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 IV. Office of the Secretary of State Chapter 101. Practice and Procedure Before the Office the Secretary of State General Rules 1 TAC sec.101.1 The Office of the Secretary of State adopts amendments to sec.101.1 concerning definitions and sec.101.22 concerning the initiation of proceedings and the examination of pleadings, with changes to the proposed text as published in the April 28, 1992, issue of the Texas Register (17 TexReg 3043). New sec.101.1 adds new definitions necessary and pertinent to the administration of Chapter 101. The amendments are adopted because of the creation of the Office of Administrative Hearings by the 72nd Texas Legislature and for the purpose of clarifying rights to formal hearings provided by Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a (Vernon Supplemental 1992). The agency received comments on the proposed rules published April 28, 1992, from the State of Office of Administrative Hearings (SOAH). The commenter representing the SOAH had four comments. First, he suggested that the term administrative law judge be used to represent the individual assigned by the SOAH to conduct a formal hearing. Second, he suggested sec.101.22(b) should be clearer on the specific procedure for initiating a formal hearing with the SOAH. Third, he suggested that in view of sec.101.22(a)(2) the proposed sec.101. 22(c) is unnecessary. Finally, he suggested that the language in the proposed sec.101.22(e) not be mandatory but be permissive. The agency staff agreed with all the suggestions and included them in the adopted rules. The amendment is adopted under Texas Civil Statutes, Article 6252-13a, sec.4(a)(1); Article 1396-9.03; Article 1528d, sec.3; Article 5949, sec.10; Article 8871, sec.11; Article 5069-16.17; Article 5221, sec.7A; Texas Government Code, sec.406.023(a); Texas Business and Commerce Code, sec.17.08(d); Texas Property Code, sec.222.001; the Texas Election Code, sec.31.003, which provides the secretary of state with the authority to prescribe and adopt rules. sec.101.1. Definitions. The following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise. APTRA-The Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a (Vernon Supplemental 1992). Formal hearing -An adjudicative proceedings in accordance with these sections. Hearings examiner -The administrative law judge assigned by the State Office of Administrative Hearings to conduct a proceeding on matters within the agency's jurisdiction. All references to hearings examiner in these rules shall mean administrative law judge. 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 May 29, 1992. TRD-9207482 Audrey Selden Assistant Secretary of State Office of the Secretary of State Effective date: June 22, 1992 Proposal publication date: April 28, 1992 For further information, please call: (512) 463-5558 Initiation of Proceedings, Complaints, and Pleadings 1 TAC sec.101.22 The amendment is adopted under Texas Civil Statutes, Article 6252-13a, sec.4(a)(1); Article 1396-9.03; Article 1528d, sec.3; Article 5949, sec.10; Article 8871, sec.11; Article 5069-16.17; Article 5221, sec.7A; Texas Government Code, sec.406.023(a); Texas Business and Commerce Code, sec.17.08(d); Texas Property Code, sec.222.001; and Texas Election Code, sec.31.003, which provides the secretary of state with the authority to prescribe and adopt rules. sec.101.22. Initiation of Proceedings and Examination of Pleadings. (a) Where applicable, upon the filing of a complaint with the appropriate office, the office shall determine whether the complaint complies with its prescribed form, if any, and whether a contested case should be initiated. (1) If the office determines that the complaint does not substantially comply with its form, the office may return the complaint to the person who filed it, together with a statement of the office's reasons for returning the complaint. (A) The person who filed a complaint shall thereafter have the right to correct and refile the complaint. (B) The refiling of the complaint shall be within the time limit prescribed by the office. (2) If the office determines that the complainant complies with its prescribed form but fails to state facts which, if proven, would be grounds for the secretary to take action, the complainant will be notified of the basis for such determination. (A) The complainant shall be allowed to submit additional facts which, if proven, would be grounds for action by the secretary. (B) The submission of the additional facts shall be within the time period specified by the office. (C) If the person who filed the complaint does not submit additional facts within the time allowed, no further action shall be taken on the complaint and the file pertaining to the complaint shall be closed. (3) If the agency determines that the legal rights, duties, or privileges of a party might be affected by action taken as a result of a complaint or the agency determines on its own volition that a contested case should be initiated, the agency shall give notice by certified mail to the party of facts and conduct alleged to warrant the intended action, and the party shall be given an opportunity as described in the notice to show compliance with all requirements of the law concerning the applicable rights, duties or privileges. (4) It is the