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 Resource Technology 1 TAC sec.201.5 The Department of Information Resources Board of Directors adopts an amendment to sec.201.5 concerning agency planning, with changes to the proposed text as published in the June 26, 1992, issue of the Texas Register (17 TexReg 4587). The amendment establishes implementation standards for the "DIR Review Required" rider in the General Appropriations Act of the 72nd Legislature. Guidelines for analysis and reporting of project acquisition alternatives are adopted by reference in this section. The section specifies standards for applicability and implementation which will result in increased accountability and productivity as well as improved cost efficiency for information resources technology acquisitions. Comments were received on the following topics: Detailed Costs and Timing; Potential Implementation Costs; Number and Type of Alternatives; Wavier Criteria, Advisory Committee; Amending Rules; RFI's and RFP's Technical Foundation; Step 8 Recertification Process; and the Calculation of Fringe Benefits. The UT Health Science Center at Houston; UT System; Texas Water Commission; Department of Human Services; Attorney General's Office; and Comptroller's Office commented on the amendment. Most comments were clarified by reference to proposed rules and guidelines. One emergency provision was changed as a result of a comment. The amendment is adopted under Texas Civil Statutes, Article 4413(32j), sec.9(a), which provide the Department of Information Resources with the authority to adopt rules as necessary to ensure the cost-effective implementation of information resources technologies by state agencies. sec.201.5. Agency Planning. (a)-(d) (No change.) (e) Appeal procedures. (1) Submittal procedures. A state agency that disagrees with the department's disapproval of a plan, plan amendment, analysis of project acquisition alternatives, or procurement may submit a written request to the department for special review no later than 30 working days after notification of department disapproval. (2) (No change.) (f) (No change.) (g) Review of state agency analyses of project acquisition alternatives. (1) Applicability. (A) Departmental review of analyses of project acquisition alternatives is required for: (i) state agency information resources projects over the agency threshold as described in an agency's initial or final operating plan; or (ii) any state agency information resources project or other activity as stipulated by the department in its approval of an initial or final operating plan; except (iii) through August 31, 1993, these provisions shall not apply for any agency projects to expand or enhance existing information resources capacity with no significant change in technical environment. (B) Through August 31, 1993, the provisions of this subsection shall only apply to any state agency with the general appropriation rider entitled "DIR Review Required." (2) Waivers. (A) A waiver shall be granted to any state agency on an emergency basis without first complying with the procedures prescribed by this section for any projects which may become necessary as a result of a natural or human disaster; any order of a court of competent jurisdiction when the ordered period of compliance is less than six months unless the agency has received prior approval for an emergency implementation period in excess of six months; any act of exemption by the Texas Legislature; or other documented emergency conditions. The agency must report and explain to the department any emergency action within 30 days after the action is taken. (B) Through August 31, 1993, a waiver shall automatically apply to any agency whose final operating plan projects are classified only as current operations, normal growth, baseline operations, or growth and expansion, or telecommunications and where the agency's total direct costs for all of those projects are less than $750,000. (C) Through August 31, 1993, a waiver shall apply for any agency projects in progress beyond the planning or feasibility study stage on or before May 1, 1992. Such waivers must be requested in writing by the Information Resources manager. The department will grant or deny waiver requests within 10 working days of receipt of the request, based on evidence of project status. (3) Compliance; adoption by reference. Each analysis of project acquisition alternatives prepared by an agency and submitted to the department must include information in the format specified by the department in the Guide for the Analysis of Project Acquisition Alternatives (hereafter referred to as Guide). Information concerning the Guide adopted by reference may be obtained from the Department of Information Resources, P.0. Box 13564, Austin, Texas 78711. (4) Submittal procedures. (A) Before project initiation beyond the planning or feasibility stage, each state agency shall prepare and submit to the department an analysis of project acquisition alternatives for projects which meet the applicability requirements stated in paragraph (1) of this subsection and which do not qualify for a waiver under paragraph (2) of this subsection. Agency submissions of information for departmental review shall occur within the timeframes specified in the Guide. (B) The Information Resources manager shall sign the transmittal document for the analysis of alternatives. (5) Review procedures. The department may not approve an agency's analysis unless the agency has submitted, and the department has approved, a current agency strategic and operating plan. (A) The department will evaluate alternative analyses: (i) for completeness with respect to published instructions in the Guide. The analysis shall address, but not be limited to, the following factors: (I) start-up costs associated with the acquisition, including but not limited to the purchase price of the acquisition, site preparation costs, freight charges, and staff costs; (II) estimated cost of maintenance; (III) estimated cost of supplies; (IV) estimated cost of employee training; (V) estimated cost of additional long-term staff needed; (VI) estimated increase in employee productivity; (VII) consistency with agency plans approved by DIR; (VIII) consistency with statewide standards and policies established in the statewide strategic plan; (ii) for cost-effectiveness in accordance with published instructions in the Guide or other rule of the department; and (iii) for any other information the department deems necessary and appropriate. (B) The department will review and approve or disapprove each analysis of project acquisition alternatives in writing no later than 30 days after receipt of the documents. If the department does not act within the time allowed, the agency may proceed with its project; however, departmental inaction does not exempt the agency, its projects, or its activities from other procedural requirements of the department under this chapter. (i) First review. If the department disapproves an agency's initial analysis, the agency may perform a recertification of the analysis by an independent reviewer and request a second review as specified in the Guide. (ii) Second review. If the department disapproves an agency's second analysis, the agency may appeal the decision to the board, under the provisions of subsection (e) of this section, provided the request for appeal is accompanied by the department's disapproval notices and the independent certification of the analysis. 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 September 25, 1992. TRD-9213056 Ann S. Fuelberg Executive Director Department of Information Resources Effective date: October 19, 1992 Proposal publication date: June 26, 1992 For further information, please call: (512) 475-4714 1 TAC sec.201.13 The Department of Information Resources adopts new sec.201.13 concerning information resource standards, with changes to the proposed text as published in the June 26, 1992, issue of the Texas Register (17 TexReg 4591). Adoption of this section is necessary to define technical standards for geographic information systems and information security standards for all state information resources. For geographic information systems, the adopted section will function to reduce redundant data development efforts and facilitate data exchange among users. The information security standards establish a state information security policy and serve to create a consistent approach for agencies to follow in protecting the state's vital information resources. Comments were received on subsection (a), geographic information system standards, on issues relating to fiscal impact, university exemption, additions to the data layer classification schema, and clarification/definition of terms. It was requested that projections, map legend and map accuracy be made guidelines rather than standards. The department agreed with all comments on sec.201.13(a) and made changes accordingly. Universities will be exempted from these standards when geographic information systems are acquired solely for instructional purposes. Agencies and private businesses submitting comments on the geographic information system standards were: Comptroller of Public Accounts; Office of the Attorney General; Railroad Commission of Texas; Texas Department of Human Services; Texas Department of Transportation; Texas General Land Office; Texas Legislative Council; Texas National Research Laboratory Commission; Texas Rehabilitation Commission; Texas Water Development Board; Texas Water Commission; Texas Water Commission/Water Utilities Division; Corpus Christi State University; Mississippi Institutions of Higher Learning; Prairie View A&M University; Southwest Texas State University; Texas A&M University/Dept of Agriculture Engineering; Texas A&M University/Remote Sensing/GIS Laboratory; University of North Texas; University of North Texas/Remote Sensing and Land Use Analysis; Lee County Appraisal District; National Institute of Standards and Technology; Tracor Applied Sciences; EDS/GDS Solutions; and Intergraph. Comments received on subsection (b), information security standards, which the department agreed with and made changes accordingly, were on issues relating to fiscal impact, clarification and definition of terms, data encryption, audit requirements, personnel requirements, report requirements and implementation timeframe. Comments which the department disagrees with, and consequently made no substantive changes, dealt with adoption of guidelines rather than standards and on what agencies felt were extensive documentation requirements. The department feels that standards are required for consistency and that agency security procedures must be documented and security manuals must be developed and maintained to ensure personnel awareness of policy, requirements and procedures. Agencies submitting comments on information security standards were: Texas Department of Insurance; Office of the Attorney General; Office of the State Auditor; Texas Employment Commission; Texas Parks and Wildlife Commission; Railroad Commission of Texas; Teacher Retirement System of Texas; University of Texas System; University of Texas Health Science Center/San Antonio; University of Texas Health Science Center/Houston; Texas Department of Health; Comptroller of Public Accounts; Texas Water Commission; Security Issues Group-An ad hoc association of agency security professionals. The new section is adopted under the Information Resources Management Act, Texas Civil Statutes, Article 4413(j), sec.1, Subsection 9, which provide the department with the authority to adopt rules as necessary to carry out its responsibility under this article. sec.201.13. Information Resource Standards. (a) Geographic information systems standards. (1) Applicability. (A) All digital spatial data users and developers of new geographic information systems in state agencies and universities must comply with the technical standards specified in the "Standards and Guidelines for Geographic Information Systems in the State of Texas ". (B) An institution of higher education, as defined by the Education Code, sec.61.003, will be exempted from these standards when Geographic Information Systems are acquired solely for instructional purposes. (C) Currently operating systems which are structurally unable to comply are not required to retrofit to these standards. (2) Waivers. (A) A waiver shall be granted to any state agency due to any order of a court of competent jurisdiction when the ordered period of compliance is less than 90 days; or any act of exemption by the Texas Legislature. (B) Letter applications for waivers will be made in writing to the department by the agency Information Resources Manager (IRM). Within 10 days after initial receipt of the waiver request, the department will notify the submitting state agency of all supporting information the department requires to conduct its review. The date of receipt of the waiver application is either the initial date of arrival of the request, or the date that any supporting or other information if requested, is received. Review shall commence on the date of receipt. The department will conduct its review within 30 days after the date of its receipt, evaluate the applications, and grant or deny these waiver requests based on an analysis of the particular circumstances or environment. Consultation with the Geographic Information Systems Standards Committee will be included in the waiver process on an as needed basis, and the Committee will review all waivers at their semi-annual meetings. (C) The acquisition of software which cannot support these standards will not be grounds for a waiver. (3) Adoption by reference. The "Standards and Guidelines for Geographic Information Systems in the State of Texas", herein adopted by reference, may be obtained from the Department of Information Resources, P.O. Box 13564, Austin, Texas 78711. (4) Submittal procedures. The agency IRM will certify that geographic information systems development in the agency adheres to the "Standards and Guidelines for Geographic Information Systems in the State of Texas" . The annual certification will be submitted to the department. (5) Review procedures. (A) The certification will be reviewed by the department and the Geographic Information Systems Standards Committee to determine compliance and agency comprehension of the standards. Review procedures and any subsequent on-site assessment will be consistent with sec.7 of the "Standards and Guidelines for Geographic Information Systems in the State of Texas". (B) The agencies may also request a peer review be performed at any time during the year. Upon receiving such a request, the department will schedule a review as soon as possible. (b) Information security standards. (1) Applicability. The following rule constitutes