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 22. EXAMINING BOARDS Part IX. Texas State Board of Medical Examiners Chapter 163. Licensure 22 TAC sec.163.2 The Texas State Board of Medical Examiners adopts an amendment to sec.163. 2 concerning medical schools approved by the board for licensure, without changes to the proposed text as published in the September 11, 1992, issue of the Texas Register (17 TexReg 6256). The amendment to the section will allow for a more expeditious processing of licensure applications in regard to clinical clerkships. The section will function by clarification of the licensing process in regard to clinical clerkships. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4495b, which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations, and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medical in this state, and the enforcement of this 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 October 26, 1992. TRD-9214491 Homer R. Goehrs, M.D. Executive Director Texas State Board of Medical Examiners Effective date: November 16, 1992 Proposal publication date: September 11, 1992 For further information, please call: (512) 834-4502 Chapter 175. Schedule of Fees and Penalties 22 TAC sec.175.1 The Texas State Board of Medical Examiners adopts an amendment to sec.175. 1 concerning fees, without changes to the proposed text as published in the September 11, 1992, issue of the Texas Register (17 TexReg 6257). With the adoption of new physician assistant rules, the amendment to the fee schedules are adopted, as well, to implement the credentialing process. The section will function by allowing the board to collect fees to register physician assistants. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4495b, which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations, and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medical in this state, and the enforcement of this 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 October 26, 1992. TRD-9214492 Homer R. Goehrs, M.D. Executive Director Texas State Board of Medical Examiners Effective date: November 16, 1992 Proposal publication date: September 11, 1992 For further information, please call: (512) 834-4502 Chapter 185. Physician Assistants 22 TAC sec.sec.185.1-185.14 The Texas State Board of Medical Examiners adopts the repeal of sec.sec.185. 1-185.14 concerning physician assistants, without changes to the proposed text as published in the September 11, 1992, issue of the Texas Register (17 TexReg 6257). The repeals are justified because extensive rewrite of the section was felt necessary; therefore, repeal with simultaneous new chapter wording is adopted. The repeals will allow clarification of the section by omission. No comments were received regarding adoption of the repeals. The repeals are adopted under Texas Civil Statutes, Article 4495b, which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations, and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medical in this state, and the enforcement of this 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 October 26, 1992. TRD-9214493 Homer R. Goehrs, M.D. Executive Director Texas State Board of Medical Examiners Effective date: November 16, 1992 Proposal publication date: September 11, 1992 For further information, please call: (512) 834-4502 22 TAC sec.sec.185.1-185.16 The Texas State Board of Medical Examiners adopts new sec. sec.185.1-185.16 concerning physician assistants. Section 185.4 is adopted with changes to the proposed text as published in the September 11, 1992, issue of the Texas Register (17 TexReg 6257). The new sections will allow for more adequate credentialing and discipline of physician assistants. Extensive rewrite of the rule chapter was felt necessary; therefore, repeal with simultaneous new chapter was adopted. The sections will function by allowing more adequate credentialing and discipline of physician assistants. No comments were received regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article 4495b, which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations, and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medical in this state, and the enforcement of this Act. sec.185.4. Grounds for Denial of Registry Certification. The board may, following notice of hearing and hearing as provided in the Administrative Procedure and Texas Register Act, discipline and physician assistant who: (1) fraudulently or deceptively registers or attempts to register with the board; (2) violates any provision of these rules; (3) is convicted of a felony; (4) is a habitual user of intoxicants or nontherapeutic drugs to such as extent that he or she is unable to safely perform as a physician assistant; (5) has been adjudicated as mentally incompetent or has a mental condition that renders him or her unable to safely perform as a physician assistant; (6) has committed an act or moral turpitude. A misdemeanor involving moral turpitude shall be defined as an offense involving baseness, vileness, or depravity in the private and social duties one owes to others or to society in general, or an offense committed with knowing disregard for justice, honesty, principles, or good morals; (7) represents himself as a physician; or (8) has acted in an unprofessional or dishonorable manner which is likely to deceive, defraud, or injure any member of the public. 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 October 26, 1992. TRD-9214494 Homer R. Goehrs, M.D. Executive Director Texas State Board of Medical Examiners Effective date: November 16, 1992 Proposal publication date: September 11, 1992 For further information, please call: (512) 834-4502 Part X. Texas Funeral Service Commission Chapter 201. Licensing and Enforcement-Practice and Procedure 22 TAC sec.201.13 The Texas Funeral Service Commission adopts new sec.201.13 concerning inspections, without changes to the proposed text as published in the September 22, 1992, issue of the Texas Register (17 TexReg 6531). The new section requires premises on which embalming or funeral directing is conducted to be open at all times for inspection. The new section sets the procedures for inspection to any premise on which embalming and funeral directing is conducted. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. 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 October 26, 1992. TRD-9214503 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: November 17, 1992 Proposal publication date: September 22, 1992 For further information, please call: (512) 834-9992 Chapter 203. Licensing and Enforcement-Specific Substantive Rules 22 TAC sec.203.18 The Texas Funeral Service Commission adopts an amendment to sec.203.18 concerning presentation of required price lists, consumer brochures, and written memorandum or purchase agreements, without changes to the proposed text as published in the September 22, 1992, issue of the Texas Register (17 TexReg 6532). The amended section provides better protection to the consumer by adding another itemized service to be provided by funeral home staff and identifies when the consumer brochures must be presented. Consumer brochures must be presented and should be done in the same manner and at the same time as price lists. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. 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 October 26, 1992. TRD-9214502 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: November 17, 1992 Proposal publication date: September 22, 1992 For further information, please call: (512) 834-9992 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 3. Life, Accident, and Health Insurance and Annuities Subchapter Q. Actuarial Opinion and Memorandum Regulation 28 TAC sec.sec.3.1601-3.1611 (Editor's note: For clarity purposes, the Texas Department of Insurance has requested that the sections being adopted without changes be printed in their entirety.) The State Board of Insurance of the Texas Department of Insurance adopts new sec.sec.3.1601-3.1611, concerning the submission of actuarial opinions with the annual statement, and preparation of memoranda in support thereof. Sections 3.1604-3.1610 are adopted with changes to the proposed text as published in the July 10, 1992 issue of the Texas Register (17 TexReg 4928). Sections 3.1601- 3.1603, and 3.1611 are adopted without changes. Sections 3.1601-3.1611 concern the submission of actuarial opinions with the annual statement, and preparation of memoranda in support thereof. These sections include requirements for submission of an opinion on the adequacy of assets to support reserve liabilities, exemption criteria from such an opinion on the adequacy of assets, and qualification standards and disciplinary action for those who render the actuarial opinion. These sections implement House Bill 2, sec.11.101 and sec.11.102, 72nd Legislature, 1991. This adoption includes several changes to the proposed text for the reasons stated in the department's response to comments. Sections 3.1601-3.1611 will provide strengthened reserve standards for life and health insurance coverage through requirements to provide an actuarial opinion on reserve levels, including an opinion on the adequacy of the assets to support reserves and contractual obligations and through requirements to increase reserves to the level needed in order to render such an opinion. The actuarial opinion requirements and other requirements of this subchapter are effective beginning with the calendar year 1992. Commenters expressed concern over the possibility of the appointed actuary reacting to liability concerns which could lead the actuary to choose overly conservative assumptions resulting in the need for higher reserves, surplus strain, and potential demise of the company. Commenters attribute part of this concern to the notion that regulators and others would view an asset adequacy opinion as a certification or guaranty of solvency. Commenters stated that the current methods and assumptions employed by actuaries in asset adequacy analysis may produce fairly significant differences in results. A commenter claimed that many members of the American Academy of Actuaries are concerned about and disagree with standards adopted by the Actuarial Standards Board for asset adequacy analysis. A commenter stated that, in an instance where a company is exempt from an asset adequacy analysis under Insurance Code, Article 3.28, sec.2A, the currently adopted Actuarial Standard of Practice Number 14 may cause the actuary to make a qualification in rendering the actuarial opinion under sec.3. 1607, of this subchapter, whenever the actuary either has not addressed the need for asset adequacy analysis or whenever the actuary has concerns that asset adequacy analysis would be warranted. The commenter added an example of a case where a qualification in this instance led to difficulties in obtaining an acceptable audit opinion on a company's 1991 statutory financial statement. Section 3.1602-One commenter recommended that this section be modified to require an actuarial memorandum only when an actuarial opinion is rendered under sec.3.1608 as a way to ease the cost burden on small companies. Section 3.1603-One commenter recommended that the commissioner should be allowed to waive compliance with requirements to provide an asset adequacy opinion in those cases where it would appear that little additional information can be obtained by requiring such an opinion of an otherwise non-exempt company. Section 3.1604-One commenter recommended that the definition of company and its inclusion of fraternals and stipulated premium insurance companies should be modified as Insurance Code, Article 3.28, is generally not applicable to fraternals and stipulated premium insurance companies, except as to those stipulated premium insurance companies meeting the requirements of the Insurance Code, Articles 22.23 and 22.23A. Section 3.1605(b)-One commenter objected to allowing only members of the American Academy of Actuaries to render the actuarial opinion and objected to the identification of the American Academy of Actuaries as the source of establishing qualification standards of those who may give this opinion. Commenters recommended that paragraph (4) be deleted based on the rationale that the commissioner should not remove an actuary from an appointed actuary status. Commenters believed, instead, that the commissioner should use the disciplinary procedures of the American Academy of Actuaries in order for the American Academy of Actuaries to discipline its members. One commenter recommended that paragraph (4) be amended to clarify the grounds for disqualification of an appointed actuary. Section 3.1605(c)-One commenter recommended that the required statement by the company, relating to the qualifications of the appointed actuary as set forth in subsection (b) of this section, be deleted or amended. The commenter pointed out that a company would not be in a position to know whether all of the qualifications are met as set forth in subsection (b) of this section. Section 3.1605(d)-Commenters objected to the delegation to the Actuarial Standards Board for standards of practice with which any required asset adequacy analysis must conform. Section 3.1606(c)-One commenter objected to the apparent delegation to the Examiner Team for the National Association of Insurance Commissioners to affect the determination of whether a company is exempt from asset adequacy analysis. Relevant paragraphs cited by the commenter are (c)(1)(D), (2)(D), and (5)(D). One commenter objected to the selection of the exemption criteria without some explanation and reasoning provided. One commenter recommended that a recent amendment to the NAIC model regulation be included in subsection (c)(1)(D), (2)(D), and (5)(D). The amendment consists of adding the words, "and the commissioner has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office" at the end of the last sentence of each of these paragraphs. Section 3.1606(d)-One commenter stated that this subsection does not appear to require the large companies (Category D companies) to submit the actuarial opinion required by sec.3.1607 and Insurance Code, Article 3.28, sec.2A(a). The commenter suggested that a requirement be added to this subsection to require an actuarial opinion under sec.3.1607 in addition to the requirement for an actuarial opinion under sec.3.1608. Section 3.1608-One commenter suggested that all references to AVR (asset valuation reserve) and IMR (interest maintenance reserve) be stricken if actuarial certification of these reserves is not intended. The commenter said that such references are found in (a)(5)(C), and (b)(2). Section 3.1608(a)(5)(G)-One commenter recommended that subsection (a)(5) (G) of this section be deleted. The commenter said that the information that is required by this subparagraph to be put in the actuarial opinion is of a type and level of detail of information that would more appropriately be found in the actuarial memorandum that supports the actuarial opinion. Section 3.1609(a)-Commenters recommended that this subsection or an additional subsection provide, at a minimum, the confidentiality safeguards contained in the NAIC Model Standard Valuation Law for the required actuarial memorandum. Commenters argue that the actuarial memorandum contains information which should be kept confidential by the commissioner. Section 3.1610(c)-A commenter questioned whether actuarial certification is required of the AVR and IMR. If not, then the commenter recommended that references to these reserves be deleted. Section 3.1610(d)-A commenter recommended deletion of the minimum requirement to perform the seven interest scenarios as specified in this subsection. The commenter believes that selection of interest scenarios should be left up to the judgement of the actuary. The American Council of Life Insurance and the Texas Life Insurance Association are in favor of the proposed sections with some recommended changes. The Texas Legal Reserve Officials Association is opposed to the proposed sections. The department understands that increased liability is an concern with the appointed actuary but the agency does not feel that this concern would lead to the use of overly conservative assumptions in order to avoid liability. The establishment of assumptions for asset adequacy analysis is intended to address whether there is a need for a higher minimum reserve, not a maximum reserve. The agency feels that the appointed actuary would not be influenced by potential liability to choose overly conservative assumptions as this might in turn lead to higher liability with the company taking exception to such choices. The agency notes that the appointed actuary is always entitled to make qualified statements wherever needed in the actuarial opinion. The department understands the concern that somewhat varying results could occur based on the current stage of development in asset adequacy analysis methods and applications. However, the agency feels that such analysis remains a viable tool to contribute to a proper support of liabilities which will undergo further improvements as such methods and applications are refined over time. The agency is not aware of major disagreements over any currently adopted standards relating to asset adequacy analysis. The agency is aware, however, of discussions and issues relating to the proposed standard of practice relating to asset adequacy analysis entitled, "Statutory Statements of Opinion by Appointed Actuaries for Life or Health Insurers." The agency views such discussions and issues as appropriate in the course of the adoption of a proposed actuarial standard of practice. The department understands that some concern exists in making a qualification relating to the adequacy of assets in an actuarial opinion, rendered under sec.3.1607 of this subchapter, in response to the guidance given under currently adopted Actuarial Standard of Practice Number 14. The agency has therefore added language in a new sec.3.1605(f) which excludes Actuarial Standard of Practice number 14 as a standard of practice to which an actuarial opinion, rendered under sec.3.1607 of this subchapter, must conform. The agency believes that this explicit exclusion is appropriate in that it clearly communicates that consideration of the need for asset adequacy analysis is not required for companies which have been exempted from such asset adequacy analysis. The agency adds that actuarial opinions or audits based on such actuarial opinions would be construed as acceptable if these actuarial opinions conform to the required standards prescribed in this regulation. Section 3.1602-The department disagrees with the recommendation to modify this section to require an actuarial memorandum only when an actuarial opinion is rendered under sec.3.1608. The Insurance Code, Article 3.28, sec.2A, requires an actuarial memorandum to be prepared for each actuarial opinion regardless of whether it was rendered under either sec.3.1607 or sec.3.1608. The agency believes that cost considerations for preparing an actuarial memorandum to support an actuarial opinion under sec.3.1607 should be addressed somewhat through the lesser requirements for this particular actuarial memorandum. Section 3.1603-The department disagrees with the comments because it would not be in the best interests of practicality and consistency for the commissioner to modify the exemption criteria on a case-by-case basis. Section 3.1604-The department agrees with comments provided and has made revisions to this subchapter to clarify applicability of this subchapter to fraternals and stipulated premium insurance companies. Fraternals have been deleted from the definition of company. The application of the definition of company to stipulated premium insurance companies has been clarified to reference only those stipulated premium insurance companies which insure or assume risk for coverages under either the Insurance Code, Articles 22.23(b) or 22.23A. Section 3.1605(b)-The department disagrees with objections to allowing only members of the American Academy of Actuaries to render the actuarial opinion required by Insurance Code, Article 3.28, sec.2A. The department also disagrees with comments that it is inappropriate for the American Academy of Actuaries to establish qualification standards for its members who render this opinion. The department disagrees with comments to delete paragraph (4). The agency believes the commissioner should have the authority to discipline the appointed actuary by removal from an appointed actuary status, in addition to the use of the disciplinary procedures of the American Academy of Actuaries. The department agrees with comments recommending changes to the standards for the disciplinary action in paragraph (4) and has made changes in order to make the basis for disciplinary action more specific, objective, and clear. Section 3.1605(c)-The department agrees with the comments and has made changes to address the concern that company may not be in a position to know whether the appointed actuary complies with all of the qualifications as set forth in subsection (b) of this section. Section 3.1605(d)-The department agrees with comments that the subchapter should be altered to make it clear as to which specific actuarial standards of practice the appointed actuary is to follow. Changes have therefore been made to the subchapter. The department notes that the law or regulation prevails in the event that any conflict would arise in any actuarial standard of practice with respect to exemption criteria or any other issue. Section 3.1606(c)-The department disagrees that inappropriate delegation is being made to the Examiner Team for the National Association of Insurance Commissioners and adds that the involvement of the Examiner Team in one of the exemption criteria is a minimum exemption criteria as required by Insurance Code, Article 3.28, sec.2A(b). The department agrees that the subchapter should be altered to be specific as to the exemption criteria and as to which National Association of Insurance Commissioners' adopted model regulation applies. Such changes have therefore been made to this subchapter in order to be specific as to the National Association of Insurance Commissioners' adopted model regulation which contains the minimum exemption criteria. The department notes that the intent of the exemption criteria is to provide a greater likelihood of exemption for the smaller companies based on criteria intended to indicate when an opinion on the adequacy of the assets would be warranted. It should also be noted that the Commissioner can overturn failure of the exemption criterion, relating to a priority 1 or 2 designation by the NAIC Examiner Team, if such a finding is resolved to the satisfaction of the commissioner. The department agrees with the recommendation to include a recent amendment to the NAIC model Actuarial Opinion and Memorandum Regulation to be added to the last sentence of each of subsection (c)(1)(D), (2)(D), and (5)(D). Section 3.1606(d)-The department disagrees that a reference should be added to provide that large companies (Category D) provide an actuarial opinion in accordance with sec.3.1607 in addition to providing an actuarial opinion in accordance with sec.3.1608. The agency notes that the actuarial opinion provided by large companies in accordance with sec.3.1608 already includes all of the opinion statements as required by sec.3.1607. Section 3.1608-The department disagrees with comments that references to AVR and IMR may need to be removed. The agency notes that the purpose of providing the IMR and AVR amounts is to disclose the appropriate amounts of assets in support of these reserves that are used in any asset adequacy analysis. Section 3.1608(a)(5)(G)-The department disagrees with comments that subsection (a)(5)(G) of this section should be deleted. The agency notes that the intent of this subparagraph is to get an explanation of why certain reserves were not subjected to asset adequacy analysis. The agency expects that a general and brief explanation of such rationale would be provided in the actuarial opinion and anticipates that the detailed and comprehensive reasoning would be provided in the actuarial memorandum. Section 3.1609(a)-The department understands commenters' concern regarding confidentiality of the actuarial memorandum; however, Article 3.28 does not provide that actuarial memorandums be confidential. Therefore, a decision of whether a particular memorandum is confidential is governed by the Open Records Act (Texas Civil Statutes, Article 6252-17a). Section 3.1610(c)-The department disagrees with comments that references to AVR and IMR may need to be removed. The agency notes that the purpose of providing the IMR and AVR amounts is to disclose the appropriate amounts of assets in support of these reserves that are used in any asset adequacy analysis. Section 3.1610(d)-The department disagrees that the requirement to perform the seven interest scenarios as specified in this subsection is inappropriate. The agency believes that the seven interest scenarios cover a basic set of patterns of interest scenarios that should be considered at a minimum. The actuary should also consider any additional interest scenarios deemed to be appropriate. The agency notes that these seven interest scenarios are not required to be considered for those reserves for which asset adequacy analysis is deemed unnecessary in the opinion of the appointed actuary. The new sections are adopted under the Insurance Code, Articles 3.28 and 1. 