and will not be republished. The amendment to sec.355.70, replacing the term "facility engineering" with "facility planning," allows the board to clarify its intent to require a single application for plans and specifications and project construction. The amendment to sec.355.71 allows the board to finance up to 100% of the cost of facility planning for water and wastewater facilities to service economically distressed areas. The change to sec.355.71 replaces the term "designated" with the phrase "economically distressed area." The change clarifies the area which the board is financing. sec.sec.355.71, 355.72, and 355.73 are amended in order to remain consistent with the amendment to sec.355.70. New sec.355.74 eliminates separate applications for plans and specifications and for project construction. Facility plan tasks and construction plans and specifications will be included in one application. The repeal of old sec.355.74 necessitates the repeal of old sec.sec.355.75- 355.77, which will be renumbered as new sec.sec.355.74-355.76. New sec.sec.355.74-355.76 will also reflect changes due to the amendment made in sec.355.70. The adoptions allow the board to continue the efficient implementation of the Economically Distressed Areas Program, which provides financial assistance to those eligible counties which contain residential areas without any or with seriously inadequate water supply and sewer services creating serious and unacceptable health hazards and threatening the public health, safety, and welfare. No comments were received regarding adoption of the amendments, repeals, and new sections. The amendments are adopted under the Texas Water Code, sec.6.101 and the Texas Water Code, Chapter 15, Subchapter F, sec.15.403, which requires the board to adopt rules necessary to carry out the powers and duties of the board and of various programs of the research and planning fund. sec.355.71. Purpose and Policy. (a) Availability. The board will make funds available through the research and planning fund or development fund to political subdivisions in affected counties for up to 100% of the cost of facility planning for water and wastewater facilities to serve economically distressed areas. The board will routinely fund up to 75% of the cost of facility planning, with at least 50% of the applicant's share to be provided in the form of cash. However, in hardship cases where the applicant does not have sufficient funds on hand to fund its share of a project in an economically distressed area, the board may fund up to 100% of the cost of facility planning. (b) Engineering. To make the most effective use of the limited amount of funds available, the applicant will confer with the board on all significant decisions related to facility planning. (c) Professional engineer. All applicable facility planning reports and plans shall be signed and sealed by a professional engineer in accordance with the Texas Engineering Practice Act, Texas Civil Statutes, Article 3271a. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205292 Suzanne Schwartz General Counsel Texas Water Development Board Effective date: May 6, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-7981 31 TAC sec.sec.355.74-355.77 The repeals are adopted under the Texas Water Code, sec.6.101 and the Texas Water Code, Chapter 15, Subchapter F, sec.15.403, which requires the board to adopt rules necessary to carry out the powers and duties of the board and of various programs of the research and planning fund. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205293 Suzanne Schwartz General Counsel Texas Water Development Board Effective date: May 6, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-7981 31 TAC sec.sec.355.74-355.76 The sections are adopted under the Texas Water Code, sec.6.101 and the Texas Water Code, Chapter 15, Subchapter F, sec.15.403, which requires the board to adopt rules necessary to carry out the powers and duties of the board and of various programs of the research and planning fund. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205294 Suzanne Schwartz General Counsel Texas Water Development Board Effective date: May 6, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-7981 Chapter 363. Rules Relating to Financial Programs Subchapter E. Economically Distressed Areas 31 TAC sec.363.508 The Texas Water Development Board (the Board) adopts an amendment to sec.363. 508, concerning rules relating to financial programs, without changes to the proposed text as published in the January 31, 1992, issue of the Texas Register (17 TexReg 837). The adoption allows the board to continue the efficient implementation of the Economically Distressed Areas Program, which provides financial assistance to those eligible counties which contain residential areas without any or with seriously inadequate water supply and sewer services creating serious and unacceptable health hazards and threatening the public health, safety, and welfare. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Water Code, sec.6.101, which requires the board to adopt rules necessary to carry out the powers and duties of the board provided by the Texas Water Code. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205295 Suzanne Schwartz General Counsel Texas Water Development Board Effective date: May 6, 1992 Proposal publication date: January 31, 1992 For further information, please call: (512) 463-7981 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter P. Municipal Sales and Use Tax 34 TAC sec.3.372 The Comptroller of Public Accounts adopts an amendment to sec.3.372, concerning adopting or abolishing city tax, without changes to the proposed text as published in the October 18, 1991, issue of the Texas Register (16 TexReg 5817). The amendment adds information on local tax for industrial development and on the various tax rates authorized by legislation passed during the 72nd Legislature, 1991. The legislation authorizing the various tax rates is effective on or after August 24, 1991. No comments were received regarding adoption of the amendment. The amendment is adopted 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. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205325 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: May 7, 1992 Proposal publication date: October 18, 1991 For further information, please call: (512) 463-4028 Subchapter R. Transit Sales and Use Tax 34 TAC sec.3.422 The Comptroller of Public Accounts adopts an amendment to sec.3.422, concerning adopting or abolishing MTA tax, without changes to the proposed text as published in the October 18, 1991, issue of the Texas Register (16 TexReg 5818). The amendment changes the definition of metropolitan transit authority to conform to amendments in order local tax rules and makes other minor changes for clarity. No comments were received regarding adoption of the amendment. The amendment is adopted 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. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 16, 1992. TRD-9205326 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: May 7, 1992 Proposal publication date: October 18, 1991 For further information, please call: (512) 463-4028 Chapter 9. Property Tax Administration Subchapter A. Practice and Procedure 34 TAC sec.sec.9.7-9.14 The Comptroller of Public Accounts adopts new sec.sec.9.7-9.14, concerning protests by school districts, county education districts, certain property owners, and appraisal districts of its property value study's preliminary findings. Sections 9.7-9.13 are adopted with changes to the proposed text as published in the January 7, 1992, issue of the Texas Register (17 TexReg 105). Section 9.14 is adopted without changes and will not be republished. The new sections are necessary because new legislation transferred responsibility for conducting the property value study and property value study protests to the comptroller. The new sections clearly describe the agency's protest procedures, including how a petitioner may file a protest petition; the hearing examiner's powers; how a hearing is conducted; procedures for issuing a proposed decision and filing exceptions; when a proposed decision becomes final; and the date on which changes to the preliminary findings must be certified to the commissioner of education. No comments were received infavor or of the new sections. Comments against the sections were received from The Texas Association of Appraisal Districts, The Texas Association of Taxpayers, and The Metropolitan Association of Appraisal Districts. The agency received comments on provisions related to conduct of a hearing. The comments were that the one-hour time limit on protest hearings was considered too short and inflexible; the limit of one authorized representative for each petitioner should be expanded; the seven-day time period for replies to exceptions was too short; the 10-day time to respond to written requests for information was too short and inflexible; the burden of proof should be on the state in an appraisal district protest; the notice provisions were too burdensome on property owners and needed clarification; the provision prohibiting admission of evidence not provided to staff within 10 days after a written request should be deleted; the provision permitting a hearing examiner to consult with technical staff to evaluate the evidence should be deleted; the provision limiting the value claimed to be correct in a protest to no less than the tax roll should be deleted. The agency disagreed with three of the comments. The agency disagreed with the comment that the provision prohibiting admission of evidence not provided to staff within 10 days after a written request should be deleted because the comptroller staff needs access to certain materials to correctly determine value. A person who fails to provide these materials on request should not be permitted to use the same materials in a protest that the state's value is wrong. The agency disagrees with the comments that the provision requiring a petitioner to claim a value no lower than the tax roll value should be deleted. This provision is founded on Senate Bill 45, amending the Education Code, sec.11. 86. The agency disagrees with comments that the provision permitting a hearing examiner to consult with technical staff should be deleted. The provision is necessary for a hearing examiner to correctly decide a technical protest and a common provision for a state agency that conducts hearings. The agency agreed with other comments and made the requested changes. These new sections are adopted under the Education Code, sec.11.86(e), which provides the comptroller with the authority to adopt procedural rules governing the conduct of protest hearings. sec.9.7. Additional General Provisions. (a) An error in a district's annual report of property value or a change in the certified tax roll as reported in the comptroller's preliminary findings may be corrected by timely filing a petition and otherwise complying with the requirements of this section. (b) A district shall send notice of its protest to each appraisal district that appraises property for the district. An appraisal district