required minimum security standards for the protection of automated information resources for agencies of the State of Texas. The department requests each agency to complete implementation of an information resources security program consistent with these standards on or before September 1, 1997, in accordance with the implementation schedule of paragraph (12) of this subsection. Beginning with the agency information resources strategic plan to be submitted on January 1, 1993, agencies shall include in each biennial strategic plan for information resources an overview of their current information security posture and their future plans for completing development of a security program, consistent with these standards and implementation schedule, over each current strategic planning cycle. Completed implementation actions shall be reported to the department in agency annual performance reports. To assist in the interpretation and implementation of these standards, the department has developed the Information Resources Security and Risk Management Policy, Standards and Guidelines manual which is available on request from the Department of Information Resources, P.O. Box 13564, Austin, Texas 78711. (2) Classification of information. The state's automated information files and databases are essential and vital public resources which must be protected from unauthorized modification, deletion, or disclosure. Subject to executive management review, agency program managers have responsibility for the information assets utilized in carrying out the programs under their direction and accordingly are responsible for classifying program information. (A) For purposes of this subsection, two classifications of information are defined which require special protective precautions: (i) confidential information -information maintained by state agencies that is exempt from disclosure under the provisions of the Texas Open Records Act or other state or federal law; and (ii) sensitive information-information maintained by state agencies that requires special precautions, as determined by agency standards and risk management decisions, to assure its accuracy and integrity by utilizing error checking, verification procedures and/or access control to protect it from unauthorized modification or deletion. (B) As defined in subparagraph (A)(ii) of this paragraph, sensitive information may be either public or confidential and requires a higher than normal assurance of accuracy and completeness. Likewise, confidential information may also be considered sensitive, requiring special measures to ensure its accuracy. Thus, the controlling factor for confidential information is dissemination, while the controlling factor for sensitive information is that of integrity. (3) Policy. It is the policy of the State of Texas that: (A) Automated information and information resources residing in the various agencies of state government are strategic and vital assets belonging to the people of Texas. These assets require a degree of protection commensurate with their value. Measures shall be taken to protect these assets against accidental or unauthorized disclosure, modification, or destruction, as well as to assure the security, reliability, integrity, and availability of information. (B) The protection of assets is a management responsibility. (C) Access to state information resources must be strictly controlled. State law requires that state owned information resources be used only for official state purposes. (D) Information which is sensitive or confidential must be protected from unauthorized access or modification. Data which is essential to critical state functions must be protected from loss, contamination, or destruction. (E) Risks to information resources must be managed. The expense of security safeguards must be appropriate to the value of the assets being protected, considering value to both the state and a potential intruder. (F) The integrity of data, its source, its destination, and processes applied to it must be assured. Changes to data must be made only in authorized and acceptable ways. (G) In the event a disaster or catastrophe disables information processing and related telecommunication functions, the ability to continue critical governmental services must be assured. Information resources must be available when needed. (H) Security needs must be considered and addressed in all phases of development or acquisition of new information processing systems. (I) Security awareness and training of employees is one of the most effective means of reducing vulnerability to errors and fraud and must be continually emphasized and reinforced at all levels of management. All individuals must be accountable for their actions relating to information resources. (J) Agency information security programs must be responsive and adaptable to changing vulnerabilities and technologies affecting state information resources. (K) Agencies must ensure adequate separation of functions for tasks that are susceptible to fraudulent or other unauthorized activity. (4) Management and staff responsibilities. (A) The responsibilities of a position with respect to security and risk management shall be commensurate with its authority. Descriptions of security roles and responsibilities for agency personnel shall be included in written position descriptions and compiled in the agency security manual developed and maintained by the information security function. (B) Each agency head, or the information resources manager acting on delegated authority, shall institute an information security function to administer the agency information security program. It shall be the duty and responsibility of this function to establish all procedures and practices necessary to ensure the security of information assets against unauthorized or accidental modification, destruction, or disclosure. The information security function within each agency shall document and maintain an up-to- date internal information security program. The agency security program shall include written internal policies and procedures for the protection of information resources, be an instrument implementing state information security policies and standards, be applicable to all elements of the agency, and be signed by the information resources manager or the agency head. (C) The Information Resources Management Act makes it clear that information and information resources residing in the various agencies of state government are assets owned by the people of Texas. For the purpose of information resources security and risk management, the concept of owners, custodians and users of information resources, and their surrogate responsibilities to the people of Texas, is utilized in the development of an information security program. The effectiveness of the program depends to a large extent on the correct identification of those surrogate owners, custodians, and users of information. Owners, custodians, and users of data, software, and other information resources shall be identified, documented, and their responsibilities defined. All resources shall be assigned an owner. In cases where data or software is aggregated for purposes of ownership, the aggregation shall be at a level which assures individual accountability. The following distinctions among owner, custodian, and user responsibilities should guide determination of these roles. (i) Owner responsibilities. The owner of information resources is the designated individual upon whom responsibility rests for carrying out the program that uses the resources. That person is referred to herein as a program manager. The owner, or program manager, is responsible and authorized to: approve access and formally assign custody of the asset; judge the asset's value; specify data control requirements and convey them to users and custodians; and ensure compliance with applicable controls. Ownership responsibilities apply in the development of outsourcing contracts with private firms or with other agencies. These contracts must specify appropriate controls, based on risk assessment, to ensure protection of the state's confidential or sensitive information files, databases and software from unauthorized modification, deletion or disclosure. (ii) Custodian responsibilities. A custodian is the agent in charge of the organizational unit providing technical facilities, data processing and other support services to owners and users of automated information. The custodian of information resources is assigned the responsibility to: implement the controls specified by the owner; provide physical and procedural safeguards for the information resources within the facility; assist owners in evaluating the cost- effectiveness of controls; administer access to the information resources; and to make provisions for timely detection, reporting, and analysis of unauthorized attempts to gain access to information resources. Custodial responsibilities apply to all entities providing outsourcing services to state agencies. (iii) User responsibilities. The users of information resources have the responsibility to: use the resource only for the purposes specified by its owner; comply with controls established by the owner; and prevent disclosure of confidential or sensitive information. (D) The agency information security function acting on behalf of the agency head and with cooperation from program and technical management, shall assign information asset ownership and ownership responsibilities for all information resources within the agency. (E) Program managers, having been assigned information resource ownership, shall assign custody of program assets to appropriate technical and data center managers and ensure they are provided the appropriate direction to implement the security controls and procedures that have been defined. (F) Technical managers, assigned information resource custodianship, are charged with executing the monitoring techniques and procedures for detecting, reporting, and investigating breaches in information asset security. (G) An internal audit of the information security function shall be performed periodically, based on risk assessment, as directed by the agency head or the information resources manager acting on delegated authority for risk management decisions. (5) Risk analysis. (A) The information security function within each agency shall require a comprehensive risk analysis of all information processing systems be performed on a periodic basis as set by agency standards. Risk analysis results shall be presented to the owner of the information resource for risk management. Each step of the risk analysis process must be documented. The degree of risk acceptance (i.e., the exposure remaining after implementation of the recommended protective measures) must be identified. (B) A risk analysis report documenting the risk assessment must be submitted to the agency head. The risk analysis process provides the basis for preparing the agency's risk analysis report. (C) All information resources determined by agency management to be essential to the agency's critical mission and functions, the loss of which would have an unacceptable impact, shall have a written and cost effective contingency plan that will provide for the prompt and effective continuation of critical state missions in the event of a disaster. The contingency plan shall be tested and updated at least annually to assure that it is valid and remains current. (D) Data and software essential to the continued operation of critical agency functions shall be backed up. The security controls over the backup resources shall be as stringent as the protection required of the primary resources. (6) Personnel practices. (A) Each agency shall prepare a security manual that lists the agency's security policies and procedures. All agency personnel shall be required to provide written acknowledgement that they have received, read, and understand the security policies and procedures. The agency head, or the information resources manager acting on delegated authority, shall determine how often this written acknowledgement must be renewed. (B) Each agency shall establish procedures for reviewing information resource functions to determine which positions require special trust or responsibilities. (C) Agencies shall use non-disclosure agreements to document the acceptance by employees and contractors of special information security requirements as defined by agency standards and risk management decisions. (D) Agencies shall provide an ongoing awareness and training program in information security and in the protection of state information resources for all personnel whose duties bring them into contact with confidential or sensitive state information resources. Security training sessions for these personnel shall be held at least annually. Further, awareness and training in security shall not be limited to formal training sessions, but shall include periodic briefings and continual reinforcement of the value of security consciousness in all employees whose duties bring them into contact with confidential or sensitive state information resources. (E) State agencies shall take advantage of new employee orientation to establish security awareness and inform new employees and contractors of information security policies and procedures. If an employee leaves the employment of any agency of the state, for whatever reason, all security privileges shall be immediately revoked and the employee shall be prevented from having any opportunity to access information. (7) Physical security. (A) Management reviews of physical security measures shall be conducted annually, as well as whenever facilities or security procedures are significantly modified. (B) Physical access to central computer rooms shall be restricted to only authorized personnel. Authorized visitors shall be recorded and supervised. (C) Employees and information resources shall be protected from environmental hazards. Designated employees shall be trained to monitor environmental control procedures and equipment and shall be trained in desired response in case of emergencies or equipment problems. (D) Confidential or sensitive information, when handled or processed by terminals, communication switches, and network components outside the central computer room, shall receive the level of protection necessary to ensure its integrity and confidentiality. The required protection may be achieved by physical or logical controls, or a mix thereof. (E) Emergency procedures shall be developed and regularly tested. (8) Information security. (A) Authorized use and ownership. (i) All information and telecommunication resources leased or owned by the state and all time-sharing services billed to the state shall be used only to conduct state business. (ii) All