04, and Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5. The Insurance Code, Article 3.28, sec.2A, authorizes and requires the State Board of Insurance to define the specific requirements of actuarial opinions required under Article 3.28, including matters deemed to be necessary to the scope of such opinions, as well as to prescribe the qualifications of the persons who may certify to such opinions. It also authorizes the board to exempt by rule companies from submitting an opinion under Insurance Code, Article 3.28, sec.2A(b). Article 1.04 authorizes the board to determine policy and rules in accordance with the laws of this state for uniform application. Texas Civil Statutes, Article 6252- 13a, sec.4 and sec.5, authorize and require each state agency to adopt rules of practice setting forth the nature and requirement of available procedures and prescribe the procedures for adoption of rules by a state administrative agency. The adopted sections affect regulation of actuarial opinions submitted in connection with reserves of insurance companies, pursuant to the Insurance Code, Article 3.28. sec.3.1601. Purpose. The purpose of these sections is to prescribe guidelines and standards for the activities described in paragraphs (1)-(3) of this section: (1) the submission of a statement of actuarial opinion in accordance with the Insurance Code, Article 3.28, sec.2A, and for memoranda in support of such opinion; (2) the submission of a statement of actuarial opinion required when a company is exempt from the Insurance Code, Article 3.28, sec.2A(b); and (3) the appointment of an appointed actuary. sec.3.1602. Scope. This regulation shall apply to all life insurance companies doing business in this state and to all life insurance companies which are authorized to reinsure life insurance, annuities, or accident and health insurance business in this state. This regulation shall be applicable to all annual statements filed with the Texas Department of Insurance after the effective date of this regulation. Except with respect to companies which are exempt pursuant to sec.3.1606 of this title (relating to Required Opinions), a statement of opinion on the adequacy of the reserves and related actuarial items based on an asset adequacy analysis in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis), and a memorandum in support thereof in accordance with sec.3.1609 of this title (relating to Description of Actuarial Memorandum), shall be required each year. Any company so exempt must file a statement of actuarial opinion pursuant to sec.3.1607 of this title (relating to Statement of Actuarial Opinion Not Including an Asset Adequacy Analysis), and a memorandum in support thereof must also be prepared pursuant to sec.3.1609(a) of this title. sec.3.1603. Commissioner Discretion. The commissioner may require any company otherwise exempt under sec.3.1606 of this title (relating to Required Opinions) to submit a statement of actuarial opinion and to prepare a memorandum in support of such opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) and sec.3.1609 of this title (relating to Description of Actuarial Memorandum) if, in the opinion of the commissioner, an asset adequacy analysis is necessary with respect to the company. sec.3.1604. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Actuarial Standards Board-The board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice. Annual statement -That financial statement as of December 31st of the preceding year required to be filed annually by the company with the Texas Department of Insurance. actuary -Any or retained in accordance with the requirements set forth in sec.3.1605(c) of this title (relating to General Requirements) to provide the actuarial opinion and supporting memorandum as required by the Insurance Code, Article 3.28, sec.2A. Asset adequacy analysis-An analysis that meets the standards and other requirements referred to in sec.3.1605(d) of this title. Such analysis may take many forms, including, but not limited to, cash flow testing, sensitivity testing, or applications of risk theory. Commissioner-The commissioner of insurance for the State of Texas. Company-A life insurance company or reinsurer subject to the provisions of this subchapter which includes a stipulated premium insurance company insuring or assuming risk for coverages under either Insurance Code, Articles 22.23(b) or 22.23A. Non-investment grade bonds-Those designated as classes 3, 4, 5, or 6 by the NAIC Securities Valuation Office. Qualified actuary -Any individual who meets the requirements set forth in sec.3.1605(b) of this title. sec.3.1605. General Requirements. (a) Submission of statement of actuarial opinion. Any statement of actuarial opinion required by these sections shall be submitted in accordance with paragraphs (1)-(4) of this subsection. (1) For each year beginning with the year in which this regulation becomes effective the annual statement shall have included on, or attached to, page one the statement of an appointed actuary, entitled "Statement of Actuarial Opinion," setting forth an opinion relating to reserves and related actuarial items held in support of policies and contracts, in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis). Any company exempt from submitting such statement of actuarial opinion by provision of sec.3.1606 of this title (relating to Required Opinions) shall include on or attach to page one of the annual statement a statement of actuarial opinion rendered by an appointed actuary in accordance with sec.3.1607 of this title (relating to Statement of Actuarial Opinion Not Including an Asset Adequacy Analysis). (2) If in the previous year a company provided a statement of actuarial opinion in accordance with sec.3.1607 of this title, and in the current year fails the exemption criteria of sec.3.1606(c)(1), (2), or (5) of this title to again provide an actuarial opinion in accordance with sec.3.1607 of this title, the statement of actuarial opinion in accordance with sec.3.1608 of this title shall not be due until August 1 of the filing year of the annual statement for which the opinion is required. In this instance, the company shall provide a statement of actuarial opinion in accordance with sec.3.1607 of this title with appropriate qualification noting the intent to subsequently provide a statement of actuarial opinion in accordance with sec.3.1608 of this title. (3) In the case of a statement of actuarial opinion required to be submitted by a foreign or alien company, the commissioner may accept the statement of actuarial opinion filed by such company with the insurance supervisory regulator of another state if the commissioner determines that the opinion reasonably meets the requirements applicable to a company domiciled in this state. (4) Upon written request by the company, the commissioner may grant an extension of the date for submission of the statement of actuarial opinion. (b) Qualified actuary. A "qualified actuary" is an individual who meets these five qualifications: (1) is a member in good standing of the American Academy of Actuaries; (2) is qualified to sign statements of actuarial opinion for life and health insurance company annual statements in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements; (3) is familiar with the valuation requirements applicable to life and health insurance companies; (4) has not been found by the commissioner (or if so found has subsequently been reinstated as a qualified actuary), following appropriate notice and hearing to have: (A) been convicted of fraud, bribery, violation of the Racketeer Influenced and Corrupt Organizations Act (18 United States Code, sec.sec.1961-1968) , or any state or federal criminal offense involving dishonest conduct; or (B) violated the insurance laws of this state with respect to any actuarial opinion filed under these rules; or (C) demonstrated a pattern or practice of failing to detect or disclose material information in an actuarial opinion filed under these rules or in any other actuarial opinion or report filed with the commissioner; or (D) demonstrated a pattern or practice of failing to adhere to accepted standards of actuarial practice in accordance with sound actuarial principles as required in an actuarial opinion filed under these rules or accepted standards of actuarial practice in any other actuarial opinion or report filed with the commissioner; and (5) has not failed to notify the commissioner of any action taken by any commissioner of any other state similar to that under paragraph (4) of this subsection. (c) Appointed actuary. An "appointed actuary" is a qualified actuary who is appointed or retained to prepare the statement of actuarial opinion required by this subchapter, either directly by or by the authority of the board of directors through an executive officer of the company. The company shall give the commissioner timely written notice of the name, title (and, in the case of a consulting actuary, the name of the firm), and manner of appointment or retention of each person appointed or retained by the company as an appointed actuary and shall state in such notice that the person meets the requirements set forth in subsection (b) of this section to the best of the company's knowledge. Once notice is furnished, no further notice is required with respect to this person, provided that the company shall give the commissioner timely written notice in the event the actuary ceases to be appointed or retained as an appointed actuary or to meet the requirements set forth in subsection (b) of this section. If any person appointed or retained as an appointed actuary replaces a previously appointed actuary, the notice shall so state and give the reasons for replacement. (d) Standards for asset adequacy analysis. The asset adequacy analysis required by this regulation: (1) shall conform to the Standards of Practice as adopted by the Actuarial Standards Board, as of September 15, 1992, and any additional standards under this regulation, which standards are to form the basis of the statement of actuarial opinion in accordance with sec.3.1608 of this title. (e) Liabilities to be covered. The liabilities to be covered shall be in accordance with paragraphs (1)-(4) of this subsection. (1) Under authority of the Insurance Code, Article 3.28, sec.2A, the statement of actuarial opinion shall apply to all in force business on the statement date regardless of when or where issued, for example, reserves of Exhibits 8, 9, and 10, and claim liabilities in Exhibit 11, Part 1 and equivalent items in the separate account statement or statements. (2) If the appointed actuary determines as the result of asset adequacy analysis that a reserve should be held in addition to the aggregate reserve held by the company and calculated in accordance with methods set forth in the Insurance Code, Article 3.28, sec.sec.6, 7, 10, and 11, and other applicable Insurance Code provisions, the company shall establish such additional reserve. (3) For years ending prior to December 31, 1994, the company may, in lieu of establishing the full amount of the additional reserve in the annual statement for that year, set up an additional reserve in an amount not less than the following: (A) December 31, 1992-the additional reserve divided by three; (B) December 31, 1993-two times the additional reserve divided by three. (4) Additional reserves established under paragraphs (2) or (3) of this subsection and deemed not necessary in subsequent years may be released. Any amounts released must be disclosed in the actuarial opinion for the applicable year. The release of such reserves would not be deemed an adoption of a lower standard of valuation. (f) Standards for an actuarial opinion not based on an asset adequacy analysis. The actuarial opinion rendered under sec.3.1607 of this title shall conform to the Standards of Practice as adopted by the Actuarial Standards Board as of September 15, 1992, excluding Actuarial Standard of Practice Number 14, and any additional standards under this regulation. sec.3.1606. Required Opinions. (a) General. In accordance with the Insurance Code, Article 3.28, sec.2A, every company doing business in this state shall annually submit the opinion of an appointed actuary as provided for by this regulation. The type of opinion submitted shall be determined by the provisions set forth in this section and shall be in accordance with the applicable provisions of this subchapter. (b) Company categories. For purposes of this subchapter, companies shall be classified as follows based on the admitted assets as of the end of the calendar year for which the actuarial opinion is applicable: (1) Category A shall consist of those companies whose admitted assets do not exceed $20 million; (2) Category B shall consist of those companies whose admitted assets exceed $20 million but do not exceed $100 million; (3) Category C shall consist of those companies whose admitted assets exceed $100 million but do not exceed $500 million; and (4) Category D shall consist of those companies whose admitted assets exceed $500 million. (c) Exemption eligibility tests. Exemption eligibility shall be in accordance with criteria set forth in paragraphs (1)-(7) of this subsection which include the criteria in the adopted model regulation by the National Association of Insurance Commissioners, as of September 15, 1992, entitled, "Actuarial Opinion and Memorandum Regulation." (1) Any Category A company that, for any year beginning with the year in which this subchapter becomes effective, meets all of the following criteria shall be eligible for exemption from submission of a statement of actuarial opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) for the year in which these criteria are met. The ratios in subparagraphs (A), (B), and (C) of this paragraph shall be calculated based on amounts as of the end of the calendar year for which the actuarial opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .10. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .30. (C) The ratio of the book value of the non-investment grade bonds to the sum of capital and surplus is less than .50. (D) The Examiner Team for the National Association of Insurance Commissioners has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or the company has resolved the first or second priority status to the satisfaction of the commissioner of the state of domicile and the commissioner has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (2) Any Category B company that, for any year beginning with the year in which this subchapter becomes effective, meets all of the following criteria shall be eligible for exemption from submission of a statement of actuarial opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) for the year in which the criteria are met. The ratios in subparagraphs (A), (B), and (C) of this paragraph shall be calculated based on amounts as of the end of the calendar year for which the actuarial opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .07. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .40. (C) The ratio of the book value of the non-investment grade bonds to the sum of capital and surplus is less than .50. (D) The Examiner Team for the National Association of Insurance Commissioners has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or the company has resolved the first or second priority status to the satisfaction of the commissioner of the state of domicile and the commissioner has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (3) Any Category A or Category B company that meets all of the criteria set forth in paragraph (1) or (2) of this subsection, whichever is applicable, is exempt from submission of a statement of actuarial opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) unless the commissioner specifically indicates to the company that the exemption is not to be taken. (4) Any Category A or Category B company that, for any year beginning with the year in which this subchapter becomes effective, is not exempt under paragraph (3) of this subsection shall be required to submit a statement of actuarial opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) for the year for which it is not exempt. (5) Any Category C company that, after submitting an opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis), meets all of the following criteria shall not be required, unless required in accordance with paragraph (7) of this subsection, to submit a statement of actuarial opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) more frequently than every third year. Any Category C company which fails to meet all of the following criteria for any year shall submit a statement of actuarial opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) for that year. The ratios in subparagraphs (A), (B) and (C) of this paragraph shall be calculated based on amounts as of the end of the calendar year for which the actuarial opinion is applicable. (A) The ratio of the sum of capital and surplus to the sum of cash and invested assets is at least equal to .05. (B) The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is less than .50. (C) The ratio of the book value of the non-investment grade bonds to the sum of the capital and surplus is less than .50. (D) The Examiner Team for the National Association of Insurance Commissioners has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or the company has resolved the first or second priority status to the satisfaction of the commissioner of the state of domicile and the commissioner has so notified the chair of the NAIC Life and Health Actuarial Task Force and the NAIC Staff and Support Office. (6) Any stipulated premium insurance company which does not insure or assume risk on contracts with death benefits, cash values, or accumulation values, on any one life, in excess of $10,000 is exempt from submission of a statement of actuarial opinion in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) unless required in accordance with paragraph (7) of this subsection. (7) Any company which is not required by this sec.3.1606 of this title (relating to Required Opinions) to submit a statement of actuarial opinion in accordance with sec.3.1608 of this title for any year shall submit a statement of actuarial opinion in accordance with sec.3.1607 of this title (relating to Statement of Actuarial Opinion Not Including an Asset Adequacy Analysis) for that year unless, as provided by sec.3.1603 of this title (relating to Commissioner Discretion), the commissioner requires a statement of actuarial opinion in accordance with sec.3.1608 of this title. (d) Large companies. Every Category D company shall submit a statement of actuarial opinion in accordance with sec.3.1608 of this title for each year beginning with the year in which this subchapter becomes effective. sec.3.1607. Statement of Actuarial Opinion Not Including an Asset Adequacy Analysis. (a) General description. The statement of actuarial opinion required by this section shall consist of the following paragraphs: (1) a paragraph identifying the appointed actuary and his or her qualifications; (2) a paragraph stating that the company is exempt pursuant to sec.3. 1606 of this title (relating to Required Opinions) from submitting a statement of actuarial opinion based on an asset adequacy analysis and that the opinion, which is not based on an asset adequacy analysis, is rendered in accordance with sec.3.1607 of this title (relating to Statement of Actuarial Opinion Not Including an Asset Adequacy Analysis); (3) a scope paragraph identifying the subjects on which the opinion is to be expressed and describing the scope of the appointed actuary's work; and (4) an opinion paragraph expressing the appointed actuary's opinion as required by the Insurance Code, Article 3.28, sec.2A, and Article 1.11(c). (b) Recommended language. The language provided in paragraphs (1)-(10) of this subsection is that which in typical circumstances would be included in a statement of actuarial opinion in accordance with this section. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary should use language which clearly expresses his or her professional judgment. Regardless of language used, the opinion shall retain all pertinent aspects of the language provided in sec.3.1607 of this title (relating to Statement of Actuarial Opinion Not Including an Asset Adequacy Analysis). (1) The opening paragraph should indicate the appointed actuary's relationship to the company. (For a company actuary, the opening paragraph of the actuarial opinion is recommended to read as follows:) I, (name and title of actuary) of (name of company), am a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of said insurer to render this opinion as stated in the letter to the Commissioner dated (insert date). I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies. (For a consulting actuary, the opening paragraph of the actuarial opinion should contain a sentence such as:) I, (name and title of actuary), a member of the American Academy of Actuaries, am associated with the firm of (insert name of consulting firm). I have been appointed by, or by the authority of, the Board of Directors of (name of company) to render this opinion as stated in the letter to the Commissioner dated (insert date). I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies. (2) The regulatory authority paragraph should include a statement such as the following: Said company is exempt pursuant to 28 TAC sec.3.1606 of the Texas Department of Insurance from submitting a statement of actuarial opinion based on an asset adequacy analysis. This opinion, which is not based on an asset adequacy analysis, is rendered in accordance with 28 TAC sec.3.1607. (3) The scope paragraph should contain a sentence such as the following: I have examined the actuarial assumptions and actuarial methods used in determining reserves and related actuarial items listed below, as shown in the annual statement of the company, as prepared for filing with state regulatory officials, as of December 31, ( ). The paragraph should list items and amounts with respect to which the appointed actuary is expressing an opinion. The list should include, but not be necessarily limited to, the items listed in subparagraphs (A)-(D) of this paragraph: (A) aggregate reserve and deposit funds for policies and contracts included in Exhibit 8; (B) aggregate reserve and deposit funds for policies and contracts included in Exhibit 9; (C) deposit funds, premiums, dividend and coupon accumulations and supplementary contracts not involving life contingencies included in Exhibit 10; and (D) policy and contract claims-liability end of current year included in Exhibit 11, Part 1. (4) If the appointed actuary has examined the underlying records, the scope paragraph should also include the following: My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic records and such tests of the actuarial calculations as I considered necessary. (5) If the appointed actuary has not examined the underlying records, but has relied upon listings and summaries of policies in force prepared by the company or a third party, the scope paragraph should include a sentence such as one of the following: I have relied upon listings and summaries of policies and contracts and other liabilities in force prepared by (name and title of company officer certifying in force records) as certified in the attached statement. (See accompanying affidavit by a company officer.) In other respects my examination included review of the actuarial assumptions and actuarial methods and such tests of the actuarial calculations as I considered necessary. (or) I have relied upon (name of accounting firm) for the substantial accuracy of the in force records inventory and information concerning other liabilities, as certified in the attached statement. In other respects my examination included review of the actuarial assumptions and actuarial methods and such tests of the actuarial calculations as I considered necessary. The statement of the person certifying shall follow the form indicated by paragraph (10) of this section. (6) The opinion paragraph should include the following: In my opinion the amounts carried in the balance sheet on account of the actuarial items identified above: are computed in accordance with appropriate actuarial standards consistently applied; are based on actuarial assumptions which produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions; meet the requirements of the insurance law and regulations of the state of (state of domicile) and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed; are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year- end (with any exceptions as noted below); and include provision for all actuarial reserves and related statement items which ought to be established. The actuarial methods, considerations and analyses used in forming my opinion conform to the appropriate Standards of Practice as adopted by the Actuarial Standards Board, as of September 15, 1992, excluding Actuarial Standard of Practice Number 14, which standards form the basis of this statement of opinion. (7) The concluding paragraph should document the eligibility for the company to provide an opinion as provided by this section. It shall include the following items: This opinion is provided in accordance with 28 TAC sec.3.1607. As such it does not include an opinion regarding the adequacy of reserves and related actuarial items when considered in light of the assets which support them. Eligibility to submit under sec.3.1607 is confirmed as follows: The ratio of the sum of capital and surplus to the sum of cash and invested assets is (insert amount), which equals or exceeds the applicable criterion based on the admitted assets of the company (28 TAC sec.3.1606(c)). The ratio of the sum of the reserves and liabilities for annuities and deposits to the total admitted assets is (insert amount), which is less than the applicable criteria based on the admitted assets of the company (28 TAC sec.3.1606(c)). The ratio of the book value of the non-investment grade bonds to the sum of capital and surplus is (insert amount), which is less than the applicable criteria of .50. To my knowledge, the National Association of Insurance Commissioners Examiner Team has not designated the company as a first priority company in any of the two calendar years preceding the calendar year for which the actuarial opinion is applicable, or a second priority company in each of the two calendar years preceding the calendar year for which the actuarial opinion is applicable or the company has resolved the first or second priority status to the satisfaction of the commissioner of the state of domicile. To my knowledge there is not a specific request from any commissioner requiring an asset adequacy analysis opinion. __________________________ Signature of Appointed Actuary _____________________________ Address of Appointed Actuary _____________________________ Telephone Number of Appointed Actuary (8) If there has been any change in the actuarial assumptions from those previously employed, that change should be described in the annual statement and in a paragraph of the statement of actuarial opinion, and the reference pursuant to paragraph (6) of this subsection, regarding consistency of assumptions, should read as follows: ... with the exception of the change described on page ( ) of the annual statement (or in the preceding paragraph). The adoption for new issues or new claims or other new liabilities of an actuarial assumption which differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of this paragraph. (9) If the appointed actuary is unable to form an opinion, he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reason(s) for such opinion. This statement should follow the scope paragraph and precede the opinion paragraph. (10) If the appointed actuary does not express an opinion as to the accuracy and completeness of the listings and summaries of policies in force, there should be attached to the opinion, the statement of a company officer or accounting firm who prepared such underlying data similar to the following: I (name of officer), (title) of (name and address of company or accounting firm), hereby affirm that the listings and summaries of policies and contracts in force as of December 31, ( ), prepared for and submitted to (name of appointed actuary), were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete. __________________________________ Signature of the Officer of the Company or Accounting Firm __________________________________ Address of the Officer of the Company or Accounting Firm __________________________________ Telephone Number of the Officer of the Company or Accounting Firm sec.3.1608. Statement of Actuarial Opinion Based On an Asset Adequacy Analysis. (a) General description. The statement of actuarial opinion submitted in accordance with this section shall consist of the following paragraphs: (1) a paragraph identifying the appointed actuary and his or her qualifications, for which language is recommended in subsection (b)(1) of this section; (2) a scope paragraph, for which language is recommended in subsection (b)(2) of this section, identifying the subjects on which an opinion is to be expressed and describing the scope of the appointed actuary's work, including a tabulation delineating the reserves and related actuarial items which have been analyzed for asset adequacy and the method of analysis, and identifying the reserves and related actuarial items covered by the opinion which have not been so analyzed; (3) a reliance paragraph, for which language is recommended in subsection (b)(3) of this section, describing those areas, if any, where the appointed actuary has deferred to other experts in developing data, procedures or assumptions, (e.g., anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios), supported by a statement of each such expert in the form prescribed by subsection (e) of this section; and (4) an opinion paragraph expressing the appointed actuary's opinion with respect to the adequacy of the supporting assets to mature the liabilities, for which language is recommended in subsection (b)(6) of this section; (5) one or more additional paragraphs will be needed in individual company cases as follows: (A) if the appointed actuary considers it necessary to state a qualification of his or her opinion; (B) if the appointed actuary must disclose the method of aggregation for reserves of different products or lines of business for asset adequacy analysis; (C) if the appointed actuary must disclose reliance upon any portion of the assets supporting the asset valuation reserve or other mandatory or voluntary statement reserves for asset adequacy analysis; (D) if the appointed actuary must disclose an inconsistency in the method of analysis or basis of asset allocation used at the prior opinion date with that used for this opinion; (E) if the appointed actuary must disclose whether additional reserves of the prior opinion date are released as of this opinion date, and the extent of the release; (F) if the appointed actuary chooses to add a paragraph briefly describing the assumptions which form the basis for the actuarial opinion; (G) if the actuary does not subject all reserves and related actuarial items listed in the opinion to an asset adequacy analysis. Explanations must be provided as to why such reserves and related actuarial items were not subjected to an asset adequacy analysis. (b) Recommended language. The following paragraphs are to be included in the statement of actuarial opinion in accordance with this section. Language is that which in typical circumstances should be included in a statement of actuarial opinion. The language may be modified as needed to meet the circumstances of a particular case, but the appointed actuary should use language which clearly expresses his or her professional judgment. However, in any event the opinion shall retain all pertinent aspects of the language provided in this section. (1) The opening paragraph should generally indicate the appointed actuary's relationship to the company and his or her qualifications to sign the opinion. For a company actuary, the opening paragraph of the actuarial opinion should read as follows: I, (name and title) of (insurance company name), am a member of the American Academy of Actuaries. I was appointed by, or by the authority of, the Board of Directors of said insurer to render this opinion as stated in the letter to the Commissioner dated (insert date). I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies. For a consulting actuary, the opening paragraph should contain a sentence such as: I, (name and title), a member of the American Academy of Actuaries, am associated with the firm of (name of consulting firm). I have been appointed by, or by the authority of, the Board of Directors of (name of company) to render this opinion as stated in the letter to the Commissioner dated (insert date). I meet the Academy qualification standards for rendering the opinion and am familiar with the valuation requirements applicable to life and health insurance companies. (2) The scope paragraph should include a statement such as the following: I have examined the actuarial assumptions and actuarial methods used in determining reserves and related actuarial items listed below, as shown in the annual statement of the company, as prepared for filing with state regulatory officials, as of December 31, ( ). Tabulated below are those reserves and related actuarial items which have been subjected to asset adequacy analysis, those other reserves which have not been subjected to asset adequacy analysis, and the total reserves for the following statement items: The paragraph should list items and amounts with respect to which the appointed actuary is expressing an opinion. The list should include, but not necessarily be limited to, the following statement items: [graphic] (3) If the appointed actuary has relied on other experts to develop certain portions of the analysis, the reliance paragraph should include a statement such as the following: I have relied on (name), (title) for (e.g., anticipated cash flows from currently owned assets, including variations in cash flows according to economic scenarios) and, as certified in the attached statement, ... (or) I have relied on personnel as cited in the supporting memorandum for certain critical aspects of the analysis in reference to the accompanying statement. Such a statement of reliance on other experts should be accompanied by a statement by each of such experts of the form prescribed by subsection (e) of this section. (4) If the appointed actuary has examined the underlying asset and liability records, the reliance paragraph should also include the following: My examination included such review of the actuarial assumptions and actuarial methods and of the underlying basic asset and liability records and such tests of the actuarial calculations as I considered necessary. (5) If the appointed actuary has not examined the underlying records, but has relied upon listings and summaries of policies in force and/or asset records prepared by the company or a third party, the reliance paragraph should include a sentence such as: I have relied upon listings and summaries (of policies and contracts, of asset records) prepared by (name and title of company officer certifying in- force records) as certified in the attached statement. In other respects my examination included such review of the actuarial assumptions and actuarial methods and such tests of the actuarial calculations as I considered necessary. (or) I have relied upon (name of accounting firm) for the substantial accuracy of the in-force records inventory and information concerning other liabilities, as certified in the attached statement. In other respects my examination included review of the actuarial assumptions and actuarial methods and such tests of the actuarial calculations as I considered necessary. Such a sentence must be accompanied by a statement by each person relied upon of the form prescribed by subsection (e) of this section. (6) The opinion paragraph should include the following: In my opinion the reserves and related actuarial values concerning the statement items identified above: Are computed in accordance with appropriate actuarial standards consistently applied and are fairly stated, in accordance with sound actuarial principles; Are based on actuarial assumptions which produce reserves at least as great as those called for in any contract provision as to reserve basis and method, and are in accordance with all other contract provisions; Meet the requirements of the insurance law and regulations of the state of (state of domicile) and are at least as great as the minimum aggregate amounts required by the state in which this statement is filed; Are computed on the basis of assumptions consistent with those used in computing the corresponding items in the annual statement of the preceding year- end (with any exceptions as noted below); and Include provision for all actuarial reserves and related statement items which ought to be established. The reserves and related items, when considered in light of the assets held by the company with respect to such reserves and related actuarial items including, but not limited to, the investment earnings on such assets, and the considerations anticipated to be received and retained under such policies and contracts, make adequate provision, according to appropriate actuarial standards of practice, for the anticipated cash flows required by the contractual obligations and related expenses of the company. The actuarial methods, considerations and analyses used in forming my opinion conform to the appropriate Standards of Practice as adopted by the Actuarial Standards Board, as of September 15, 1992, which standards form the basis of this statement of opinion. This opinion is updated annually as required by statute. To the best of my knowledge, there have been no material changes from the applicable date of the annual statement to the date of the rendering of this opinion which should be considered in reviewing this opinion. (or) The following material change(s) which occurred between the date of the statement for which this opinion is applicable and the date of this opinion should be considered in reviewing this opinion: (Describe the change or changes.) Choose whichever of the two immediately preceding statements is appropriate. The impact of unanticipated events subsequent to the date of this opinion is beyond the scope of this opinion. The analysis of asset adequacy portion of this opinion should be viewed recognizing that the company's future experience may not follow all the assumptions used in the analysis. ____________________________ Signature of Appointed Actuary ____________________________ Address of Appointed Actuary ________________________________ Telephone Number of Appointed Actuary (c) Assumptions for new issues. The adoption for new issues or new claims or other new liabilities of an actuarial assumption which differs from a corresponding assumption used for prior new issues or new claims or other new liabilities is not a change in actuarial assumptions within the meaning of this section. (d) Adverse opinions. If the appointed actuary is unable to form an opinion, then he or she shall refuse to issue a statement of actuarial opinion. If the appointed actuary's opinion is adverse or qualified, then he or she shall issue an adverse or qualified actuarial opinion explicitly stating the reason(s) for such opinion. This statement should follow the scope paragraph and precede the opinion paragraph. (e) Reliance on data furnished by other persons. If the appointed actuary does not express an opinion as to the accuracy and completeness of the listings and summaries of policies in force and/or asset oriented information, there shall be attached to the opinion the statement of a company officer or accounting firm who prepared such underlying data similar to the following: I (name of officer), (title), of (name of company or accounting firm), hereby affirm that the listings and summaries of policies and contracts in force as of December 31, ( ), and other liabilities prepared for and submitted to (name of appointed actuary) were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete. __________________________________ Signature of the Officer of the Company or Accounting Firm __________________________________ Address of the Officer of the Company or Accounting Firm __________________________________ Telephone Number of the Officer of the Company or Accounting Firm (and/or) I, (name of officer), (title) of (name of company, accounting firm, or security analyst), hereby affirm that the listings, summaries and analyses relating to data prepared for and submitted to (name of appointed actuary) in support of the asset-oriented aspects of the opinion were prepared under my direction and, to the best of my knowledge and belief, are substantially accurate and complete. __________________________________ Signature of the Officer of the Company, Accounting Firm, or the Security Analyst _____________________________________ Address of the Officer of the Company, Accounting Firm, or the Security Analyst _______________________________________ Telephone Number of the Officer of the Company, Accounting Firm, or the Security Analyst sec.3.1609. Description of Actuarial Memorandum (a) General provisions. Any actuarial memorandum required by the provisions of this subchapter shall be prepared in accordance with and subject to the provisions and qualifications of paragraphs (1)-(4) of this subsection. (1) In accordance with the Insurance Code, Article 3.28, sec.2A, the appointed actuary shall prepare a memorandum to the company describing the analysis done in support of his or her opinion regarding the reserves under the opinion. The memorandum shall be made available for examination by the commissioner upon his or her request. (2) In preparing the memorandum, the appointed actuary may rely on, and include as a part of his or her own memorandum, memoranda prepared and signed by other actuaries who are qualified within the meaning of sec.3.1605(b) of this title (relating to General Requirements), with respect to the areas covered in such memoranda, and so state in their memoranda. (3) If the commissioner requests a memorandum and no such memorandum exists or if the commissioner finds that the analysis described in the memorandum fails to meet the standards of the Actuarial Standards Board, as required by sec.3.1605(d) of this title, or the standards and requirements of this subchapter, the commissioner may designate a qualified actuary to review the opinion and prepare such supporting memorandum as is required for review. The reasonable and necessary expense of the independent review shall be paid by the company but shall be directed and controlled by the commissioner. (4) The reviewing actuary shall have the same status as an examiner for purposes of obtaining data from the company and the work papers and documentation of the reviewing actuary shall be retained by the commissioner. The reviewing actuary shall not be an employee of a consulting firm involved with the preparation of any prior memorandum or opinion for the insurer pursuant to this subchapter for any one of the current year or the preceding three