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 13. CULTURAL RESOURCES Part I. Texas State Library and Archives Commission Chapter 3. State Publications Depository Program 13 TAC sec.sec.3.1-3.10 The Texas State Library and Archives Commission adopts the repeal of sec.sec.3.1-3.10, concerning State Publications Depository Program, without changes to the proposed text as published in the December 11, 1992, issue of the Texas Register (17 TexReg 8069). These repeals will be replaced by revised rules which will define more specifically how agencies should comply with the depository law. In addition, the number of publications required to be deposited will be reduced to better meet the needs of the program. These repeals will be replaced by revised rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Government Code, Chapter 441, 102, which provides the Texas State Library and Archives Commission with authority to establish rules for distribution of state publications to depository libraries. 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 February 16, 1993. TRD-9319272 Raymond Hitt Assistant State Librarian Texas State Library and Archives Commission Effective date: March 12, 1993 Proposal publication date: December 11, 1992 For further information, please call: (512) 463-5440 13 TAC sec.sec.3.1-3.10 The Texas State Library and Archives Commission adopts new sec.sec.3.1-3.10, concerning State Publications Depository Program. Section 3.2 and sec.3.4 are adopted with changes to the proposed text as published in the December 11, 1992, issue of the Texas Register (17 TexReg 8069). Sections 3.1, 3.3, 3.5-3.10 are adopted without changes and will not be republished. The following changes were adopted: sec.3.2(2) the number of copies to be deposited for publications produced in quantities of less than 300 was increased from three to four copies; and sec.3.4(9) the subsection that listed computer disks and tapes was dropped from the section. The sections simplify and clarify requirements for state agencies to deposit their publications with the Texas State Library. The sections define more specifically how agencies should comply with the state publications depository law. They also reduce the number of publications to be deposited. Costs to print publications will decrease while public access to government information in the publications will be maintained at the current level. State agencies will send copies of their publications to the Texas State Library; the Library will classify, index, catalog, list in a monthly checklist, and send them to selected depository libraries in the State. Lamar University commented that computer disks and tapes should be included in the program. The State Securities Board commented that strategic plans should not be treated as state plans and sent in depository quantity. The Legislative Reference Library commented that the number of copies to be deposited when fewer than 300 copies are printed should be increased from three to four. Lamar University, State Securities Board, Legislative Reference Library, commented against adoption of these rules. Computer disks and tapes were removed from the exemptions table. Strategic plans are state plans and should be deposited in standard depository quantity due to their value as public information. The number of copies to be deposited when fewer than 300 are printed was increased from three to four. The new sections are adopted under the Government Code, Chapter 441, 102, which provides the Texas State Library and Archives Commission with authority to establish rules for distribution of state publications to depository libraries. sec.3.2. Standard Deposit Requirements. State agencies are required to deposit copies of all publications that have not been exempted from the program. The standard number of copies to be deposited is based on the number of copies produced. (1) If 300 or more copies are produced, 55 copies must be deposited with the State Publications Depository Program. (2) If fewer than 300 copies are produced, four copies must be deposited with the program. sec.3.4. Standard Exemptions. The state librarian has exempted certain kinds of publications from deposit requirements. A state agency is not required to deposit any copies of the publications or other information materials listed as follows: (1) agendas; (2) advertisements; (3) alumni materials; (4) announcements; (5) artwork; (6) audiovisual materials; (7) calendars; (8) charts; (9) contracts; (10) correspondence; (11) course schedules; (12) curriculum catalogs (departmental only); (13) drafts of plans, reports; (14) fiction; (15) forms; (16) fund raising materials; (17) grant proposals, bids; (18) hearings (transcripts of); (19) job announcements; (20) literary criticisms; (21) memorabilia; (22) memoranda; (23) news or press releases; (24) newsletters (meant only for employee, faculty, or student use); (25) notices of sale; (26) daily or weekly periodicals (which are summarized in monthly or quarterly publications); (27) personnel manuals; (28) photographs; (29) poetry; (30) policy handbooks (student and faculty); (31) programs (announcements of); (32) recruitment materials; (33) reprints (reissued without change); (34) stationery; (35) student publications (those produced by students); (36) telephone directories (meant only for employee, faculty, or student use); and (37) volunteer newsletters. 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 February 16, 1993. TRD-9319273 Raymond Hitt Assistant State Librarian Texas State Library and Archives Commission Effective date: December 11, 1992 Proposal publication date: March 12, 1993 For further information, please call: (512) 463-5440 Chapter 6. State Records Standards and Procedures for Management of Electronic Records 13 TAC sec.sec.6.91-6.99 The Texas State Board of Library and Archives Commission adopts new sec.sec.6. 91-6.99, concerning standards and procedures for electronic records of state agencies and local governments. Sections 6.91, 6.92, 6.95, 6.96, and 6.98 are adopted with changes to the proposed text as published in the September 4, 1992 issue of the Texas Register (17 TexReg 6084). Sections 6.93, 6.94, 6.97, and 6.99 are adopted without changes and will not be republished. The adoption of the new sections is justified by the need to protect the integrity and longevity of public records that are being stored in electronic form by state agencies and local governments. Section 6.91 is changed to add definitions for IEC and ISO, acronyms for organizations publishing international standards referenced for the storage of optical disks. The wording of sec.6.92(a) is changed to clarify that these are minimum standards and to draw attention to the requirements for short-term electronic records found in the Local Government Code, Chapter 205. The records management officer is added to sec.6.92(d) as a key participant in the management of local government records, of which electronic records are a part, and the wording of sec.6.92(d)(1) is changed to clarify that the administration of a program for electronic records management is what is required. Section 6.95(a) is rewritten to verify that the security requirements for electronic records apply to both office and storage areas. Rewording of sec.6.95(c) makes the specified controls applicable to all types of rewritable electronic media for permanent records. The pretesting, storing, and recopying requirements in sec.6.96(b)(1), (b)(2), and (c) are updated to reflect current, acceptable practices for electronic media. Section 6.98(c) is reworded to clarify that the recommendations in the referenced AIIM technical report must be implemented. The sections will function by establishing the basic requirements for the maintenance, use, retention, and storage of all medium-term, long-term, permanent, and archival electronic records of state agencies and local governments. Comments were received from 10 state agencies, seven local governments, and two private organizations. Two commenters requested that the standards and procedures for electronic records be published as recommended guidelines rather than administrative rules. One commenter recommended that the definition of electronic media include audiotape and videotape. One commenter suggested the addition of two definitions: ISO and IEC. One commenter objected to the definition of medium-term records including records with a retention of 10 years. One commenter recommended the use of minimum requirements instead of "basic requirements in sec.6.92(a) and the addition of a reference in this section to statutory requirements for short-term electronic records. Two commenters recommended that the records management officer be named in sec.6. 92(d) as having responsibility in local governments for managing electronic records. One commenter recommended clarification of the wording in sec.6.92(d) (1) by beginning this phrase with "administer a program." One commenter recommended that wording be added to sec.6.92(d)(6) to establish additional specific documentation requirements. One commenter requested that sec.6.93(a) be changed to state that disposition instructions must be incorporated into the system's design. One commenter requested that sec.6.95(a) be reworded to clarify that the security requirements apply to both office and storage areas. Two commenters suggested changes to the requirement for testing and verification of tapes in sec.6.96(b)(1). Two commenters objected that the storage requirements in sec.6.96(b)(2) were too stringent. One commenter recommended that the sampling requirements in sec.6.96(b)(3) only be applied to permanent records. Three commenters suggested the consideration of alternative options to the recopying of magnetic tapes every three years, as stated in sec.6.96(c). One commenter recommended that the requirements in sec.6. 96(f) apply to medium-term and long-term electronic records as well as permanent records. One commenter preferred that sec.6.96(g)(6) allow the use of a scanning density of 120 dots per inch with various grey levels as an alternative to the required minimum of 200 dots per inch. One commenter recommended sec.6.97(c) be expanded to also include permanent local records; two commenters objected to the requirement for alkaline paper in this section. One commenter suggested that sec.6.98(c) be changed to clarify that the expungement of information must be implemented according to the recommendations in the referenced technical report. One commenter suggested more specific wording for sec.6.99. One commenter recommended that sec.sec.6.97-6. 99 apply to short-term records. Commenting for the new sections were the Association of Records Managers and Administrators (Tejas Chapter, Amarillo), City of Dallas, City of Fort Worth, Harris County, Harris County Department of Education, and Texas Department of Criminal Justice. The new sections were recommended for approval by the Records Management and Preservation Advisory Committee at an open meeting held in Austin on February 11, 1993. Commenting against the new sections were the Texas Higher Education Coordinating Board and Texas Municipal League. The agency agreed with many of the comments and has made the previously mentioned changes to comply with these comments. The agency disagreed, however, with several comments because they were judged to be incompatible with established national standards or Texas law, or because their adoption would endanger the integrity or longevity of electronic records. The new sections sec.sec.6.91-6.99 are adopted under the Government Code, sec.441.32(b)(1) and sec.441.37(5), which provide the Texas State Library and Archives Commission with the authority to manage all state records with the cooperation of the heads of the various departments and institutions in charge of the records and to issue rules, standards, and procedures for the efficient management of state records. sec.6.91. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. For local governments, terms not defined in these rules shall have the meanings defined in the Local Government Code, Title 6, Subtitle C, Chapter 201. For state agencies, terms not defined in these rules shall have the meanings defined in the Government Code, sec. sec.441.31-441.39 and sec.sec.441.51-441.62. AIIM-The Association for Information and Image Management. ANSI-The American National Standards Institute. Archival record -A record of a state agency scheduled to be reviewed by or that has been approved by an archives for permanent preservation. Database (A) collection of digitally stored data records; (B) collection of data elements within records within files that have relationships with other records within other files. Database Management System (DBMS)-Set of programs designed to organize, store, and retrieve machine-readable information from a computer-maintained database or data bank. Data file-Related numeric, textual, sound, or graphic information that is organized in a strictly prescribed form and format. Electronic media -All media capable of being read by a computer including computer hard disks, magnetic tapes, optical disks, or similar machine-readable media. Electronic record -Any information that is recorded in a form for computer processing and that satisfies the definition of a state record in the Government Code, sec.441.31(5), or the definition of local government record data in the Local Government Code, sec.205.1. Electronic records system-Any information system that produces, manipulates, and stores state or local government records by using a computer. IEC-International Electrotechnical Commission. ISO-International Organization for Standardization. Long-term record -A record for which the retention period on a records retention schedule is 100 years or more but less than permanent. Medium-term record -A record for which the retention period on a records retention schedule is 10 years or more but less than 100 years. Records administrator -The the head of each state agency to act as the agency's representative in all issues of records management policy, responsibility, and statutory compliance. Records custodian -The public officer who by the state constitution, state law, ordinance, or administrative policy is in charge of an office that creates or receives local government records. Records management officer-Each elected county officer or the person designated by the governing body of each local government pursuant to the Local Government Code, sec.203.25. Short-term record -A record for which the retention period on a records retention schedule is less than 10 years. Permanent record -A record for which the retention period on a records retention schedule is permanent. Text documents -Narrative or tabular documents, such as letters, memorandums, and reports, in loosely prescribed form and format. sec.6.92. General. (a) These rules establish the minimum requirements for the maintenance, use, retention, and storage of all medium-term, long-term, and permanent electronic records of state agencies and local governments, and archival electronic records of state agencies. These rules do not apply to short-term electronic records, but the short-term electronic records of local governments are subject to the applicable provisions of the Local Government Code, Chapter 205. (b) Unless otherwise noted, these requirements apply to all electronic records storage systems, whether on microcomputers, minicomputers, or main-frame computers, regardless of storage media. (c) An electronic storage authorization request certifying that these rules will be followed must be submitted to and approved by the director and librarian for all existing electronic storage of medium-term, long-term, and permanent state or local government records and state archival records, and before any new electronic storage of medium-term, long-term, and permanent state or local government records and state archival records. The authorization request must be submitted in a form and manner to be determined by the director and librarian and must be signed by the agency head or designated records administrator (for state agencies), or the records management officer (for local governments). (d) The agency head or designated records administrator (for state agencies), and the governing body or records management officer in cooperation with records custodians (for local governments) must: (1) administer a program for the management of records created, received, maintained, used, or stored on electronic media; (2) integrate the management of electronic records with other records and information resources management programs of the agency; (3) incorporate electronic records management objectives, responsibilities, and authorities in pertinent agency directives; (4) establish procedures for addressing records management requirements, including recordkeeping requirements and disposition; (5) ensure that training is provided for users of electronic records systems in the operation, care, and handling of the equipment, software, and media used in the system; (6) ensure the development and maintenance of up-to-date documentation about all electronic records systems that is adequate to specify all technical characteristics necessary for reading or processing the records and the timely, authorized disposition of records; and (7) specify the location and media on which electronic records are maintained to meet retention requirements and maintain inventories of electronic records systems to facilitate disposition. (e) with the exception of subsections (c) and (f) of this section, which are effective immediately, state agencies and local governments must be in compliance with the Standards and Procedures for Electronic Records on or before January 2, 1995. (f) Any electronic recordkeeping system not meeting the provisions of these rules may be utilized for medium-term, long-term, or permanent state or local government records and state archival records provided the source document, if any, or a paper copy is maintained, or the record is microfilmed in accordance with the specifications in American National Standard for Imaging Media (Film) - Silver-Gelatin Type-Specifications for Stability (ANSI IT9.1-1989 or latest revision) for state records or in accordance with the provisions of Local Government Code, Chapter 204, and the rules adopted under it for local government records. sec.6.95. Security of Electronic Records. (a) State agencies and local governments must implement and maintain an electronic records security program for office and storage areas that: (1) ensures that only authorized personnel have access to electronic records; (2) provides for backup and recovery of