computer software programs, applications, source code, object code, and documentation shall be deemed to be a work made for hire and is state property and shall be protected as such if developed: (I) by state employees in the course and scope of their employment or with the use of state equipment, materials, or other resources, with the exception of employees of universities and other institutions of higher education, provided such university or institution has an intellectual property policy in place which addresses ownership rights regarding software development; or (II) by contract personnel acting under a contract with the state, unless the contract under which the software or documentation is developed specifically provides otherwise; or (III) with state funds. (iii) All computer software programs, applications, and documentation purchased for the use of the state is state property and shall be protected as such. (B) Confidentiality of data and systems. (i) Confidential information shall be accessible only to personnel who are authorized by the owner on a strict "need to know" basis in the performance of their duties. Data containing any confidential information shall be readily identifiable and treated as such in its entirety. (ii) When confidential or sensitive information from one agency is received by another agency in connection with the transaction of official business, the receiving agency shall maintain the confidentiality or sensitivity of the information in accordance with the conditions imposed by the providing agency. (C) Integrity. Controls shall be established to ensure the accuracy and completeness of data. User management shall ensure that data comes from the appropriate source for the intended use. (D) Passwords. (i) Except for public users of systems where such access is authorized, or for situations where risk analysis demonstrates no need for individual accountability of users, each user of a multiple-user automated system shall be assigned a unique personal identifier or user identification. User identification shall be authenticated before the system may grant that user access to automated information. (ii) A user's access authorization shall be removed from the system when the user's employment is terminated or the user transfers to a position where access to the system is no longer required. (iii) Systems which use passwords shall conform to the federal standard on password usage contained in the Federal Information Processing Standard Publication 112 (FIPS PUB 112), which specifies minimum criteria and provides guidance for selecting additional password security criteria, when appropriate. A current password standard compliance document shall be maintained for each system which uses passwords, specifying the criteria to be met for the 10 factors which address design, implementation, and use of access control systems as contained in the FIPS PUB 112 standard. (E) Auditability. (i) Audit trails shall be maintained to provide accountability for all accesses to confidential or sensitive information and software and for all changes to automated security or access rules. (ii) An auditable, continuous chain of custody shall record the transfer of confidential or sensitive information. (iii) A sufficiently complete history of transactions shall be maintained for each session involving access to confidential or sensitive information to permit an audit of the system by tracing the activities of individuals through the system. (iv) Automated systems which process confidential or sensitive information must provide the means whereby authorized personnel have the ability to audit and establish individual accountability for any action that can potentially cause access to, generation of, or effect the release of the information. (F) Access controls. Controls shall ensure that legitimate users of the computer cannot access stored software or data unless they have been authorized to do so. (G) Security breaches. (i) Security breaches shall be promptly investigated. (ii) If criminal action is suspected, the agency must contact the appropriate local law enforcement and investigative authorities immediately. Laws governing the admissibility of evidence are very strict, and without professional advice the agency may be jeopardizing possible legal actions. (H) Systems development and testing. (i) Test functions shall be kept either physically or logically separate from production functions. Copies of production data shall not be used for testing unless the data has been declassified or unless all personnel involved in testing are otherwise authorized access to the data. (ii) Appropriate information security and audit controls shall be incorporated into new systems. Each phase of systems acquisition shall incorporate corresponding development or assurances of security and auditability controls. (iii) After a new system has been placed in operation, all program changes shall be approved before implementation to determine whether they have been authorized, tested, and documented. (9) Authentication, data encryption, and key management. (A) Systems shall implement authentication functions that are consistent with the level of confidentiality or sensitivity of the data they contain and process. (B) It will not be a requirement at this time for agencies to use data encryption techniques for storage and transmission of data. However, those agencies who choose to employ data encryption shall adopt the data encryption standard, also referred to as the DES algorithm, which is defined in the Federal Information Processing Standard Publication 46-1 (FIPS PUB 46-1). It is highly recommended that electronic fund transfer (EFT) systems use the data encryption standard (DES). For systems employing encryption as described above, procedures shall be prescribed for secure handling, distribution, storage, and construction of data encryption standard (DES) key variables used for encryption and decryption. Protection of the key shall be at least as stringent as the protection required for the information encrypted with the key. (10) Data communication systems. (A) General network controls. (i) Network resources participating in the access of confidential information shall assume the confidentiality level of that information for the duration of the session. Controls shall be implemented commensurate with the 18 highest risk. (ii) All network components under state control must be identifiable and restricted to their intended use. (B) Distributed network access security. Owners of distributed information resources served by distributed networks shall prescribe sufficient controls to ensure that access to those resources is restricted to authorized users and uses only. These controls shall selectively limit services based on: (i) user identification and authentication (e.g., password, smart card/token); or (ii) designation of other users, including the public where authorized, as a class (e.g., public access through dial-up or public switched networks), for the duration of a session, or (iii) physical access controls. (C) Application security. Network access to an application containing confidential or sensitive data, and data sharing between applications, shall be as authorized by the application owners and shall require authentication. (D) Alternate procedures. If the agency utilizes a communication network to process critical applications or functions, it shall, as part of its contingency plan, provide for an alternate means of accomplishing its program objectives in case the system or its communication network becomes unavailable. Alternative procedures shall be established that enable agency personnel to continue critical day-to-day governmental operations in spite of the loss of the communication network. (E) Dial-up access. For services other than those authorized for the public, users of dial-up terminals shall be positively and uniquely identifiable and their identity authenticated (e.g., by password) to the systems being accessed. (F) Warning statements. System identification screens shall include the following warning statements: (i) unauthorized use is prohibited; (ii) usage may be subject to security testing and monitoring; and (iii) abuse is subject to criminal prosecution. (11) Personal computers and word processors. Personal computer systems and word processors used to store, process and/or access confidential or sensitive data, shall undergo risk analysis as required by the information security function. Risk analysis results shall be presented to the owner of the information resources for risk management. The degree of risk acceptance (i.e., the exposure remaining after implementation of the recommended protective measures) must be identified. The information security function must be prepared to demonstrate that security precautions have been established to ensure data confidentiality and the maintenance of information integrity. (12) Implementation schedule. Implementation of this rule shall be in accordance with the following schedule. Earlier implementation of any item would be advantageous to the protection of state information resources. (A) September 1, 1993-Establish an information security function, (reference paragraph (4) of this subsection), to administer the agency information security program which shall include: (i) written internal policies and procedures for the protection of information resources; (ii) assignment of information asset ownership and custodianship and the attendant responsibilities for all information resources within the agency. (B) September 1, 1993-Implementation of all required personnel practices (reference paragraph (6) of this subsection). (C) September 1, 1994-Completion of risk analysis, (reference paragraph (5) of this subsection), of all information resources (including mainframes, minicomputers, personal computers, local area networks and distributed processing systems) used to collect, record, process, store, retrieve, display and transmit confidential or sensitive information, including: (i) documentation of risk analysis results; (ii) recommended protective measures; (iii) the degree of risk acceptance after such measures would be implemented; (iv) a written disaster recovery plan. (D) September 1, 1994-Implementation of all physical security requirements (reference paragraph (7) of this subsection): (i) physical access controls; (ii) identification of environmental hazards; (iii) development of environmental control procedures; (iv) emergency response training. (E) September 1, 1995-Implementation and testing of agency disaster recovery plans (reference paragraph (5)(C) of this subsection). (F) September 1, 1996-Implementation of information resources protective measures as identified by risk analysis including those for mainframes, minicomputers, personal computers, local area networks and distributed processing systems (reference paragraph (8) of this subsection): (i) logical and/or physical access controls to all information resources on a "need to know" basis; (ii) user authentication (passwords); (iii) data integrity controls; (iv) audit trails; (v) periodic internal audits; (vi) documentation and investigation of security breaches. (G) September 1, 1997-All remaining requirements consistent with these standards. (H) Waivers. The executive director of the department is hereby delegated authority by the board to grant a requesting state agency a compliance waiver from any implementation date of the schedule in paragraph 12 of this subsection. Application for waiver will be made in writing to the department by the agency information resources manager. The agency must clearly demonstrate to the department through written justification that the overall economic interests of the state in matters of information security are best served by granting the compliance waiver and the requesting agency must submit a new written implementation schedule. The department will act on requests for waivers based on the agency's compliance with other information security standards not affected by the waiver, the agency's newly submitted implementation schedule and the provision that the executive director of the department will notify the board when requests for waivers are received. 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 September 25, 1992. TRD-9213057 Ann S. Fuelberg Executive Director Department of Information Resources Effective date: October 19, 1992 Proposal publication date: June 26, 1992 For further information, please call: (512) 475-4714 TITLE 16. ECONOMIC REGULATION Part III. Texas Alcoholic Beverage Commission Chapter 55. Bingo Regulation Bingo Regulation and Tax 16 TAC sec.55.550 The Texas Alcoholic Beverage Commission adopts an amendment to sec.55.550, concerning bingo reports, without changes to the proposed text as published in the August 18, 1992, issue of the Texas Register (17 TexReg 5629). The amendment will allow licensed authorized organizations to continue conducting bingo and carrying out their charitable activities until the legislature has had an opportunity to review and act on any amendments it considers necessary to the bingo gross receipts tax. The amendment amends subsections (b), (c), and (f) to change the reporting period for and the payment of the bingo gross receipts tax and the bingo prize fee from monthly to semi-monthly, and specifies an effective date of October 16, 1992-May 31, 1993. A public hearing on the proposed amendment was held at the commission's monthly meeting on September 22, 1992. Seven persons testified at that hearing, and one written comment was also received at that time. Representatives of Harris, Dallas, and Tarrant Counties testified against the rule and the Texas Association of Counties submitted a written comment against the rule. They variously urged that the commission leave the rule unamended, wait to amend the rule until after the special session of the legislature, wait until an Attorney General's Opinion has been received concerning the commission's authority to change reporting periods, or return to quarterly reporting. They described the loss of revenue they believed would result from adoption of the amendment. A representative of the City of Dallas predicted a similar loss of revenue but did not make any recommendations. The commission disagrees with these comments on the grounds that the predictions of revenue losses are based on an assumption that the number of licensees conducting bingo will remain the same if the amendment is not adopted, while anecdotal evidence previously submitted to the commission indicates that without this proposed tax relief many licensees will cease conducting bingo and would then not be paying any state or local taxes or carrying out charitable activities supported by bingo proceeds. The commission believes its authority to change reporting periods is clearly set out in Texas Civil Statutes, Article 179d, sec.23(e). The president of the Texas Association of Bingo Licensees opposed the rule to the extent that, while licensees must have tax relief, he believed that they must not be taxed at all. The commission disagrees with that comment on the grounds that the tax is imposed by statute and that the constitutionality of that tax is presently in litigation. Representatives of two licensed organizations testified that the proposed tax relief was needed by licensees in order for them to continue conducting bingo. The amendment is proposed under Texas Civil Statutes, Article 179d, sec.16(a) and sec.23(e), which provide the commission with the authority to adopt rules relating to the enforcement and administration of the Bingo Enabling Act. 