intention of the Office of the Secretary of State to afford all parties an opportunity for a hearing in all contested cases. (5) If revocation, suspension, probation, or other action concerning a registration, license, or commission is proposed, the agency shall give written notice to the affected party that the party must request, in writing, a formal hearing within 10 days of receipt of the notice. The notice shall state the basis for the proposed action. Receipt of the notice is presumed to occur on the tenth day after the notice is mailed to the last known address shown in the most recent filing with the appropriate office of the agency unless another date is reflected on a United States Postal Service return receipt. (6) If no timely request for a hearing is received, the party is deemed to have waived the hearing and be in agreement with the allegations and proposed action. (7) If the hearing is waived, action including, but not limited to, suspension, revocation or probation of the registration, license, or commission, shall be taken by an order of the secretary of state. (8) If a civil penalty is assessed pursuant to the Athlete Agents Act, Texas Civil Statutes, Article 8871 (Vernon 1992), the procedures delineated in Section 9 of the referenced Athlete Agents Act supersedes those stated in paragraph (1)- (7) of this section. (9) If a formal hearing is requested, it shall be conducted in accordance with the provisions of APTRA, other state statutes, agency rules applying to such hearings, and the rules of the State Office of Administrative Hearings. (b) A formal hearing is initiated by the filing of a petition with the State Office of Administrative Hearings and a request for a setting of a hearing or an assignment of an administrative law judge in accordance with 1 T.A.C. sec.155.7. The formal hearing is conducted by the State Office of Administrative Hearings. The petition shall state the following: (1) the name and address of the person initiating the proceeding or the name and address of the party's attorney or representative, if any; (2) a statement of the legal authority and jurisdiction under which the contested case has been initiated; (3) a reference to the particular sections of the statutes and rules involved; (4) a statement of the matters asserted; (5) a copy of the complaint, if any, upon which the proceeding is based; and (6) the relief requested. (c) Unless otherwise provided by law, where an office initiates a contested case on its own volition, the Office of Administrative Hearings shall assign a hearings examiner to hear the case and the office shall follow the notice procedures as outlined by sec.101.7 of this title (relating to Personal Service by the Agency). (d) Upon the filing of any pleading, the hearing examiner may examine same and determine its sufficiency under these sections. (1) If the hearings examiner finds that the pleading does not substantially comply with these sections, the hearings examiner may return it to the person who filed it, together with a statement of the reasons for returning the pleading. (2) The person who filed such pleading shall thereafter have the right to correct and refile the pleading, provided that the refiling of such shall not be permitted to delay any contested case, unless the hearings examiner determines that the interest of justice so requires. 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 May 29, 1992. TRD-9207481 Audrey Selden Assistant Secretary of State Office of the Secretary of State Effective date: June 22, 1992 Proposal publication date: April 28, 1992 For further information, please call: (512) 463-5558 TITLE 7. BANKING AND SECURITIES Part VII. State Securities Board Chapter 117. Administrative Guidelines for Registration of Real Estate Programs 7 TAC sec.sec.117.1, 117.5, 117.7 The State Securities Board adopts amendments to sec.sec.117.1, 117.5, and 117. 7, concerning administrative guidelines for registration of real estate programs, without changes to the proposed text as published in the February 7, 1992, issue of the Texas Register (17 TexReg 984). The amendments allow for the continued uniformity with other states in applying standards for registration of real estate program offerings. The amendments reflect provisions that were included in the most recent changes to the North American Securities Administrators Association's real estate guidelines. No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 581, sec.28-1, which provide that the board may make or adopt rules or regulations governing registration statements, applications, notices, and reports, and in the adoption of rules and regulations, may classify securities, persons, and matters within its jurisdiction, and prescribe different requirements for different classes. 