shall send notice of its protest to each district that participates in the appraisal district. A copy of the district's or appraisal district's petition shall contain a certification that a copy of its petition was delivered as required by this subsection. (c) A property owner may contact the property tax division manager for information concerning the districts or appraisal districts that have filed a petition as required by this section. A district or appraisal district may contact the property tax division manager for information concerning property owners that have filed a petition as required by this section. (d) During the conduct of a protest hearing, a petitioner or a comptroller employee may present additional evidence supporting the petition if the information is requested and obtained by a comptroller employee pursuant to sec.9.10(f) of this title (relating to Conduct of Hearing), after the deadline to file a petition has passed and before the date set for the petitioner's protest hearing. (e) A comptroller employee may present evidence, gathered during the conduct of the property value study or during the comptroller's review of the petitioner's protest, during a hearing on the petitioner's protest. (f) At any time before the date final changes in the preliminary findings are certified to the commissioner of education, the comptroller may certify to the commissioner of education amended preliminary findings. If the comptroller certifies amended preliminary findings that are adverse to the district, the appraisal district's, property owner's, and district's, time to protest begins to run on the date the amended preliminary findings are certified. An amended preliminary finding is made when the comptroller's finding of property value for a district is delivered to a district and certified to the commissioner of education between the date preliminary findings for the district are originally certified and final certification of changes in preliminary findings. (g) A petition shall show the petitioner's name and address, designate the petitioner's agent, and list for each category of property the reasons for disagreement with the preliminary findings for that category. The petition shall include the following information: (1) all documentary evidence, placed in order by category, necessary to support the factual and legal contentions made in the petition; and (2) the value petitioner claims is correct, however, the value claimed to be correct may not be less than the tax roll value for the year of the study. (A) A district or appraisal district that files a protest of its self reported value under sec.9. 7(a) of this title (relating to Additional General Provisions) may claim the tax or appraisal roll value it claims is correct in its self-report protest. (B) The hearing examiner may amend a district's or appraisal district's petition to reflect the tax roll value the examiner finds is correct, if evidence is presented that a self-report protest made under sec.9.7(a) of this title determined against the petitioner. (h) A petition must be signed by: (1) the superintendent of the district if it is a petition filed by a school district; or (2) the chairman of the board of trustees if it is a petition filed by a county education district; or (3) the property owner or the property owner's agent if it is a petition filed by a property owner; or (4) the chief appraiser of the appraisal district, if it is a petition filed by an appraisal district. (i) The petition must contain a sworn statement by the person signing the petition that, to the best of his knowledge, the evidence contained in the petition is true and correct. (j) In a protest of the comptroller's preliminary findings, the comptroller has the burden of proving by a preponderance of the evidence that the comptroller used appraisal, statistical compilation, and analysis techniques, generally accepted as an appropriate method for the conduct of a ratio study by organizations setting recognized standards for the conduct of a ratio study, to reach a correct value for a district included in the property value study. (k) Before a scheduled protest hearing the comptroller or a petitioner may request a preliminary conference to clarify the issues or resolve the protest. If the request is accepted, the conference shall be scheduled during business hours at the offices of the comptroller or at a time mutually agreeable to the comptroller and the petitioner. A hearing examiner may not attend a preliminary conference. (l) The comptroller may, on the comptroller's own motion, grant an extension of time for the limited purpose of correcting technical errors or omissions in a timely filed protest petition. sec.9.8. Scheduling a Protest Hearing. On receiving a petition, the comptroller shall determine whether the petition raises issues that are within the comptroller's jurisdiction. The comptroller shall deliver notice of the date, time, and place fixed for a hearing to each petitioner's agent. The notice must be delivered not later than 10 days before the date of the hearing. sec.9.9. Hearing Examiner's Powers. (a) Hearing examiner. The hearing examiner shall conduct a protest hearing in a manner insuring fairness, the reliability of evidence, and the timely completion of the hearing. The hearing examiner shall have the authority necessary to receive and consider all evidence, propose decisions, consider exceptions and replies to exceptions, and amend a proposed decision. The hearing examiner's authority includes, but is not limited to, the following: (1) establish the comptroller's