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 September 22, 1992. TRD-9212966 Emmitt Roberts General Counsel Texas Alcoholic Beverage Commission Effective date: October 16, 1992 Proposal publication date: August 18, 1992 For further information, please call: (512) 206-3485 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part IX. Texas Water Commission Chapter 331. Underground Injection Control Subchapter I. Financial Responsibility 31 TAC sec.sec.331.141-331.146 The Texas Water Commission (TWC) adopts new sec.sec.331.141-331.146, concerning underground injection control. Sections sec.sec.331.142-331.144 are adopted with changes to the proposed text as published in the March 27, 1992, issue of the Texas Register (17 TexReg 2249). Sections 331.141, 331.145, and 331.146 are adopted without changes and will not be republished. These sections are adopted in order to promulgate a new Subchapter I, entitled "Financial Responsibility," which provides specific regulations concerning the financial responsibilities of owners and operators of underground injection control wells. Subchapter I is patterned after rules promulgated by the Environmental Protection Agency pursuant to its authority under the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (RCRA). These new sections are intended to replace existing sec.305.153, which will be repealed. TWC received one written comment on the proposed regulations. The commenter requested that TWC provide a reference in sec.331.142, concerning financial responsibility, which states that the financial assurance mechanisms delineated in sec.331.144, concerning financial assurance for plugging and abandonment, are approved forms of financial assurance for purposes of complying with sec.331.142. The commenter is concerned that sec.331.142 did not specifically identify which financial assurance mechanisms TWC deemed to be equivalent to a performance bond. TWC intended the financial assurance mechanisms specifically identified in sec.331.144 to be the forms of financial assurance determined to be equivalent to a performance bond. Therefore, TWC will insert a cross- reference regarding sec.331.144 in sec.331.142 in order to clarify this intent. TWC is designated the state agency which manages injection wells which are not within the jurisdiction of the Railroad Commission. As such, TWC is required to maintain the quality of fresh water in the state to the extent consistent with the public health and welfare, the operation of existing industries and the economic development of the state, to prevent underground injection that may pollute fresh water, and to require the use of all reasonable methods to implement this policy. The new sections are adopted under the Texas Water Code, sec.5.103 and sec.5. 105, which provides TWC with the authority to adopt any rules necessary to carry out its powers and duties under the Texas Water Code and other laws of the State of Texas, and to establish and approve all general policy of the commission. In addition, the Texas Water Code, sec.27.109, authorizes TWC to adopt rules and procedures reasonably required for the performance of its powers and duties under Chapter 27. sec.331.142. Financial Responsibility. (a) The permittee shall secure and maintain a performance bond or other equivalent form of financial assurance or guarantee approved by the commission as identified in sec.331.144 of this title (relating to Financial Assurance for Plugging and Abandonment) to ensure the closing, plugging, abandonment, and post-closure care of the injection operation in the manner prescribed by the commission. The assurance may cover more than one well or operation. For new hazardous waste disposal wells, financial security shall be obtained at least 60 days prior to the commencement of drilling operations for the well. For other injection wells, financial security shall be obtained prior to the injection of fluids. (b) The requirement to maintain financial responsibility is enforceable regardless of whether the requirement is a condition of the permit. sec.331.143. Cost Estimate for Plugging and Abandonment. (a) The owner or operator must prepare a written estimate, in current dollars, of the cost of plugging the injection well in accordance with the plugging and abandonment plan as specified in this chapter. The plugging and abandonment cost estimate must equal the cost of plugging and abandonment at the point in the facility's operating life when the extent and manner of its operation would make plugging and abandonment the most expensive, as indicated by its plugging and abandonment plan. (b) The owner or operator must adjust the plugging and abandonment cost estimate for inflation within 30 days after each anniversary of the date on which the first plugging and abandonment cost estimate was prepared. The adjustment must be made as specified in paragraphs (1) and (2) of this subsection, using an inflation factor derived from the most recent implicit price deflator for gross national product published by the United States Department of Commerce in its Survey of Current Business. The inflation factor is the result of dividing the latest published annual deflator by the deflator for the previous year. (1) The first adjustment is made by multiplying the closure cost estimate by the inflation factor. The result is the adjusted closure cost estimate. (2) Subsequent adjustments are made by multiplying the latest adjusted closure cost estimate by the latest inflation factor. (c) The owner or operator must revise the plugging and abandonment cost estimate whenever a change in the plugging and abandonment plan increases the cost of plugging and abandonment. The revised plugging and abandonment cost estimate must be adjusted for inflation as specified in subsection (b) of this section. (d) The owner or operator must keep the following at the facility during the operating life of the facility: the latest plugging and abandonment cost estimate prepared in accordance with subsections (a) and (c) of this section and, when this estimate has been adjusted in accordance with subsection (b) of this section, the latest adjusted plugging and abandonment cost estimate. (e) All financial assurance documents shall be filed with the executive director. sec.331.144. Financial Assurance for Plugging and Abandonment. An owner or operator of each facility must establish financial assurance for the plugging and abandonment of each existing and new Class I, III, IV, and/or V well(s) hazardous waste injection well. For new wells, financial security shall be obtained at least 60 days prior to the commencement of drilling operations for the well. For the other injection wells, financial security shall be obtained at least 60 days prior to the injection of fluids. He may choose from the options as specified in paragraphs (1)-(6) of this section. (1) Plugging and abandonment trust fund. (A) An owner or operator may satisfy the requirements of this section by establishing a plugging and abandonment trust fund which conforms to the requirements of this paragraph and by submitting an originally signed duplicate of the trust agreement to the executive director. An owner or operator of a Class I well injecting hazardous waste must submit the originally signed duplicate of the trust agreement to the executive director with the permit application or for approval to operate under rule. The trustee must be an entity which has the authority to act as a trustee and whose trust operations are regulated and examined by a federal or state agency. (B) The wording of the trust agreement must be identical to the wording specified in sec.331.147(a)(1) of this title (relating to Wording of the Instruments), and the trust agreement must be accompanied by a formal certification of acknowledgement (for example, see sec.331.147(a)(2) of this title). Schedule A of the trust agreement must be updated within 60 days after a change in the amount of the current plugging and abandonment cost estimate covered by the agreement. (C) Payments into the trust fund must be made annually by the owner or operator over the term of the initial permit or over the remaining operating life of the injection well as estimated in the plugging and abandonment plan, whichever period is shorter. This period is hereafter referred to as the "pay-in period." The payments into the plugging and abandonment trust fund must be made as follows. (i) For a new well, the first payment must be made before the initial injection of waste(s). A receipt from the trustee for this payment must be submitted by the owner or operator to the executive director 60 days before this initial injection of waste(s). The first payment must be at least equal to the current plugging and abandonment cost estimate, divided by the number of years in the pay-in period. Subsequent payments must be made no later than 30 days after each anniversary date of the first payment. The amount of each subsequent payment must be determined by this formula. [graphic] where PE is the current plugging and abandonment cost estimate, CV is the current value of the trust fund, and Y is the number of years remaining in the pay-in period. (ii) If an owner or operator establishes a trust fund as specified in this paragraph, and the value of that trust fund is less than the current plugging and abandonment cost estimate when a permit is awarded for the injection well, the amount of the current plugging and abandonment cost estimate still to be paid into the trust fund must be paid in over the pay-in period as defined in this subparagraph. Payment must continue to be made no later than 30 days after each anniversary date of the first payment made pursuant to this chapter. The amount of each payment must be determined by this formula: [graphic] where PE is the current plugging and abandonment cost estimate, CV is the current value of the trust fund, and Y is the number of years remaining in the pay-in period. (D) The owner or operator may accelerate payments into the trust fund or he may deposit the full amount of the current plugging and abandonment cost estimate at the time the fund is established. However, he must maintain the value of the fund at no less than the value that the fund would have if annual payments were made as specified in subparagraph (C) of this paragraph. (E) If the owner or operator establishes a plugging and abandonment trust fund after having used one or more alternate mechanisms specified in this section, his first payment must be in at least the amount that the fund would contain if the trust fund were established initially and annual payments made according to specifications of this paragraph. (F) After the pay-in period is completed, whenever the current plugging and abandonment cost estimate changes, the owner or operator must compare the new estimate with the trustee's most recent annual valuation of the trust fund. If the value of the fund is less than the amount of the new estimate, the owner or operator, within 60 days after the change in the cost estimate, must either deposit an amount into the fund so that its value after this deposit at least equals the amount of the current plugging and abandonment cost estimate, or obtain other financial assurance as specified in this section to cover the difference. (G) If the value of the trust fund is greater than the total amount of the current plugging and abandonment cost estimate, the owner or operator may submit a written request to the executive director for release of the amount in excess of the current plugging and abandonment cost estimate. (H) If an owner or operator substitutes other financial assurance as specified in this section for all or part of the trust fund, he may submit a written request to the executive director for release of the amount in excess of the current plugging and abandonment cost estimate covered by the trust fund. (I) Within 60 days after receiving a request from the owner or operator for release of funds as specified in subparagraphs (G) or (H) of this paragraph, the executive director may instruct the trustee to release to the owner or operator such funds as the executive director specifies in writing. (J) After beginning final plugging and abandonment, an owner or operator or any other person authorized to perform plugging and abandonment may request reimbursement for plugging and abandonment expenditures by submitting itemized bills to the executive director. Within 60 days after receiving bills for plugging and abandonment activities, the executive director will determine whether the plugging and abandonment expenditures are in accordance with the plugging and abandonment plan or otherwise justified, and if so, he will instruct the trustee to make reimbursement in such amounts as the executive director specifies in writing. If the executive director has reason to believe that the cost of plugging and abandonment will be significantly greater than the value of the trust fund, he may withhold reimbursement of such amounts as he deems prudent until he determines, in accordance with paragraph (9) of this section, that the owner or operator is no longer required to maintain financial assurance for plugging and abandonment. (K) The executive director will agree to termination of the trust when: (i) an owner or operator substitutes alternate financial assurance as specified in this section; or (ii) the executive director releases the owner or operator from the requirements of this section in accordance with paragraph (9) of this section. (2) Surety bond guaranteeing payment into a plugging and abandonment trust fund. (A) An owner or operator must satisfy the requirements of this section by obtaining a surety bond which conforms to the requirements of this paragraph and submitting the bond to the executive director with the application for a permit or for approval to operate under rule. The bond must be effective at least 60 days before the initial injection of hazardous waste. The bond must, at a minimum, be among those listed as acceptable sureties on federal bonds in