years. (b) Details of the memorandum section documenting asset adequacy analysis. When an actuarial opinion under sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis) is provided, the memorandum shall demonstrate that the analysis has been done in accordance with the standards for asset adequacy referred to in sec.3.1605(d) of this title and any additional standards under this subchapter. It shall specify: (1) for reserves: (A) product descriptions including market description, underwriting and other aspects of a risk profile, and the specific risks the appointed actuary deems significant; (B) source of liability in force; (C) reserve method and basis; (D) investment reserves; (E) reinsurance arrangements; (2) for assets: (A) portfolio descriptions, including a risk profile disclosing the quality, distribution, and types of assets; (B) investment and disinvestment assumptions; (C) source of asset data; (D) asset valuation bases; (3) analysis basis: (A) methodology; (B) rationale for inclusion/exclusion of different blocks of business and how pertinent risks were analyzed; (C) rationale for degree of rigor in analyzing different blocks of business; (D) criteria for determining asset adequacy; (E) effect of federal income taxes, reinsurance, and other relevant factors. (4) summary of results (5) conclusion(s). (c) Conformity to standards of practice. The memorandum shall include a statement with wording substantially similar to that of this subsection as follows: actuarial methods, considerations, and analyses used in the preparation of this memorandum conform to the appropriate Standards of Practice as adopted by the Actuarial Standards Board, as of September 15, 1992, which standards form the basis for this memorandum. sec.3.1610. Additional Considerations for Analysis. (a) Aggregation. For the asset adequacy analysis for the statement of actuarial opinion provided in accordance with sec.3.1608 of this title (relating to Statement of Actuarial Opinion Based On an Asset Adequacy Analysis), reserves and assets may be aggregated by either of the methods described in paragraphs (1) and (2) of this subsection. (1) Aggregate the reserves and related actuarial items, and the supporting assets, for different products or lines of business, before analyzing the adequacy of the combined assets to mature the combined liabilities. The appointed actuary must be satisfied that the assets held in support of the reserves and related actuarial items so aggregated are managed in such a manner that the cash flows from the aggregated assets are available to help mature the liabilities from the blocks of business that have been aggregated. (2) Aggregate the results of asset adequacy analysis of one or more products or lines of business, the reserves for which prove through analysis to be redundant, with the results of one or more products or lines of business, the reserves for which prove through analysis to be deficient. The appointed actuary must be satisfied that the asset adequacy results for the various products or lines of business for which the results are so aggregated meet the qualifications of subparagraphs (A) or (B) of this paragraph. (A) Such results are developed using consistent economic scenarios. (B) Such results are subject to mutually independent risks, such as the likelihood of events impacting the adequacy of the assets supporting the redundant reserves is completely unrelated to the likelihood of events impacting the adequacy of the assets supporting the deficient reserves. (3) In the event of any aggregation, the actuary must disclose in his or her opinion that such reserves were aggregated on the basis of the method described in paragraph (1) or either of the two methods described in paragraph (2) of this subsection, whichever is applicable. Such aggregation shall be described in the supporting memorandum. (b) Selection of assets for analysis. The appointed actuary shall analyze only those assets held in support of the reserves which are the subject for specific analysis, hereafter called "specified reserves." A particular asset or portion thereof supporting a group of specified reserves cannot support any other group of specified reserves. An asset may be allocated over several groups of specified reserves. The annual statement value of the assets held in support of the reserves shall not exceed the annual statement value of the specified reserves, except as provided in subsection (c) of this section. If the method of asset allocation is not consistent from year to year, the extent of its inconsistency should be described in the supporting memorandum. (c) Use of assets supporting the interest maintenance reserve and the asset valuation reserve. An appropriate allocation of assets in the amount of the interest maintenance reserve (IMR), whether positive or negative, must be used in any asset adequacy analysis. Analysis of risks regarding asset default may include an appropriate allocation of assets supporting the asset valuation reserve (AVR); these AVR assets may not be applied for any other risks with respect to reserve adequacy. Analysis of these and other risks may include assets supporting other mandatory or voluntary reserves available to the extent not used for risk analysis and reserve support. The amount of the assets used for the AVR must be disclosed in the table of reserves and liabilities of the opinion and in the memorandum. The method used for selecting particular assets or allocated portions of assets must be disclosed in the memorandum. (d) Required interest scenarios. For the purpose of performing the asset adequacy analysis required by this subchapter, the qualified actuary is expected to follow standards adopted by the Actuarial Standards Board as required by sec.3.1605(d) of this title (relating to General Requirements); nevertheless, the appointed actuary must consider in the analysis, at a minimum, the effect of the interest rate scenarios described in paragraphs (1) -(7) of this subsection: (1) level with no deviation; (2) uniformly increasing over 10 years at a 0.5% per year and then level; (3) uniformly increasing at 1.0% per year over five years and then uniformly decreasing at 1.0% per year to the original level at the end of 10 years and then level; (4) an immediate increase of 3.0% and then level; (5) uniformly decreasing over 10 years at a 0.5% per year and then level; (6) uniformly decreasing at 1.0% per year over five years and then uniformly increasing at 1.0% per year to the original level at the end of 10 years and then level; and (7) an immediate decrease of 3.0% and then level. (e) Beginning interest rates. For the scenarios required in subsection (d) of this section and for any other scenarios which may be used, projected interest rates for a five year treasury note need not be reduced beyond the point where such five year treasury note yield would be at 50% of its initial level. The beginning interest rates may be based on interest rates for new investments as of the valuation date similar to recent investments allocated to support the product being tested or be based on an outside index, such as treasury yields, of assets of the appropriate length on a date close to the valuation date. Whatever method is used to determine the beginning yield curve and associated interest rates should be specifically defined. The beginning yield curve and associated interest rates should be consistent for all interest rate scenarios. (f) Documentation. The appointed actuary shall retain on file, for at least seven years, sufficient documentation so that it will be possible to determine the procedures followed, the analyses performed, the bases for assumptions and the results obtained. sec.3.1611. Disciplinary Action. A company or a qualified actuary who fails to comply with or violates applicable provisions of the Insurance Code, Article 3.28, or rules adopted pursuant to the Insurance Code, Article 3.28, is subject to disciplinary action under the Insurance Code, Article 1.10, sec.7, in addition to other disciplinary action as may be provided elsewhere. 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 October 28, 1992. TRD-9214550 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: November 18, 1992 Proposal publication date: July 10, 1992 For further information, please call: (512) 463-6327 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part III. Texas Air Control Board Chapter 101. General Rules 31 TAC sec.101.1 The Texas Air Control Board (TACB) adopts amendments to sec.101.1, concerning definitions, without changes to the proposed text as published in the June 30, 1992, issue of the Texas Register (17 TexReg 4655-4656). The amendments to sec.101.1 update the definition of volatile organic compound (VOC) for consistency with revisions to the corresponding federal definition of VOC recently promulgated by the United States Environmental Protection Agency (EPA), add a definition for extreme performance coating, revise the definition of surface coating processes to include mirror backing coating, and clarify the existing definitions of gasoline bulk plant and miscellaneous metal parts and products coating. Public hearings were held on July 27, 1992, in Houston; July 28, 1992, in Beaumont; July 29, 1992, in El Paso; and July 30, 1992, in Arlington. Written comments were initially to be accepted through July 31, 1992; however, the comment period was extended to August 14, 1992. No testimony was received during the comment period regarding the proposed revisions to sec.101.1. The TACB is an equal opportunity employer and does not discriminate on the basis of race, color, religion, sex, national origin, age, or disability in employment or in the provision of services, programs, or activities. In compliance with the Americans With Disabilities Act, this document may be requested in alternate formats by contacting the Air Quality Planning Program staff at (512) 908-1457, (512) 908-1500 FAX or 1-800-RELAY-TX (TDD), or by writing or visiting at 12124 Park 35 Circle, Austin, Texas 78753. The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382.017, Texas Health and Safety Code (Vernon 1990), which provides the TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. 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 October 26, 1992. TRD-9214456 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Subchapter A. Definitions. The Texas Air Control Board (TACB) adopts amendments to sec.sec.115.10, 115. 116, 115.119, 115.126, 115.127, 115.129, 115.136, 115.139, 115.211, 115. 215- 115.217, 115.219, 115.316, 115.319, 115.421, 115.425-115.427, 115.429, 115. 436, 115.439, 115.536, and 115.539 and new sec.sec.115.241-115.249, concerning definitions. Sections 115.116, 115.119, 115.126, 115.129, 115.136, 115.139, 115.216, 115.219, 115.316, 115.319, 115.426, 115.429, 115.436, 115.439, 115. 536, and 115.539 and new sec.sec.115.242, 115.245, 115.246, 115.248, and 115.249 are adopted with changes to the proposed text as published in the June 30, 1992, issue of the Texas Register (17 TexReg 4656). Sections 115.10, 115.127, 115.211, 115.215, 115.217, 115.421, 115.425, and 115.427 and new sec.sec.115.241, 115.243, 115.244, and 115.247 are adopted without changes and will not be republished. The amendments satisfy a requirement by the United States Environmental Protection Agency (EPA) for states to adopt Stage II vapor recovery rules for motor vehicle fuel dispensing facilities in ozone nonattainment counties (Brazoria, Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty, Montgomery, Orange, Tarrant, and Waller Counties). The amendments also satisfy a requirement by EPA for states to adopt Reasonably Available Control Technology (RACT) rules by November 15, 1992, for major volatile organic compound (VOC) sources which are not covered under an existing EPA control techniques guideline (CTG) or by one of the new CTGs which EPA must finalize in 1993. Additionally, the proposed revisions correct the recordkeeping requirements for Victoria County as required by EPA in order to facilitate the reclassification of Victoria County as an ozone attainment area. In concurrent rulemaking, TACB adopts the repeal of the undesignated head, concerning Control of Reid Vapor Pressure of Gasoline, and previous sec.115.249. Public hearings were held on July 27, 1992, in Houston; July 28, 1992, in Beaumont; July 29, 1992, in El Paso; and July 30, 1992, in Arlington. Written comments were initially to be accepted through July 31, 1992; however, the comment period was extended to August 14, 1992. Written testimony was received from 58 commenters during the comment period. Oral testimony was received from 30 commenters. Most of the comments addressed the specific changes proposed and covered a variety of issues. EPA; Sierra Club, Lone Star Chapter (Sierra Club); Texas Campaign for the Environment (TCE); Galveston-Houston Association for Smog Prevention (GHASP); El Paso City-County Health and Environmental District (El Paso); C and R Distributing (C&R); and four individuals generally supported the proposed revisions and suggested changes. Rescar Incorporated (Rescar); Texas Oil Marketers Association (TOMA); DuPont, Gulf Coast Regional Manufacturing Services (DuPont); Texas Automobile Dealers Association (TADA); Diamond Shamrock, Incorporated (Diamond Shamrock); Monsanto Chemical Company (Monsanto); Chevron Corporation (Chevron); Ameron Protective Coatings Division (Ameron); McGinnis, Lochridge, and Kilgore; Texas Paint Council (TPC); Dow Chemical Company (Dow); Barras Industries, Incorporated (Barras); M. G. Wright Company (Wright); Permian Enterprises, Incorporated (Permian); Sterling Chemicals (Sterling); Houston Lighting and Power (HL&P); Weismantel International (Weismantel); Carboline Company (Carboline); Chemical Waste Management, Incorporated (CWMI); DeVilbiss Ransburg Company (DeVilbiss); Energy Coatings Company (Energy Coatings); North Star Steel Texas (North Star); Champions Pipe Coating, Incorporated (Champions); Graco, Incorporated (Graco); Mobil Oil Corporation (Mobil); Chaparral Industries, Incorporated (Chaparral); Five Star Transportation, Incorporated (Five Star); Speeflo Manufacturing Corporation (Speeflo); DuPont, Automotive Products (DuPont Automotive); The Sherwin-Williams Company (Sherwin-Williams); Palmer Painting Company, Incorporated (Palmer); The Glidden Company (Glidden); Jones-Blair Company (Jones-Blair); AWD Technologies, Incorporated (AWD); Wagner Spray Tech Corporation (Wagner); L. M. Spray Equipment Company (L. M. Spray); Laster Castor Corporation (Laster); El Paso Natural Gas Company (EPNGC); Spray-Quip, Incorporated (Spray-Quip); Exxon Company, U.S.A. (Exxon); Sipco Services and Marine, Incorporated (Sipco); Steel Structures Painting Council (SSPC); Texas Chemical Council (TCC); Harry's Pump Service, Incorporated (Harry's); Empire Coatings, Incorporated (Empire); Porter International (Porter); Don S. Reichle and Associates (Reichle); Trinity Industries, Incorporated (Trinity); BJ Services Company (BJ); Switzer Petroleum Products (Switzer); City of Port Arthur (Port Arthur); Foret Painting and Sandblasting Company (Foret); Painting and Decorating Contractors of America (PDCA); NCN Texaco (NCN); Shell Oil Company (Shell); Sigma Coatings (Sigma); and two individuals were opposed to the revisions. Testimony submitted by Palmer was supported by Wright and TPC. Comments by Glidden were supported by TPC. Sierra Club and an individual supported all rule revisions affecting Victoria County in order to facilitate the reclassification of Victoria County as an ozone attainment county. An individual commented on recordkeeping requirements throughout Chapter 115. The individual wanted the required records to be made available to the public at TACB, local air pollution control agencies, and the library at either Rice University or the University of Houston. Companies are not required to supply records directly to the public or to university libraries, but as stated in the opening paragraphs of the recordkeeping rules, the records must be made available to TACB, EPA, and any local air pollution control program having jurisdiction. Some of the information in records may be proprietary information, and TACB cannot require that this information be made available to any member of the public upon request. However, the public does have access to nonproprietary information in TACB permit and compliance files. An individual commented that regulations should be enforceable. The staff agrees and has endeavored to draft the most enforceable regulations possible. An individual suggested that control of particulate emissions would be less expensive than control of VOCs in order to reduce ozone. The roles of VOC and oxides of nitrogen (NO [sub]x) in ozone formation have been well documented. While reductions in VOC emissions will continue to play an important role in the overall ozone control strategy, reductions in NO [sub]x emissions have emerged as the next technically justifiable step toward attainment of the ozone standard. However, particulate emissions are unrelated to ozone formation, and therefore the cost of particulate controls is irrelevant to the ozone control strategy. An individual commented that emissions from both stationary sources and mobile sources need to be controlled and suggested that the TACB require "close-coupled catalytic fittings" or "preheated catalytic converters" on cars. The staff agrees that additional emphasis on mobile sources and stationary sources will be necessary to achieve attainment with the ozone standard. Comments on mobile source emission control requirements are not within the scope of the revisions. The suggestions may be considered in future rulemaking efforts. Sierra Club commented on sec.115.10 and recommended that the definition of "independent small business marketer of gasoline" be revised to include only a throughput criteria. Sierra Club suggested the definition be based upon a throughput of 10,000 gallons of gasoline per month. Sierra Club commented further that the proposed definition could allow sizable businesses to be exempted from Stage II vapor control requirements at motor vehicle fuel dispensing facilities. The staff disagrees that the proposed definition would allow "sizable businesses" to be exempt from Stage II. Rather, it would enable eligible independent small business marketers of gasoline to request, under sec.115. 249(3), an extension of time to comply with the Stage II requirements. Since the proposed definition was made in response to an EPA requirement and contains the wording used by EPA, the definition was adopted as proposed. DuPont, Dow, TCC, CWMI, Sterling, Mobil, Monsanto, and AWD commented on proposed revisions to sec.sec.115.116, 115.126, 115.136, 115.216, 115.316, 115. 436, and 115.536, concerning proposed revisions to carbon adsorption rules. DuPont, CWMI, Mobil, and Monsanto objected to continuous monitoring for disposable carbon canisters. DuPont and Mobil suggested daily monitoring in these cases, while CWMI favored weekly monitoring, and Monsanto suggested monthly monitoring. Mobil also expressed concern that they would be given no time to install monitors on carbon adsorbers. Neither the current rule nor the proposed changes require monitors on carbon canisters. Carbon canisters are carbon adsorbers as defined in sec.115. 10. Carbon adsorption systems are defined separately to "include a system to regenerate the saturated adsorbent." The monitoring and recordkeeping requirements apply to carbon adsorption systems as defined in sec.115.10, but not to simple carbon adsorbers such as carbon canisters. In response to the commenters' suggested monitoring schedule for carbon adsorbers, TACB may consider adding specific monitoring and recordkeeping requirements for carbon adsorbers in future rulemaking. Due to the apparent confusion concerning the distinction between carbon adsorbers and carbon adsorption systems, the wording "as defined in sec.115.10 of this title (relating to Definitions)" was added after "carbon adsorption system" in sec.sec.115.116(a)(3)(C), 115.116(b)(3) (C), 115.126(a)(1)(C), 115.126(b)(1)(C), 115.136(b)(2)(C), 115.216(a)(2)(C), 115.216(b)(2)(C), 115.316(a)(1)(C), 115.316(b)(1)(C), 115.436(a)(3)(C), 115. 