records to protect against information loss; (3) ensures that personnel are trained to safeguard confidential electronic records; (4) minimizes the risk of unauthorized alteration or erasure of electronic records; and (5) documents that similar kinds of records generated and stored electronically are created by the same processes each time and have a standardized retrieval approach. (b) A duplicate copy of essential records and any software or documentation required to retrieve and read the records must be maintained in a storage area located in a separate building from the building where the records that have been copied are maintained. (c) For all permanent records stored on rewritable electronic media, the system must ensure that read/write privileges are controlled and that an audit trail of rewrites is maintained. sec.6.96. Maintenance of Electronic Records Storage Media. (a) State agencies and local governments must ensure that the accuracy, completeness, and accessibility of information are not lost prior to its authorized destruction date because of changing technology or media deterioration, by converting electronic storage media and taking other action as required to provide compatibility with current hardware and software. The migration strategy for upgrading equipment as technology evolves must be documented and include: (1) periodically recopying to the same electronic media as required, and/or transferring of data from an obsolete technology to a supportable technology; and (2) providing backward system compatibility to the data in the old system, and/or converting data to media that the system upgrade and/or replacement can support. (b) Paragraphs (1)-(3) of this section outline the maintenance of backup electronic media stored offsite. (1) Magnetic computer tapes must be tested and verified no more than six months prior to using them to store electronic records. Pretesting of tapes is not required if an automated system is used that monitors read/write errors and there is a procedure in place for correcting errors. (2) The storage areas for electronic media must be maintained within the following temperatures and relative humidities: (A) for magnetic media-65 degrees Fahrenheit to 75 degrees Fahrenheit, and 30% to 50% relative humidity; (B) for optical disks-storage environmental conditions as specified in Information technology -130 mm optical disk cartridge, write once, for information interchange (ISO/IEC 9171-1, 1990 or latest revision). (3) A random sample of all magnetic computer tapes must be read annually to identify any loss of data and to discover and correct the causes of data loss. At least a 10% sample or a sample size of 50 magnetic tapes, whichever is less, must be read. Tapes with unrecoverable errors must be replaced and, when possible, lost data must be restored. All other tapes which might have been affected by the same cause (i. e. poor quality tape, high usage, poor environment, improper handling) must be read and corrected. (c) State agencies and local governments must recopy data maintained on electronic media according to the following schedule. (1) Data maintained on magnetic tape must be recopied onto new or used tape a minimum of once every three years. (2) An alternative option for recopying magnetic tape is for the data to be recopied onto new tape a minimum of once every 10 years, provided the tape is rewound under controlled tension every three and one-half years. The requirement for rewinding does not apply to 3480-type tape cartridges. (3) Data maintained on optical disks must be recopied a minimum of once every 10 years. (d) Floppy disks (diskettes) or any type of flexible disk system may not be used for the exclusive storage of medium-term, long-term, or permanent records and state archival records. (e) External labels, or an eye-readable index relating to unique identifiers, for electronic media used to process or store electronic records must include the following information: (1) name or other identifier of the organizational unit responsible for the records; (2) descriptive title of the contents; (3) dates of creation and authorized disposition date; (4) security classification; (5) identification of the software (to include specific application if appropriate) and hardware used; and (6) system title, including the version number of the application. (f) Additionally, the following information must be maintained for electronic media used to store permanent electronic records: (1) file title(s); (2) dates of coverage; (3) the recording density; (4) type of internal labels; (5) volume serial number, if applicable; (6) the number of tracks; (7) character code/software dependency; (8) information about block size; (9) sequence number, if the file is part of a multi-media set; and (10) relative starting position of data, if applicable. (g) The following standards must be met for electronic records stored as digital images on optical media. (1) A non-proprietary image file header label must be used, or the system developer must provide a bridge to a non-proprietary image file header label, or the system developer must supply a detailed definition of image file header label structure. (2) The system hardware and/or software must provide a quality assurance capability that verifies information that is written to the optical media. (3) Periodic maintenance of optical data storage systems is required, including an annual recalibration of the optical drives. (4) Scanner quality must be evaluated based on the standard procedures in American National Standard for Information and Image Management-Recommended Practice for Quality Control of Image Scanners (ANSI/AIIM MS44-1988 or latest revision). (5) A visual quality control evaluation must be performed for each scanned image and related index data. (6) A scanning density with a minimum of 200 dots per inch is required for recording documents that contain no type font smaller than six point. (7) A scanning density with a minimum of 300 dots per inch is required for engineering drawings, maps, and other documents with background detail. (8) The selected scanning density must be validated with tests on actual documents. (9) The use of the Consultative Committee on International Telegraphy and Telephony (CCITT) Group 3 or Group 4 compression techniques is required for document images without continuous tonal qualities. If use of a proprietary compression technique is unavoidable, the vendor must provide a gateway to either Group 3 or Group 4 compression techniques. (10) Optical drive systems must not be operated in environments with high levels of airborne particulates. (11) All aspects of the design and use of the imaging system must be documented, including administrative procedures for digital imaging, retrieval, and storage; technical system specifications; problems encountered; and measures taken to address them, including hardware and software modifications. (h) Smoking, drinking, and eating must be prohibited in electronic media storage areas. sec.6.98. Destruction of Electronic Records. (a) Electronic records may be destroyed only in accordance with a records schedule approved by the director and librarian or designee or, in lieu of an approved records schedule, an approved records disposition authorization request. (b) Each state agency and local government must ensure that: (1) electronic records scheduled for destruction are disposed of in a manner that ensures protection of any confidential information; and (2) magnetic storage media previously used for electronic records containing confidential information are not reused if the previously recorded information can be compromised by reuse in any way. (c) The court ordered expungement of information recorded on an optical Write- Once-Read-Many (WORM) system must be implemented according to the recommendations provided in Technical Report for Information and Image Management-The Expungement of Information Recorded on Optical Write-Once-Read- Many (WORM) Systems (AIIM TR28-1991 or latest revision). 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 February 19, 1993. TRD-9319274 Raymond Hitt Assistant State Librarian Texas State Library and Archives Commission Effective date: March 12, 1993 Proposal publication date: September 4, 1992 For further information, please call: (512) 463-5440 Chapter 7. Local Records Standards and Procedures for Management of Electronic Records 13 TAC sec.sec.7.71-7.79 The Texas State Library and Archives Commission adopts new sec.sec.7.71-7.79, concerning standards and procedures for electronic records of state agencies and local governments. Sections 7.71, 7.72, 7.75, 7.76, and 7.78 are adopted with changes to the proposed text as published in the September 4, 1992, issue of the Texas Register (17 TexReg 6087). Sections 7.73, 7.74, 7.77, and 7.79, are adopted without changes and will not be republished. The adoption of the new sections is justified by the need to protect the integrity and longevity of public records that are being stored in electronic form by state agencies and local governments. Section 7.71 is changed to add definitions for IEC and ISO, acronyns for organizations publishing international standards referenced for the storage of optical disks. The wording of sec.7.72(a) is changed to clarify that these are minimum standards and to draw attention to the requirements for short-term electronic records found in Local Government Code, Chapter 205. The records management officer is added to sec.7.72(d) as a key participant in the management of local government records, of which electronic records are a part, and the wording of sec.7.72(d) (1) is changed to clarify that the administration of a program for electronic records management is what is required. Section 7.75(a) is rewritten to verify that the security requirements for electronic records apply to both office and storage areas. Rewording of sec.7.75(c) makes the specified controls applicable to all types of rewritable electronic media for permanent records. The pretesting, storing, and recopying requirements in sec.7.76(b)(1), (b)(2), and (c) are updated to reflect current, acceptable practices for electronic media. Section 7.78(c) is reworded to clarify that the recommendations in the referenced AIIM technical report must be implemented. The sections will function by establishing the basic requirements for the maintenance, use, retention, and storage of all medium-term, long-term, permanent, and archival electronic records of state agencies and local governments. Comments were received from 10 state agencies, seven local governments, and two private organizations. Two commenters requested that the standards and procedures for electronic records be published as recommended guidelines rather than administrative rules. One commenter recommended that the definition of electronic media include audiotape and videotape. One commenter suggested the addition of two definitions: ISO and IEC. One commenter objected to the definition of medium-term records including records with a retention of 10 years. One commenter recommended the use of "minimum" requirements instead of "basic" requirements in sec.7.72(a) and the addition of a reference in this section to statutory requirements for short-term electronic records. Two commenters recommended that the records management officer be named in sec.7.72(d) as having responsibility in local governments for managing electronic records. One commenter recommended clarification of the wording in sec.7.72(d)(1) by beginning this phrase with "administer a program." One commenter recommended that wording be added to sec.7.72(d)(6) to establish additional specific documentation requirements. One commenter requested that sec.7.73(a) be changed to state that disposition instructions must be incorporated into the system's design. One commenter requested that sec.7.75(a) be reworded to clarify that the security requirements apply to both office and storage areas. Two commenters suggested changes to the requirement for testing and verification of tapes in sec.7.76(b)(1). Two commenters objected that the storage requirements in sec.7.76(b)(2) were too stringent. One commenter recommended that the sampling requirements in sec.7.76(b)(3) only be applied to permanent records. Three commenters suggested the consideration of alternative options to the recopying of magnetic tapes every three years, as stated in sec.7.76(c). One commenter recommended that the requirements in sec.7.76(f) apply to medium-term and long-term electronic records as well as permanent records. One commenter preferred that sec.7.76(g)(6) allow the use of a scanning density of 120 dots per inch with various grey levels as an alternative to the required minimum of 200 dots per inch. One commenter recommended sec.7.77(c) be expanded to also include permanent local records; two commenters objected to the requirement for alkaline paper in this section. One commenter suggested that sec.7.78(c) be changed to clarify that the expungement of information must be implemented according to the recommendations in the referenced technical report. One commenter suggested more specific wording for sec.7.79. One commenter recommended that sec.sec.7.77-7. 79 apply to short-term records. Commenting for the new sections were the Association of Records Managers and Administrators (Tejas Chapter, Amarillo), City of Dallas, City of Fort Worth, Harris County, Harris County Department of Education, and Texas Department of Criminal Justice. The new sections were recommended for approval by the Records Management and Preservation Advisory Committee at an open meeting held in Austin on February 11, 1993. Commenting against the new sections were the Texas Higher Education Coordinating Board and Texas Municipal League. The agency agreed with many of the comments and has made the previously mentioned changes to comply with these comments. The agency disagreed, however, with several comments because they were judged to be incompatible with established national standards or Texas law or because their adoption would endanger the integrity or longevity of electronic records. The new sec.sec.7.71-7.79 are adopted under the Local Government Code, sec.205. 003(a), which provides the Texas State Library and Archives Commission with the authority to establish standards and procedures for the electronic storage of any local government records whose retention period is at least 10 years. These sections were approved by the Local Government Records Committee, as required by the Government Code, sec.441.165, at an open meeting held in Austin on January 22, 1993. sec.7.71. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. For local governments, terms not defined in these rules shall have the meanings defined in the Local Government Code, Title 6, Subtitle C, Chapter 201. For state agencies, terms not defined in these rules shall have the meanings defined in the Government Code, sec. sec.441.31-441.39 and sec.sec.441.51-441.62. AIIM-The Association for Information and Image Management. ANSI-The American National Standards Institute. Archival record -A record of a state agency scheduled to be reviewed by or that has been approved by an archives for permanent preservation. Database (A) collection of digitally stored data records; (B) collection of data elements within records within files that have relationships with other records within other files. Database Management System (DBMS)-Set of programs designed to organize, store, and retrieve machine-readable information from a computer-maintained database or data bank. Data file-Related numeric, textual, sound, or graphic information that is organized in a strictly prescribed form and format. Electronic media -All media capable of being read by a computer including computer hard disks, magnetic tapes, optical disks, or similar machine-readable media. Electronic record -Any information that is recorded in a form for computer processing and that satisfies the definition of a state record in the Government Code, sec.441.31(5), or the definition of local government record data in the Local Government Code, sec.205.1. Electronic records system-Any information system that produces, manipulates, and stores state or local government records by using a computer. IEC-International Electrotechnical Commission. ISO-International Organization for Standardization. Long-term record -A record for which the retention period on a records retention schedule is 100 years or more but less than permanent. Medium-term record -A record for which the retention period on a records retention schedule is 10 years or more but less than 100 years. Records administrator -The the head of each state agency to act as the agency's representative in all issues of records management policy, responsibility, and statutory compliance. Records custodian -The public officer who by the state constitution, state law, ordinance, or administrative policy is in charge of an office that creates or receives local government records. Records management officer-Each elected county officer or the person designated by the governing body of each local government pursuant to the Local Government Code, sec.203.25. Short-term record -A record for which the retention period on a records retention schedule is less than 10 years. Permanent record -A record for which the retention period on a records retention schedule is permanent. Text documents -Narrative or tabular documents, such as letters, memorandums, and reports, in loosely prescribed form and format. sec.7.72. General. (a) These rules establish the minimum requirements for the maintenance, use, retention, and storage of all medium-term, long-term, and permanent electronic records of state agencies and local governments, and archival electronic records of state agencies. These rules do not apply to short-term electronic records, but the short-term electronic records of local governments are subject to the applicable provisions of the Local Government Code, Chapter 205. (b) Unless otherwise noted, these requirements apply to all electronic records storage systems, whether on microcomputers, minicomputers, or main-frame computers, regardless of storage media. (c) An electronic storage authorization request certifying that these rules will be followed must be submitted to and approved by the director and librarian for all existing electronic storage of medium-term, long-term, and permanent state or local government records and state archival records, and before any new electronic storage of medium-term, long-term, and permanent state or local government records and state archival records. The authorization request must be submitted in a form and manner to