Circular 570 of the United States Department of Treasury. (B) The wording of the surety bond must be identical to the wording in sec.331.147(b) of this title. (C) The owner or operator who uses a surety bond to satisfy the requirements of this section must also establish a standby trust fund. Under the terms of the bond, all payments made thereunder will be deposited by the surety directly into the standby trust fund in accordance with instructions from the executive director. This standby trust fund must meet the requirements specified in paragraph (1) of this section, except that: (i) an originally signed duplicate of the trust agreement must be submitted to the executive director with the surety bond; and (ii) until the standby trust fund is funded pursuant to the requirements of this section, the following are not required by these requirements: (I) payments into the trust fund as specified in paragraph (1) of this section; (II) updating of Schedule A of the trust agreement (see sec.331.147(a) of this title) to show current plugging and abandonment cost estimates; (III) annual valuations as required by the trust agreement; and (IV) notices of nonpayment as required by the trust agreement. (D) The bond must guarantee that the owner or operator will: (i) fund the standby trust fund in an amount equal to the penal sum of the bond before beginning of plugging and abandonment of the injection well; or (ii) fund the standby trust fund in an amount equal to the penal sum within 15 days after an order to begin plugging and abandonment is issued by the executive director or a United States district court or other court of competent jurisdiction; or (iii) provide alternate financial assurance as specified in this section, and obtain the executive director's written approval of the assurance provided, within 90 days after receipt by both the owner or operator and the executive director of a notice of cancellation of the bond from the surety. (E) Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond. (F) The penal sum of the bond must be in amount at least equal to the current plugging and abandonment cost estimate, except as provided in paragraph (7) of this section. (G) Whenever the current plugging and abandonment cost estimate increases to an amount greater than the penal sum, the owner or operator, within 60 days after the increase, must either cause the penal sum to be increased to an amount at least equal to the current plugging and abandonment cost estimate and submit evidence of such increase to the executive director, or obtain other financial assurance as specified in this section to cover the increase. Whenever the current plugging and abandonment cost estimate decreases, the penal sum may be reduced to the amount of the current plugging and abandonment cost estimate following written approval by the executive director. (H) Under the terms of the bond, the surety may cancel the bond by sending notice of cancellation by certified mail to the owner or operator and to the executive director. Cancellation may not occur, however, during 120 days beginning on the date of the receipt of the notice of cancellation by both owner or operator and the executive director as evidenced by the returned receipts. (I) The owner or operator may cancel the bond if the executive director has given prior written consent based on his receipt of evidence of alternate financial assurance as specified in this section. (3) Surety bond guaranteeing performance of plugging and abandonment. (A) An owner or operator may satisfy the requirements of this section by obtaining a surety bond which conforms to the requirements of this paragraph and by submitting the bond to the executive director. An owner or operator of a new facility must submit the bond to the executive director with the permit application or for approval to operate under rule. The bond must be effective before injection of waste(s) is started. The surety company issuing the bond must, at a minimum, be among those listed as acceptable sureties on federal bonds in Circular 570 of the United States Department of the Treasury. (B) The wording of the surety bond must be identical to the wording specified in sec.331.147(d) of this title. (C) The owner or operator who uses a surety bond to satisfy the requirements of this section must also establish a standby trust fund. Under the terms of the bond, all payments made thereunder will be deposited by the surety directly into the standby trust fund in accordance with instructions from the executive director. The standby trust must meet the requirements specified in paragraph (1) of this section, except that: (i) an original signed duplicate of the trust agreement must be submitted to the executive director with the surety bond; and (ii) unless the standby trust fund is funded pursuant to the requirements of this section, the following are not required by these regulations: (I) payments into the trust fund as specified in paragraph (1) of this section; (II) updating of Schedule A of the trust agreement (see sec.331.147(a) of this title) to show current plugging and abandonment cost estimates; (III) annual valuations as required by the trust agreement; and (IV) notices of nonpayment as required by the trust agreement. (D) The bond must guarantee that the owner or operator will: (i) perform plugging and abandonment in accordance with the plugging and abandonment plan and other requirements of the permit for the injection well whenever required to do so; or (ii) provide alternate financial assurance as specified in this section, and obtain the executive director's written approval of the assurance provided, within 90 days after receipt by both the owner or operator and the executive director of a notice of cancellation of the bond from the surety. (E) Under the terms of the bond, the surety will become liable on the bond obligation when the owner or operator fails to perform as guaranteed by the bond. Following a determination that the owner or operator has failed to perform plugging and abandonment in accordance with the plugging and abandonment plan and other permit requirements when required to do so, under terms of the bond the surety will perform plugging and abandonment as guaranteed by the bond or will deposit the amount of the penal sum into the standby trust fund. (F) The penal sum of the bond must be in an amount at least equal to the current plugging and abandonment cost estimate. (G) Whenever the current plugging and abandonment cost estimate increases to an amount greater than the penal sum, the owner or operator, within 60 days after the increase, must either cause the penal sum to be increased to an amount at least equal to the current plugging and abandonment cost estimate and submit evidence of such increase to the executive director, or obtain other financial assurance as specified in this section. Whenever the plugging and abandonment cost estimate decreases, the penal sum may be reduced to the amount of the current plugging and abandonment cost estimate following written approval by the executive director. (H) Under the terms of the bond, the surety may cancel the bond by sending notice of cancellation by certified mail to the owner or operator and to the executive director. Cancellation may not occur, however, during the 120 days beginning on the date of receipt of the notice of cancellation by both the owner or operator and the executive director, as evidenced by the return receipts. (I) The owner or operator may cancel the bond if the executive director has given prior written consent. The executive director will provide such written consent when: (i) an owner or operator substitute alternate financial assurance as specified in this section; or (ii) the executive director releases the owner or operator from the requirements of this section in accordance with paragraph (9) of this section. (J) The surety will not be liable for deficiencies in the performance of plugging and abandonment by the owner or operator after the executive director releases the owner or operator from the requirements of this section in accordance with paragraph (9) of this section. (4) Plugging and abandonment letter of credit. (A) An owner or operator may satisfy the requirements of this section by obtaining an irrevocable standby letter of credit which conforms to the requirements of this paragraph and by submitting the letter to the executive director. An owner or operator of an injection well must submit the letter of credit to the executive director during submission of the permit application or for approval to operate under rule. The letter of credit must be effective before initial injection of waste(s). The issuing institution must be an entity which has the authority to issue letters of credit and whose letter of credit operations are regulated and examined by a federal or state agency. (B) The wording of the letter of credit must be identical to the wording specified in sec.331.147(d) of this title. (C) An owner or operator who uses a letter of credit to satisfy the requirements of this section must also establish a standby trust fund. Under the terms of the letter of credit, all amounts paid pursuant to a draft by the executive director will be deposited by the issuing institution directly into the standby trust fund in accordance with instructions from the executive director. This standby trust fund must meet the requirements of the trust fund specified in paragraph (1) of this section, except that: (i) an originally signed duplicate of the trust agreement must be submitted to the executive director with the letter of credit; and (ii) unless the standby trust fund is funded pursuant to the requirements of this sections, the following are not required by these regulations: (I) payments into the trust fund as specified in paragraph (1) of this section; (II) updating of Schedule A of the trust agreement (see sec.331.147(a) of this title) to show current plugging and abandonment cost estimates; (III) annual valuations as required by the trust agreement; and (IV) notices of nonpayment as required by the trust agreement. (D) The letter of credit must be accompanied by a letter from the owner or operator referring to the letter of credit by number, issuing institution, and date, and providing the following information: the EPA identification number, name, and address of the facility, and the amount of funds assured for plugging and abandonment of the well by the letter of credit. (E) The letter of credit must be irrevocable and issued for a period of at least one year. The letter of credit must provide that the expiration date will be automatically extended for a period of at least one year unless, at least 120 days before the current expiration date, the issuing institution notifies both the owner or operator and the executive director by certified mail of a decision not to extend the expiration date. Under the terms of the letter of credit, the 120 days will begin on the date when both the owner or operator and the executive director have received the notice, as evidenced by the return receipts. (F) The letter of credit must be issued in an amount at least equal to the current plugging and abandonment cost estimate, except as provided in paragraph (7) of this section. (G) Whenever the current plugging and abandonment cost estimate increases to an amount greater than the amount of credit, the owner or operator, within 60 days after the increase, must either cause the amount of the credit to be increased so that it at least equals the current plugging and abandonment cost estimate and submit evidence of such increase to the executive director, or obtain other financial assurance as specified in this section to cover the increase. Whenever the current plugging and abandonment cost estimate decreases, the amount of the credit may be reduced to the amount of the current plugging and abandonment cost estimate following written approval by the executive director. (H) Following a determination that the owner or operator has failed to perform final plugging and abandonment in accordance with the plugging and abandonment plan and other permit requirements when required to do so, the executive director may draw on the letter of credit. (I) If the owner or operator does not establish alternate financial assurance as specified in this section and obtain written approval of such alternate assurance from the executive director within 90 days after receipt by both the owner or operator and the executive director of a notice from the issuing institution that it has decided not to extend the letter of credit beyond the current expiration date, the executive director will draw on the letter of credit. The executive director may delay the drawing if the issuing institution grants an extension of the term of the credit. During the last 30 days of any such extension, the executive director will draw on the letter of credit if the owner or operator has failed to provide alternate financial assurance as specified in this section and obtain written approval of such assurance from the executive director. (J) The executive director will return the letter of credit to the issuing institution for termination when: (i) an owner or operator substitutes and receives approval from the executive director of TWC for alternate financial assurance as specified in this section; or (ii) the executive director releases the owner or operator from the requirements of this section in accordance with paragraph (9) of this section. (5) Plugging and abandonment insurance. (A) An owner or operator may satisfy the requirements of this section by obtaining plugging and abandonment insurance which conforms to the requirements of this paragraph and submitting a certificate of such insurance to the executive director. An owner or operator of a new injection well must submit the certificate of insurance to the executive director with the permit application or for approval to operate under rule. The insurance must be effective at least 60 days before injection starts. At a minimum, the insurer must be licensed to transact the business of insurance, or eligible to provide insurance as an excess or surplus lines insurer, in one or more states. (B) The wording of the certificate of insurance must be identical to the wording specified in sec.331.147(e) of this title. (C) The plugging and abandonment insurance policy must be issued for a face amount at least equal to the current plugging and abandonment estimate, except as provided in paragraph (7) of this section. The term "face amount" means the total amount the insurer is obligated to pay under the policy. Actual payments by the insurer will not change the face amount, although the insurers future liability will be lowered by the amount of the payments. (D) The plugging and abandonment insurance policy must guarantee