jurisdiction concerning the protest, including whether a timely protest has been filed or whether an extension of time should be granted; (2) set hearing dates; (3) rule on motions and the admissibility of evidence; (4) designate parties and establish the order of presentation of evidence; (5) consolidate related protests; (6) conduct a single hearing that provides for: (A) participation by the affected district(s), appraisal district, and any property owner that has filed a valid and timely petition, if the hearing concerns preliminary findings of taxable value or the degree of uniformity and median level of appraisals; or (B) participation by the affected district(s) and the commissioner of education, if the hearing concerns the preliminary findings of an audit of a district's taxable property values; (7) conduct hearings in an orderly manner; (8) administer oaths to all persons presenting testimony; (9) examine witnesses and comment on the evidence; (10) insure that evidence, argument, and testimony are introduced and presented expeditiously; (11) refuse to hear arguments that are repetitious, not confined to matters raised in the petition, not related to the evidence or that constitute mere personal criticism; (12) accept and note a petitioner's waiver of any right granted by these rules; (13) limit each hearing to one hour for presentation of evidence and argument or extend the one-hour time limit in the interest of a full and fair hearing; and (14) exercise any other powers necessary or convenient to carry out the hearing examiner's responsibilities and to insure timely certification of changes in preliminary findings to the commissioner of education. (b) Official notice. The hearing examiner may take official notice of any matter which trial judges may judicially notice and of facts within the hearing examiner's personal knowledge or specialized experience. Petitioners in a protest in which official notice is taken shall have an opportunity to contest the matter. (c) Transcription of protest hearings. All protests heard by the hearing examiner shall be recorded. A petitioner will be provided a copy of the recording after a written request and payment of a cost-based fee. A petitioner may at any time make arrangements for and bear the cost of having a hearing recorded and transcribed by a court reporter, provided the comptroller's staff timely receives a copy of the transcript. (d) Motion to dismiss. The hearing examiner may entertain motions for dismissal at anytime for any of the following reasons: (1) failure to prosecute; (2) unnecessary duplication of proceedings or res judicata; (3) withdrawal of protest; (4) moot questions or obsolete petition; (5) failure to certify that notice of protest was delivered as required by sec.9.7(b) of this title (relating to Additional General Provisions) or failure to actually deliver notice as required by sec.9.7(b) of this title; or (6) the result of an appraisal district protest is adverse to a district. (e) Postponement. The hearing examiner may grant or deny a request to postpone a protest hearing if good cause is shown and doing so would not in any way prevent timely certification of changes in the preliminary findings to the commissioner of education. A request to postpone must be in writing, show good cause for the postponement, and be delivered before the date the protest hearing is scheduled to begin. (f) Evidence. The hearing examiner shall determine the admissibility of the evidence. Any petitioner may object to the admission of evidence and the objection will be ruled on and noted on the record. The hearing examiner may exclude irrelevant, immaterial, or unduly repetitious evidence. The hearing examiner may receive any part of the evidence in writing. (g) Ex parte communications. The hearing examiner in a protest may not communicate outside a protest hearing, directly or indirectly, with any agency, person, petitioner, petitioner's agent, or petitioner's authorized representative regarding any issue of fact or law relating to the protest unless all petitioners in the protest have notice and opportunity to participate, except that the hearing examiner may communicate ex parte with comptroller employees to use the comptroller's special skills to evaluate the evidence if the employee will not participate in the protest hearing, has not been involved in preparing for the hearing, and has not been involved in conducting the particular property value study under protest. sec.9.10. Conduct of Hearing. (a) The hearing examiner shall convene a hearing for a protest. (b) All proceedings are open to the public and are held in Austin, unless the hearing examiner designates another place for the hearing. The hearing examiner may close a hearing, on his own motion or on the motion of any party, if confidential information may be disclosed during the hearing. (c) The petitioner may designate in writing either himself or an authorized representative to present evidence and argument. (d) If a comptroller employee has requested in writing information, materials, sales, or documentary evidence of any type from the appraisal district, property owner, or district and any of these materials are not provided to the comptroller's employee within 10 working days of the request, the materials that were not provided shall be inadmissible during the conduct of a protest hearing for a petitioner who failed to provide the materials. The comptroller may require that information requests be supplemented. (e) Each petitioner may present argument on any matter raised by the petition. Each petitioner may offer