436(b)(3)(C), 115.536(a)(2)(A)(ii), and 115.536(b)(2)(A)(ii). Mobil commented that they do not know of any EPA requirement for continuously monitoring the operational parameters of control devices, while Dow recommended daily, weekly, or monthly monitoring for carbon adsorption systems. EPA specified the continuous monitoring requirements for control devices in the November 1991 EPA document "Technical Support Document for the Proposed Approval of the Texas Air Control Board Revisions to Regulation V, Control of Air Pollution From Volatile Organic Compounds-Post 87 VOC RACT Corrections (RACT Fix-up)." This document is referenced in the April 14, 1992, issue of the Federal Register on page 12904. DuPont, Mobil, Dow, Sterling, and TCC believed the cost of monitors to be underestimated. The cost of monitors will vary from relatively inexpensive for thermocouples to measure temperature of catalytic or thermal incinerators to more costly for equipment to monitor the VOC exhaust concentration from a carbon adsorption system. TCC suggested that installation and maintenance of monitors should be in a section other than recordkeeping. Existing rules in the Recordkeeping Requirements section already require monitors on the operational parameters of control devices. Since the monitoring and recordkeeping requirements are inextricably linked, the staff changed the section title to "Monitoring and Recordkeeping Requirements" for clarity. TCC stated that carbon adsorption systems have very predictable breakthrough conditions and/or times and are designed to never reach breakthrough. TCC suggested some other (unspecified) methods besides monitoring the exhaust gas VOC concentration of the carbon adsorption system be used, and stated that most of the time the exhaust gas VOC concentration of the system would be very low. AWD claimed that Dow's SORBATHENE carbon adsorption system never reaches saturation and suggested that continuous temperature monitoring be considered equivalent for this unit. AWD also believed that the monitoring requirements should be defined in the permit. Monitoring is necessary in order to verify that the control device is functioning properly and to insure the enforceability of the control requirements. Any carbon adsorption system may reach breakthrough, regardless of the intent of the system design, and monitoring of the exhaust gas VOC concentration is the accepted method to observe the operating condition of the system. Since not all affected facilities have TACB permits, monitoring requirements must remain in Regulation V to insure that enforceable requirements are in place for all affected facilities. Dow commented that an excessive amount of paper will be generated by keeping records for two years. Retention of records for two years is standard practice and will not require excessive paperwork. EPA requires that records be maintained for two years. Any relaxation of this requirement could jeopardize EPA approval. Dow believed that recordkeeping for carbon adsorption systems should only be required when a system is inoperable or when "operating out of established boundaries." The staff disagrees with Dow. The company's proposal would require recordkeeping only when the carbon adsorption system is in an upset condition, but would not establish that the unit was operating in compliance at all other times. Sterling believed that monitoring requirements are redundant because some sources have to do monitoring as required by National Emission Standards for Hazardous Air Pollutants (NESHAPS), and recommended that any source subject to NESHAPS be exempt from Regulation V monitoring requirements. The staff is aware that federal requirements such as NESHAPS may sometimes overlap with Regulation V requirements. However, EPA's RACT requirements do not recognize exemptions for such cases. EPA, Sierra Club, TCE, GHASP, El Paso, and two individuals generally supported the proposed sec.sec.115.241-115.249. Port Arthur questioned whether on-board canisters would be required on new automobiles in lieu of Stage II requirements for motor vehicle fuel dispensing facilities. Port Arthur also suggested that TACB consider missing the mandated deadline of November 15, 1992, for adoption of Stage II rules in order to spend more time developing the rules. EPA will not be requiring on-board canisters due to safety concerns expressed by the Department of Transportation. The 1990 amendments to the Federal Clean Air Act (FCAA) require TACB to adopt Stage II rules by November 15, 1992, and the state is subject to sanctions if the statutory deadline is missed. TCE and GHASP believed Stage II to be cost-effective, while Chevron believed costs to be underestimated. TOMA believed that the cost to facilities with less than 50,000 gallons per month of gasoline throughput will be too high and cause economic hardship. TCE, GHASP, and an individual recommended that TACB consider offering low-interest loans to small independent facilities affected by Stage II, while NCN expressed a desire for federal financial assistance for facilities affected by Stage II. TACB recognizes that independent small business marketers of gasoline may have a difficult time absorbing the costs associated with installation of Stage II equipment and has added the availability of an extended compliance schedule for these facilities. Specifically, the compliance schedule has been revised to allow independent small business marketers of gasoline, whose facilities have a gasoline throughput of less than 50,000 gallons per month per facility, to install Stage II systems when their storage tanks are replaced or equipped with corrosion protection as required by the Texas Water Commission (TWC), but no later than December 22, 1998. While sympathetic with the financial concerns of affected facilities, TACB currently has no authority or resources to provide loans. However, the TACB Small Business Ombudsman is developing a proposal to offer financial assistance to small businesses. The proposal would create a loan program using penalty or fee money collected by TACB as a means of assisting small businesses with the financial burden of complying with air pollution laws. In addition, the United States Small Business Administration makes loans to small businesses. Sierra Club commented that it should be explicitly stated that Stage II applies to all counties in the ozone nonattainment areas. The applicable counties are explicitly listed in sec.115.249, concerning counties and compliance schedule. TCE suggested that Stage II be implemented statewide. Regulation V is specifically intended to address VOC emissions in ozone nonattainment areas rather than statewide emissions. Additionally, as specified in the Health and Safety Code, sec.382.019(d), the Texas Legislature has allowed TACB to adopt Stage II rules only when EPA has determined that Stage II is required for compliance with the FCAA, except that TACB may adopt Stage II rules following appropriate health studies and in consultation with the Texas Department of Health, if it is determined to be necessary for the protection of public health. HL&P and TADA stated that Stage II should only apply to facilities which sell gasoline and not to private refueling facilities (such as government and company fleet refueling facilities). EPA requires that private motor vehicle refueling facilities as well as retailers be subject to the Stage II requirements. VOC emissions will result from vehicle refueling operations, regardless of whether the gasoline is sold to a private individual or dispensed into a fleet vehicle. The purpose of Stage II is to control these VOC emissions, resulting in emission reductions in ozone nonattainment areas which are necessary for the timely attainment of the ozone standard. Stage II will also reduce the general public's exposure to benzene during vehicle refueling. An individual and Port Arthur commented on sec.115.241. The individual questioned how the 95% control efficiency is determined, while Port Arthur opposed requiring Stage II systems certified by the California Air Resources Board (CARB). The 95% control efficiency is determined by CARB. CARB tests Stage II systems using established test procedures and methods and approves only those systems which achieve at least 95% vapor recovery. As stated in sec.115.242(1), only CARB-certified Stage II systems may be installed. Due to the resources required to duplicate the already-established CARB testing program, the staff does not support rules which would allow Stage II systems other than CARB-certified systems. EPA commented on sec.115.242(1) and suggested revised language to clarify the prohibition against the installation of Stage II systems which include remote vapor check valves and/or dual-hang (non-coaxial) hoses. The staff agrees that EPA's proposed revision will clarify sec.115.242(1) and has incorporated the suggested language. Chevron commented on sec.115.242(3) and suggested the addition of language which would allow leaks between the nozzle and the vehicle filler neck. Chevron contended that these defects do not involve the dispensing or Stage II systems and should be exempt. The staff disagrees with Chevron. Gasoline leaks between the nozzle and the vehicle filler neck serve as an indication of defects in the dispensing and/or Stage II systems. Two individuals commented on sec.115.242(4) and suggested that a dated "Out-of- Order" tag be required on inoperable dispensing equipment. The proposed sec.115.242(4) already includes a requirement for a dated "Out-of-Order" tag on inoperable equipment. Therefore, no change in the language was made. Chevron commented on sec.115.242(5) and suggested that "approved" be changed to "certified" for consistency. The staff agrees and has incorporated the suggested revision. Chevron and El Paso commented on sec.115.242(7). Chevron suggested that sec.115.242(7) be revised to allow posting of the operating instructions "in a conspicuous place on each side of any pump island involving Stage II," rather than on the front of each gasoline dispensing pump. The staff believes the operating instructions should be posted conspicuously on the front of each gasoline dispensing pump to help ensure the proper operation of the Stage II system. Operating instructions posted on each side of a gasoline pump island might not be visible to every person operating the dispensing equipment. Therefore, no change in the proposed language was made. El Paso suggested that sec.115.242(7)(C) specify the appropriate local air pollution control agency in addition to the appropriate TACB regional office. The staff agrees with El Paso, and the commenter's suggestion was incorporated into sec.115.242(7)(C). An individual commented that "substantially equivalent" is not defined in sec.115.243 and suggested that the definition of "substantially equivalent" include a 95% control efficiency. The individual also suggested TACB receive input from local air pollution control programs, EPA, and the general public on any Stage II system authorized under sec.115.243. The term "substantially equivalent" has the meaning commonly ascribed to it in the field of air pollution control, and the staff does not believe that further definition is necessary. Section 115.243 requires alternate Stage II systems to be both CARB-certified and substantially equivalent. Consequently, any system approved under sec.115.243 must meet the 95% control efficiency required by CARB. Section 115.243 will allow the TACB to approve new Stage II systems which were certified by CARB since the April 1992 date referenced in sec.115.242(1). No additional input from local air pollution control programs, EPA, and the general public on Stage II systems authorized under sec.115.243 appears necessary. Diamond Shamrock suggested revisions to sec.115.243 which would enable TACB to approve Stage II systems that have not been CARB-certified. EPA has advised that Stage II systems must be either: a CARB-certified system; tested and approved using CARB test methods; or a system approved through an equivalent testing program which in turn has been approved by EPA. EPA has stated that it will not accept the TACB's approval of systems modified from their CARB-certified configuration, unless TACB opts to submit and gain EPA approval for a testing program equivalent to CARBs. Due to the resources required to duplicate the CARB testing program, the staff does not support rules which would allow Stage II systems other than CARB-certified systems. Diamond Shamrock commented on sec.115.244 and stated that the daily inspection requirements are onerous and should be changed to a monthly inspection requirement. The staff disagrees and believes that the time required to conduct the daily inspections will be minimal. Diamond Shamrock's suggested monthly inspection schedule could allow defects to remain uncorrected for an unacceptable length of time. Chevron commented on sec.115.245(2) and suggested that the 10-day notification requirement be shortened to two-three days. The staff supports the 10-day notification requirement in order to allow inspectors an opportunity to observe the required initial testing of Stage II equipment. The staff notes that the 10- day notification is considerably shorter than the 45-day notification for testing specified in a typical TACB permit. An individual commented on sec.115.245(2), which defines a major system replacement or modification to be the replacing, repairing, or upgrading of 75% or more of a facility's Stage II equipment. The individual questioned how "75% or more of the Stage II equipment" will be determined. The staff agrees that this phrase is ambiguous and has developed more specific language. The language referring to "75% or more of a facility's Stage II equipment" in sec.115.245(2) has been deleted, and clarifying language has been added which specifies that a major system replacement or modification is the repair or replacement of any stationary storage tank equipped with a Stage II vapor recovery system; or the repair or replacement of any part of an underground piping system attached to a stationary storage tank equipped with a Stage II vapor recovery system, excluding the repair or replacement of an underground piping system which is accessible for such repair or replacement without excavation. An individual commented on sec.115.245(3). The individual opposed language which states that "minor modifications of these test methods may be approved by the executive director" and commented that "minor modification" is not defined. EPA has identified and published specific acceptable test methods for use in determining compliance. These test methods are currently recognized as industry standards, but EPA has indicated that minor modifications to methods which do not involve any significant change in the results may be independently approved by the executive director. However, new test methods or major changes must still be submitted to EPA for approval. El Paso suggested that sec.115.246 specify clearly that records be made available to the appropriate TACB regional office and the appropriate local air pollution control agency, where applicable. The staff agrees with El Paso and has incorporated the revision into a new paragraph (6) in sec.115.246. Diamond Shamrock, Chevron, Exxon, and C&R opposed the requirement of sec.115. 246 to keep records on-site and suggested that the rule be revised to allow recordkeeping at an alternate centralized location such as a division office with the records to be provided by that office at TACB's request. The staff does not agree that keeping records on-site should be optional because enforcement would become much more difficult. It would be impossible for the TACB or other inspectors to conduct a complete on-site inspection if records were maintained at a remote location. An individual commented on sec.115.246(1) and suggested that affected facilities be required to keep a copy of the CARB executive order for the facility's Stage II system indefinitely, rather than just for two years. The staff agrees that a copy of the appropriate CARB executive order should always be kept at each facility. Revised language has been incorporated into a new paragraph (6) in sec.115.246. Chevron commented that the requirement of sec.115.246(2) to keep records of "the time period and duration of each malfunction of the system" is contrary to the requirement that malfunctioning equipment be taken out of service immediately. Section 115.246(2) is not intended to imply that a facility is permitted to continue operating noncompliant equipment. The wording has been revised to eliminate any potential misunderstanding. TOMA recommended the addition of rules to sec.115.247 that would require certification for exemption verification purposes. The staff can not add additional recordkeeping requirements to sec.115.247 for exempt facilities or independent small business marketers of gasoline who have requested an extended compliance schedule without first conducting additional public hearings. However, any facility claiming to be exempt from Stage II requirements must maintain monthly gasoline throughput records to document the applicability of the exemption, and the staff will require appropriate recordkeeping as part of any compliance schedule extension granted to independent small business marketers of gasoline. EPNGC believed that the exemption criteria of sec.115.247(2) was unclear and suggested TACB clarify if the exemption limit applies to the entire facility's gasoline throughput or to each "tank system" or pump. As noted in sec.115.247(2) , the exemption is based upon a motor vehicle fuel dispensing facility's gasoline throughput. As defined in sec.115.10, a "motor vehicle fuel dispensing facility" is "any site where gasoline is dispensed to motor vehicle fuel tanks from stationary storage tanks." The staff believes that it is clear that this definition covers the entire facility, rather than just a component such as a fuel dispensing pump or storage tank. EPNGC commented that the meaning of "construction" in sec.115.247(2) needs to be clarified and suggested revised language. "Construction" refers to the construction of an entirely new motor vehicle fuel dispensing facility and not to the replacement of one or more underground storage tanks. However, an exempted facility that replaces an underground storage tank would be wise to concurrently install underground Stage II piping. If the gasoline throughput ever exceeded the exemption level, this would minimize Stage II installation costs since the tank would not have to be excavated. The staff does not believe that additional clarification is necessary. TADA, HL&P, Switzer, and an individual opposed the exemption criteria specified in sec.115.247(2). TADA believed that the exemption level specified in sec.115.247(2) should be 50,000 gallons of gasoline per month, while HL&P suggested an exemption level of 10,000 gallons per month averaged over one year. Switzer suggested an exemption level of 50,000 gallons per month until 1998 and an exemption level of 25,000 gallons per month after 1998. The individual opposed any exemption based upon gasoline throughput. EPA requires that the exemption throughput level be no greater than 10,000 gallons per month, except that for independent small business marketers of gasoline, a state may choose to raise the exemption level as high as 50,000 gallons per month. Therefore, a blanket exemption for facilities with gasoline throughputs of less than 50,000 gallons per month is not permissible. The exemption level was set at 10,000 gallons per calendar month as proposed with an extended compliance schedule available for independent small business marketers of gasoline. The staff believes that establishing the gasoline exemption level based upon the throughput for any post-1990 calendar month, rather than upon a monthly average throughput, will result in a rule which is more clearly defined and more enforceable. For instance, the exemption in EPA's model rule is based upon an average monthly gasoline throughput and specifies that the averaging period is a rolling 30-day period. This would require inspectors to determine 365 "monthly averages" per year per facility. Chevron and Exxon commented on sec.115.248. Chevron supported the training requirements of sec.115.248(1)-(2), but suggested that detailed training be mandated only for those people who actually work with and on Stage II equipment. Exxon suggested that the person completing the training be allowed to train employees from multiple facilities; i.e., a relaxation of the requirement for at least one trainer per Stage II facility. Section 115.248 contains the minimum training requirements mandated by EPA. Since the proposed sec.115.248 was made in response to an EPA requirement, a relaxation of the training requirements could jeopardize EPA approval. Therefore, no change in the language has been made. Two individuals commented on sec.115.248(3)(A) and suggested that the owner/operator training program include a discussion of health effects. The staff agrees and revised sec.115.248(3)(A) to include language specifying that the training program will include a discussion of health effects. TOMA, Diamond Shamrock, EPA, C&R, Sierra Club, and an individual commented on sec.115.249. TOMA believed that the compliance schedule is too short and suggested a phased schedule for independent small business marketers of gasoline based upon throughput: facilities with 25,000 to 50,000 gallons per month to comply with Stage II requirements by December 22, 1998 with Stage II equipment to be installed when the tanks are replaced or equipped with corrosion protection and facilities with less than 25,000 gallons per month to always be exempt. C&R stated that there are only five contractors in the El Paso area who are licensed by TWC to install the necessary equipment and suggested that the May 15, 1993, compliance date of sec.115.249(1) be extended to November 15, 1993, with all facilities to be in compliance by November 15, 1995, without exception. Diamond Shamrock opposed the 100,000 gallons per calendar month cutoff and suggested the cutoff be set at 100,000 gallons per month averaged over two years. Sierra Club opposed the extension of compliance dates by more than three months. An individual supported the installation of Stage II systems concurrently with underground storage tank replacement. The staff has discussed these comments with TWC and EPA and has revised sec.115.249(3) such that independent small business marketers of gasoline whose facilities have a gasoline throughput of less than 50,000 gallons per month shall be required to install Stage II systems when their storage tanks are replaced or equipped with corrosion protection, but no later than December 22, 1998. This extended schedule will reduce costs significantly for independent small business marketers of gasoline by allowing Stage II systems to be installed concurrently with underground storage tank upgrades and/or replacements required by TWC no later than December 22, 1998. The May 15, 1993, compliance date in sec.115.249(1) for facilities for which construction began after November 15, 1990, is mandated by EPA, however, and cannot be changed. The staff believes that establishing the gasoline throughput cutoffs based upon the throughput for any post-1990 calendar month, rather than upon a monthly average throughput, will result in a rule which is more clearly defined and more enforceable. EPA stated that the cutoff in sec.115.249(2) should be changed from "more than 100,000 gallons per month" to "at least 100,000 gallons per month" to insure that the cutoff is at least as stringent as specified in the 1990 FCAA amendments. The staff agrees with EPA and has incorporated corrected language into sec.115.249(2). An individual supported the proposed mirror backing coating emission limitations of sec.115.421(a)(12), while TPC suggested that mirror backing rules are not warranted since there is no CTG for this category. The staff developed the proposed revisions in response to a requirement by EPA for states to adopt RACT rules by November 15, 1992, for major VOC sources which are not covered by an existing EPA CTG or by one of the new CTGs which EPA is scheduled to finalize in 1993. The mirror backing coating industry is a major VOC source (greater than 25 tons per year per facility) which will not be covered by a CTG; therefore, TACB is required to develop an appropriate RACT rule. A number of comments were received on the proposed revisions to sec.115. 422(3) and sec.115.429(d) which would restrict the types of spray equipment used to apply coatings at some facilities. Rescar, Ameron, Barras, Permian, Carboline, Energy Coatings, North Star, Champions, Chaparral, Five Star, Speeflo, DuPont Automotive, Sherwin-Williams, Palmer, Jones-Blair, Wagner, Laster, Spray-Quip, Sipco, SSPC, Empire, Trinity, BJ, PDCA, Shell, Sigma, and two individuals believed that conventional air atomization and airless guns may, in some cases, be necessary. TPC also suggested that conventional air atomization and airless guns may, in some cases, be more efficient than high-volume, low-pressure spray guns. TPC, Barras, DuPont Automotive, Sherwin-Williams, Wagner, Sipco, SSPC, PDCA, and Reichle expressed concern that the proposed spray gun restrictions could apply to architectural coatings. Glidden, Graco, and Foret believed the proposal needed clarification as to the applicability. Wright, Carboline, Champions, Palmer, Jones-Blair, Wagner, L. M. Spray, Laster, Spray-Quip, Sipco, Harry's, Empire, Porter, and PDCA believed that transfer efficiency is irrelevant to VOC emissions and suggested that the VOC content in the coating being applied should be the only consideration. Weismantel, Carboline, DeVilbiss, and an individual believed that compliant coatings should be exempted from sec.115.422(3). Wright and SSPC suggested that the existing limits on the VOC content in coatings be lowered. DeVilbiss, Glidden, Sipco, DuPont Automotive, and SSPC expressed concern about costs. Information received during the comment period indicates that more investigation into the technical aspects of possible restrictions on coating application equipment is needed before any regulatory controls should be implemented. Therefore, the proposed revisions to sec.115.422(3) and sec.115. 