that funds will be available whenever final plugging and abandonment occurs. The policy must also guarantee that once plugging and abandonment begins, the issuer will be responsible for paying out funds, up to an amount equal to the face amount of the policy, upon the direction of the executive director, to such party or parties as the executive director specifies. (E) After beginning plugging and abandonment, an owner or operator or any other person authorized to perform plugging and abandonment may request reimbursement for plugging and abandonment expenditures by submitting itemized bills to the executive director. Within 60 days after receiving bills for plugging and abandonment activities, the executive director will determine whether the plugging and abandonment expenditures are in accordance with the plugging and abandonment plan or otherwise justified, and if so, he will instruct the insurer to make reimbursement in such amounts as the executive director specifies in writing. If the executive director has reason to believe that the cost of plugging and abandonment will be significantly greater than the face amount of the policy, he may withhold reimbursement of such amounts as he deems prudent until he determines, in accordance with paragraph (9) of this section, that the owner or operator is no longer required to maintain financial assurance for plugging and abandonment of the injection well. (F) The owner or operator must maintain the policy in full force and effect until the executive director consents to termination of the policy by the owner or operator as specified in subparagraph (J) of this paragraph. Failure to pay the premium, without substitution of alternate financial assurance as specified in this section, will constitute a significant violation of these regulations, warranting such remedy as the executive director deems necessary. Such violation will be deemed to begin upon receipt by the executive director of a notice of future cancellation, termination, or failure to renew due to nonpayment of the premium, rather than upon the date of expiration. (G) Each policy must contain provisions allowing assignment to a successor owner or operator. Such assignment may be conditional upon consent of the insurer, provided such consent is not unreasonably refused. (H) The policy must provide that the insurer may not cancel, terminate, or fail to renew the policy except for failure to pay the premium. The automatic renewal of the policy must, at a minimum, provide the insured with the option of renewal at the face amount of the expiring policy. If there is a failure to pay the premium, the insurer may elect to cancel, terminate, or fail to renew the policy by sending notice by certified mail to the owner or operator and the executive director. Cancellation, termination, or failure to renew may not occur, however, during 120 days beginning with date of receipt of the notice by both the executive director and the owner or operator, as evidenced by the return of receipts. Cancellation, termination, or failure to renew may not occur and the policy will remain in full force and effect in the event that on or before the date of expiration: (i) the executive director deems the injection well abandoned; or (ii) the permit is terminated or revoked or a new permit is denied; or (iii) plugging and abandonment is ordered by the executive director or a United States district court or other court of competent jurisdiction; or (iv) the owner or operator is named as debtor in a voluntary or involuntary proceeding under Title 11 (Bankruptcy), United States Code; or (v) the premium due is paid. (I) Whenever the current plugging and abandonment cost estimate increases to an amount greater than the face amount of the policy, the owner or operator, within 60 days after the increase, must either cause the face amount to be increased to an amount at least equal to the current plugging and abandonment estimate and submit evidence of such increase to the executive director, or obtain other financial assurance as specified in this section to cover the increase. Whenever the current plugging and abandonment cost estimate decreases, the face amount may be reduced to the amount of the current plugging and abandonment cost estimate following written approval by the executive director. (J) The executive director will give written consent to the owner or operator that he may terminate the insurance policy when: (i) an owner or operator substitutes alternate financial assurance as specified in this section; or (ii) the executive director releases the owner or operator from the requirements of this section in accordance with paragraph (9) of this section. (6) Financial test and corporate guarantee for plugging and abandonment. (A) An owner or operator may satisfy the requirements of this section by demonstrating that he passes a financial test as specified in this paragraph. To pass this test the owner or operator must meet the criteria of either clause (i) or (ii) of this subparagraph. (i) The owner or operator must have: (I) two of the following three ratios: a ratio of total liabilities to net worth less than 2.0; a ratio of the sum of net income plus depreciation, depletion, and amortization to total liabilities greater than 0.1; and a ratio of current assets to current liabilities greater than 1.5; and (II) net working capital and tangible net worth each at least six times the sum of the current plugging and abandonment cost estimate; and (III) tangible net worth of at least $10 million; and (IV) assets in the United States amounting to at least 90% of his total assets or at least six times the sum of the current plugging and abandonment cost estimate. (ii) The owner or operator must have: (I) a current rating for his most recent bond issuance of AAA, AA, A, or BBB as issued by Standard and Poor's or Aaa, Aa, A, or Baa as issued by Moody's; and (II) tangible net worth at least six times the sum of the current plugging and abandonment cost estimate; and (III) tangible net worth of at least $10 million; and (IV) assets located in the United States amounting to at least 90% of his total assets or at least six times the sum of the current plugging and abandonment cost estimates. (B) The phrase "current plugging and abandonment cost estimate" as used in subparagraph (A) of this paragraph refers to the cost estimate required to be shown in paragraphs 1-4 of the letter from the owner's or operator's chief financial officer in sec.331.147(f) of this title. (C) To demonstrate that he meets this test, the owner or operator must submit the following items to the executive director: (i) a letter signed by the owner's or operator's chief financial officer and worded as specified in sec.331.147(f) of this title; and (ii) a copy of the independent certified public accountant's report on examination of the owner's or operator's financial statements for the latest completed fiscal year; and (iii) a special report from the owner's or operator's independent certified public accountant to the owner or operator stating that: (I) he has compared the data which the letter from the chief financial officer specifies as having been derived from the independently audited, year-end financial statements for the latest fiscal year with the amounts in such financial statements; and (II) in connection with that procedure, no matters came to his attention which caused him to believe that the specified data should be adjusted. (D) An owner or operator of a new injection well must submit the items specified in subparagraph (C) of this paragraph to the executive director within 90 days after the close of each succeeding fiscal year. This information must consist of all three items specified in subparagraph (C) of this paragraph. (E) After the initial submission of items specified in subparagraph (C) of this paragraph, the owner or operator must send updated information to the executive director within 90 days after the close of each succeeding fiscal year. This information must consist of all three items specified in subparagraph (C) of this paragraph. (F) If the owner or operator no longer meets the requirements of subparagraph (A) of this paragraph, he must send notice to the executive director of intent to establish alternate financial assurance as specified in this section. The notice must be sent by certified mail within 90 days after the end of the fiscal year for which the year-end financial data show that the owner or operator no longer meets the requirements. The owner or operator must provide the alternate financial assurance within 120 days after the end of such fiscal year. (G) The executive director may, based on a reasonable belief that the owner or operator may no longer meet the requirements of subparagraph (A) of this paragraph, require reports of financial condition at any time from the owner or operator in addition to those specified in subparagraph (C) of this paragraph. If the executive director finds, on the basis of such reports or other information, that the owner or operator no longer meets the requirements of subparagraph (A) of this paragraph, the owner or operator must provide alternate financial assurance as specified in this section within 30 days after notification of such a finding. (H) The executive director may disallow use of this test on the basis of qualifications in the opinion expressed by the independent certified public accountant in his report on examination of the owner's or operator's financial statements (see subparagraph (C)(ii) of this paragraph). An adverse opinion or disclaimer of opinion will be cause for disallowance. The executive director will evaluate other qualifications on an individual basis. The owner or operator must provide alternate financial assurance as specified in this section within 30 days after notification of the disallowance. (I) The owner or operator is no longer required to submit the items specified in subparagraph (C) of this paragraph when: (i) an owner or operator substitutes alternate financial assurance as specified in this section; or (ii) the executive director releases the owner or operator from the requirements of this section in accordance with paragraph (9) of this section. (J) An owner or operator may meet the requirements of this section by obtaining a written guarantee, hereafter referred to as "corporate guarantee." The guarantee must be the parent corporation of the owner or operator. The guarantee must meet the requirements for owners or operators in subparagraphs (A)-(H) of this paragraph and must comply with the terms of the corporate guarantee. The wording of the corporate guarantee must be identical to the wording specified in sec.331.147(g) of this title. The corporate guarantee must accompany the items sent to the executive director as specified in subparagraph (C) of this paragraph. The terms of the corporate guarantee must provide the following. (i) If the owner or operator fails to perform plugging and abandonment of the injection well covered by the corporate guarantee in accordance with the plugging and abandonment plan and other permit requirements whenever required to do so, the guarantee will do so or establish a trust fund as specified in paragraph (1) of this section in the name of the owner or operator. (ii) The corporate guarantee will remain in force unless the guarantor sends notice of cancellation by certified mail to the owner or operator and the executive director, as evidenced by the return receipts. Cancellation may not occur, however, during the 120 days beginning on the date of receipt of the notice of cancellation by both the owner or operator and the executive director, as evidenced by the return receipts. (iii) If the owner or operator fails to provide alternate financial assurance as specified in this section and obtain the written approval of such alternate assurance from the executive director within 90 days after receipt by both the owner or operator and the executive director of a notice of cancellation of the corporate guarantee from the guarantor, the guarantor will provide such alternative financial assurance in the name of the owner or operator. (7) Use of multiple financial mechanisms. An owner or operator may satisfy the requirements of this section by establishing more than one financial mechanism per injection well. These mechanisms are limited to trust funds, surety bonds, guaranteeing payment into a trust fund, letters of credit, and insurance. The mechanisms must be as specified in paragraphs (1), (2), (4) , and (5), respectively, of this section, except that it is the combination of mechanisms, rather than the single mechanism, which must provide financial assurance for an amount at least equal to the adjusted plugging and abandonment cost. If an owner or operator uses a trust fund in combination with a surety bond or letter of credit, he may use that trust fund as the standby trust fund for the other mechanisms. A single standby trust may be established for two or more mechanisms. The executive director may invoke any or all of the mechanisms to provide for plugging and abandonment of the injection well. (8) Use of a financial mechanism for multiple facilities. An owner or operator may use a financial assurance mechanism specified in this section to meet the requirements of this section for more than one injection well. Evidence of financial assurance submitted to the executive director must include a list showing, for each injection well, the EPA identification number, name, address, and the amount of funds for plugging and abandonment assured by the mechanism. If the injection wells covered by the mechanism are in more than once EPA region, identical evidence of financial assurance must be submitted to the executive director. The amount of funds available through the mechanism must be no less than the sum of funds that would be available if a separate mechanism had been established and maintained for each injection well. In directing funds available through the mechanism for plugging and abandonment of any of the injection wells covered by the mechanism, the executive director may direct only the amount of funds designated for that injection well, unless the owner or operator agrees to use additional funds available under the mechanism. (9) Release of the owner or operator from the requirements of this section. Within 60 days after receiving certifications from the owner or operator and an independent registered professional engineer that plugging and abandonment has been accomplished in accordance with the plugging and abandonment plan, the executive director will notify the owner or operator in writing that he is no longer required by this section to maintain financial assurance for plugging and abandonment of the injection well, unless the executive director has reason to believe that plugging and abandonment has not been in accordance with the plugging and abandonment plan. 