be determined by the director and librarian and must be signed by the agency head or designated records administrator (for state agencies), or the records management officer (for local governments). (d) The agency head or designated records administrator (for state agencies), and the governing body or records management officer in cooperation with records custodians (for local governments) must: (1) administer a program for the management of records created, received, maintained, used, or stored on electronic media; (2) integrate the management of electronic records with other records and information resources management programs of the agency; (3) incorporate electronic records management objectives, responsibilities, and authorities in pertinent agency directives; (4) establish procedures for addressing records management requirements, including recordkeeping requirements and disposition; (5) ensure that training is provided for users of electronic records systems in the operation, care, and handling of the equipment, software, and media used in the system; (6) ensure the development and maintenance of up-to-date documentation about all electronic records systems that is adequate to specify all technical characteristics necessary for reading or processing the records and the timely, authorized disposition of records; and (7) specify the location and media on which electronic records are maintained to meet retention requirements and maintain inventories of electronic records systems to facilitate disposition. (e) With the exception of subsections (c) and (f) of this section, which are effective immediately, state agencies and local governments must be in compliance with the Standards and Procedures for Electronic Records on or before January 2, 1995. (f) Any electronic recordkeeping system not meeting the provisions of these rules may be utilized for medium-term, long-term, or permanent state or local government records and state archival records provided the source document, if any, or a paper copy is maintained, or the record is microfilmed in accordance with the specifications in American National Standard for Imaging Media (Film) - Silver-Gelatin Type-Specifications for Stability (ANSI IT9.1-1989 or latest revision) for state records or in accordance with the provisions of Local Government Code, Chapter 204, and the rules adopted under it for local government records. sec.7.75. Security of Electronic Records. (a) State agencies and local governments must implement and maintain an electronic records security program for office and storage areas that: (1) ensures that only authorized personnel have access to electronic records; (2) provides for backup and recovery of records to protect against information loss; (3) ensures that personnel are trained to safeguard confidential electronic records; (4) minimizes the risk of unauthorized alteration or erasure of electronic records; and (5) documents that similar kinds of records generated and stored electronically are created by the same processes each time and have a standardized retrieval approach. (b) A duplicate copy of essential records and any software or documentation required to retrieve and read the records must be maintained in a storage area located in a separate building from the building where the records that have been copied are maintained. (c) For all permanent records stored on rewritable electronic media, the system must ensure that read/write privileges are controlled and that an audit trail of rewrites is maintained. sec.7.76. Maintenance of Electronic Records Storage Media. (a) State agencies and local governments must ensure that the accuracy, completeness, and accessibility of information are not lost prior to its authorized destruction date because of changing technology or media deterioration, by converting electronic storage media and taking other action as required to provide compatibility with current hardware and software. The migration strategy for upgrading equipment as technology evolves must be documented and include: (1) periodically recopying to the same electronic media as required, and/or transferring of data from an obsolete technology to a supportable technology; and (2) providing backward system compatibility to the data in the old system, and/or converting data to media that the system upgrade and/or replacement can support. (b) Paragraphs (1)-(3) of this subsection outline the maintenance of backup electronic media stored offsite. (1) Magnetic computer tapes must be tested and verified no more than six months prior to using them to store electronic records. Pretesting of tapes is not required if an automated system is used that monitors read/write errors and there is a procedure in place for correcting errors. (2) The storage areas for electronic media must be maintained within the following temperatures and relative humidities: (A) for magnetic media-65 degrees Fahrenheit to 75 degrees Fahrenheit, and 30% to 50% relative humidity; (B) for optical disks-storage environmental conditions as specified in Information technology -30 mm optical disk cartridge, write once, for information interchange (ISO/IEC 9171-1, 1990 or latest revision). (3) A random sample of all magnetic computer tapes must be read annually to identify any loss of data and to discover and correct the causes of data loss. At least a 10% sample or a sample size of 50 magnetic tapes, whichever is less, must be read. Tapes with unrecoverable errors must be replaced and, when possible, lost data must be restored. All other tapes which might have been affected by the same cause (i.e. poor quality tape, high usage, poor environment, improper handling) must be read and corrected. (c) State agencies and local governments must recopy data maintained on electronic media according to the following schedule. (1) Data maintained on magnetic tape must be recopied onto new or used tape a minimum of once every three years. (2) An alternative option for recopying magnetic tape is for the data to be recopied onto new tape a minimum of once every 10 years, provided the tape is rewound under controlled tension every three and one-half years. The requirement for rewinding does not apply to 3480-type tape cartridges. (3) Data maintained on optical disks must be recopied a minimum of once every 10 years. (d) Floppy disks (diskettes) or any type of flexible disk system may not be used for the exclusive storage of medium-term, long-term, or permanent records and state archival records. (e) External labels, or an eye-readable index relating to unique identifiers, for electronic media used to process or store electronic records must include the following information: (1) name or other identifier of the organizational unit responsible for the records; (2) descriptive title of the contents; (3) dates of creation and authorized disposition date; (4) security classification; (5) identification of the software (to include specific application if appropriate) and hardware used; and (6) system title, including the version number of the application. (f) Additionally, the following information must be maintained for electronic media used to store permanent electronic records: (1) file title(s); (2) dates of coverage; (3) the recording density; (4) type of internal labels; (5) volume serial number, if applicable; (6) the number of tracks; (7) character code/software dependency; (8) information about block size; (9) sequence number, if the file is part of a multi-media set; and (10) relative starting position of data, if applicable. (g) The following standards must be met for electronic records stored as digital images on optical media. (1) A non-proprietary image file header label must be used, or the system developer must provide a bridge to a non-proprietary image file header label, or the system developer must supply a detailed definition of image file header label structure. (2) The system hardware and/or software must provide a quality assurance capability that verifies information that is written to the optical media. (3) Periodic maintenance of optical data storage systems is required, including an annual recalibration of the optical drives. (4) Scanner quality must be evaluated based on the standard procedures in American National Standard for Information and Image management-Recommended Practice for Quality Control of Image Scanners (ANSI/AIIM MS44-1988 or latest revision). (5) A visual quality control evaluation must be performed for each scanned image and related index data. (6) A scanning density with a minimum of 200 dots per inch is required for recording documents that contain no type font smaller than six point. (7) A scanning density with a minimum of 300 dots per inch is required for engineering drawings, maps, and other documents with background detail. (8) The selected scanning density must be validated with tests on actual documents. (9) The use of the Consultative Committee on International Telegraphy and Telephony (CCITT) Group 3 or Group 4 compression techniques is required for document images without continuous tonal qualities. If use of a proprietary compression technique is unavoidable, the vendor must provide a gateway to either Group 3 or Group 4 compression techniques. (10) Optical drive systems must not be operated in environments with high levels of airborne particulates. (11) All aspects of the design and use of the imaging system must be documented, including administrative procedures for digital imaging, retrieval, and storage; technical system specifications; problems encountered; and measures taken to address them, including hardware and software modifications. (h) Smoking, drinking, and eating must be prohibited in electronic media storage areas. sec.7.78. Destruction of Electronic Records. (a) Electronic records may be destroyed only in accordance with a records schedule approved by the director and librarian or designee or, in lieu of an approved records schedule, an approved records disposition authorization request. (b) Each state agency and local government must ensure that: (1) electronic records scheduled for destruction are disposed of in a manner that ensures protection of any confidential information; and (2) magnetic storage media previously used for electronic records containing confidential information are not reused if the previously recorded information can be compromised by reuse in any way. (c) The court ordered expungement of information recorded on an optical Write- Once-Read-Many (WORM) system must be implemented according to the recommendations provided in Technical Report for Information and Image Management-The Expungement of Information Recorded on Optical Write-Once-Read- Many (WORM) Systems (AIIM TR28-1991 or latest revision). 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 February 19, 1993. TRD-9319275 Raymond Hitt Assistant State Librarian Texas State Library and Archives Commission Effective date: March 12, 1993 Proposal publication date: September 4, 1992 For further information, please call: (512) 463-5440 TITLE 22. EXAMINING BOARDS Part XXII. Texas State Board of Public Accountancy Chapter 527. Quality Review 22 TAC sec.sec.527.3-527.7 The Texas State Board of Public Accountancy adopts amendments to sec.sec.527. 3-527.7, concerning definitions. Section 527.4 and sec.527.6 are adopted with changes to the proposed text as published in the September 22, 1992, issue of the Texas Register (17 TexReg 6533). Sections 527.3, 527.5, and 527.7 are adopted without changes and will not be republished. The benefit anticipated as a result of enforcing the sections will be that the language in two rules is simplified, the consistency of quality reviews will be ensured, the reporting requirements for quality reviewers are consistent, and the underlying documents shall be protected. The amendments delete the word "quality" from a rule; require practice units to enroll with sponsoring organizations and require new practice units to have quality reviews within 18 months after commencement of the practice unit; simplify a rule's language but don't change its meaning; clarify the requirements for reporting quality reviews; and reduce the length of time for retention of documents. No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 41a-1, sec.6(a), which provide the Texas State Board of Public Accountancy with the authority to promulgate rules relating to quality review. sec.527.4. Quality Review Program. The following operations of the program shall be conducted by the board. (1) Applicability. Participation in the program is required of each practice unit/licensee licensed or registered with the board who performs accounting and/or auditing engagements, including, but not limited to, audits, reviews, compilations, forecasts, projections, or other special reports. (2) Operation. The board shall effect the program by requiring that each practice unit/licensee licensed or registered with the board as of January 1, 1992, shall schedule a review to commence no later than December 31, 1994. Each practice unit shall enroll with one of the sponsoring organizations approved in accordance with paragraph (6) of this section. Each practice unit shall adopt the review date assigned by the appropriate sponsoring organization and shall notify the board of such date. It is the responsibility of the practice unit to anticipate its needs for review services in sufficient time to enable the reviewer to complete the review within six months after the end of the review date. (3) Minimum standards. The board hereby adopts "Standards for Performing and Reporting on Quality Reviews" promulgated by the American Institute of Certified Public Accountants, Inc., as its minimum standards for review of practice units/licensees. This section shall not require any practice unit/licensee to become a member of any sponsoring organization. (4) Oversight. The board shall appoint a Quality Review Oversight Board (QROB) whose function shall be the oversight and monitoring of sponsoring organizations for compliance and implementation of the minimum standards for performing and reporting on reviews. The QROB shall consist of three members, none of whom are current members of the board. QROB's membership shall consist of: (A)-(B) (No change.) (5) Compensation. Compensation of QROB members shall be set by the board. Oversight procedures to be followed by the QROB shall be provided for by rules promulgated by the board. Information concerning a specific firm obtained by the QROB during oversight activities shall be confidential, and the firm's identity shall not be reported to the board. (6) Sponsoring organizations. Qualified sponsoring organizations shall be the Securities and Exchange Commission Practice Section (SECPS); Private Companies Practice Section (PCPS); American Institute of Certified Public Accountants Quality Review Program, state CPA Societies fully involved in the administration of the AICPA Quality Review Program, and such other entities which register with and are approved by the board on their adherence to the quality review minimum standards. (7) Mergers, combinations, dissolutions, or separations. (A) Mergers or combinations. In the event that two or more practice units are merged or sold and combined, the surviving practice unit shall retain the review year of the largest practice unit. (B) Dissolutions or separations. In the event that a practice unit is divided, the new practice unit(s) shall retain the review year of the former practice unit. In the event that such period is less than 12 months, a review year shall be assigned so that the review occurs within 18 months of the commencement of the new practice unit(s). (8) The board may accept an extension, not to exceed 180 days, as granted by the sponsoring organization for the conduct of a review, provided the board is notified by the practice unit/licensee within 20 days of the date of such an extension. sec.527.6. Reporting to the Board. (a) A practice unit which is a member of the American Institute of Certified Public Accountants Division for CPA Firms and which has a peer review performed under the auspices of the Private Companies Practice Section (PCPS) or the Securities and Exchange Commission Practice Section (SECPS) shall submit to the board a copy of the peer review report, letter of comments (LOC), letter of response (LOR), and acceptance letter. (b) For the first quality review covering a review year ending after January 1, 1992, a practice unit shall submit to the board: (1) a copy of the report, if such report is unqualified; or (2) a copy of the report, the LOC, the LOR, and notice of acceptance from the sponsoring organization, if such report is modified (qualified in any respect or adverse). Information submitted in accordance with this subsection shall be held confidential pursuant to the Public Accountancy Act of 1991, sec.25. (c) For a practice unit's second and subsequent quality review, including any quality review carried out on an accelerated basis as part of the corrective action taken as a result of the previous quality review, a practice unit shall submit to the board a copy of that quality review report, LOC, LOR, and notice of acceptance from the sponsoring organization. (d) A Texas practice unit of a multiple office firm not subject to peer review or quality review tests and procedures shall submit an affidavit which includes affirmation, together with the date thereof, that a firm inspection of all Texas practice units was performed which was at least as extensive as a review required by the relevant review program and that the workpapers of such inspection were reviewed and accepted as part of the peer review or quality review procedures. (e)-(f) (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 February 12, 1993. TRD-9319147 William Treacy Executive Director Texas State Board of Public Accountancy Effective date: March 10, 1993 Proposal publication date: September 22, 1992 For further information, please call: (512) 450-7066 TITLE 25. HEALTH SERVICES Part I. Texas Department of Health Chapter 289. Radiation Control Texas Regulations for Control of Radiation 25 TAC sec.289.124 The Texas Department of Health (department) adopts an amendment to sec.289. 