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 June 2, 1992. TRD-9207517 Richard D. Latham Securities Commissioner State Securities Board Effective date: June 23, 1992 Proposal publication date: February 7, 1992 For further information, please call: (512) 474-2233 Chapter 121. Administrative Guidelines for Registration of Oil and Gas Programs 7 TAC sec.sec.121.1, 121.2, 121.8, 121.9 The State Securities Board adopts amendments to sec.sec.121.1, 121.2, 121.8, and 121.9, concerning administrative guidelines for registration of oil and gas programs, without changes to the proposed text as published in the February 7, 1992, issue of the Texas Register (17 TexReg 987). The amendments allow for the continued uniformity with other states in applying standards for registration of oil and gas program offerings. The amendments reflect provisions that were included in the most recent changes to the North American Securities Administrators Association's oil and gas guidelines. No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 581, sec.28-1, which provide that the board may make or adopt rules or regulations governing registration statements, applications, notices, and reports, and in the adoption of rules and regulations, may classify securities, persons, and matters within its jurisdiction, and prescribe different requirements for different classes. 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 June 2, 1992. TRD-9207518 Richard D. Latham Securities Commissioner State Securities Board Effective date: June 23, 1992 Proposal publication date: February 7, 1992 For further information, please call: (512) 474-2233 Chapter 139. Exemptions by Rule or Order 7 TAC sec.139.6 The State Securities Board adopts an amendment to sec.139.6, concerning distribution by liquidating trustees, without changes to the proposed text as published in the February 7, 1992, issue of the Texas Register (17 TexReg 989). The exemption will be broad enough to cover many different situations involving distributions by liquidating trustees than is now the case. The amendment broadens the exemption by allowing the articles of dissolution to be filed either before or after a distribution. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1, which provide that the board may make or adopt rules or regulations governing registration statements, applications, notices, and reports, and in the adoption of rules and regulations, may classify securities, persons, and matters within its jurisdiction, and prescribe different requirements for different classes. 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 June 2, 1992. TRD-9207520 Richard D. Latham Securities Commissioner State Securities Board Effective date: June 23, 1992 Proposal publication date: February 7, 1992 For further information, please call: (512) 474-2233 Chapter 141. Administrative Guidelines for Registration of Equipment Programs 7 TAC sec.sec.141.1, 141.5, 141.6 The State Securities Board adopts amendments to sec.sec.141.1, 141.5, and 141. 6, concerning administrative guidelines for registration of equipment programs, without changes to the proposed text as published in the February 7, 1992, issue of the Texas Register (17 TexReg 990). The amendments allow for the continued uniformity with other states in applying standards for registration of equipment leasing program offerings. The amendments reflect provisions that were included in the most recent changes to the North American Securities Administrators Association's equipment leasing guidelines. No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 581, sec.28-1, which provide that the board may make or adopt rules or regulations governing registration statements, applications, notices, and reports, and in the adoption of rules and regulations, may classify securities, persons, and matters within its jurisdiction, and prescribe different requirements for different classes. 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 June 2, 1992. TRD-9207519 Richard D. Latham Securities Commissioner State Securities Board Effective date: June 23, 1992 Proposal publication date: February 7, 1992 For further information, please call: (512) 474-2233 TITLE 16. ECONOMIC REGULATIONS Part I. Railroad Commission of Texas Chapter 3. Oil and Gas Division Conservation Rules and Regulations 16 TAC sec.3.1 The Railroad Commission of Texas adopts an amendment to sec.3.1, concerning conservation rules and regulations, with changes to the proposed text as published in the April 17, 1992, issue of the Texas Register (17 TexReg 2666). The amendment shall take effect on July 1, 1992. Adoption of the amendment to subsection (a)(7) will reduce waste and increase efficiency in the commission's enforcement and regulatory functions by providing organizations with legally sufficient notice, consistent with due process, of enforcement or other proceedings to which they may be, or may wish to be, a party. Adoption of the amendment to subsection (c) will make it more likely that documents listed in subsection (b) will still be in the hands of an organization should they become necessary in an enforcement or other proceeding. The following changes have been made to the published version. Subsection (a)(7) has been modified to allow organizations to make changes of the organization address only by letter as an alternative to filing an amended organization report. The subsection has also been changed to specify precisely when service is effective upon an organization in the event the item sent is refused or not claimed. Subsection (c) has been modified to make it clear that the phrase "supporting documents" refers to those documents listed in the preceding subsection (b). The following comments on the proposed amendment were received. Comments received from Texas Mid-Continent Oil & Gas Association and Oryx Energy suggested that the 15-day deadline for the reporting of