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 September 25, 1992. TRD-9213051 Mary Ruth Holder Director, Legal Division Texas Water Commission Effective date: October 16, 1992 Proposal publication date: March 27, 1992 For further information, please call: (512) 463-8069 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter Q. Franchise Tax 34 TAC sec.3.412 The Comptroller of Public Accounts adopts the repeal of sec.3.412, concerning survivors of mergers, without changes to the proposed text as published in the June 19, 1992, issue of the Texas Register (17 TexReg 4432). This section is being repealed in order that it can be adopted under the 34 TAC, Part I, Chapter 3, Subchapter V. The section will be replaced with a new 34 TAC sec.3.565, concerning survivors of mergers. No comments were received regarding adoption of the repeal. The repeal 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 September 23, 1992. TRD-9212949 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: October 14, 1992 Proposal publication date: June 19, 1992 For further information, please call: (512) 463-4028 Subchapter AA. Automotive Oil Sales Fee 34 TAC sec.3.702 The Comptroller of Public Accounts adopts new sec.3.702, concerning definitions and exemptions, with changes to the proposed text as published in the June 5, 1992, issue of the Texas Register (17 TexReg 4071). Senate Bill 1340, adopted in the 72nd Legislature, 1991, requires the comptroller to administer and enforce the collection of the automotive oil fee imposed on the first actual sale of automotive oil delivered to a location in this state and sold to a purchaser who is not an automotive oil manufacturer. The changes were made to subsections (a)(2) and (b)(2). The last sentence in subsection (a)(2) was deleted. The word "exclusively" was added to the phrase "vessels engaged in foreign and interstate commerce" in each subsection. If a vessel is not engaged exclusively in foreign and interstate commerce, but moves goods transported in interstate commerce with goods moving in intrastate commerce, the fee must be paid on the oil. A comma was removed in (a)(1)(A) for clarity. Two comments were received on the proposed new section. An attorney with the law firm of Clark, Thomas, Winters & Newton of Austin, expressed the opinion that the proposed rule's attempt to tax oil used by vessels is contrary to the intent of the statute. It was the attorney's opinion that the rule should allow the sale of oil without the fee to a vessel engaged in interstate commerce even if a significant amount of the vessel's activity is in intrastate commerce. In the alternative, the attorney requested that the rule include a 5.0% de minimis provision for a vessel engaged in intrastate commerce as a part of its interstate journey. The attorney disagreed with the comptroller's authority to determine that a vessel participating in a segment of an interstate journey is not engaged in interstate commerce. The comptroller responded that the statute describes a type of oil, not how the oil is used. The comptroller believes this opinion is supported by the exemption for interstate vessels. If the legislature had intended to exclude all vessels from the fee, this provision would have been unnecessary. The comptroller concluded that a reasonable interpretation is that the fee applies to all oil which could be used in automobiles, buses, or trucks unless labeled for non- vehicle use regardless of the use to which the oil is actually placed. The comptroller has concluded that the provision excluding first sales of oil to vessels engaged in interstate commerce should be strictly construed. Lastly, the comptroller stated that a vessel transporting goods on a portion of an interstate journey is engaged in interstate commerce even though the vessel may move only between points within Texas. Therefore, oil sold to such a vessel is not subject to the fee. However, if the vessel moves such goods together with goods moving in intrastate commerce, the fee must be paid on the oil. The second comment was made by Texaco Inc. of Bellaire. It was Texaco's opinion that the intent of the legislature was to place a fee on automotive oil used solely in automobiles, buses, or trucks. The rule should not expand the fee to include oil used in construction equipment, stationary equipment, or by marine vessels. The comptroller rejected this argument for the same reasons as are stated in the preceding paragraph. The statute describes the type of oil, not how the oil is used. The new section 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. sec.3.702. Definitions and Exemptions. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Automotive oil-Any lubricating oils that can be used in an internal combustion engine, crankcase, transmission, gear box, or differential for an automobile, bus, or truck. (A) Automotive oil includes natural or synthetic engine oil, transmission fluid, and gear oil of any type that can be used, according to the labeling, in the engine of an automobile, truck, or bus, and includes oil that is not labeled specifically for this use, but is suitable for this use according to generally accepted industry specifications. (B) Automotive oil does not include: (i) chain oil; (ii) turbine oil; (iii) waste oil; (iv) outboard motor oil; (v) refrigerant oil; (vi) cotton spray oil; (vii) form oil; and (viii) oil additives as they exist prior to blending. (2) First sale-The first actual sale of automotive oil delivered to a location in this state and sold to a purchaser who is not an automotive oil manufacturer. First sale does not include the sale of automotive oil exported from this state, to a location outside this state, for the purpose of sale or use outside this state, or for resale to or use by vessels engaged exclusively in foreign or interstate commerce. (3) Importer-Any person who imports, or causes to be imported, automotive oil into this state for sale, use, or consumption. For purposes of this subsection first sale includes the use or consumption of automotive oil in this state. (4) Oil manufacturer-Any person or entity that formulates automotive oil and packages, distributes, or sells that automotive oil. Oil manufacturer includes any person packaging or repackaging automotive oil. (5) Out-of-state seller-A person or entity engaged in business in this state will be defined as in sec.3.286 of this title (relating to Seller's and Purchaser's Responsibilities). (b) Exemptions. (1) Sales of automotive oil to an oil manufacturer are exempted from the automotive oil fee. (2) Sales of automotive oil that is to be used by vessels engaged exclusively in foreign and interstate commerce are exempted from this fee. (3) Out-of-state sales of automotive oil delivered to a location in another state for the purpose of sale or use outside the State of Texas are exempted from this fee if shipment is made by means of: (A) the facilities of the seller; (B) delivery by the seller to a carrier for shipment to a consignee at a point outside this state; (C) delivery by the seller to a forwarding agent for shipment to a location in another state of the United States or its territories or possessions; or (D) the facilities of the purchaser if proof of delivery outside of Texas is provided. (4) Exports beyond the territorial limits of the United States are exempted from this fee if proof of export can be shown by: (A) a copy of the bill of lading issued by a licensed and certificated carrier showing the seller as consignor, the buyer or purchaser as consignee, and a delivery point outside the territorial limits of the United States; (B) documentation provided by a licensed United States custom broker certifying that delivery was made to a point outside the territorial limits of the United States; (C) formal entry documents from the country of destination showing that the automotive oil was imported into a country other than the United States. For the country of Mexico, the formal entry document would be the pedimento de importaciones document with a computerized number issued by Mexican customs officials; or (D) a copy of the original airway, ocean, or railroad bill of lading issued by a licensed and certificated carrier which describes the items being exported and a copy of the freight forwarder's receipt if the freight forwarder takes possession of the property in Texas. (c) Credit or refund of fee paid-A purchaser of automotive oil who makes an exempt sale of the oil as provided in this rule, may obtain a refund or credit for the fee previously paid. The purchaser requesting a refund or credit from their supplier must furnish documentation that verifies the exemption. 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 September 25, 1992. TRD-9213040 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: October 16, 1992 Proposal publication date: June 5, 1992 For further information, please call: (512) 463-4028 Subchapter CC. Waste Tire Recycling Fee 34 TAC sec.3.721 The Comptroller of Public Accounts adopts an amendment to sec.3.721, concerning collection and reporting requirements, without changes to the proposed text as published in the August 21, 1992, issue of the Texas Register (17 TexReg 5728). This amendment excludes tires purchased as original equipment in the manufacture of new vehicles. 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 September 23, 1992. TRD-9212948 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: October 14, 1992 Proposal publication date: August 21, 1992 For further information, please call: (512) 463-4028 Subchapter EE. Boat and Motor Sales and Use Tax 34 TAC sec.3.743 The Comptroller of Public Accounts adopts new sec.3.743, concerning the purchase of accessories attached to a boat or boat motor, without changes to the proposed text as published in the June 19, 1992, issue of the Texas Register (17 TexReg 4433). The new section is necessary so that persons in the business of selling boats and boat motor accessories will be aware of the manner in which the tax is collected. The Tax Code, Chapter 160, was passed by the 72nd Legislature, 1991. The tax is assessed on certain boats and motors formerly taxed under the Tax Code, Chapter 151. No comments were received regarding adoption of the new section. The new section 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 September 23, 1992. TRD-9212950 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: October 14, 1992 Proposal publication date: June 19, 1992 For further information, please call: (512) 463-4028 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part VI. Texas Department of Criminal Justice Chapter 152. General Allocation Provisions Subchapter A. Institutional Division Admissions 37 TAC sec.152.3 The Texas Department of Criminal Justice adopts an amendment to 37 TAC sec.152.3, concerning allocation formulas, with changes to the proposed text as published in the August 4, 1992, issue of the Texas Register (17 TexReg 5426). Section 152.3(f) is adopted with changes. Section 152.3(c)(9) and (10) are adopted without changes. The purpose of the allocation formula is to equitably allocate admissions at the Institutional Division, and to fairly apportion Community Corrections Program State Aid to local probation departments in accordance with the Texas Code of Criminal Procedure, Article 42.12, sec.11(a)(3). Annual revision of the allocation formula is required by the Texas Government Code, sec.499.071(c). The adopted formula allocates to each county a prorate share of available Institutional Division Admissions, and apportions Community Corrections Program State Aid to local probation departments in conformity with the requirements of the Texas Government Code, sec.499.071. Under that statute, the Texas Board of Criminal Justice is required to give some weight to each of seven statutory factors, and has discretion to give weight to other factors which would reward "community effort" in reducing admissions to the Institutional Division. The department received written comments on the proposed rule changes from officials in the following counties: Collin, Concho, Delta, Franklin, Hopkins, Kerr, Kimble, McCulloch, Menard, Morris, Rains, and Ward. Comments from seven of the counties represented did not specifically address formula elements, but expressed concerns that the projected admissions from their counties would not suffice to reduce the overcrowded conditions of their jails. Comments from six of the counties complained that the uniform crime rate data used in formula computations was not accurate with respect to their counties, because of the manner in which that data is complied. In addition to the written comments specifically addressing this proposed rule, the department has received communications from Harris County officials suggesting that the statutory formula elements should be revised in a fashion that will ensure that the persons convicted of the most serious offenses shall be given priority admissions to the Institutional Division. At their meeting on September 11, 1992, the Criminal Justice Board articulated its awareness of the acute problems of overcrowding in jails statewide. This situation affects not only the counties who submitted written comments, but also almost all of the jails in the state. The problem of projected admissions as set out in the Texas Register publication of August 4, 1992, were addressed by board member Judge Clarence Stevenson. He noted that the number of projected admissions varies depending upon a number of factors which neither the board nor the institutional division can control or predict. For example, the recent precipitant decline in the number of parole releases has significantly reduced the number of institutional division beds available for allocation to the counties. Since it is impossible to predict with accuracy the number of beds that will become available during the coming year, Judge Stevenson moved that the board delete from its final adopted rule the language in 37 TAC sec.152.3(f) which refers to an estimated number of annual admissions to the Institutional Division. The explained purpose of the amendment was to avoid "the creation of false expectations through the publication of projected admissions numbers which the board cannot control." That motion was adopted, and the final rule as published herein deletes all reference to projected numbers of future admissions. Instead, the final rule merely sets out the percentage of all admissions that will be assigned to each county. The Texas Department of Criminal Justice cannot correct the difficulties with the Uniform Crime Rate data, because we neither collect that data nor control the manner in which it is collected. Therefore, the complaints as to the inaccuracies in that data are a local data collection