429(d) were withdrawn. DuPont, Dow, TCC, Sterling, and AWD commented on proposed revisions to carbon adsorption monitoring in sec.115.426. Dow recommended daily, weekly, or monthly monitoring for carbon adsorption systems. DuPont objected to continuous monitoring for disposable carbon canisters and suggested daily monitoring. Neither the current rule nor the proposed changes require monitors on carbon canisters. Carbon canisters are carbon adsorbers as defined in sec.115. 10. Carbon adsorption systems are defined separately to "include a system to regenerate the saturated adsorbent." The monitoring and recordkeeping requirements apply to carbon adsorption systems as defined in sec.115.10, but not to simple carbon adsorbers such as carbon canisters. Mobil commented that they do not know of any EPA requirement for continuously monitoring the operational parameters of control devices. EPA specified the continuous monitoring requirements for control devices in the November 1991 EPA document "Technical Support Document for the Proposed Approval of the Texas Air Control Board Revisions to Regulation V, Control of Air Pollution From Volatile Organic Compounds-Post 87 VOC RACT Corrections (RACT Fix-up)." This document is referenced in the April 14, 1992, Federal Register on page 12904. DuPont, Dow, Sterling, and TCC believed the cost of monitors to be underestimated. The cost of monitors will vary from relatively inexpensive for thermocouples to measure temperature of catalytic or thermal incinerators to more costly for equipment to monitor the VOC exhaust concentration from a carbon adsorption system. TCC suggested that installation and maintenance of monitors should be in a section other than recordkeeping. Existing rules in the recordkeeping requirements section already require monitors on the operational parameters of control devices. Since the monitoring and recordkeeping requirements are inextricably linked, the staff has changed the section title from "Recordkeeping Requirements" to "Monitoring and Recordkeeping Requirements" for clarity. TCC stated that carbon adsorption systems have very predictable breakthrough conditions and/or times and are designed to never reach breakthrough. TCC suggested some other (unspecified) methods besides monitoring the exhaust gas VOC concentration of the carbon adsorption system be used, and stated that most of the time the exhaust gas VOC concentration of the system would be very low. AWD claimed that Dow's SORBATHENE carbon adsorption system never reaches saturation and suggested that continuous temperature monitoring be considered equivalent for this unit. AWD also believed that the monitoring requirements should be defined in the permit. Monitoring is necessary in order to verify that the control device is functioning properly and to insure the enforceability of the control requirements. Any carbon adsorption system may reach breakthrough, regardless of the intent of the system design, and monitoring of the exhaust gas VOC concentration is the accepted method to observe the operating condition of the system. Since not all affected facilities have TACB permits, monitoring requirements must remain in Regulation V to insure that enforceable requirements are in place for all affected facilities. Dow commented that an excessive amount of paper will be generated by keeping records for two years. Retention of records for two years is standard practice and will not require excessive paperwork. EPA requires that records be maintained for two years, and any relaxation of this requirement could jeopardize EPA approval. Dow believed that recordkeeping for carbon adsorption systems should only be required when a system is inoperable or when "operating out of established boundaries." The staff disagrees with Dow. The company's proposal would require recordkeeping only when the carbon adsorption system is in an upset condition, but would not establish that the unit was operating in compliance at all other times. Sterling believed that monitoring requirements are redundant because some sources have to do monitoring as required by National Emission Standards for Hazardous Air Pollutants (NESHAPS), and recommended that any source subject to NESHAPS be exempt from Regulation V monitoring requirements. The staff is aware that federal requirements such as NESHAPS may sometimes overlap with Regulation V requirements. However, EPA's RACT requirements do not recognize exemptions for such cases. 31 TAC sec.115.10 The amendments are adopted under the Texas Clean Air Act (TCAA) sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. TACB is an equal opportunity employer and does not discriminate on the basis of race, color, religion, sex, national origin, age, or disability in employment or in the provision of services, programs, or activities. In compliance with the Americans With Disabilities Act, this document may be requested in alternate formats by contacting the Air Quality Planning Program staff at (512) 908-1457, (512) 908- 1500 FAX or 1-800-RELAY-TX (TDD), or by writing or visiting at 12124 Park 35 Circle, Austin, Texas 78753. 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 October 26, 1992. TRD-9214459 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Subchapter B. General Volatile Organic Compound Sources Storage of Volatile Organic Compounds 31 TAC sec.115.116, sec.115.119 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.116. Monitoring and Recordkeeping Requirements. (a) For all persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the following recordkeeping requirements shall apply. (1) (No change.) (2) The results of inspections required by sec.115.114(a) of this title (relating to Inspection Requirements) shall be recorded. (3) Affected persons shall install and maintain monitors to continuously measure and record operational parameters of any of the following emission control devices installed to meet applicable control requirements. Such records must be sufficient to demonstrate proper functioning of those devices to design specifications, including: (A) the exhaust gas temperature immediately down-stream of a direct-flame incinerator; (B) the inlet and outlet gas temperature of a chiller or catalytic incinerator; (C) the exhaust gas volatile organic compound (VOC) concentration of any carbon adsorption system, as defined in sec.115.010 of this title (relating to Definitions), to determine if breakthrough has occurred; and (D) (No change.) (4) (No change.) (5) All records shall be maintained for two years and be made available for review upon request by authorized representatives of the Texas Air Control Board (TACB), United States Environmental Protection Agency (EPA), or local air pollution control agencies. (b) For all persons in Gregg, Nueces, and Victoria Counties, the following recordkeeping requirements shall apply. (1) (No change.) (2) The results of inspections required by sec.115.114(b) of this title shall be recorded. (3) In Victoria County, affected persons shall install and maintain monitors to continuously measure and record operational parameters of any of the following emission control devices installed to meet applicable control requirements. Such records must be sufficient to demonstrate proper functioning of those devices to design specifications, including: (A) the exhaust gas temperature immediately downstream of a direct-flame incinerator; (B) the inlet and outlet gas temperature of a chiller or catalytic incinerator; (C) the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.10 of this title, to determine if breakthrough has occurred; and (D) the date and reason for any maintenance and repair of the required control devices and the estimated quantity and duration of VOC emissions during such activities. (4) The results of any testing conducted in accordance with the provisions specified in sec.115.115(b) of this title (relating to Testing Requirements) shall be maintained at an affected facility. (5) All records shall be maintained for two years and be made available for review upon request by authorized representatives of the TACB, EPA, or local air pollution control agencies. sec.115.119. Counties and Compliance Schedules. (a) All affected persons in Chambers, Collin, Denton, Fort Bend, Hardin, Liberty, Montgomery, and Waller Counties shall be in compliance with sec.115.112(a) of this title (relating to Control Requirements), sec.115.113(a) of this title (relating to Alternate Control Requirements), sec.115.114(a) of this title (relating to Inspection Requirements), sec.115.115(a) of this title (relating to Testing Requirements), sec.115.116(a) of this title (relating to Monitoring and Recordkeeping Requirements), and sec.115.117(a) of this title (relating to Exemptions) as soon as practicable, but no later than January 31, 1994. Sections 115.112(c) of this title, 115.113(c) of this title, and 115.117(c) of this title shall no longer apply in Hardin and Montgomery Counties after January 31, 1994. (b) All affected persons in Victoria County shall be in compliance with sec.115.116(b)(3) of this title, as soon as practicable, but no later than July 31, 1993. 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 October 26, 1992. TRD-9214460 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Vent Gas Control 31 TAC sec.sec.115.126, 115.127, 115.129 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.126. Monitoring and Recordkeeping Requirements. (a) For the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the owner or operator of any facility which emits volatile organic compounds (VOC) through a stationary vent shall maintain records at the facility for at least two years and shall make such records available to representatives of the Texas Air Control Board (TACB), United States Environmental Protection Agency (EPA), or any local air pollution control agency having jurisdiction in the area upon request. These records shall include, but not be limited to, the following. (1) Records for each vent required to satisfy the provisions of sec.115.121(a)(2) and (3) of this title (relating to Emission Specifications) shall be sufficient to demonstrate the proper functioning of applicable control equipment to design specifications, including: (A) continuous monitoring of the exhaust gas temperature immediately downstream of a direct-flame incinerator; (B) (No change.) (C) continuous monitoring of the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.010 of this title (relating to Definitions), to determine breakthrough; (D) (No change.) (E) the results of any testing of any vent conducted at an affected facility in accordance with the provisions specified in sec.115. 125(a) of this title (relating to Testing Requirements). (2)-(3) (No change.) (b) For Victoria County, the owner or operator of any facility which emits VOC through a stationary vent shall maintain records at the facility for at least two years and shall make such records available to representatives of TACB, EPA, or any local air pollution control agency having jurisdiction in the area upon request. These records shall include, but not be limited to, the following. (1) Records for each vent required to satisfy the provisions of sec.115.121(b) of this title shall be sufficient to demonstrate the proper functioning of applicable control equipment to design specifications, including: (A) continuous monitoring of the exhaust gas temperature immediately downstream of a direct-flame incinerator; (B) continuous monitoring of temperatures upstream and downstream of a catalytic incinerator or chiller; (C) continuous monitoring of the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.10 of this title, to determine breakthrough; (D) the date and reason for any maintenance and repair of the required control devices and the estimated quantity and duration of VOC emissions during such activities; and (E) the results of any testing of any vent conducted at an affected facility in accordance with the provisions specified in sec.115.125(b) of this title (relating to Testing Requirements). (2) Records for each vent exempted from control requirements in accordance with sec.115.127(b) of this title (relating to Exemptions) shall be sufficient to demonstrate compliance with applicable exemption limits, including: (A) the pounds of ethylene emitted per 1,000 pounds of low-density polyethylene produced; (B) the combined weight of VOC of each vent gas stream on a daily basis; (C) the true partial pressure of VOC in each vent gas stream on a daily basis; and (D) the results of any testing of any vent conducted at an affected facility in accordance with the provisions specified in this section. (3) Records for each vent exempted from control requirements in accordance with sec.115.127(b) of this title and having a VOC emission rate and concentration less than 50% of the applicable exemption limits at maximum actual operating conditions shall be sufficient to demonstrate continuous compliance with the applicable exemption limit, including: (A) complete information from either test results or appropriate calculations which clearly documents that the emission characteristics at maximum actual operating conditions are less than 50% of the applicable exemption limits; and (B) daily operating parameters which may affect VOC emissions from the vent sufficient to demonstrate that the maximum actual operating conditions represented for the affected facility have not been exceeded. sec.115.129. Counties and Compliance Schedules. (a) All affected persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas shall be in compliance with this undesignated head (relating to Vent Gas Control) in accordance with the following schedules. (1) All affected persons in Chambers, Collin, Denton, Fort Bend, Hardin, Liberty, Montgomery, and Waller Counties shall be in compliance with sec.115.121(a) of this title (relating to Emission Specifications), sec.115. 122(a) of this title (relating to Control Requirements), sec.115.123(a) of this title (relating to Alternate Control Requirements), sec.115.125(a) of this title (relating to Testing Requirements), sec.115.126(a) of this title (relating to Monitoring and Recordkeeping Requirements), and sec.115.127(a) of this title (relating to Exemptions), as soon as practicable, but no later than July 31, 1994. Sections 115.121(c) of this title, 115.122(c) of this title, 115.123(c) of this title, and 115.127(c) of this title, shall no longer apply in Hardin and Montgomery Counties after July 31, 1994. (2)-(3) (No change.) (b) All affected persons in Victoria County shall be in compliance with sec.115.126(b) of this title, as soon as practicable, but no later than July 31, 1993. 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 October 26, 1992. TRD-9214461 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Water Separation 31 TAC sec.115.136, sec.115.139 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.136. Monitoring and Recordkeeping Requirements. (a) For the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the following recordkeeping requirements shall apply. (1)-(3) (No change.) (4) All records shall be maintained at the affected facility for at least two years and be made available upon request to representatives of the Texas Air Control Board (TACB), United States Environmental Protection Agency (EPA), or any local air pollution control agency having jurisdiction in the area. (b) For Gregg, Nueces, and Victoria Counties, the following recordkeeping requirements shall apply. (1) Any person who operates a single or multiple compartment volatile organic compound (VOC) water separator without the controls specified in sec.115.132(b) of this title (relating to Control Requirements) shall maintain complete and up- to-date records sufficient to demonstrate continuous compliance with the applicable exemption criteria including, but not limited to, the names and true vapor pressures of all such materials stored, processed, or handled at the affected property, and any other necessary operational information. (2) In Victoria County, affected persons shall install and maintain monitors to continuously measure and record operational parameters of any emission control device installed to meet applicable control requirements. Such records must be sufficient to demonstrate proper functioning of those devices to design specifications, including: (A) the exhaust gas temperature immediately downstream of any direct-flame incinerator; (B) the gas temperature immediately upstream and downstream of any catalytic incinerator or chiller; (C) the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.10 of this title (relating to Definitions), to determine if breakthrough has occurred; and (D) the dates and reasons for any maintenance and repair of the required control devices and the estimated quantity and duration of VOC emissions during such activities. (3) Affected persons shall maintain the results of any testing conducted in accordance with the provisions specified in sec.115.135(b) of this title (relating to Testing Requirements). (4) All records shall be maintained at the affected facility for at least two years and be made available upon request to representatives of TACB, EPA, or any local air pollution control agency having jurisdiction in the area. sec.115.139. Counties and Compliance Schedules. (a) All affected persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas shall be in compliance with this undesignated head (relating to Water Separation) in accordance with the following schedules: (1)-(2) (No change.) (b) All affected persons in Victoria County shall be in compliance with sec.115.136(b)(2) of this title (relating to Monitoring and Recordkeeping Requirements) as soon as practicable, but no later than July 31, 1993. 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 October 26, 1992. TRD-9214462 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Loading and Unloading of Volatile Organic Compounds 31 TAC sec.sec.115.211, 115.215, 115.216, 115.217, 115.219 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.216. Monitoring and Recordkeeping Requirements. (a) For facilities in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas affected by sec.115.211(a) of this title (relating to Emission Specifications) and sec.115.212(a) of this title (relating to Control Requirements), the owner or operator of any volatile organic compound (VOC) loading or unloading facility shall maintain the following information at the facility for at least two years and shall make such information available upon request to representatives of the Texas Air Control Board (TACB), United States Environmental Protection Agency (EPA), or any local air pollution control agency having jurisdiction in the area: (1) (No change.) (2) for vapor recovery systems: (A) continuous monitoring and recording of the exhaust gas temperature immediately downstream of a direct-flame incinerator; (B) continuous monitoring and recording of the inlet and outlet gas temperature of a chiller or catalytic incinerator; (C) continuous monitoring and recording of the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.10 of this title (relating to Definitions), to determine breakthrough; and (D) (No change.) (3)-(4) (No change.) (5) affected persons shall maintain the results of any testing conducted in accordance with the provisions specified in sec.115.215(a) of this title (relating to Testing Requirements). (b) For facilities in Victoria County affected by sec.115.211(b) of this title and sec.115.212(b) of this title, the owner or operator of any VOC loading or unloading facility shall maintain the following information at the facility for at least two years and shall make such information available upon request to representatives of TACB, EPA, or any local air pollution control agency having jurisdiction in the area: (1) a daily record of the total throughput of VOC loaded at the facility; (2) for vapor recovery systems: (A) continuous monitoring and recording of the exhaust gas temperature immediately downstream of a direct-flame incinerator; (B) continuous monitoring and recording of the inlet and outlet gas temperature of a chiller or catalytic incinerator; (C) continuous monitoring and recording of the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.10 of this title, to determine breakthrough; and (D) the date and reason for any maintenance and repair of the required control devices and the estimated quantity and duration of VOC emissions during such activities; (3) for gasoline terminals: (A) a daily record of the number of delivery vessels loaded at the terminal and the quantity of gasoline loaded to each delivery vessel; and (B) a record of the results of any testing conducted at the terminal in accordance with the provisions specified in sec.115.215(b) of this title; (4) affected persons shall maintain the results of any testing conducted in accordance with the provisions specified in sec.115.215(b) of this title. sec.115.219. Counties and Compliance Schedules. (a) All affected persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas shall be in compliance with this undesignated head (relating to Loading and Unloading of Volatile Organic Compounds) in accordance with the following schedules. (1) All affected persons in Chambers, Collin, Denton, Fort Bend, Hardin, Liberty, Montgomery, and Waller Counties shall be in compliance with sec.115.211(a) of this title (relating to Emission Specifications), sec.115.212(a) of this title (relating to Control Requirements), sec.115.213(a) of this title (relating to Alternate Control Requirements), sec.115.214(a) of this title (relating to Inspection Requirements), sec.115.215(a) of this title (relating to Testing Requirements), sec.115.216(a) of this title (relating to Monitoring and Recordkeeping Requirements), and sec.115.217(a) of this title (relating to Exemptions), as soon as practicable, but no later than January 31, 1994. Sections 115.212(c) of this title, 115.213(c) of this title, and 115.217(c) of this title shall no longer apply in Hardin and Montgomery Counties after January 31, 1994. (2) All affected persons in Brazoria, El Paso, Galveston, Jefferson, and Orange Counties shall be in compliance with sec.115. 