124, with changes to the proposed text as published in the November 3, l992, issue of the Texas Register (17 TexReg 7750) and with changes to the material the section adopts by reference. The section adopts by reference Part 44 of the Texas Regulations for Control of Radiation (TRCR) titled, Licensing of Radioactive Waste Processing and Storage Facilities. The amendment to Part 44 adds limited exemptions from the section for nuclear pharmacy operations and clarifies that a person collecting waste from sites under the control of that person is not collecting waste from "other" persons. The amendment does not drop those exempted persons from regulatory review and oversight; the exempted persons are licensed under TRCR Part 41. Several wording changes were made to Part 44 to further clarify the intent of the section. Since the exemption applies only to nuclear pharmacies, the word "products" was replaced with "radiopharmaceuticals" for further clarification. The word "compounded" was added to futher clarify that this exemption applies to nuclear pharmacies and not drug manufacturers. Also, the phrase "...to background radiation levels" was added to make the exemption as clear as possible. The following comments were received concerning the proposed amendment. Comment. Two commentors expressed support of the proposed amendment. Response. The department acknowledged their support. Comment. A commentor stated that the proposed changes were an attempt to subvert the existing regulations which were formulated to ensure radioactive waste storage and processing facilities are sited in locations where geological and environmental conditions have been evaluated and found to be optimum. The commentor stated that no less than ten public hearings and extended comment periods were involved in the formulation of TRCR Part 44 and that the department is attempting to make changes in TRCR Part 44 without that same peer review and input. Response. The department's response is that any revision to the TRCR must follow the Administrative Procedures and Texas Register Act (APTRA) before it can be enacted as rule. The development of TRCR Part 44 and the current revision have both followed APTRA, and provisions for public review and comment have been made. The department made no change to the section as a result of the comment. Comment. A commentor opposed to the proposed amendment stated that the purpose of Part 44 was to ensure that proper management of radioactive waste storage and processing was performed and the proposed exemption will not provide for this. Further, the only person who will be regulated by TRCR Part 44 as proposed will be one or two companies who might handle less than 10% of all the radioactive waste in the state of Texas. The other 90% will "slip through the crack." This commentor also stated that the department has consistently formulated exemptions to the section in order to take the cost of radioactive waste disposal off the medical and educational community, as in TRCR Part 21. Another commentor in opposition to the proposed section stated that the proposed amendment was due to the imminent closure of existing radioactive waste burial sites, the high cost of disposal, and the lack of available radioactive waste storage capacity. The commentor notes that on November 24, l992, the Texas Low-Level Radioactive Waste Disposal Authority (TLLRWDA) signed an agreement assuring continuing access to the Barnwell radioactive waste disposal site for Texas-generated waste through June 30, 1994, and suggests that, when a Texas site is opened, the TLLRWDA charges will be significantly higher than the present Barnwell charges. The commentor also noted that a company currently licensed by the department and owned by the commentor has adequate storage space at the present time. Response. The department's response to those comments are as follows: TRCR Part 44 was established for commercial waste processors. The section states that Part 44 establishes "...the requirements for management of commercial radioactive waste processing and storage facilities, the procedures and criteria for the issuance of licenses to receive, possess, transport, store and process radioactive waste from other persons, and the terms and conditions upon which the department will issue such licenses." Non-commercial waste storage by a person as defined in TRCR Part 44 is not exempt from regulatory oversight. The purpose of the proposed section is to clarify that a person collecting waste from sites under the control of that person is not collecting waste from "other" persons. The section does not drop such persons from regulatory oversight. Such a person is regulated under TRCR Part 41 and any application for waste storage will be carefully reviewed to ensure that any such operation commits to procedures and safeguards which are adequate to protect public health and safety and the environment. Also, the department is currently developing a regulatory guide for submission of waste storage applications which addressess many of the same technical criteria as in TRCR Part 44. In addition, the requirements in TRCR Part 21 do not redefine the definition of "radioactive material." The section states that certain radioactive materials, under certain conditions, may be disposed of without regard to their radioactivity. The department made no changes to the section as a result of the comments. Comment. Many of one commentor's statements were in regard to a specific application submitted to the department and not on the proposed section itself and some comments were speculation on current or future costs of waste disposal. Response. The department did not respond to these statements, as they did not concern the proposed section. Comment. A commentor noted that allowing an entity to be licensed for a facility for storage of radioactive wastes may allow it to store nonhazardous radioactive waste, but will not provide the additional permits needed from the Texas Water Commission for collection and storage of dry, solid wastes, special infectious wastes and hazardous chemical wastes. Response. The department's response is that if mixed wastes are to be stored, other required permits will have to be obtained by an applicant, whether commercial or non-commercial. The department made no change to the section as a result of the comment. Representatives from the Mallinckrodt Medical, Inc. in Houston, and from the University of Texas System offered comments in support of the proposed amendment. Representatives from the Nuclear Sources and Services, Inc. /Monitoring Services in Friendswood, and from the Nuclear Sources and Services, Inc. in Houston, presented comments and concerns in opposition to the proposed amendment as discussed in the summary of comments. The amendment is adopted under the Chapter 401 of the Health and Safety Code, which provides the Board of Health with the authority to adopt rules and guidelines relating to the control of radiation; and sec.12.001, which authorizes the board to adopt rules for the performance of every duty imposed by law on the board, the department, and the commissioner of health. sec.sec.289.124. Adoption by Reference. (a) The Texas Department of Health adopts by reference Part 44, Licensing of Radioactive Waste Processing and Storage Facilities of the Department's document titled Texas Regulations for Control of Radiation, as amended in April 1993. (b) The document adopted by reference in this section is indexed and filed in the Bureau of Radiation Control, Texas Department of Health, The Exchange Building, 8407 Wall Street, Austin, Texas 78754 and is available for public inspection during regular working hours. 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 February 19, 1993. TRD-9319364 Robert A. MacLean, M.D. Deputy Commissioner Texas Department of Health Effective date: April 1, 1993 Proposal publication date: November 3, 1992 For further information, please call: (512) 834-6688 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 7. Corporate and Financial Regulation Subchapter A. Examination and Corporate Custodian and Tax 28 TAC sec.7.18 The State Board of Insurance of the Texas Department of Insurance adopts the repeal of sec.7.18, concerning salvage and subrogation, without changes to the proposed text as published in the December 25, 1992, issue of the Texas Register (17 TexReg 9086). Section 7.18 concerns the treatment of salvage and subrogation in the annual statement. The treatment of salvage and subrogation is currently addressed in sec.7.62. Notification appears elsewhere in this issue of the Texas Register of the adoption of new sec.7.62. The repeal of this section is necessary to eliminate unnecessary provisions and allow the board to simultaneously adopt new sec.7.62 concerning the filing requirements for annual and quarterly statements and other reporting forms. The section was adopted to be effective in 1983 and to be consistent with the National Association of Insurance Commissioners' instructions to the annual statement regarding the treatment of salvage and subrogation. In June, 1992 the NAIC changed the annual statement instructions and those changes are incorporated in sec.7.62. A commentor suggested repeal or revision of the section to allow property and casualty insurance companies the option of netting anticipated salvage and subrogation against loss reserves as allowed by the NAIC. The commentor pointed out the discrepancy between subsection (a) which requires salvage and subrogation to be recognized only when reduced to cash or a qualified admitted asset and subsection (b) which states that the section conforms to the NAIC's instructions on the annual statement blank. In addition, repeal or revision of the section was recommended since a position by Texas contrary to the NAIC would support federal legislators' contentions that federal regulation of the insurance industry is desirable, and the commentor believes the NAIC position is correct and failure to be consistent with the NAIC position would put Texas domiciled companies at a competitive disadvantage. The agency agrees that the section should be repealed. USAA Property and Casualty Insurance commented in favor of the repeal. The repeal is adopted under the Insurance Code, Articles 1.11, 21.43, and 1. 04, and Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5. The Insurance Code, Article 1.11, authorizes the Board to change the form of the statement blanks and other reporting forms as shall seem to it best adapted to elicit a true exhibit of the financial condition and the methods of transacting the business of insurers and other regulated entities. Article 21.43 provides the conditions under which foreign insurers are permitted to do business in this state and requires foreign insurers to comply with the provisions of the Insurance Code. Article 1.04 authorizes the State Board of Insurance to determine 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 repeal affects the filing of the annual statement and other reporting forms to elicit the financial condition of insurers under the Insurance Code, Article 1.11. 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 February 19, 1993. TRD-9319305 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: March 12, 1993 Proposal publication date: December 25, 1992 For further information, please call: (512) 463-6327 28 TAC sec.7.62 The State Board of Insurance of the Texas Department of Insurance adopts the repeal of sec.7.62, concerning annual statement blanks, instructions, and other forms, 1983, without changes to the proposed text as published in the December 25, 1992, issue of the Texas Register (17 TexReg 9087). Section 7.62 concerns the annual statement blanks, instructions, and other forms for calendar year 1983, concerning corporate and financial regulation. The repeal of sec.7.62 is simultaneous with the adoption of new sec.7.62 concerning the annual statement blanks for 1992 and quarterly statements for 1993, and other reporting forms. Notification appears elsewhere in this issue of the Texas Register of the adoption of new sec.7.62, which replaces repealed sec.7.62. The repeal of this section is necessary to eliminate unnecessary provisions and to enable the board simultaneously to adopt new sec.7.62, which replaces the repealed section with other provisions concerning the filing requirements for annual and quarterly statements and other reporting forms for calendar year 1992 and 1993. No comments were received regarding adoption of the repeal. The repeal is adopted under the Insurance Code, Articles 1.11, 1.10, 3.07, 6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 11.19, 14.15, 14. 39, 15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 20.02, 20A.10, 20A. 22, 21.54, 22.06, 22.18, 23.02, 23.26, 21.21, 21.43, and 1.04, and Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5. The referenced articles of the Insurance Code authorize the State Board of Insurance to promulgate rules and regulations necessary to accomplish the purposes of those articles and to protect the public interest concerning the regulation of insurance. The Insurance Code, Article 1.11, authorizes the Board to change the form of the statement blanks and other reporting forms as shall seem to it best adapted to elicit a true exhibit of the financial condition and the methods of transacting the business of insurers and/or other regulated entities and requires certain insurers and/or other regulated entities to make filings with the National Association of Insurance Commissioners. Article 1.10, sec.9 requires the department to furnish the statement blanks and other reporting forms necessary for companies to comply with the filing requirements. Articles 3.07, 6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 11.19, 14. 15, 14.39, 15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 20.02, 20A. 10, 20A.22, 21.54, 22.06, 22.18, 23.02, and 23.26 require the filing of financial reports and other information by insurers and other regulated entities, and specify particular rule-making authority of the Board relating to those insurers and other regulated entities. Article 21.21 prohibits any person engaged in the business of insurance from filing with any public official any false statement of financial condition of an insurer with intent to deceive and requires that all statements made by person in the business of insurance be truthful and not misleading. Article 21.43 provides the conditions under which foreign insurers are permitted to do business in this state and requires foreign insurers to comply with the provisions of the Insurance Code. Article 1.04(b) authorizes the Board to determine 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 repeal affects the filing of the annual statement and other reporting forms for calendar year 1983 to elicit the financial condition of insurers under the Insurance Code, Article 1.11. 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 February 19, 1993. TRD-9319304 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: March 12, 1993 Proposal publication date: December 25, 1992 For further information, please call: (512) 463-6327 The State Board of Insurance of the Texas Department of Insurance adopts new sec.7.62, concerning requirements for filing the 1992 annual and 1993 quarterly statements, other reporting forms and diskettes, with changes to the proposed text published in the December 25, 1992, issue of the Texas Register (17 TexReg 9087). The new section concerns the annual and quarterly statement blanks, other reporting forms, diskettes and instructions to be used by insurers and certain other entities regulated by the Texas Department of Insurance when reporting their financial condition and business operations and activities, and the requirement to file such completed statement blanks and other reporting forms, including diskettes. These statement blanks, other reporting forms and diskettes are required for reporting, in 1993, the financial condition and business operations and activities conducted during the 1992 and 1993 calendar years. The adoption of new sec.7.62 is simultaneous with the repeal of existing sec.7.62, concerning the 1983 annual statement filings. Notice of the repeal appears elsewhere in this issue of the Texas Register. The adoption includes a change to the last sentence of subsection (a) to correct a typographical error. Changes were made to paragraphs (1)(A)-(E), (2)(A)-(B), (2)(D)-(G), (3)(A), and (3)(C) of subsection (c) to clarify the dates by which certain reports are to be filed by stipulated premium companies. Changes were made to subsections (c)-(g) and (k) to clarify that the Insurance Code and existing departmental rules take precedence whenever there is a conflict with the NAIC manuals or instructions. Changes were made to subsection (d) to be consistent with the NAIC treatment of salvage and subrogation in the annual statement and not require insurers to file a different annual statement for the State of Texas. Along with the changes made to the section as published, the Board announced its intention to promulgate rules to provide guidelines for anticipated salvage and subrogation by insurers. The new section requires insurers and certain other entities regulated by the Texas Department of Insurance to file annual statements for 1992 and quarterly statements during 1993 which report the financial condition and business operations and activities of the insurers on specified blanks, reporting forms and diskettes within certain time periods. The section also requires insurers and certain other regulated entities to file such annual and quarterly statements and other reporting forms with the department and/or the National Association of Insurance Commissioners. The new section allows anticipation of salvage and subrogation recoveries by insurers. The Board's intention is to promulgate rules to provide guidelines for such anticipation as soon as practically possible. A commentor suggested that the reference to subsection (e) in the last sentence of subsection (a) be changed to subsection (c) since the filing requirements commence with (c) rather than (e). The agency agrees with the comment and has made the suggested change. A commentor supported the language which permits companies to choose the size annual statement which is filed. It was felt that uniformity among the states of annual statement requirements would not only be economically beneficial to companies, but also reduce errors in filing and reporting requirements. The agency has maintained the language which allows companies to choose the size annual statement which it files. A commentor pointed out that stipulated premium companies have a filing deadline of April 1 of each year rather than March 1 as set forth in various subparagraphs of subsection (c). The agency concurs and has included a reference to stipulated premium companies and the date of April 1, 1993, in subsections (c)(1)(A)-(D), (c)(2)(A)-(B), (c)(2)(D)-(G), (c)(3)(A), and (c)(3) (C). The date of May 1, 1993, was added for stipulated premium companies for subsection (c)(1)(E). A commentor suggested changing the language in subsection (c) and the other subsections where similar language is used regarding the Insurance Code and department's rules taking precedence over discrepancies with the NAIC manuals since there are discrepancies between the NAIC manuals and the Insurance Code as well as existing rules of the department. The agency concurs with the commentor and has changed the language regarding conflict between the NAIC manuals and the Insurance Code and existing departmental rules to the suggested language. Commentors recommended that subsection (d) be changed to allow anticipation of salvage and subrogation recoveries and that the treatment of salvage and subrogation should be consistent with the NAIC instructions for the annual statement and the federal tax law. It was felt by commentors that it is not appropriate or cost effective to require insurers to compute a separate annual statement just for the State of Texas. One commentor contends that the amounts will be disclosed in the Notes to financial Statements on page 18 of the Annual Statement and the NAIC has promulgated further disclosure of these items in Schedule P for future Annual Statements. Another commentor believed that anticipation of salvage and subrogation is a preferable method of accounting because it provides a better estimation of an insurer's unpaid claims, which in turn provides a better indication of an insurer's financial condition and operating performance during any given year. The agency concurs and has made the recommended change by deleting the language that required a different treatment and reporting of salvage and subrogation in the annual statement for the State of Texas. United Services Life Companies-For. Texas Association of Life Insurance Officials-Neither for nor against. National Association of Independent Insurers, American Insurance Association, and Texas Farmers Insurance Company-Against. The new section is adopted under the Insurance Code, Articles 1.11, 1.10, 3. 