problem. The suggestion that the formula should be rewritten entirely is within the province of the Legislature. The amendment is adopted under the Texas Government Code, sec.499.071, and by the Texas Code of Criminal Procedure, Article 42.13, sec.11, which requires that Texas Board of Criminal Justice to adopt rules relating to the allocation of prison admissions, and the authority to use additional factors in the formula computation. sec.152.3. Allocation Formula. (a)-(b) (No change.) (c) The board assigns the following weights to each statutory and discretionary factor: STATUTORY FACTORS (1)-(7) (No change.) DISCRETIONARY FACTORS (8) (No change.) (9) Section 152.3(b)(2)-(probation completions)-5. (10) Section 152.3(b)(3)-(juvenile probation funding) -10. (d)-(e) (No change.) (f) This formula gives each county a fixed percentage of total institutional division admissions, as follows: [graphic] 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 September 23, 1992. TRD-9212945 Jackee Cox General Counsel Texas Department of Criminal Justice Effective date: November 1, 1992 Proposal publication date: August 4, 1992 For further information, please call: (512) 463-9988 Chapter 192. Parole Board and Parole Division Administrative Matters 37 TAC sec.192.1 The Texas Department of Criminal Justice adopts new sec.192.1, concerning administrative review of parole panel actions, without changes to the proposed text as published in the August 4, 1992, issue of the Texas Register (17 TexReg 5435). The purpose for the new section will be to require the entire 18-member Board of Pardons and Paroles to provide an administrative review of any parole panel decision to release a person convicted of a capital offense. Although the rule requires the Parole Board to conduct an administrative review of decisions to release persons convicted of a capital offense, implementation of the rule is left to the discretion of the Parole Board, through its rule- making authority over its own procedures. Comments in support of the rule were received from Parole Board members, and from the chairman of that board. A citizens group styled "Agenda for Action" requested a rule revision "to mandate the unanimous approval of parole by all members present at an official meeting of the Board of Pardons and Paroles after personal review by every member of the Board of Pardons and Paroles." The agency believes that the rule as adopted properly leaves the Parole Board discretion to conduct its proceedings in conformity with the provisions of law governing the Parole Board. The new section is adopted under the Texas Code of Criminal Procedures, Article 42.18, sec.7(d), which provides the Texas Board of Criminal Justice with authority to promulgate written plans for administrative review of actions taken by a parole panel. 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 September 23, 1992. TRD-9212944 Jackee Cox General Counsel Texas Department of Criminal Justice Effective date: October 14, 1992 Proposal publication date: August 4, 1992 For further information, please call: (512) 463-9988 Part XI. Texas Juvenile Probation Commission Chapter 341. Policies and Procedures 37 TAC sec.341.21 The Texas Juvenile Probation Commission adopts an amendment to sec.341.21, concerning memorandum of understanding on service delivery to runaways, without changes to the proposed text as published in the August 11, 1992, issue of the Texas Register (17 TexReg 5618). The amendment will eliminate the need for annual publication of the rule for changes of the formula to calculate high number of runaways. The amendment will improve coordination for runaway children's services at the community level. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Human Resource Code, sec.141.0475, which provides the Texas Juvenile Probation Commission with the authority to develop a memorandum of understanding and model cooperative agreement. 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 September 23, 1992. TRD-9212957 Bernard Licarione, Ph.D. Executive Director Texas Juvenile Probation Commission Effective date: October 14, 1992 Proposal publication date: August 11, 1992 For further information, please call: (512) 443-2001 Chapter 347. Title IV-E Federal Foster Care Program 37 TAC sec.sec.347.1, 347.3, 347.5, 347.7, 347.9, 347.11, 347.13, 347.15, 347.17, 347.19, 347.21 The Texas Juvenile Probation Commission adopts new sec. sec.347.1, 347.3, 347. 5, 347.7, 347.9, 347.11, 347.13, 347.15, 347.17, 347.19, and 347.21. Section 347.5 and sec.347.15 are adopted with changes to the proposed text as published in the August 7, 1992, issue of the Texas Register (17 TexReg 5513). Sections 347.1, 347.3, 347.7, 347.9, 347.11, 347.13, 347.17, 347.19, and 347. 21 are adopted without changes and will not be republished. More comprehensive foster care services will be provided to juvenile offenders referred to juvenile probation departments. The sections will improve the effectiveness of juvenile probation services and provide alternative to commitment of juveniles by providing financial aid to juvenile boards to establish and improve probation services, and to adopt rules for these purposes. The Texas Department of Regulatory and Protective Services (TDPRS) raised two objections to the proposed rule. First, TDPRS suggested that sec.347.5(e)(1) - (3) could cause an audit exception with the federal government and that inclusion of the statement in the rules could jeopardize the upcoming IV-E contract between TJPC and TDPRS. They are also changing their policy to be more restrictive in the payments to facilities when a child runs away. Next, TDPRS suggested that the word "caregiver" be included as one who should be invited to the six-month review. The names of groups or association making comments for the sections was as follows: Texas Department of Regulatory and Protective Services. The new sections are adopted under the Texas Human Resources Code, sec.sec.141. 001, 141.04, and 141.02, which provide the Texas Juvenile Probation Commission with the authority to improve the effectiveness of juvenile probation services and provide alternatives to commitment of juveniles by providing financial aid to juvenile boards to establish and improve probation services, and to adopt rules for these purposes. sec.347.5. Eligibility Requirements Documented In the Initial Court Order That Removes the Child from Home or the Subsequent Court Order. (a) If a juvenile court finds that it is in a child's best interest to be removed from home, and includes this finding in the initial court order that removes the child from the home, then the child may be eligible for federal foster care payments. In addition, the court must find that reasonable efforts were made to prevent the child's removal from the home, and must order that responsibility for the child's care and placement rests with the juvenile probation department. The court may make the reasonable efforts finding at any time, but federal foster care payments may not begin until the finding is made. The order that places responsibility for the child's care and placement with the juvenile probation department must be entered within the first six months after the last day on which the child lived with a specified relative. (b) The juvenile board must seek to ensure that the juvenile court determines whether it is in a child's best interest to be removed from home, or that continuation in the home is contrary to the child's welfare; whether responsibility for the child's care and placement should be given to the juvenile probation department; and whether reasonable efforts have been made to prevent the child's removal from the home. The juvenile board must seek to ensure that the juvenile court uses the following language to express it's findings about best interest, responsibility for care and placement, and reasonable efforts in the initial court order that removes the child from home: (1) "The court finds that it is in the best interest of the child for the child to be placed outside of (his or her) home;" or (2) "The court finds that continuation in the home is contrary to the child's welfare;" and (3) "It is ordered that the (name of county in which the court's jurisdiction arises) juvenile probation department be responsible for the child's placement, care, and control;" and (4) "The court finds that reasonable efforts have been made to prevent or eliminate the need for the child to be removed from (his or her) home, and to make it possible for the child to return to (his or her) home." (c) IV-E eligibility begins the month: (1) the juvenile court enters into court orders the reasonable efforts, best interest, and care and placement responsibility findings as described in subsections (a) and (b) of this section; and (2) all other IV-E eligibility requirements are met, as specified in the rule of the Texas Department of Human Services, 40 TAC sec.49.316(3), (5), (6), (7), and (8); sec.49.317(1)(A) and (B), (3), and (4); sec.49.320(1), (3), and (4); sec.49.322; sec.49.323(1)-(4); sec.49.329(a)-(c); and sec.49.332. (d) The effective date for discontinuing IV-E payments for substitute care is the date before the day the child leaves the facility. (e) A child is eligible for IV-E reimbursement during an absence from a substitute care facility, except an emergency shelter, if the following conditions are met: (1) the absence does not exceed 10 days. The child may be absent for up to 30 days if the chief juvenile probation officer, or his designee, approves the extended absence in writing; (2) the child plans to return to the facility; (3) the facility is retaining space for the child; and (4) the juvenile probation department is not paying someone else or another facility for the child's care. sec.347.15. Case Plan and Review System. (a) The juvenile board must ensure that the juvenile probation department develops a service plan that meets the requirements of the child's service plan and family service plan within 30 working days of the childs date of actual placement. (b) The juvenile board must seek to ensure that the juvenile probation department or the juvenile court conducts an administrative review or a judicial review, for each IV-E eligible child six months from the child's date of actual placement and every six months thereafter during the child's stay in the substitute care. (c) If the six-month review is an administrative review, the juvenile board must ensure that the juvenile probation department accomplishes the following: (1) prior to the review; the juvenile probation officer completes the review of child's service plan and the review of family service plan and provides a copy of each to the designated facilitator; (2) designates a facilitator who: (A) develops and maintains a tracking system to schedule timely reviews; (B) schedules the review at least three weeks prior to the actual review date; (C) arranges the review by: (i) informing parents, caregiver, and all persons who are listed in the administrative review definition about when and where the review will be conducted; (ii) invites them; (iii) documents the notice in the case record; and (D) documents in the case record who participated in the review; (3) during the review, the designated facilitator ensures that the following are discussed: (A) continuing necessity for the child's placement; (B) appropriateness of the child's placement; (C) extent of compliance with the service plan; (D) extent of progress which has been made toward solving or reducing the causes necessitating the child's placement in substitute care; and (E) a likely date by which the child may be returned to the home; or (F) a likely date by which the child's permanency plan will be achieved. (4) the facilitator documents the results of the review on the six- month administrative case review form. (d) If the six-month review is a judicial review, the juvenile court performs the functions of the designated facilitator that are described in subsection (c) of this section, except that instead of documenting the results of the review on the six-month administrative case review form, the juvenile court documents the results in a court order. The juvenile court may delegate to its staff any responsibilities of the designated facilitator except documenting the results of the review in a court order. (e) The juvenile board must seek to ensure that the juvenile court holds a hearing on a motion to modify the child's disposition 12 months after the child's date of actual placement and every 12 months thereafter during the child's stay in substitute care. For the hearing to qualify as a IV-E disposition hearing, the juvenile court must review the child's service plan and enter an order that finds: (1) the child's plan for permanent placement discusses the child's future status, and is appropriate; (2) the projected time frame for accomplishment of the child's plan for permanent placement is appropriate; (3) the juvenile probation department has made reasonable efforts to reunite the child with the family; and (4) if the child is 16 years of age or older, whether an independent living plan has been developed to assist the child with the transition into adulthood; (5) the parents' rights to be notified of the following have been protected: (A) removal of the child from the home of his parents; (B) change in the child's placement; and (C) determination affecting visitation privileges for the parents. (6) the child's service plan was reviewed and updated and supplied to the caregivers each time the child was placed in substitute care, including medical and education information. 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 September 23, 1992. TRD-9212958 Bernard Licarione, Ph.D. Executive Director Texas Juvenile Probation Commission Effective date: October 14, 1992 Proposal publication date: August 7, 1992 For further information, please call: (512) 443-2001 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 10. Family Self-Support Services Welfare Reform Waiver Project 40 TAC sec.sec.10.7001-10.7008 The Texas Department of Human Services (DHS) adopts the repeal of sec.sec.10.7001-10.7008, concerning welfare reform waiver projects, without changes to the proposed text as published in the August 18, 1992, issue of the Texas Register . The repeals are justified to delete obsolete rules from the rule base. The repeals will function by deleting the rules for the welfare reform waiver project that has been completed. No comments were received regarding adoption of the repeals. The repeals are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs. 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 September 24, 1992. TRD-9212981 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: November 1, 1992 Proposal publication date: August 18, 1992 For further information, please call: (512) 450-3765