changes in the information required to be disclosed on the organization report, found in subsection (a)(7), is too short. Suggested alternative deadlines were 30 or 60 days; the reason offered for extending the deadline was that it is difficult for the operating divisions of large organizations to learn of changes in the organization's officer or directors in time to comply with the deadline. The commission disagrees that extension of the deadline is warranted. The purpose of the 15-day deadline is to ensure that all organizations timely report changes in address, personnel, and other circumstances, knowledge of which is necessary for the commission to efficiently discharge its regulatory and enforcement responsibilities. Doubling or quadrupling the time allowed to report these changes will cause waste and create delays. The same commenters requested that organizations be allowed to file notification of changes of address only by letter, as an alternative to filing an amended organization report. The commission agrees, and the adopted version of subsection (a)(7) makes this change. The same commenters also requested clarification of the meaning of the phrase "supporting documents" in subsection (c). While the phrase refers to the documents listed in subsection (b), the commission agrees that the reference is not clear; the adopted version clarifies the reference. The Texas Independent Producers and Royalty Owners Association endorsed the proposed amendments as published. The amendment is adopted under Texas Civil Statutes, Article 6252-13a, sec.4(a)(1), and the Natural Resources Code, sec.81.052 (Vernon Supplemental 1992). sec.3.1. Organization Report; Retention of Records; Notice Requirements. (a) Filing Requirements. (1)-(6) (No change.) (7) Organization reports must be refiled annually according to the schedule assigned by the commission. Prior to the filing date, the commission will mail notification and information to each organization for update of the organization report file. An amended organization report must be filed within 15 days after a change in any information required to be reported in the organization report. Address changes only may also be reported by letter. Any requirement under statute or commission rule for an order to be sent or notice to be given by the commission to an organization may be met by mailing the item to the organization's mailing address shown on the most recently filed organization report or the most recently filed letter notification of change of address. Notices sent by regular first-class mail may be presumed to have been received if, upon arrival of the deadline for any response to the notice, the wrapper containing the notice has not been returned to the commission. Service of notices and orders sent by certified mail is effective upon: acceptance of the item by any person at the address; initial failure to claim or refusal to accept the item by any person at the address prior to its eventual return to the commission by the United States Postal Service; or return of the item to the commission by the United States Postal Service bearing a notation such as "addressee unknown," "no forwarding address," "forwarding order expired," or any similar notation indicating that the organization's mailing address shown on the most recently filed organization report or address change notification letter is incorrect. Any commission action or proceeding for which notice is required may go forward on the basis of the notice provided under this subsection, whether or not actual notice has been received. (b) (No change.) (c) Time frame. All organizations shall keep copies of records, forms, and documents which are required to be filed with the commission, along with the supporting documents referred to in subsection (b) of this section, for a period of three years, or longer if required by another commission rule, and any such copies may be disposed of at the discretion of such entities after the original records, forms, and documents have been on file with the commission for the required period, except that particular documents shall be retained beyond the required period and until the resolution of pending commission regulatory enforcement proceedings if the documents contain information material to the determination of any issues therein. All records, forms, and documents required to be filed with the commission shall be filed in the same name, exactly as it appears on the organization report. 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 June 1, 1992. TRD-9207512 Nolan F. Ward Hearings Examiner Legal Division-General Law Railroad Commission of Texas Effective date: July 1, 1992 Proposal publication date: April 17, 1992 For further information, please call: (512) 463-6802 Chapter 5. Transportation Division Subchapter P. Commercial Zones 16 TAC sec.5.292 The Railroad Commission of Texas adopts an amendment to sec.5.292, concerning factors considered by the commission, with changes to the proposed text as published in the April 7, 1992, issue of the Texas Register (17 TexReg 2452). The amendment sets out the factors considered by the commission in determining whether a community should be included within an existing commercial zone. The version as adopted includes two additional factors suggested by commenters. The additional factors