07, 6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 11.19, 14.15, 14.39, 15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 20.02, 20A.10, 20A.22, 21.54, 22.06, 22.18, 23.02 23.26, 21.21, 21.43, and 1.04, and Texas Civil Statutes, Article 6252-13a, sec.4 and sec.5. The Insurance Code, Article 1. 11, authorizes the Board to change the form of the statement blanks and other reporting forms as shall seem to it best adapted to elicit a true exhibit of the financial condition and the methods of transacting the business of insurers and/or other regulated entities and requires certain insurers and/or other regulated entities to make filings with the National Association of Insurance Commissioners. Article 1.10, sec.9, requires the department to furnish the statement blanks and other reporting forms necessary for companies to comply with the filing requirements. Articles 3.07, 6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 11.19, 14.15, 14.39, 15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 20.02, 20A.10, 20A.22, 21.54, 22.06, 22.18, 23.02, and 23.26 require the filing of financial reports and other information by insurers and other regulated entities, and specify particular rulemaking authority of the Board relating to those insurers and other regulated entities. Article 21.21 prohibits any person engaged in the business of insurance from filing with any public official any false statement of financial condition of an insurer with intent to deceive and requires that all statements made by persons in the business of insurance be truthful and not misleading. Article 21.43 provides the conditions under which foreign insurers are permitted to do business in this state and requires foreign insurers to comply with the provisions of the Insurance Code. Article 1.04(b) authorizes the Board to determine 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 new section affects the filing of the annual statement, other reporting forms, and diskettes to elicit the financial condition of insurers under the Insurance Code, Article 1.11. sec.7.62. Requirements for filing the 1992 Annual and 1993 Quarterly Statements, Other Reporting Forms, and Diskettes. (a) Scope. This section provides insurers and other regulated entities with the filing requirements for the 1992 annual statement, 1993 quarterly statements, other reporting forms, and diskettes necessary to report information concerning the financial condition and business operations and activities of insurers. This section applies to all insurers and other regulated entities authorized to do the business of insurance in this state and includes, but is not limited to, life, life and accident, life and health, accident and health insurers; life, accident and health insurers; mutual life insurers; stipulated premium insurers; group hospital service corporations; fire insurers; fire and marine insurers; general casualty insurers; fire and casualty insurers; mutual insurers other than life; county mutual insurers; Lloyd's plans; reciprocal and inter-insurance exchanges; risk retention groups; joint underwriting associations; title insurers; fraternal benefit societies; local mutual aid associations; statewide mutual assessment companies; mutual burial associations; exempt associations; farm mutual insurers; health maintenance organizations; and nonprofit legal services corporations. The Texas Department of Insurance adopts by reference the 1992 annual and 1993 quarterly statement blanks, instruction manuals, and other reporting forms specified in this section. The annual and quarterly statement blanks and other reporting forms are available from the Texas Department of Insurance, Financial Analysis, Mail Code 303-1A, P.O. Box 149099, Austin, Texas 78714-9099. Insurers and other regulated entities shall properly report to the Texas Department of Insurance and the National Association of Insurance Commissioners (NAIC), using the appropriate annual and quarterly statement blanks, other reporting forms and machine-readable diskettes and following the applicable instructions as outlined in subsections (c)-(l) of this section. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Board-The State Board of Insurance of the State of Texas. (2) Department-The Texas Department of Insurance. (3) Commissioner-The Commissioner of Insurance of the Texas Department of Insurance, appointed under the Insurance Code, Article 1.09. (4) Texas edition-Blanks and forms promulgated by the State Board of Insurance of the Texas Department of Insurance. (5) NAIC-The National Association of Insurance Commissioners. (6) Association edition-Blanks and forms promulgated by the National Association of Insurance Commissioners. (7) Insurer-A person or business entity legally organized in and authorized by its domiciliary jurisdiction to do the business of insurance. (c) Filing requirements for life, accident, and health insurers. Each life, life and accident, life and health, accident, and health, mutual life, or life, accident, and health insurance company, stipulated premium insurance company, and group hospital services corporation shall file the following blanks, forms, and diskettes for the 1992 calendar year and the first three quarters of the 1993 calendar year. The forms, reports, and diskettes identified in paragraphs (1)(A)-(G); (2)(A)-(C); and (3)(A)-(D) of this subsection shall be completed in accordance with the current NAIC Accounting Practices and Procedures Manual for Life, Accident and Health Insurance Companies, and the current NAIC Annual Statement Instructions, Life Accident and Health. The diskettes identified in paragraphs (3)(C) and (D) of this subsection shall be completed in accordance with the current NAIC Annual Statement Diskette Filing Specifications- Life/Health. Since Texas domestic companies have historically not been required to establish a Mandatory Securities Valuation Reserve (MSVR), they are not required at the present time to establish an Asset Valuation Reserve (AVR) or Interest Maintenance Reserve (IMR) unless the company is licensed in a state that requires an AVR or IMR, in which case the reserve must be calculated in accordance with the instructions established by the NAIC. In the event of a conflict between the Insurance Code or any current existing departmental rule, form or instruction and the listed manuals for statements, forms, and filing requirements as contained in this subsection, then and in that event, the Insurance Code or the department's promulgated rule, form or instruction shall take precedence and in all respects control. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any departmentally promulgated rule or the Insurance Code. (1) Reports to be filed with the department and the NAIC include the following: (A) Annual Statement (association edition, Form 1, Form 1A, or Form 11), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (B) Annual Statement of the Separate Accounts (association edition, Form 1-S) (required of companies maintaining separate accounts), either the 12-inch by 19- inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (C) Long-Term Care Insurance Exhibit (association edition) (required of companies writing long-term care business), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (D) Schedule DS (association edition) (required of companies that have included equity in the undistributed income of consolidated subsidiaries in its net gain/(loss) from operations), either the 12-inch by 19-inch size or nine- inch by 14-inch size, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (E) Interest Sensitive Life Insurance Products Report (association edition) (required of companies writing interest sensitive products), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before April 1, 1993 (stipulated premium insurance companies, May 1, 1993); (F) Life, Health, and Annuity Guaranty Association Model Act Assessment Base Reconciliation Exhibit (association edition), 8 1/2-inch by 14-inch size, to be filed on or before June 30, 1993; and (G) Life and Accident and Health Quarterly Statement (association edition), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before May 15, August 15, and November 15, 1993. However, a Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file quarterly statements with the department or the NAIC if it meets all three of the following conditions: (i) it is authorized to write only life insurance on its Certificate of Authority; (ii) it collected premiums in the prior calendar year of less than $1 million; and (iii) it had a profit from operations in the prior two calendar years. (2) Reports to be filed only with the department: (A) Schedule SIS, Stockholder Information Supplement (association edition) (required of domestic stock companies which have 100 or more stockholders), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (B) Schedule DM (association edition) (shows statement value and fair market value of all bonds and preferred stock owned), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (C) Accident and Health Policy Experience Exhibit (association edition) (required of companies writing accident and/or health business), either the 12- inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before June 30, 1993; (D) Annual Statement (Texas edition, green) (required of companies authorized to write prepaid legal business), 8 1/2-inch by 14-inch size, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (E) Supplemental and Balance Sheet Data (TEXSPEC19), to be filed in duplicate on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (F) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); and (G) Analysis of Surplus, for life, accident, and health insurers, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993). (3) Reports and diskettes to be filed only with the NAIC: (A) Officers and Directors Information (association edition) (required of companies upon their initial filing with the NAIC and to report any changes in previously filed information), to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993); (B) Credit Insurance Experience Exhibit (association edition) (required of companies writing credit business), nine-inch by 14-inch size, to be filed on or before May 1, 1993; (C) machine-readable diskettes containing computerized annual statement data, to be filed on or before March 1, 1993 (stipulated premium insurance companies, April 1, 1993), (not required of companies filing annual statement Form 1A or Form 11); and (D) machine-readable diskettes containing computerized quarterly statement data, to be filed on or before May 15, August 15, and November 15, 1993 (not required of companies filing annual statement Form 1A or Form 11). However, a Texas stipulated premium company, unless specifically requested to do so by the department, is not required to file diskettes with the NAIC if it meets all three of the following conditions: (i) it is authorized to write only life insurance on its Certificate of Authority; (ii) it collected premiums in the prior calendar year of less than $1 million; and (iii) it had a profit from operations in the prior two calendar years. (d) Requirements for property and casualty insurers. Each fire, fire and marine, general casualty, fire and casualty or county mutual insurance company, mutual insurance company other than life, Lloyd's plan, reciprocal or inter- insurance exchange, risk retention group, life insurance company that is licensed to write workers' compensation, any farm mutual insurance company that filed on a Form 2 for the 1991 calendar year, and joint underwriting association shall file the following blanks, forms, and diskettes for the 1992 calendar year and the first three quarters of the 1993 calendar year. The forms, reports, and diskettes identified in paragraphs (1)(A)-(F); (2)(A)-(C); and (3)(A)-(D) of this subsection shall be completed in accordance with the current NAIC Accounting Practices and Procedures Manual for Fire and Casualty Insurance Companies, and the current NAIC Annual Statement Instructions, Property and Casualty. No loss reserve discounts, other than as respects fixed and determinable payments such as those emanating from workers' compensation tabular indemnity reserves and long-term disability claims for which specific segregated investments have been established, shall be allowed; provided, however, any company that claimed loss reserve discounts, other than as respects fixed and determinable payments such as those emanating from workers' compensation tabular indemnity reserves and long-term disability claims, as of December 31, 1991, shall be allowed to claim such reserve discounts at the applicable percentage. The applicable percentage for claiming such loss reserve discounts shall be 100% for 1992, 75% for 1993, 50% for 1994, 25% for 1995, 0% for 1996, and subsequent years. In no event shall the dollar amount of discounts, other than as respects fixed and determinable payments such as those emanating from workers' compensation tabular indemnity reserves and long-term disability claims, claimed as of December 31, 1991, and subject to the applicable percentage, be increased as of December 31, 1992 and thereafter. The commissioner shall have the authority to determine the appropriateness of, and may disapprove, discounts taken as respects fixed and determinable payments such as those emanating from workers' compensation tabular indemnity reserves and long-term disability claims. The diskettes identified in paragraphs (3)(C) and (D) of this subsection shall be completed in accordance with the current NAIC Annual Statement Diskette Filing Specifications-Property/Casualty. In the event of a conflict between the Insurance Code or any current existing departmental rule, form or instruction and the listed manuals for statements, forms, and filing requirements as contained in this subsection, then and in that event, the Insurance Code or the department's promulgated rule, form or instruction shall take precedence and in all respects control. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any departmentally promulgated rule or the Insurance Code. (1) Reports to be filed with the department and the NAIC: (A) Annual Statement (association edition, Form 2), either the 12-inch by 19- inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (B) Long-Term Care Insurance Exhibit (association edition) (required of companies writing long-term care business), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (C) Financial Guaranty Insurance Exhibit (association edition) (required of companies writing financial guaranty business), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (D) Supplement "A" to Schedule T, Exhibit of Medical Malpractice Premiums Written (association edition) (required of companies writing medical malpractice business), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (E) Insurance Expense Exhibit (association edition), either the 12-inch by 19- inch size or nine-inch by 14-inch size, to be filed on or before April 1, 1993; and (F) Fire and Casualty Quarterly Statement (association edition), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before May 15, August 15, and November 15, 1993. (2) Reports to be filed only with the department: (A) Schedule SIS, Stockholder Information Supplement (association edition) (required of domestic stock companies which have 100 or more stockholders), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (B) Schedule DM (association edition) (shows statement value and fair market value of all bonds and preferred stock owned), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (C) Accident and Health Policy Experience Exhibit (association edition) (required of companies writing accident and/or health business), either the 12- inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before June 30, 1993; (D) Annual Statement (Texas edition, green) (required of companies authorized to write prepaid legal business), 8 1/2-inch by 14-inch size, to be filed on or before March 1, 1993; (E) Texas Supplemental State Page (14TS), either 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed in duplicate on or before March 1, 1993; (F) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1993; (G) Analysis of Surplus, for property and casualty insurers (required of all licensed companies, except Texas domestic county mutual companies), to be filed on or before March 1, 1993; and (H) Supplement for County Mutuals (attach to page 16 of the annual statement as required by subsection (e)(1)(A) of this section, required of Texas domestic county mutual companies), to be filed on or before March 1, 1993. (3) Reports and diskettes to be filed only with the NAIC: (A) Officers and Directors Information (association edition) (required of companies upon their initial filing with the NAIC and to report any changes in previously filed information), to be filed on or before March 1, 1993; (B) Credit Insurance Experience Exhibit (association edition) (required of companies writing credit business), nine-inch by 14-inch size, to be filed on or before May 1, 1993; (C) machine-readable diskettes containing computerized annual statement data, to be filed on or before March 1, 1993; and (D) machine-readable diskettes containing computerized quarterly statement data, to be filed on or before May 15, August 15, and November 15, 1993. (e) Requirements for fraternal benefit societies. Each fraternal benefit society shall file the following blanks, forms, and diskettes for the 1992 calendar year and the first three quarters of the 1993 calendar year. The forms, reports, and diskettes identified in paragraphs (1)(A)-(D); (2)(A)-(C); and (3)(A) and (B) of this subsection shall be completed in accordance with the current NAIC Accounting Practices and Procedures Manual for Life, Accident and Health Insurance Companies, and the current NAIC Annual Statement Instructions, Fraternal. The diskettes identified in paragraph (3)(B) of this subsection shall be completed in accordance with the current NAIC Annual Statement Diskette Filing Specifications-Fraternal. In the event of a conflict between the Insurance Code or any current existing departmental rule, form or instruction and the listed manuals for statements, forms, and filing requirements as contained in this subsection, then and in that event, the Insurance Code or the department's promulgated rule, form or instruction shall take precedence and in all respects control. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any departmentally promulgated rule or the Insurance Code. (1) Reports to be filed with the department and the NAIC: (A) Annual Statement (association edition, Form 4), either the 12-inch by 19- inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (B) Annual Statement of the Separate Accounts (association edition, Form 1-S) (required of companies maintaining separate accounts), either the 12-inch by 19- inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (C) Long-Term Care Insurance Exhibit (association edition) (required of companies writing long-term care business), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; and (D) Interest Sensitive Life Insurance Products Report (association edition) (required of companies writing interest sensitive products), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before April 1, 1993. (2) Reports to be filed only with the department: (A) Schedule DM (association edition) (shows statement value and fair market value of all bonds and preferred stock owned), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993; (B) Accident and Health Policy Experience Exhibit (association edition) (required of companies writing accident and/or health business), either the 12- inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before June 30, 1993; (C) Fraternal Quarterly Statement (association edition), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before May 15, August 15, and November 15, 1993; (D) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1993; and (E) Analysis of Surplus, for fraternal benefit societies, to be filed on or before March 1, 1993. (3) Reports and diskettes to be filed only with the NAIC: (A) Officers and Directors Information (association edition) (required of companies upon their initial filing with the NAIC and to report any changes in previously filed information), to be filed on or before March 1, 1993; and (B) Machine-readable diskettes containing computerized annual statement data, to be filed on or before March 1, 1993. (f) Requirements for title insurers. Each title insurance company shall file the following blanks and forms for the 1992 calendar year and the first three quarters of the 1993 calendar year. The reports and forms identified in paragraphs (1), (3), and (2)(A)-(B) of this subsection shall be completed in accordance with the Title Insurance Accounting Principles Supplement section of the current NAIC Accounting Practices and Procedures Manual for Fire and Casualty Insurance Companies, and the current NAIC Annual Statement Instructions, Title. In the event of a conflict between the Insurance Code or any current existing departmental rule, form or instruction and the listed manuals for statements, forms, and filing requirements as contained in this subsection, then and in that event, the Insurance Code or the department's promulgated rule, form or instruction shall take precedence and in all respects control. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any departmentally promulgated rule or the Insurance Code. (1) Reports to be filed with the department and the NAIC: Annual Statement (association edition, Form 9), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before March 1, 1993. (2) Reports to be filed only with the department: (A) Schedule DM (association edition) (shows statement value and fair market value of all bonds and preferred stock owned), either the 12-inch by 19-inch size or nine-inch by 14-inch size, to be filed on or before each March 1, 1993; (B) Title Quarterly Statement (association edition), either the 12-inch by 19- inch size or nine-inch by 14-inch size, to be filed on or before May 15, August 15, and November 15, 1993; (C) Texas Supplemental State Page (42TS), to be filed in duplicate on or before March 1, 1993; (D) Texas Overhead Assessment Form (required of Texas domestic Companies only), to be filed on or before March 1, 1993; and (E) Analysis of Surplus, for title insurers, to be filed on or before March 1, 1993. (3) Reports to be filed only with the NAIC: Officers and Directors Information (association edition) (required of companies upon their initial filing with the NAIC and to report any changes in previously filed information) , to be filed on or before March 1, 1993. (g) Requirements for health maintenance organizations. Each health maintenance organization shall file the following blanks and forms for the 1992 calendar year and the first three quarters of the 1993 calendar year only with the department. The forms or reports identified in paragraphs (1) and (2) of this subsection shall be completed in accordance with the current NAIC Accounting Practices and Procedures Manual for Health Maintenance Organizations, and the current NAIC Annual Statements Instructions, Health Maintenance Organizations. In the event of a conflict between the Insurance Code or any current existing departmental rule, form or instruction and the listed manuals for statements, forms, and filing requirements as contained in this subsection, then and in that event, the Insurance Code or the department's promulgated rule, form, or instruction shall take precedence and in all respects control. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any departmentally promulgated rule or the Insurance Code. (1) Annual Statement (association edition, HMO), 8 1/2-inch by 14-inch size, to be filed on or before March 1, 1993; (2) HMO Quarterly Statement (association edition), 8 1/2-inch by 14-inch size, to be filed on or before May 15, August 15 and November 15, 1993; (3) HMO Supplement, 8 1/2-inch by 14-inch size, to be filed on or before March 1, 1993; (4) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1993; and (5) Exhibit Z, 8 1/2-inch by 14-inch size, to be filed on or before May 15, August 15, and November 15, 1993. (h) Requirements for farm mutual insurers not subject to the provisions of subsection (d) of this section. Each farm mutual insurance company shall file the following completed blanks and forms for the 1992 calendar year with the department only: (1) Annual statement (Texas edition, tan), 8 1/2-inch by 14-inch size, to be filed on or before March 1, 1993; and (2) Texas Overhead Assessment Form, to be filed on or before March 1, 1993. (i) Requirements for mutual assessment companies, mutual aid and mutual burial associations, and exempt companies. Each statewide mutual assessment company, local mutual aid association, local mutual burial association, and exempt company shall file the following completed blanks and forms for the 1992 calendar year only with the department: (1) Annual Statement (Texas edition, orange), 8 1/2-inch by 14-inch size, to be filed on or before April 1, provided, however, exempt companies are not required to complete lines 22, 23, 24, 25, and 26 on page 3, the special instructions at the bottom of page 3, and pages 4, 5, 6, 7, and 19. All other pages are required; (2) Texas Overhead Assessment Form, to be filed on or before April 1, 1993; (3) Release of Contribution Form, to be filed on or before April 1, 1993; (4) Reserve Valuation (3 1/2% Chamberlain Reserve Table), to be filed on or before April 1, 1993; and (5) Inventory of Insurance in Force by Age of Issue, to be filed on or before April 1, 1993. (j) Requirements for nonprofit legal service corporations. Each nonprofit legal service corporation shall file the following completed blanks and forms for the 1992 calendar year only with the department; (1) Annual Statement (Texas edition, green), 8 1/2-inch by 14-inch size, to be filed on or before March 1, 1993; and (2) Texas Overhead Assessment Form, to be filed on or before March 1, 1993. (k) Requirements for Mexican casualty companies. Each Mexican casualty company shall file the following blanks and forms for the 1992 calendar year only with the department. The form identified in paragraph (1) of this subsection shall be completed in accordance with the current NAIC Accounting Practices and Procedures Manual for Fire and Casualty Insurance Companies, and the current NAIC Annual Statement Instructions, Property and Casualty. All submissions shall be printed or typed in English and all monetary values shall be clearly designated in U. S. dollars. In the event of a conflict between the Insurance Code or any current existing departmental rule, form or instruction and the listed manuals for statements, forms, and filing requirements as contained in this subsection, then and in that event, the Insurance Code or the department's promulgated rule, form or instruction shall take precedence and in all respects control. It is the express intent of this subsection that it shall not repeal or otherwise modify or amend any departmentally promulgated rule or the Insurance Code. (1) Annual Statement (association edition, Form 2), 12-inch by 19-inch size, provided, however, only pages 1-4, 14, and 16 are required to be completed, to be filed on or before March 1, 1993; (2) Texas Supplemental State Page (14TS), 12-inch by 19-inch size, to be filed in duplicate on or before March 1, 1993; (3) a copy of the balance sheet and the statement of profit and loss from the Mexican financial statement (printed or typed in English), to be filed on or before March 1, 1993; (4) a copy of the official documents issued by the COMISION NACIONAL BANCARIA Y DE SEGUROS approving the current year's annual statement, to be filed on or before March 1, 1993; and (5) A copy of the current license to operate in the Republic of Mexico, to be filed on or before March 1, 1993. (l) Other financial reports. Nothing in this section prohibits the department from requiring any insurer or other regulated entity from filing other financial reports with the department. 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 February 19, 1993. TRD-9319303 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: March 12, 1993 Proposal publication date: December 25, 1992 For further information, please call: (512) 463-6327 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part IX. Texas Water Commission Chapter 331. Underground Injection Control Subchapter I. Financial Responsibility 31 TAC sec.331.147 The Texas Water Commission (TWC) adopts new sec.331.147, concerning underground injection control. Section 331.147 is adopted with changes to the proposed text as published in the November 13, 1992, issue of the Texas Register (17 TexReg 7984). The new section is adopted in order to incorporate rules promulgated by the Environmental Protection Agency pursuant to it's authority under the federal Solid Waste Disposal Act; as amended by the Resource Conservation and Recovery Act of 1976 (RCRA), 42 United States Code, sec.sec.6901 et seq, as amended. This new section is adopted to provide both consistency with existing Texas Administrative Code (TAC) regulations and clarification of the TWC's regulatory intent. A new sec.331.147 is adopted as an appendix to the new sec.sec.331.141- 331.146. The new sec.331.147 delineates the acceptable wording for trust agreements, guarantee bonds, performance bonds, irrevocable standby letters of credit, letters from the chief financial officer, and plugging and abandonment guarantees. One comment received pointed out that the format of the new sec.331.147 had been incorrectly printed in the November 13, 1992, Texas Register. This problem has been corrected. Another commenter noted that in Section 20 of Exhibit A, there is a citation which is confusing, based on the proper format for this section. This citation has been corrected. In fact, there were many citations similarly incorrect due to formatting mistakes. All of these have been corrected. The new section is adopted under the Texas Water Code, sec.5.103 and sec.5. 105, which provides the TWC with the authority to adopt any rules necessary to carry out its powers and duties under the Texas Water Code and other laws of the State of Texas, and to establish and approve all general policy of the commission. In addition, the Texas Water Code, sec.27.19, authorizes the TWC to adopt rules and procedures reasonably required for the performance of its powers and duties under Chapter 27. The TWC is designated the state agency which manages injection wells which are not within the jurisdiction of the Railroad Commission. As such, TWC is required to maintain the quality of fresh water in the state to the extent consistent with the public health and welfare, the operation of existing industries and the economic development of the state, to prevent underground injection that may pollute fresh water, and to require the use of all reasonable methods to implement this policy. sec.331.147. Wording of the Instruments. (a) Trust Agreement. (1) A trust agreement for a trust fund, as specified in sec.331.144(1) of this title (relating to Financial Assurance for Plugging and Abandonment), must be worded as follows, except that instructions in parenthesis are to be replaced with the relevant information and the parenthesis deleted. TRUST AGREEMENT TRUST AGREEMENT, the "Agreement," entered into as of [date] by and between [name of the owner or operator], a [name of State] [insert "corporation," "partnership," "association," or "proprietorship"], the "Grantor," and [name of corporate trustee], [insert "incorporated in the State of _______" or "a national bank"], the "Trustee." Whereas, the Texas Water Commission, "TWC," an agency of the State of Texas, has established certain regulations applicable to the Grantor, requiring that an owner or operator of an injection well shall provide assurance that funds will be available when needed for plugging and abandonment of the injection well, Whereas, the Grantor has elected to establish a trust to provide all or part of such financial assurance for the facility(ies) identified herein, Whereas, the Grantor, acting through its duly authorized officers, has selected the Trustee to be the trustee under this agreement, and the Trustee is willing to act as trustee, Now, therefore, the Grantor and the Trustee agree as follows: Section 1. Definitions. As used in this Agreement: (a) The term "Grantor" means the owner or operator who enters into this Agreement and any successors or assigns of the Grantor. (b) The term "Trustee" means the Trustee who enters into this Agreement and any successor Trustee. (c) Facility or activity means any "underground injection well" or any other facility or activity that is subject to regulation under the Underground Injection Control Program. Section 2. Identification of Facilities and Cost Estimates. This Agreement pertains to the facilities and cost estimates identified on attached Schedule A [on Schedule A, for each facility list the EPA Identification Number, name, address, and the current plugging and abandonment cost estimate, or portions thereof, for which financial assurance is demonstrated by this Agreement]. Section 3. Establishment of Fund. The Grantor and the Trustee hereby establish a trust fund, the "Fund," for the benefit of TWC. The Grantor and the Trustee intend that no third party have access to the Fund except as herein provided. The Fund is established initially as consisting of the property, which is acceptable to the Trustee, described in Schedule B attached hereto. Such property and any other property subsequently transferred to the Trustee is referred to as the Fund, together with all earnings and profits thereon, less any payments or distributions made by the Trustee pursuant to this Agreement. The Fund shall be held by the Trustee, IN TRUST, as hereinafter provided. The Trustee shall not be responsible nor shall it undertake any responsibility for the amount or adequacy of, nor any duty to collect from the Grantor, any payments necessary to discharge any liabilities of the Grantor established by TWC. Section 4. Payment for Plugging and Abandonment. The Trustee shall make payments from the Fund as the Executive Director shall direct, in writing, to provide for the payment of the costs of plugging and abandonment of the injection wells covered by this Agreement. The Trustee shall reimburse the Grantor or other persons as specified by the Executive Director from the Fund for plugging and abandonment expenditures in such amounts as the Executive Director shall direct in writing. In addition, the Trustee shall refund to the Grantor such amounts as the Executive Director specifies in writing. Upon refund, such funds shall no longer constitute part of the Fund as defined herein. Section 5. Payments Comprising the Fund. Payments made to the Trustee for the Fund shall consist of cash or securities acceptable to the Trustee. Section 6. Trustee Management. The Trustee shall invest and reinvest the principal and income of the Fund and keep the Fund invested as a single fund, without distinction between principal and income, in accordance with general investment policies and guidelines which the Grantor may communicate in writing to the Trustee from time to time, subject, however, to the provisions of this Section. In investing, reinvesting, exchanging, selling, and