211(a)(1)(B) of this title as soon as practicable, but no later than January 31, 1994. (3) All affected persons in Brazoria, Dallas, El Paso, Galveston, Jefferson, Orange, and Tarrant Counties shall be in compliance with sec.115.211(a)(2) of this title as soon as practicable, but no later than January 31, 1994. (4) All affected persons in Brazoria, Galveston, Jefferson, and Orange Counties shall be in compliance with sec.115.212(a)(4) and (5) of this title, sec.115.214(a)(4) of this title, and sec.115.216(a)(4) of this title as soon as practicable, but no later than January 31, 1994. (5)-(6) (No change.) (b) All affected persons in Victoria County shall be in compliance with sec.115.216(b) of this title as soon as practicable, but no later than July 31, 1993. 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 October 26, 1992. TRD-9214463 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Control of Vehicle Refueling Emissions (Stage II) at Motor Vehicle Fuel Dispensing Facilities 31 TAC sec.sec.115.241-115.249 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.242. Control Requirements. For all persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas affected by this undesignated head (relating to Control of Vehicle Refueling Emissions (Stage II) at Motor Vehicle Fuel Dispensing Facilities), a vapor recovery system will be assumed to comply with the specified emission limitation of sec.115.241 of this title (relating to Emission Specifications) if the following conditions are met. (1) The facility is equipped with a Stage II vapor recovery system that has been certified by a California Air Resources Board (CARB) executive order concerning Stage II vapor recovery systems as of April 1992, except that Stage II vapor recovery systems which include remote vapor check valves and/or dual- hang hoses shall not be installed. (2) The owner or operator shall maintain the Stage II vapor recovery system in proper operating condition as specified by the manufacturer and free of defects that would impair the effectiveness of the system, including, but not limited to: (A) absence or disconnection of any component that is a part of the approved system; (B) a vapor hose that is crimped or flattened such that the vapor passage is blocked, or the pressure drop through the vapor hose exceeds by a factor of two or more the value as certified in the approved system; (C) a nozzle boot that is torn in one or more of the following ways: (i) a triangular-shaped or similar tear more than 0.5 inches on a side; (ii) a hole more than 0.5 inches in diameter; or (iii) a slit more than 1.0 inch in length; (D) for balance nozzles, a faceplate that is damaged such that the capability to achieve a seal with a fill pipe interface is affected for a total of at least one-fourth of the circumference of the faceplate; (E) for nozzles in vacuum assist type systems, a flexible cone for which a total of at least one-fourth of the cone is damaged or missing; (F) a nozzle shutoff mechanism that malfunctions in any manner; (G) vapor return lines, including such components as swivels, anti- recirculation valves, and underground piping, that malfunction, are blocked, or are restricted such that the pressure drop through the line exceeds by a factor of two or more the value as certified in the approved system; (H) a vapor processing unit that is inoperative; (I) a vacuum producing device that is inoperative; (J) pressure/vacuum relief valves, vapor check valves, or dry breaks that are inoperative; and (K) any equipment defect that is identified in a CARB certification of an approved system as substantially impairing the effectiveness of the system in reducing refueling vapor emissions. (3) No gasoline leaks, as detected by sight, sound, or smell, exist anywhere in the dispensing equipment or Stage II vapor recovery system. (4) Upon identification of any of the defects described in paragraphs (2) and (3) of this section, the owner or operator shall place a dated "Out-of-Order" tag on all dispensing equipment for which vapor recovery has been impaired. The tagged equipment shall not be used and the tag shall not be removed until the defective equipment has been properly repaired, replaced, or adjusted, as necessary. (5) No person shall repair, modify, or permit the repair or modification of the Stage II vapor recovery system or its components such that they are different from their approved configuration, and only original equipment manufacturer (OEM) parts or CARB-certified non-OEM aftermarket parts shall be used as replacement parts. (6) No person shall tamper with, or permit tampering with, any part of the Stage II vapor recovery system in a manner that would impair the operation or effectiveness of the system. (7) The owner or operator of a motor vehicle fuel dispensing facility shall post operating instructions conspicuously on the front of each gasoline dispensing pump equipped with a Stage II vapor recovery system. These instructions shall, at a minimum, include: (A) a clear description of how to correctly dispense gasoline using the system; (B) a warning against attempting to continue to refuel after initial automatic shutoff of the system (an indication that the vehicle fuel tank is full); and (C) the telephone number and address of the appropriate Texas Air Control Board regional office and any local air pollution control program with jurisdiction to be used for questions, comments, or the reporting of any problems experienced with the system. (8) Any motor vehicle fuel dispensing facility that becomes subject to the provisions of this undesignated head by exceeding the exemption limits of sec.115.247 of this title (relating to Exemptions) will remain subject to the provisions of this undesignated head even if its gasoline throughput later falls below exemption limits. sec.115.245. Testing Requirements. For all affected persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas compliance with sec.115.241 of this title (relating to Emission Specifications) and sec.115.242 of this title (relating to Control Requirements) shall be determined at each facility within 30 days of installation of the Stage II equipment by testing as follows. (1) Liquid blockage testing, leak check testing, and all other related tests for automatic shutoff and flow prohibiting mechanisms, as applicable, shall be conducted in accordance with the test procedures found in Appendix J of the United States Environmental Protection Agency guidance document "Technical Guidance-Stage II Vapor Recovery Systems for Control of Vehicle Refueling Emissions at Gasoline Dispensing Facilities" (EPA-450/3-91-022b) as in effect November 1991. The owner or operator shall provide written notification to the appropriate Texas Air Control Board (TACB) regional office and any local air pollution program with jurisdiction of the testing date and who will conduct the test at least 10 days in advance of the date the testing will occur. (2) Verification of proper operation of the Stage II equipment shall be performed at least every five years or upon major system replacement or modification, whichever occurs first. The verification shall include a leak check test and all other functional tests that were required for the initial system test. The owner or operator shall provide written notification to the appropriate TACB regional office and any local air pollution program with jurisdiction of the testing date and who will conduct the test at least 10 days in advance of the date the testing will occur. For the purposes of this paragraph, a major system replacement or modification is defined as: (A) the repair or replacement of any stationary storage tank equipped with a Stage II vapor recovery system; or (B) the repair or replacement of any part of an underground piping system attached to a stationary storage tank equipped with a Stage II vapor recovery system, excluding the repair or replacement of an underground piping system which is accessible for such repair or replacement without excavation. (3) Minor modifications of these test methods may be approved by the executive director. sec.115.246. Recordkeeping Requirements. For the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the owner or operator of any motor vehicle fuel dispensing facility subject to the control requirements of this undesignated head (relating to Control of Vehicle Refueling Emissions (Stage II) at Motor Vehicle Fuel Dispensing Facilities) shall maintain the following records: (1) a copy of the California Air Resources Board (CARB) executive order for the Stage II vapor recovery system installed at the facility; (2) a record of any maintenance conducted on any part of the Stage II equipment, including a general part description, the date and time the equipment was taken out of service, the date of repair or replacement, the replacement part manufacturer's information, a general description of the part location in the system (e.g., pump number, etc.), and a description of the problem; (3) proof of attendance and completion of the training specified in sec.115.248 of this title (relating to Training Requirements), with the documentation of all Stage II training for each employee to be maintained as long as that employee continues to work at the facility; (4) a record of the results of testing conducted at the motor vehicle fuel dispensing facility in accordance with the provisions specified in sec.115.245 of this title (relating to Testing Requirements); (5) a record of the results of the daily inspections conducted at the motor vehicle fuel dispensing facility in accordance with the provisions specified in sec.115.244 of this title (relating to Inspection Requirements); and (6) all records shall be maintained at the facility site for at least two years, except that the CARB executive order specified in paragraph (1) of this section shall be kept on-site indefinitely. All records shall be made immediately available for review upon request by authorized representatives of the Texas Air Control Board, United States Environmental Protection Agency, or any local air pollution control program with jurisdiction. sec.115.248. Training Requirements. For all persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas affected by this undesignated head (relating to Control of Vehicle Refueling Emissions (Stage II) at Motor Vehicle Fuel Dispensing Facilities), the following training requirements apply. (1) The owner or operator of a motor vehicle fuel dispensing facility shall ensure that at least one facility representative receive training and instruction in the operation and maintenance of the Stage II vapor recovery system by successfully completing a training course approved by the Texas Air Control Board. Each such facility representative is then responsible for making every current and future employee aware of the purposes and correct operating procedures of the system. The required training shall be completed as soon as practicable prior to the initiation of operation of the facility's Stage II equipment. (2) If the facility representative who received the training is no longer employed at that facility, another facility representative must successfully complete the training within three months of the departure of the previously trained employee. (3) Training will include, but is not limited to, the following: (A) purposes and effects of the Stage II vapor recovery system program, including health effects; (B) equipment operation and function specific to each facility's Stage II vapor recovery system; (C) maintenance schedules and requirements for the facility's equipment; (D) equipment warranties; (E) equipment manufacturer contacts (names, addresses, and telephone numbers) for parts and service; and (F) enforcement consequences for noncompliance with Stage II program requirements. sec.115.249. Counties and Compliance Schedules. All affected persons in Brazoria, Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Harris, Hardin, Jefferson, Liberty, Montgomery, Orange, Tarrant, and Waller Counties shall be in compliance with this undesignated head (relating to Control of Vehicle Refueling Emissions (Stage II) at Motor Vehicle Fuel Dispensing Facilities) according to the following schedules: (1) as soon as practicable, but no later than May 15, 1993, for facilities for which construction began after November 15, 1990; (2) as soon as practicable, but no later than November 15, 1993, for facilities with a monthly throughput of at least 100,000 gallons of gasoline. For the purposes of this paragraph, the monthly throughput shall be based on the gasoline throughput for each calendar month beginning January 1, 1991; (3) as soon as practicable, but no later than November 15, 1994, for all other facilities, except that individual independent small business marketers of gasoline, as defined in sec.115.10 of this title (relating to Definitions), may petition the executive director for an extension of the compliance deadline to December 22, 1998, or until one or more of the facility's gasoline storage tanks are replaced and/or equipped with corrosion protection as required by the Texas Water Commission, whichever occurs first, provided that the petition is submitted no later than November 15, 1993 and approved by the executive director. The availability of an extended compliance schedule for independent small business marketers of gasoline only applies to individual facilities for which the monthly gasoline throughput is less than 50,000 gallons per month, based on the gasoline throughput for each calendar month beginning January 1, 1991; and (4) if more than one of the compliance schedules in paragraphs (1)-(3) of this section (relating to Counties and Compliance Schedules) applies to a facility, the earliest compliance schedule shall take precedence. 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 October 26, 1992. TRD-9214464 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Chapter 115. Control of Air Pollution from Volatile Organic Compounds Subchapter C. Volatile Organic Compound Marketing Operations Control of Reid Vapor Pressure of Gasoline 31 TAC sec.115.249 The Texas Air Control Board (TACB) adopts the repeal of sec.115.249, concerning control of Reid vapor pressure of gasoline as published in the June 30, 1992 issue of the Texas Register (17 TexReg 4666). The repeal of sec.115.249 involves removal of existing requirements which were superseded by more stringent federal requirements that became effective on May 1, 1992. In concurrent action, TACB adopts a new undesignated head concerning control of vehicle refueling emissions (Stage II) at motor vehicle fuel dispensing facilities. This new undesignated head is included in Subchapter C, concerning volatile organic compound marketing operations. Public hearings were held on July 27, 1992, in Houston; July 28, 1992, in Beaumont; July 29, 1992, in El Paso; and July 30, 1992, in Arlington. Written comments were initially to be accepted through July 31, 1992; however, the comment period was extended to August 14, 1992. No written or oral testimony was received during the comment period concerning the proposed repeal of sec.115.249. TACB is an equal opportunity employer and does not discriminate on the basis of race, color, religion, sex, national origin, age, or disability in employment or in the provision of services, programs, or activities. In compliance with the Americans With Disabilities Act, this document may be requested in alternate formats by contacting the Air Quality Planning Program staff at (512) 908-1457, (512) 908-1500 FAX or 1-800-RELAY-TX (TDD), or by writing or visiting at 12124 Park 35 Circle, Austin, Texas 78753. The repeal is adopted under the Texas Clean Air Act (TCAA), Texas Health and Safety Code, sec.382.017 (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. 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 October 26, 1992. TRD-9214458 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Subchapter D. Petroleum Refining and Petrochemical Processes Process Unit Turnaround and Vacuum Producing Systems in Petroleum Refineries 31 TAC sec.115.316, sec.115.319 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.316. Monitoring and Recordkeeping Requirements. (a) For all affected persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the following recordkeeping requirements shall apply. (1) Any person who operates a vacuum-producing system affected by sec.115.311(a) of this title (relating to Emission Specifications) shall keep the following records: (A) continuous monitoring of the exhaust gas temperature immediately downstream of a direct-flame incinerator; (B) (No change.) (C) continuous monitoring of the exhaust gas volatile organic compound (VOC) concentration of any carbon adsorption system, as defined in sec.115.10 of this title (relating to Definitions), to determine breakthrough; and (D) (No change.) (2)-(3) (No change.) (4) All records shall be maintained for two years and be made available for review upon request by authorized representatives of the Texas Air Control Board (TACB), United States Environmental Protection Agency (EPA), or local air pollution control agencies. (b) For all affected persons in Victoria County, the following recordkeeping requirements shall apply. (1) Any person who operates a vacuum-producing system affected by sec.115.311(b) of this title shall keep the following records: (A) continuous monitoring of the exhaust gas temperature immediately downstream of a direct-flame incinerator; (B) continuous monitoring of temperatures upstream and downstream of a catalytic incinerator or chiller; (C) continuous monitoring of the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.10 of this title, to determine breakthrough; and (D) the date and reason for any maintenance and repair of the required control devices and the estimated quantity and duration of VOC emissions during such activities. (2) Any person who conducts a process unit turnaround affected by sec.115.312(b) of this title (relating to Control Requirements) shall keep the following records: (A) the date of process unit shutdown and subsequent start-up following turnaround; (B) the type of process unit involved in the turnaround; and (C) an estimation of the concentration and total emissions of VOC emissions released to the atmosphere during the process turnaround. (3) The results of any testing conducted in accordance with the provisions specified in sec.115.315(b) of this title (relating to Testing Requirements) shall be maintained at the affected facility. (4) All records shall be maintained for two years and be made available for review upon request by authorized representatives of TACB, EPA, or local air pollution control agencies. sec.115.319. Counties and Compliance Schedules. (a) All affected persons in the Beaumont/Port Arthur, Dallas/ Fort Worth, El Paso, and Houston/Galveston areas shall be in compliance with this undesignated head (relating to Process Unit Turnaround and Vacuum-Producing Systems in Petroleum Refineries) in accordance with the following schedules. (1) All affected persons in Chambers, Collin, Denton, Fort Bend, Hardin, Liberty, Montgomery, and Waller Counties shall be in compliance with sec.115.311(a) of this title (relating to Emission Specifications), sec.115. 312(a) of this title (relating to Control Requirements), sec.115.313(a) of this title (relating to Alternate Control Requirements), sec.115.315(a) of this title (relating to Testing Requirements), and sec.115.316(a) of this title (relating to Monitoring and Recordkeeping Requirements), as soon as practicable, but no later than July 31, 1993. (2) All persons in Dallas, Jefferson, Orange, and Tarrant Counties affected by the provisions of sec.115.316(a) of this title shall be in compliance with this section as soon as practicable, but no later than July 31, 1993. (b) All affected persons in Victoria County shall be in compliance with sec.115.316(b) of this title, as soon as practicable, but no later than July 31, 1993. 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 October 26, 1992. TRD-9214465 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Subchapter E. Solvent-Using Processes Surface Coating Processes 31 TAC sec.sec.115.421, 115.425, 115.426, 115.427, 115.429 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides the TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.421. Emission Specifications. (a) No person in the Beaumont/Port Arthur, Dallas/ Fort Worth, El Paso, and Houston/Galveston areas as defined in sec.115.010 of this title (relating to Definitions) may cause, suffer, allow, or permit volatile organic compound (VOC) emissions from the surface coating processes as defined in sec.115.10 of this title affected by paragraphs (1)-(12) of this subsection to exceed the specified emission limits. These limitations are based on the daily weighted average of all coatings delivered to each coating line, except for those in paragraph (10) of this subsection which are based on paneling surface area and those in paragraph (11) of this subsection which are based on the VOC con- tent of architectural coatings sold or offered for sale. (1)-(11) (No change.) (12) Surface coating of mirror backing. (A) After July 31, 1994, VOC emissions from the coating of mirror backing shall not exceed the following limits for each surface coating application method: (i) 9.8 pounds per gallon (0.50 kg/liter) of solids delivered to a curtain coating application system; (ii) 7.1 pounds per gallon (0.43 kg/liter) of solids delivered to a roll coating application system. (B) All VOC emissions from solvent washings shall be included in determination of compliance with the emission limitations in subparagraph (A) of this paragraph, unless the solvent is directed into containers that prevent evaporation into the atmosphere. (b) (No change.) sec.115.425. Testing Requirements. (a) For the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the following testing requirements shall apply. (1)-(3) (No change.) (4) The capture efficiency shall be measured using applicable procedures outlined in 40 Code of Federal Regulations Part 52.741, Subpart O, Appendix B. These procedures are: Procedure T-Criteria for and Verification of a Permanent or Temporary Total Enclosure; Procedure L-Volatile Organic Compounds (VOC) Input; Procedure G.2-Captured VOC Emissions (Dilution Technique); Procedure F.1-Fugitive VOC Emissions from Temporary Enclosures; Procedure F.2-Fugitive VOC Emissions from Building Enclosures. (A) -(B) (No change.) (C) The following conditions must be met in measuring capture efficiency. (i) (No change.) (ii) All affected facilities shall accomplish the initial capture efficiency testing by July 31, 1992, in Brazoria, Dallas, El Paso, Galveston, Harris, Jefferson, Orange, and Tarrant Counties, and by July 31, 1993, in Chambers, Collin, Denton, Fort Bend, Hardin, Liberty, Montgomery, and Waller Counties, except that all mirror backing coating facilities shall accomplish the initial capture efficiency testing by July 31, 1994. (iii) (No change.) (b) (No change.) sec.115.426. Monitoring and Recordkeeping Requirements. (a) For the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the following recordkeeping requirements shall apply. (1) (No change.) (2) The owner or operator of any surface coating facility which utilizes a vapor recovery system approved by the executive director in accordance with sec.115.423(a)(3) of this title (relating to Alternate Control Requirements) shall: (A) install and maintain monitors to accurately measure and record operational parameters of all required control devices as necessary to ensure the proper functioning of those devices in accordance with design specifications; including: (i) continuous monitoring of the exhaust gas temperature of direct-flame incinerators and/or the gas temperature immediately upstream and downstream of any catalyst bed; (ii)-(iv) (No change.) (B)-(C) (No change.) (3)-(4) (No change.) (b) For Gregg, Nueces, and Victoria Counties, the following recordkeeping requirements shall apply. (1) (No change.) (2) The owner or operator of any surface coating facility which utilizes a vapor recovery system approved by the executive director in accordance with sec.115.423(b)(3) of this title shall: (A) install and maintain monitors to accurately measure and record operational parameters of all required control devices as necessary to ensure the proper functioning of those devices in accordance with design specifications; including: (i) continuous monitoring of the exhaust gas temperature of direct-flame incinerators and/or the gas temperature immediately upstream and downstream of any catalyst bed; (ii) -(iv) (No change.) (B)-(C) (No change.) (3) (No change.) sec.115.427. Exemptions. (a) For the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the following exemptions shall apply. (1)-(4) (No change.) (5) In Dallas, El Paso, Harris, and Tarrant Counties, and after July 31, 1993, in counties other than Dallas, El Paso, Harris, and Tarrant, the following exemptions shall apply to surface coating operations, except for aircraft prime coating controlled by sec.115.421(a)(9)(A)(v) of this title (relating to Emission Specifications) and automobile and truck refinishing controlled by sec.115. 