oral argument at the hearing. Argument shall be confined to the evidence and to arguments of other parties. (f) Not more than one representative for each petitioner or aligned group of petitioners shall be heard in the protest hearing on any petition except on leave of the hearing examiner. An authorized representative may designate, and the hearing examiner may approve, a reasonable number of individuals to present evidence and argument. Nothing in this subsection limits the presentation of evidence through witness testimony. (g) The hearing examiner shall establish the order of proceeding, and is responsible for closing the record. sec.9.11. Proposed Decision. (a) The hearing examiner, hearing examiner's designee, or a comptroller employee who has read the record shall prepare a proposed decision which shall include a statement of the reasons for the proposed decision. (b) The hearing examiner shall serve the proposed decision on the petitioner's agent by certified mail. sec.9.12. Exceptions to Proposed Decision. (a) Unless the petitioner has waived the right of review of the proposed decision, any petitioner adversely affected by the proposal may, within 10 working days after the date the proposed decision is mailed, file exceptions by delivering the original documents to the hearing examiner. Replies to exceptions shall be filed in the same manner within 20 working days after the proposal for decision is mailed. Copies of all exceptions and replies shall be served promptly on the examiner and on all other petitioners in the protest with certification of service furnished to the hearing examiner. Failure to provide copies to all other petitioners in the protest and to the hearing examiner with certification of service is grounds for withholding consideration of the written exceptions. (b) After consideration of the exceptions and replies, the hearing examiner may issue an amended decision without again serving the decision on the petitioner's agent. sec.9.13. Final Decision. (a) A proposed decision is final 10 days after it is delivered to the parties to the protest, unless: (1) exceptions to the proposed decision are filed, in which case the decision becomes final 10 working days after the latest deadline for filing a reply to the exceptions; or (2) the decision is amended, in which case the decision becomes final on the day the amended decision is issued. (b) A final decision ordering changes to preliminary findings made as a result of a school district's protest will change the preliminary findings for the county education district in which the school district participates. (c) A final decision ordering changes to preliminary findings made as a result of a county education district's protest will change the preliminary findings for the county education district's component school districts. (d) A final decision ordering changes to preliminary findings made as a result of an appraisal district's protest will change the preliminary findings for the county education district and the school districts located in the appraisal district. (e) A final decision ordering changes to preliminary values made as a result of a property owner's or district's protest will change the measures for an appraisal district. (f) A final decision ordering changes to preliminary findings made as a result of a property owner's protest will change the preliminary findings for the county education district and the school district where the property which is the subject of the protest is located. A property owner's preliminary value will be changed by a protest brought by a county education district, school district, or appraisal district. (g) A decision concerning a protest of preliminary findings of an audit request must be decided by written order within 120 days of the date the school district received the preliminary findings. (h) The hearing examiner shall deliver by certified mail written notice of the final decision to each protesting petitioner's agent. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 17, 1992. TRD-9205395 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: May 8, 1992 Proposal publication date: January 7, 1992 For further information, please call: (512) 463-4028 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part VI. Texas Commission for the Deaf and Hearing Impaired Chapter 183. Board For Evaluation of Interpreters and Interpreter Certification 40 TAC sec.183.3 The Texas Commission for the Deaf and Hearing Impaired hereby adopts an amendment to sec.183.3, concerning board organization, without changes to the proposed text as published in the February 21, 1992, issue of the Texas Register (17 TexReg 1456). The section amends Section (1) of the rule, Term of members, making a member of the board who has completed a full three-year term eligible for term. A member who has completed two full terms for a period of at least one year. A member completing an unexpired term is eligible immediately for terms. The amendment will result in more experienced advisory board members, less vacancies and turnover, more consistency in procedures, and less training of new members. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Human Resource Code, Chapter 81, sec.81.006(b) #3 which provides the commission with the authority to adopt such rules. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on April 15, 1992. TRD-9205339 Carla Stephenson Interim Director Texas Commission for the Deaf and Hearing Impaired Effective date: May 7, 1992 Proposal publication date: February 21, 1991 For further information, please call: (512) 444-3323