managing the Fund, the Trustee shall discharge his duties with respect to the trust fund solely in the interest of the beneficiary and with the care, skill, prudence, and diligence under the circumstances then prevailing which persons of prudence, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a like use in the conduct of an enterprise of a like character and with like aims; except that: (i) Securities or other obligations of the Grantor, or any other owner or operator of the facilities, or any of their affiliates as defined in the Investment Company Act of 1940, as amended, 15 U.S.C. 80a-2(a), shall not be acquired or held unless they are securities or other obligations of the Federal or a State government; (ii) The Trustee is authorized to invest the Fund in time or demand deposits of the Trustee, to the extent insured by an agency of the Federal or State government; and (iii) The Trustee is authorized to hold cash awaiting investment or distribution uninvested for a reasonable time and without liability for the payment of interest thereon. Section 7. Commingling and Investment. The Trustee is expressly authorized in its discretion: (a) To transfer from time to time any or all of the assets of the Fund to any common, commingled, or collective trust fund created by the Trustee in which the Fund is eligible to participate, subject to all of the provisions thereof, to be commingled with the assets of other trusts participating therein; and (b) To purchase shares in any investment company registered under the Investment Company Act of 1940, 15 U.S. C. 80a-1 et seq., including one which may be created, managed, underwritten, or to which investment advice is rendered or the shares of which are sold by the Trustee. The Trustee may vote shares in its discretion. Section 8. Express Powers of Trustee. Without in any way limiting the powers and discretion conferred upon the Trustee by the other provisions of this Agreement or by law, the Trustee is expressly authorized and empowered: (a) To sell, exchange, convey, transfer, or otherwise dispose of any property held by it, by public or private sale. No person dealing with the Trustee shall be bound to see to the application of the purchase money or to inquire into the validity or expediency of any such sale or other disposition; (b) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (c) To register any securities held in the Fund in its own name or in the name of a nominee and to hold any security in bearer form or in book entry, or to combine certificates representing such securities with certificates of the same issue held by the Trustee in other fiduciary capacities, or to deposit or arrange for the deposit of such securities in a qualified central depository even though, when so deposited, such securities may be merged and held in bulk in the name of the nominee of such depository with other securities deposited therein by another person, or to deposit or arrange for the deposit of any securities issued by the United States Government, or any agency or instrumentality thereof, with a Federal Reserve bank, but the books and records of the Trustee shall at all times show that all such securities are part of the Fund; (d) To deposit any cash in the Fund in interest-bearing accounts maintained or savings certificates issued by the Trustee, in its separate corporate capacity, or in any other banking institution affiliated with the Trustee, to the extent insured by an agency of the Federal or State government; and (e) To compromise or otherwise adjust all claims in favor of or against the Fund. Section 9. Taxes and Expenses. All taxes of any kind that may be assessed or levied against or in respect of the Fund and all brokerage commissions incurred by the Fund shall be paid from the Fund. All other expenses incurred by the Trustee in connection with the administration of this Trust, including fees for legal services rendered to the Trustee, the compensation of the Trustee to the extent not paid directly by the Grantor, and all proper charges and disbursements of the Trustee shall be paid from the Fund. Section 10. Annual Valuation. The Trustee shall annually, at least 30 days prior to the anniversary date of establishment of the Fund, furnish to the Grantor and to the appropriate Executive Director a statement confirming the value of the Trust. Any securities in the Fund shall be valued at market value as of no more than 60 days prior to the anniversary date of establishment of the Fund. The failure of the Grantor to object in writing to the Trustee within 90 days after the statement has been furnished to the Grantor and the Executive Director shall constitute a conclusively binding assent by the Grantor, barring the Grantor from asserting any claim or liability against the Trustee with respect to matters disclosed in the statement. Section 11. Advice of Counsel. The Trustee may from time to time consult with counsel, who may be counsel to the Grantor, with respect to any question arising as to the construction of this Agreement of any action to be taken hereunder. The Trustee shall be fully protected, to the extent permitted by law, in acting upon the advice of counsel. Section 12. Trustee Compensation. The Trustee shall be entitled to reasonable compensation for its services as agreed upon in writing from time to time with the Grantor. Section 13. Successor Trustee. The Trustee may resign or the Grantor may replace the Trustee, but such resignation or replacement shall not be effective until the Grantor trustee and this successor successor trustee shall have the same powers and duties as those conferred upon the Trustee hereunder. Upon the successor trustee's acceptance Trustee shall assign, transfer, and pay over to the successor trustee the funds and properties then constituting the Fund. If for any reason the Grantor cannot or does not act in the event of the resignation of the Trustee, the Trustee may apply to a court of competent jurisdiction for successor trustee or for instructions. The successor trustee shall specify the date on which it assumes administration of the trust in a writing sent to the Grantor, the Executive Director, and the present Trustee by certified mail 10 days before such change becomes effective. Any expenses incurred by the Trustee as a result of any of the acts contemplated by this Section shall be paid as provided in Section 9. Section 14. Instructions to the Trustee. All orders, requests, and instructions by the Grantor to the Trustee shall be in writing, signed by such persons as are designated in the attached Exhibit A or such other designees as the Grantor may designate by amendment to Exhibit A. The Trustee shall be fully protected in acting without inquiry in accordance with the Grantor's orders, requests, and instructions. All orders, requests, and instructions by the Executive Director to the Trustee shall be in writing, signed by his designee, and the Trustee shall act and shall be fully protected in acting in accordance with such orders, requests, and instructions. The Trustee shall have the right to assume, in the absence of written notice to the contrary, that no event constituting a change or a termination of the authority of any person to act on behalf of the Grantor or TWC hereunder has occurred. The Trustee shall have no duty to act in the absence of such orders, requests, and instructions from the Grantor and/or TWC, except as provided for herein. Section 15. Notice of Nonpayment. The Trustee shall notify the Grantor and the appropriate Executive Director, by certified mail within 10 days following the expiration of the 30-day period after the anniversary of the establishment of the Trust, if no payment is received from the Grantor during that period. After the pay-in period is completed, the Trustee shall not be required to send a notice of nonpayment. Section 16. Amendment of Agreement. This Agreement may be amended by an instrument in writing executed by the Grantor, the Trustee, and the appropriate Executive Director, or by the Trustee and the appropriate Executive Director if the Grantor ceases to exist. Section 17. Irrevocability and Termination. Subject to the right of the parties to amend this Agreement as provided in Section 16, this Trust shall be irrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee, and the Executive Director, or by the Trustee and the Executive Director if the Grantor ceases to exist. Upon termination of the Trust, all remaining trust property, less final trust administration expenses, shall be delivered to the Grantor. Section 18. Immunity and Indemnification. The Trustee shall not incur personal liability of any nature in connection with any act or omission, made in good faith, in the administration of this Trust, or in carrying out any directions by the Grantor or the Executive Director issued in accordance with this Agreement. The Trustee shall be indemnified and saved harmless by the Grantor or from the Trust Fund, or both, from and against any personal liability to which the Trustee may be subjected by reason of any act or conduct in its official capacity, including all expenses reasonably incurred in its defense in the event the Grantor fails to provide such defense. Section 19. Choice of Law. This Agreement shall be administered, construed, and enforced according to the laws of the State of [insert name of State]. Section 20. Interpretation. As used in this Agreement, words in the singular include the plural and words in the plural include the singular. The descriptive headings for each Section of this Agreement shall not affect the interpretation or the legal efficacy of this Agreement. In Witness Whereof the parties have caused this Agreement to be executed by their respective officers duly authorized and their corporate seals to be hereunto affixed and attested as of the date first above written. The parties below certify that the wording of this Agreement is identical to the wording specified in 31 Texas Administrative Code sec.331.147(a)(1) as such regulations were constituted on the date first above written. [Signature of Grantor] By [Title] Attest: [Title] [Seal} [Signature of Trustee] By Attest: [Title} [Seal] (2) The following is an example of the certification of acknowledgment which must accompany the trust agreement for a trust fund as specified in sec.331.144(1) of this title (relating to Financial Assurance for Plugging and Abandonment). State requirements may differ on the proper content of this acknowledgment. State of___________________________________________________________ County of__________________________________________________________ On this [date], before me personally came [owner or operator] to me known, who, being by me duly sworn, did depose and say that she/he resides at [address], that she/he is [title] of [corporation], the corporation described in and which executed the above instrument; that she/he knows the seal of said corporation; that the seal affixed to such instrument is such corporate seal; that it was so affixed by order to the Board of Directors of said corporation, and that she/he signed her/his name thereto by like order. [signature of Notary Public] (b) A surety bond guaranteeing payment into a trust fund, as specified in sec.331.144(2) of this title (relating to Financial Assurance for Plugging and Abandonment) must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted. FINANCIAL GUARANTEE BOND Dated bond executed: ______________________________________________ Effective date: ___________________________________________________ Principal: [legal name and business address of owner or operator]. Type of organization: [insert "individual," "joint venture," "partnership," or "corporation"]. State of incorporation: __________________________________________ Surety(ies): [name(s) and business address(es)]. EPA Identification Number, name, address, and plugging and abandonment amount(s) for each facility guaranteed by this bond [indicate plugging and abandonment amounts separately]:__________ Total penal sum of bond: $____________________ Surety's bond number: ________________________ Know All Persons By These Presents, That we, the Principal and Surety(ies) hereto are firmly bound to the Texas Water Commission (hereinafter called TWC), in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Surety(ies) are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sum only as is set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sum. Whereas said Principal is required, under the Underground Injection Control Regulation (UIC), to have a permit or comply with requirements to operate under rule in order to own or operate each injection well identified above, and Whereas said Principal is required to provide financial assurance for plugging and abandonment as a condition of the permit or provisions to operate under rule, and Whereas said Principal shall establish a standby trust fund as is required when a surety bond is used provide such financial assurance; Now, therefore, the condition of the obligation are such that if the Principal shall faithfully, before the beginning of plugging and abandonment of each injection well identified above, fund the standby trust fund in the amount(s) identified above for the injection well, Or if the Principal shall fund the standby trust fund in such amount(s) within 15 days after an order to begin plugging and abandonment is issued by an Executive Director or a U.S. district court or other court of competent jurisdiction, Or, if the Principal shall provide alternate financial assurance, as specified in Subchapter I of 31 Texas Administrative Code Chapter 331, as applicable, and obtain the Executive Director's written approval of such assurance, within 90 days after the date of notice of cancellation is received by both the Principal and the Executive Director from the Surety(ies), then this obligation shall be null and void, otherwise it is to remain in full force and effect. The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notification by an Executive Director that the Principal has failed to perform as guaranteed by this bond, the Surety(ies) shall place funds in the amount guaranteed for the injection well(s) into the standby trust funds as directed by the Executive Director. The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said penal sum. The Surety(ies) may cancel the bond by sending notice of cancellation by certified mail to the Principal and to the Executive Director, provided, however, that cancellation shall not occur during the 120 days beginning on the date of receipt of the notice of cancellation by both the Principal and the Executive Director(s), as evidenced by the return receipts. The Principal may terminate this bond by sending written notice to the Surety(ies), provided, however, that no such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of the bond by the Executive Director(s) of the Region(s) in which the bonded facility(ies) is (are) located. [The following paragraph is an optional rider that may be included but is not required.] Principal and Surety(ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new plugging and abandonment amount, provided that the penal sum does not increase by more than 20% in any one year, and no decrease in the penal sum takes place without the written permission of the Executive Director(s). In Witness Whereof, the Principal and Surety(ies) have executed this Financial Guarantee Bond and have affixed their seals on the date set forth above. The person whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording of this surety bond is identical to the wording specified in 31 Texas Administrative Code sec.331.147(b) as such regulations were constituted on the date this bond was executed. Principal [Signature(s)] [Name(s)] [Title(s)] [Corporate seal] Corporate Surety(ies) [Name and address] State of incorporation: ___________________. Liability limit: $_________________________. [Signature(s)] [Name(s) and title(s)] [Corporate seal] [For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.] Bond premium: $___________________________. (c) A surety bond guaranteeing performance of plugging and abandonment, as specified in sec.331. 