421(a)(8)(B) and (C) of this title. (A)-(B) (No change.) (C) Mirror backing coating operations located on a property which, when uncontrolled, emit a combined weight of volatile organic compound less than 25 tons in one year (based on historical coating and solvent usage) are exempt from the provisions of this undesignated head (relating to Surface Coating Processes). (6) The following coatings are exempt from the provisions of sec.115.421(a)(11) of this title: (A) paints sold in containers of one quart or less; (B) paints used on roadways, pavement, swimming pools, and similar surfaces; and (C) concentrated color additives. (7) Sealants applied over bare metal during automobile refinishing solely for the prevention of flash rusting are exempt from the provisions of sec.115.421(a)(8)(C) of this title. (b) (No change.) sec.115.429. Counties and Compliance Schedules. (a)-(c) (No change.) (d) All affected mirror backing coating facilities in Brazoria, Chambers, Collin, Dallas, Denton, El Paso, Fort Bend, Galveston, Hardin, Harris, Jefferson, Liberty, Montgomery, Orange, Tarrant, and Waller Counties shall be in compliance with sec.115.421(a) of this title (relating to Emission Specifications), sec.115.422 of this title (relating to Control Requirements), sec.115.423(a) of this title (relating to Alternate Control Requirements), sec.115.424(a) of this title (relating to Inspection Requirements), sec.115.425(a) of this title (relating to Testing Requirements), sec.115.426(a) of this title (relating to Monitoring and Recordkeeping Requirements), and sec.115.427(a) of this title (relating to Exemptions) as soon as practicable, but no later than July 31, 1994. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on October 26, 1992. TRD-9214466 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Graphic Arts (Printing) by Rotogravure and Flexographic Processes 31 TAC sec.115.436, sec.115.439 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides the TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.436. Monitoring and Recordkeeping Requirements. (a) For the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the owner or operator of any graphic arts facility subject to the control requirements of sec.115.432(a) of this title (relating to Control Requirements) shall: (1)-(2) (No change.) (3) install and maintain monitors to continuously measure and record operational parameters of any emission control device installed to meet applicable control requirements. Such records must be sufficient to demonstrate proper functioning of those devices to design specifications, including: (A)-(B) (No change.) (C) the exhaust gas volatile organic compound (VOC) concentration of any carbon adsorption system, as defined in sec.115.010 of this title (relating to Definitions), to determine if breakthrough has occurred; and (D) (No change.) (4)-(6) (No change.) (b) For Gregg, Nueces, and Victoria Counties, the owner or operator of any graphic arts facility subject to the control requirements of sec.115.432(b) of this title shall: (1)-(2) (No change.) (3) install and maintain monitors to continuously measure and record operational parameters of any emission control device installed to meet applicable control requirements. Such records must be sufficient to demonstrate proper functioning of those devices to design specifications, including: (A) (No change.) (B) the total amount of VOC recovered by a carbon adsorption or other solvent recovery system during a calendar month; (C) in Victoria County, the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.010 of this title, to determine if breakthrough has occurred; and (D) the dates and reasons for any maintenance and repair of the required control devices and the estimated quantity and duration of VOC emissions during such activities; (4)-(5) (No change.) sec.115.439. Counties and Compliance Schedules. (a)-(c) (No change.) (d) All affected persons in Victoria County shall be in compliance with sec.115.436(b)(3)(C) of this title (relating to Monitoring and Recordkeeping Requirements) as soon as practicable, but no later than July 31, 1993. 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 October 26, 1992. TRD-9214468 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 Subchapter F. Miscellaneous Industrial Sources Pharmaceutical Manufacturing Facilities 31 TAC sec.115.536, sec.115.539 The amendments are adopted under the Texas Clean Air Act (TCAA), sec.382. 017, Texas Health and Safety Code (Vernon 1990), which provides TACB with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.536. Monitoring and Recordkeeping Requirements. (a) For the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the following recordkeeping requirements shall apply. (1) The owner or operator of any pharmaceutical manufacturing facility which utilizes a surface condenser to control emissions of volatile organic compound (VOC) from process units affected by sec.115.531(a)(1) of this title (relating to Emission Specifications) shall install and maintain monitors to continuously measure and record the outlet gas temperature to ensure proper functioning in accordance with design specifications. (2) The owner or operator of any pharmaceutical manufacturing facility which utilizes a vapor recovery system to satisfy the requirements of sec.115.531(a) of this title or sec.115.532(a) of this title (relating to Control Requirements) shall: (A) install and maintain monitors to continuously measure and record operational parameters of all required control devices as necessary to ensure the proper functioning of those devices in accordance with design specifications, including: (i) (No change.) (ii) the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.10 of this title (relating to Definitions), to determine if breakthrough has occurred; (iii)-(iv) (No change.) (B) (No change.) (3)-(4) (No change.) (5) The owner or operator of any affected pharmaceutical manufacturing facility shall maintain all records at the affected facility for at least two years and make such records available upon request to representatives of the Texas Air Control Board (TACB), United States Environmental Protection Agency (EPA), or local air pollution control agency. (b) For Gregg, Nueces, and Victoria Counties, the following recordkeeping requirements shall apply. (1) The owner or operator of any pharmaceutical manufacturing facility which utilizes a surface condenser to control emissions of VOC from process units affected by sec.115.531(b)(1) of this title shall install and maintain monitors to continuously measure and record the outlet gas temperature to ensure proper functioning in accordance with design specifications. (2) The owner or operator of any pharmaceutical manufacturing facility which utilizes a vapor recovery system to satisfy the requirements of sec.115.531(b) of this title or sec.115.532(b) of this title shall: (A) install and maintain monitors to continuously measure and record operational parameters of all required control devices as necessary to ensure the proper functioning of those devices in accordance with design specifications, including: (i) (No change.) (ii) in Victoria County, the exhaust gas VOC concentration of any carbon adsorption system, as defined in sec.115.10 of this title, to determine if breakthrough has occurred; (iii) the total amount of VOC recovered by carbon adsorption or other solvent recovery systems during a calendar month; or (iv) the daily emission rate of VOC from the control device; (B) (No change.) (3)-(5) (No change. ) sec.115.539. Counties and Compliance Schedules. (a)-(b) (No change.) (c) All affected persons in Victoria County shall be in compliance with sec.115.536(b)(2)(A)(iii) of this title (relating to Monitoring and Recordkeeping Requirements) as soon as practicable, but no later than July 31, 1993. 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 October 26, 1992. TRD-9214469 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: November 16, 1992 Proposal publication date: June 30, 1992 For further information, please call: (512) 908-1451 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 15. Medicaid Eligibility Subchapter B. Medicare and Third-party Resources 40 TAC sec.15.204 The Texas Department of Human Services (DHS) adopts new sec.15.204, without changes to the proposed text as published in the September 25, 1992, issue of the Texas Register (17 TexReg 6593). The new section is justified to comply with the Omnibus Budget Reconciliation Act of 1990, which created a new federally-mandated coverage group, Specified Low-Income Medicare Beneficiaries (SLMB). The new section will function by ensuring that eligible clients will have their Medicare Part B Premiums paid by Medicaid. No comments were received regarding adoption of the new section. The new section is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which authorizes the department to administer public and medical 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 October 27, 1992. TRD-9214513 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1993 Proposal publication date: September 25, 1992 For further information, please call: (512) 450-3765 Chapter 27. Intermediate Care Facility for Mentally Retarded Subchapter E. Eligibility and Review 40 TAC sec.27.519 The Texas Department of Human Services (DHS) adopts an amendment to sec.27. 519, with changes to the proposed text as published in the August 28, 1992, issue of the Texas Register (17 TexReg 5849). The justification for the amendment is to standardize the method used to document each resident's therapeutic visits away from the facility. The amendment will function by ensuring that each client record contains current and complete information to ensure correct vendor payments are made to the facility. One comment was received regarding the proposal from a program administrator of a provider facility. Comment: The commenter opposes adoption of the amendment on the grounds that requiring documentation of information about therapeutic leaves on a specific DHS form will not ensure compliance of providers who do not currently document this information. The commenter also opposes the requirement that providers maintain a specific form because it appears to be merely for the convenience of DHS auditors. In addition, the commenter objects to the disclosure of the client's location during a leave because it is an infringement on the client's privacy. Response: The amendment standardizes the method used for documenting each therapeutic and extended therapeutic leave and facilitates the audit process. Currently, documentation practices are inadequate for use in assessing client absences; for example, the physician's certification does not record information about visits away from the facility; the qualified mental retardation professional's (QMRP's) notes do not always specify the date of the client's return; records are purged and archived and are not always available for auditors to review; and not all facilities maintain census records. Since DHS is responsible for auditing Medicaid-funded programs, DHS believes adoption of the amendments requiring the standardized documentation is needed to ensure effective program operations. With regard to documenting the client's location during periods away from the facility, DHS does not view this requirement as a privacy issue since the client record is confidential; however, documentation of location is unnecessary for auditing purposes, and DHS has deleted this from the rule and the record of therapeutic leaves form. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs. sec.27.519. Payment for Absences from the Facility. (a) (No change.) (b) The Texas Department of Human Services (DHS) makes vendor payments for ICF-MR clients who are absent from a facility for therapeutic or extended therapeutic visits when the following criteria are met: (1)-(5) (No change.) (6) The facility must make and maintain an accurate record of each therapeutic and extended therapeutic visit and must ensure that these records are available to DHS for review. For each therapeutic or extended therapeutic leave, the facility must record the following information on DHS's record of therapeutic leaves form: the name of the individual who will be absent; the date and time of the individual's departure from the facility; and the date and time of the individual's return to the facility. The facility's records must include documentation regarding the number of visits for which vendor payments have not been made. When DHS audits the facility, it reviews the facility's documentation of therapeutic and extended therapeutic visits and verifies the facility's compliance with the provisions of this subsection. (c)-(e) (No change.) 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 October 27, 1992. TRD-9214514 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: December 1, 1992 Proposal publication date: August 28, 1992 For further information, please call: (512) 450-3765 Chapter 29. Purchased Health Services Subchapter D. Medicaid Home Health Program 40 TAC sec.29.304 The Texas Department of Human Services (DHS) adopts an amendment to sec.29. 304, without changes to the proposed text as published in the September 15, 1992, issue of the Texas Register (17 TexReg 6355). The justification for the amendment is to allow home health visits beyond the 50-visit limitation when the additional visits have been determined to be medically necessary and have received prior approval. The amendment will function by enabling clients requiring more than 50 home health visits to receive the additional visits and reduce the need for care in the institutional setting. Comments were received from the Texas Children's Hospital, Houston, and HealthCor, Inc., Dallas. Both commenters support adoption of the amendment. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical 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 October 27, 1992. TRD-9214515 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: December 1, 1992 Proposal publication date: September 15, 1992 For further information, please call: (512) 450-3765 Chapter 48. Community Care for Aged and Disabled In-Home and Family Support Program 40 TAC sec.sec.48.2702, 48.2703, 48.2705-48.2707, 48.2709, 48. 2711 The Texas Department of Human Services (DHS) adopts amendments to sec.sec.48.2702, 48.2703, 48.2705-48.2707, 48.2709, and 48.2711, without changes to the proposed text as published in the September 18, 1992, issue of the Texas Register (17 TexReg 6433). The justification for the amendments is to create a more user friendly In-Home and Family Support Program for program participants and the social workers responsible for program administration. The amendments are also more consistent with legislative intent. The amendments will function by increasing accountability, increasing the number of receipts that are returned, and providing more appropriate expenditures of program funds. No comments were received regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 35, which provides the department with the authority to administer public assistance and support services for persons with disabilities 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 October 27, 1992. TRD-9214516 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: December 1, 1992 Proposal publication date: September 18, 1992 For further information, please call: (512) 450-3765 Texas Department of Insurance Exempt Filing Notification Pursuant to the Insurance Code, Chapter 5, Subchapter L (Editor's Note: As required by the Insurance Code, Article 5.96 and 5. 97, the Texas Register publishes notices of actions taken by the State Board of Insurance pursuant to Chapter 5, Subchapter L, of the Code. Board action taken under these articles is not subject to the Administrative Procedure and Texas Register Act. These actions become effective 15 days after the date of publication or on a later specified date. The text of the material being adopted will not be published, but may be examined in the offices of the State Board of Insurance, 333 Guadalupe, Austin. ) The State Board of Insurance of the Texas Department of Insurance, at a board meeting scheduled on October 16, 1992, and reconvened on October 23, 1992, in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street in Austin, considered a petition filed by the staff of the Texas Department of Insurance proposing amendments to Rule IX E of the Texas Basic Manual of Rules, Classifications and Rates for Workers' Compensation and Employers' Liability pertaining to employee leasing arrangements. The rule was proposed in a petition (Reference Number W-0992-57-I), filed by staff on September 9, 1992. On October 23, 1992, the State Board of Insurance adopted the amendments with changes to the proposed published text. The amendments change the preamble by providing a method to calculate more accurately the proper workers' compensation premium attributable to leased workers by requiring the use of the client company's modifier for two years and by attributing experience for leased workers to the employee provider firm. After two years, the time necessary for experience to be reflected in an experience modifier, the employee provider firm can use its own experience modifier. The amendments also change the definition of employee leasing firm, client company, employee leasing arrangements, and leased worker. The amendments change the term "employee leasing firm" to "employee provider firm" and amends the definition of that term to mean an entity or any affiliates whose principal business is providing workers, as distinct from providing non- personnel services, to another entity to perform activities in furtherance of the business, trade or profession of the other entity at the business premises of or at locations designated by the other entity. As a result of the change from employee leasing firm to employee provider firm, editorial changes are made throughout the rule and the Employee Provider Form EP-1, Employee Provider Form EP-1A and Employee Provider/Client Company Endorsement WC 42 04 06, formerly named Employee Leasing Form EL-1, Employee Leasing Form EL-1A and Employee Leasing/Client Company Endorsement WC 42 04 06, respectively, to reflect the change in terminology. The definition of client company is amended to mean an entity that obtains one or more leased workers from an employee provider firm. In addition three editorial changes are made in the rule to reflect this change in definition. The definition of employee leasing arrangement is an arrangement under lease, contract, or other agreement made orally or in writing whereby an employee provider firm provides one or more leased workers to a client company and, for purposes of workers' compensation insurance, claims the leased workers are employees or co-employees of it and the client company, or claims to be the employer or co-employer with the client company of the leased workers. The definition of leased workers provides that a leased worker means a worker provided to another entity by an employee provider firm who is or was considered to be an employee or co-employee of the other entity for any purpose. In order to be able to monitor the effectiveness of this amended definition, the rule also provides that if an employee leasing arrangement does not exist as of the effective date of this rule, but workers were provided for a continuous period of more than six months in the coming year, then the employee provider firm shall provide a completed Employee Provider Form EP-1A to the insurer. In addition the Employee Provider Form EP-1 and Employee Provider Form EP-1A are amended to reflect this change in definition. The amendments also change Section 10 of the rule pertaining to conflicts with other rules by stating, except for Rule VII of the Rules and Regulations Governing the Employers Rejected Risk Fund of the Texas Workers' Compensation Insurance Facility, the terms of this rule shall control over conflicting terms of any other rule in the Texas Basic Manual of Rules, Classifications and Rates for Workers' Compensation and Employers' Liability or the Texas Experience Rating Plan Manual. The Employee Provider/Client Company Endorsement WC 42 04 06 is also amended to delete the requirement for the signature of the president of the client company and to accept the signature of any other representative authorized to bind the client company on the endorsement. These amendments are effective November 20, 1992. Copies of the amendments are available in the Office of the Chief Clerk of the Texas Department of Insurance, 333 Guadalupe Street, Austin, Texas 78714-9104. For further information or to request copies of the amendments, please contact Angie Arizpe at (512) 322-4147, (refer to Reference Number W-0992-57-I). This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure and Texas Register 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 October 28, 1992. TRD-9214548 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: November 20, 1992 Proposal publication date: September 15, 1992 For further information, please call: (512) 463-6327