will provide additional guidance to the commission in determining whether add a community to an existing commercial zone. The amendment is proposed to provide further guidance to persons who file petitions for inclusion in commercial zones. Petitions are to include information on the factors listed. That information will allow the commission to determine whether or not to publish the proposed amendment, and will allow more consistent handling of such petitions throughout the rulemaking process. Several comments were received in regard to the proposed amendment. Commenters in favor supported the rule, but suggested additional factors that would provide additional guidance to the commission. Commenters in opposition argued that the decision to add a community to an existing commercial zone should be based on shipper need for expedited service, and other factors peculiar to the transportation system in the area. Those commenters also stated a desire to present the involved information at the hearing stage, rather than prior to publication. Comments in favor of the proposed amendment were received from the McKinney Economic Development Partnership, and the McKinney Chamber. Comments in opposition to the proposed rule were received from the Committee for the Expansion of the Houston Commercial Zone. The commission disagrees with the comments in opposition to the proposed amendment. The standards set out in the Motor Carrier Act, that a community be "adjacent to and commercially a part of" the central city, are not expressed solely in terms of transportation services. Further, the commission needs additional information prior to initiating the rulemaking process. Publication for public comment is perceived by some communities as preliminary approval of an addition; the commission wishes to avoid such misperception, especially where there is little likelihood of eventual approval. The amendment is adopted under the Texas Motor Carrier Act, Texas Civil Statutes, Article 911b sec.1(j), which authorizes the commission to define commercial zones that are adjacent to and commercially a part of a central city. sec.5.292. Factors Considered by the Commission. (a) In determining the necessity of the designation of an area as a commercial zone, the commission shall take into consideration its powers and duties under the Motor Carrier Act in view of the economic conditions in each proposed or established commercial zone, and particularly the effect that unregulated transportation has had or may have upon fully regulated motor carriers operating to, from, and within such commercial zone. (b) In any petition seeking the addition of any city or area to an existing commercial zone, the petitioner shall include, to the extent possible, the information set out in subsection (c) of this section. If a petition fails to include any of the information required, the commission may deny the petition, and request that any additional information necessary for consideration be included with the petition when resubmitted. It is not necessary that a community meet any standard within the categories of information listed. The information will be used to generate a complete depiction of the commercial, economic, and geographic relationship between the invalided communities. If the petition seeks the inclusion within the commercial zone of an area that includes more than one city or community, the petition should include the information for a representative number of communities that are affected within the area. (c) The petition should set out the following information: (1) information that may be helpful in showing that the community to be added is "adjacent to" the central city: (A) the distance in miles from the center of the community to be added to the central city; (B) the distance in miles from the boundary of the community to be added to the corporate limits of the central city; (C) the distance in miles from the boundary of the community to be added to the boundary of the existing commercial zone; and (D) whether the community to be added is separated from the existing commercial zone and the central city by significant unincorporated area; (2) information that may be helpful in showing that the community to be added is "commercially a part of" the central city: (A) demographic trends relating to population movements between the central city and the community; (B) business migration from the central city to the community; (C) the extent and nature of business and commercial dealings between the central city and the community; (D) two-way traffic in employees, goods, and services between the central city and the community; (E) wholesale and retail sales areas for central city business enterprises; (F) existence of branch stores in the community; (G) service to the community by communications and advertising media in the central city; and (H) existence of a common transportation infrastructure, including mass transit systems; (3) information regarding any effect on the existing common carriers that serve the community. 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 June 1, 1992. TRD-9207511 Nolan F. Ward Hearing Examiner Legal Division-General Law Railroad Commission of Texas Effective date: June 23, 1992 Proposal publication date: April 7, 1992 For further information, please call: (512) 463-7094