144(3) of this title (relating to Financial Assurance for Plugging and Abandonment), must be worded as follows, except that the instructions in brackets are to be replaced with the relevant information and the brackets deleted. PERFORMANCE BOND Date bond executed: _______________________. Effective date: ___________________________. Principal: [legal name and business address of owner or operator]. Type of organization: [insert "individual," "joint venture," "partnership," or "corporation']. State of incorporation: ___________________. Surety(ies): [name(s) and business address(es)] _______________________________________________________________ EPA Identification Number, name, address, and plugging and abandonment amounts(s) for each injection well guaranteed by this bond [indicate plugging and abandonment amounts for each well]: ________________________________________________________________ Total penal sum of bond: $___________________. Surety's bond number: _______________________. Know All Persons By These Presents. That We, the Principal and Surety(ies) hereto are firmly bound to the Texas Water Commission [hereinafter called TWC], in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that, where the Surety(ies) are corporations acting as co-sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sum only as is set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sum. Whereas said Principal is required, under the Underground Injection Control Regulations, as amended, to have a permit or comply with provisions to operate under rule for each injection well identified above, and Whereas said Principal is required to provide financial assurance for plugging and abandonment as a condition of the permit or approval to operate under rule, and Whereas said Principal shall establish a standby trust fund as required when a surety bond is used to provide such financial assurance; Now, Therefore, the conditions of this obligation are such that if the Principal shall faithfully perform plugging and abandonment, whenever required to do so, of each injection well for which this bond guarantees plugging and abandonment, in accordance with the plugging and abandonment plan and other requirements of the permit or provisions for operating under rule and other requirements of the permit or provisions for operating under rule as may be amended, pursuant to all applicable laws, statutes, rules and regulations, as such laws, statutes, rules, and regulations may be amended, Or, if the Principal shall provide alternate financial assurance as specified in Subchapter I of 31 Texas Administrative Code Chapter 331, and obtain the Executive Director's written approval of such assurance, within 90 days after the date of notice of cancellation is received by both the Principal and the Executive Director(s) from the Surety(ies), then this obligation shall be null and void, otherwise it is to remain in full force and effect. The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notification by an Executive Director that the Principal has been found in violation of the plugging and abandonment requirements of Subchapter I of 31 Texas Administrative Code Chapter 331, for an injection well which this bond guarantees performances of plugging and abandonment, the Surety(ies) shall either perform plugging and abandonment in accordance with the plugging and abandonment plan and other permit requirements or provisions for operating under rule and other requirements or place the amount for plugging and abandonment into a standby trust fund as directed by the Executive Director. Upon notification by an Executive Director that the Principal has failed to provide alternate financial assurance as specified in Subchapter I of 31 Texas Administrative Code Chapter 331, and obtain written approval of such assurance from the Executive Director(s) during the 90 days following receipt by both the Principal and the Executive Director(s) of a notice of cancellation of the bond, the Surety(ies) shall place funds in the amount guaranteed for the injection well(s) into the standby trust fund as directed by the Executive Director. The surety(ies) hereby waive(s) notification of amendments to plugging and abandonment plans, permits, applicable laws, statutes, rules, and regulations and agrees that no such amendment shall in any way alleviate its (their) obligation on this bond. The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of said penal sum. The Surety(ies) may cancel the bond by sending notice by certified mail to the owner and operator and to the Executive Director provided, however, that cancellation shall not occur during the 120 days beginning on the date of receipt of the notice of cancellation by both the Principal and the Executive Director, as evidenced by the return receipts. The principal may terminate this bond by sending written notice to the Surety(ies), provided, however, that no such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of the bond by the Executive Director. [The following paragraph is an optional rider that may be included but is not required.] Principal and Surety(ies) hereby agree to adjust the penal sum of the bond yearly so that it guarantees a new plugging and abandonment amount, provided that the penal sum does not increase by more than 20% in any one year, and no decrease in the penal sum takes place without the written permission of the Executive Director. In Witness Whereof, The Principal and Surety(ies) have executed this Performance Bond and have affixed their seals on the date set forth above. The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording on this surety bond is identical to the wording specified in 31 Texas Administrative Code sec.331.147(c) as such regulation was constituted on the date this bond was executed. Principal. [Signature(s)] [Name(s)] [Title(s)] [Corporate seal] [Corporate Surety(ies)] [Name and address] State of incorporation: ______________________________________________________________ Liability limit: $ __________. [Signature(s)] [name(s) and title(s)] Corporate seal: [For every co-surety, provide signature(s), corporate seal, and other information in the same manner as for Surety above.] Bond premium: $ _____________. (d) A letter of credit, as specified in sec.331.144(4) of this title (relating to Financial Assurance for Plugging and Abandonment), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted. IRREVOCABLE STANDBY LETTER OF CREDIT Executive Director Texas Water Commission Dear Sir or Madam: We hereby establish our Irrevocable Standby Letter of Credit No. _____ in your favor, at the request and for the account of [owner's or operator's name and address] up to the aggregate amount of [in words] U.S. dollars $____________, available upon presentation of (1) Your sight draft, bearing reference to this letter of credit No. _________, and (2) Your signed statement reading as follows: "I certify that the amount of the draft is payable pursuant to regulations issued under authority of the Safe Drinking Water Act." This letter of credit is effective as of [date] and shall expire on [date at least 1 year later], but such expiration date shall be automatically extended for a period of [at least 1 year] on [date] and on each successive expiration date, unless, at least 120 days before the current expiration date, we notify both you and [owner's or operator's name] by certified mail that we have decided not to extend this letter of credit beyond the current expiration date. In the event you are so notified, any unused portion of the credit shall be available upon presentation of your sight draft for 120 days after the date of receipt by both you and [owner's or operator's name], as shown on the signed return receipts. Whenever this letter of credit is drawn on under and in compliance with the terms of this credit, we shall duly honor such draft upon presentation to us, and we shall deposit the amount of the draft directly into the standby trust fund of [owner's or operator's name] in accordance with your instructions. We certify that the wording of this letter of credit is identical to the wording specified in 31 Texas Administrative Code sec.331.147(d) as such regulations were constituted on the date shown immediately below. [Signature(s) and title(s) of official(s) of issuing institution] [Date] This credit is subject to [insert "the most recent edition of the Uniform Customs and Practice for Documentary Credits, published by the International Chamber of Commerce," or "the Uniform Commercial Code"]. (e) A certificate of insurance, as specified in sec.331.144(5) of this title, must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted. CERTIFICATE OF INSURANCE FOR PLUGGING AND ABANDONMENT Name and Address of Insurer (herein called the "insurer"): _________________________________________________________________ Name and Address of Insurer (herein called the "insurer"): _________________________________________________________________ Injection Wells covered: [list for each well: The EPA Identification Number, name, address, and the amount of insurance for plugging and abandonment (these amounts for all injection wells covered must total the face amount shown below).] Face Amount: ________________________________________________ Policy Number: _______________________________________________ Effective Date: ______________________________________________ The insurer hereby certifies that it has issued to the Insured the policy of insurance identified above to provide financial assurance for plugging and abandonment for the injection wells identified above. The Insurer further warrants that such policy conforms in all respects with the requirements of 31 Texas Administrative Code sec.331.144(5), as applicable and as such regulations were constituted on the date shown immediately below. It is agreed that any provision of the policy inconsistent with such regulations is hereby amended to eliminate such inconsistency. Whenever requested by the Executive Director of the Texas Water Commission ("TWC"), the Insurer agrees to furnish to the Executive Director(s) a duplicate original of the policy listed above, including all endorsements thereon. I hereby certify that the wording of this certificate is identical to the wording specified in 31 Texas Administrative Code sec.331.147(e) as such regulations were constituted on the date shown immediately below. [Authorized signature of Insurer] [Name of person signing] [Title of person signing] [Signature of witness or notary:] _________________________________ [Date] (f) A letter from the chief financial officer, as specified in sec.331.144(6) of this title (relating to Financial Assurance for Plugging and Abandonment), must be worded as follows, except that instructions in brackets are to be replaced with the relevant information and the brackets deleted. LETTER FROM CHIEF FINANCIAL OFFICER [Address to Executive Director] I am the chief financial officer of [name and address of firm.] This letter is in support of this firm's use of the financial test to demonstrate financial assurance, as specified in Subchapter I of 31 Texas Administrative Code Chapter 331. [Fill out the following four paragraphs regarding injection wells and associated cost estimates. If your firm has no injection wells that belong in a particular paragraph, write "None" in the space indicated. For each injection well, include its EPA Identification Number, name, address, and current plugging and abandonment cost estimate.] 1. This firm is the owner or operator of the following injection wells for which financial assurance for plugging and abandonment is demonstrated through the financial test specified in Subchapter I of 31 Texas Administrative Code Chapter 331. The current plugging and abandonment cost estimate covered by the test is shown for each injection well: ___________. 2. This firm guarantees, through the corporate guarantee specified in Subchapter I of 31 Texas Administrative Code Chapter 331, the plugging and abandonment of the following injection wells owned or operated by subsidiaries of this firm. The current cost estimate for plugging and abandonment so guaranteed is shown for each injection well: ____________. 3. In States where TWC is not administering the financial requirements of Subchapter I of 31 Texas Administrative Code Chapter 331, this firm, as owner or operator or guarantor, is demonstrating financial assurance for the plugging and abandonment of the following injection wells through the use of a test equivalent or substantially equivalent to the financial test specified in Subchapter I of 31 Texas Administrative Code Chapter 331. The current plugging and abandonment cost estimate covered by such a test is shown for each injection well:______________. 4. This firm is the owner or operator of the following injection wells for which financial assurance for plugging and abandonment is not demonstrated either to TWC or a State through the financial test or any other financial assurance mechanism specified in Subchapter I of 31 Texas Administrative Code Chapter 331 or equivalent or substantially equivalent State mechanisms. The current plugging and abandonment cost estimate not covered by such financial assurance is shown for each injection well: ____________________. This firm [insert "is required" or "is not required"] to file a Form 10K with the Securities and Exchange Commission (SEC) for the latest fiscal year. The fiscal year of this firm ends on [month, day]. The figures for the following items marked with an asterisk are derived from this firm's independently audited, year-end financial statements for the latest completed fiscal year, ended [date]. [Fill in Alternative I if the criteria of paragraph (6)(A)(i) of sec.331.144 of this title (relating to Financial Assurance for Plugging and Abandonment) are used. Fill in Alternative II if the criteria of paragraph (6) (A)(ii) of sec.331.144 of this title (relating to Financial Assurance for Plugging and Abandonment) are used.] ALTERNATIVE 1 1. (a) Current plugging and abandonment cost $_____________ (b) Sum of the company's financial responsibilities under 31 Texas Administrative Code Chapter 335, Subchapters E and F, currently met using the financial test or corporate guarantee $___________ (c) Total of lines a and b $___________ *2. Total liabilities [if any portion of the plugging and abandonment cost is included in total liabilities, you may deduct the amount of that portion from this line and add that amount to lines 3 and 4] $___________ *3. Tangible net worth $___________ *4. Net Worth $___________ *5. Current assets $___________ *6. Current liabilities $___________ *7. Net working capital [line 5 minus line 6] $___________ *8. The sum of net income plus depreciation, depletion and amortization $___________ *9. Total assets in U. S. (required only if less than 90% of firm's assets are located in U.S.) $___________ 10. Is line 3 at least $10 million? yes/no 11. Is line 3 at least 6 time line 1(c)? yes/no 12. Is line 7 at least 6 times line 1(c)? yes/no *13. Are at least 90% of firm's assets located in the U.S.? If not, complete line 14. yes/no 14. Is line 9 at least 6 times line 1(c)? yes/no 15. Is line 2 divided by line 4 less than 2.0? yes/no 16. Is line 8 divided by line 2 greater than 0.1? yes/no 17. Is line 5 divided by line 6 greater than 1.5? yes/no ALTERNATIVE II 1. (A) Current plugging and abandonment cost $_________ (b) Sum of the company's financial responsibilities under 31 Texas Administrative Code Chapter 335, Subchapters E and F, currently met using the financial test or corporate guarantee (c) Total of lines a and b $_________ 2. Current bond rating of most recent issuance of this firm and name of rating service $_________ 3. Date of issuance of bond $_________ 4. Date of maturity of bond $_________ *5. Tangible net worth [if any portion of the plugging and abandonment cost estimate is included in "total liabilities" on your firm's financial statements, you may add the amount of that portion to this line] $_________ *6. Total assets in U.S. (required only if less than 90% of firm's assets are located in U.S.) $_________ 7. Is line 5 at least $10 million? yes/no 8. Is line 5 at least 6 times line 1(c)? yes/no *9. Are at least 90% of the firm's assets located in the U.S.? If not, complete line 10 yes/no 10. Is line 6 at least 6 times line 1(c)? yes/no I hereby certify that the wording of this letter is identical to the wording specified in 31 Texas Administrative Code sec.331.146(f) as such regulations were constituted on the date shown immediately below. [Signature] [Name] [Title] [Date] (g) A corporate guarantee as specified in sec.331.144(6) of this title (relating to Financial Assurance for Plugging and Abandonment) must be worded as follows except that instructions in brackets are to be replaced with the relevant information and the bracketed material deleted. GUARANTEE FOR PLUGGING AND ABANDONMENT Guarantee made this _____ day of ______________________, 19____, by [name of guaranteeing entity], a business corporation organized under the laws of the State of ________, herein referred to as guarantor, to the Texas Water Commission (TWC), obligee, on behalf of our subsidiary [owner or operator] of [business address]. Recitals 1. Guarantor meets or exceeds the financial test criteria and agrees to comply with the reporting requirements for guarantors as specified in 31 Texas Administrative Code sec.331.147(g). 2. [Owner or operator] owns or operates the following Class I hazardous waste injection well covered by this guarantee: [List for each facility: EPA Identification Number, name, and address. Indicate for each whether guarantee is for closure, post-closure care, or both.] 3. "Plugging and abandonment plan" as used below refers to the plans maintained as required by Subchapter I of 31 Texas Administrative Code Chapter 331 for the plugging and abandonment of injection wells as identified above. 4. For value received from [owner or operator], guarantor guarantees to TWC that in the event that [owner or operator] fails to perform ["plugging and abandonment"] of the above facility(ies) in accordance with the plugging and abandonment plan and other requirements when required to do so, the guarantor will do so or fund a trust fund as specified in 31 Texas Administrative Code sec.331.144 in the name of [owner or operator] in the amount of the adjusted plugging and abandonment cost estimates prepared as specified in 31 Texas Administrative Code sec.331.143. 5. Guarantor agrees that, if at the end of any fiscal year before termination of this guarantee, the guarantor fails to meet the financial test criteria, guarantor will send within 90 days, by certified mail, notice to the Executive Director(s) for the Region(s) in which the facility(ies) is (are) located and to [owner or operator] that he intends to provide alternate financial assurance as specified in 31 Texas Administrative Code sec.331.144 in the name of [owner or operator]. Within 30 days after sending such notice, the guarantor will establish such financial assurance if [owner or operator] has not done so. 6. The guarantor agrees to notify the Executive Director, by certified mail, of a voluntary or involuntary case under Title 11, U.S. Code, naming guarantor as debtor, within 10 days after its commencement. 7. Guarantor agrees that within 30 days after being notified by the Executive Director of a determination that guarantor no longer meets the financial test criteria or that he is disallowed from continuing as a guarantor of plugging and abandonment, he will establish alternate financial assurance, as specified in 31 Texas Administrative Code sec.331.144, in the name of [owner or operator] if [owner or operator] has not done so. 8. Guarantor agrees to remain bound under this guarantee notwithstanding any or all of the following: amendment or modification of the plugging and abandonment plan, the extension or reduction of the time of performance of plugging and abandonment or any other modification or alteration of an obligation of [owner or operator] pursuant to 31 Texas Administrative Code Chapter 331. 9. Guarantor agrees to remain bound under this guarantee for so long as [owner or operator] must comply with the applicable financial assurance requirements of 31 Texas Administrative Code Chapter 331 for the above-listed facilities, except that guarantor may cancel this guarantee by sending notice by certified mail, to the Executive Director in which the facility(ies) is (are) located and to [owner or operator], such cancellation to become effective no earlier than 120 days after actual receipt of such notice by both TWC and [owner or operator] as evidenced by the return receipts. 10. Guarantor agrees that if [owner or operator] fails to provide alternate financial assurance and obtain written approval of such assurance from the Executive Director within 90 days after a notice of cancellation by the guarantor is received by both the Executive Director and [owner or operator], guarantor will provide alternate financial assurance as specified in 31 Texas Administrative Code sec.331.144 in the name of the [owner or operator]. 11. Guarantor expressly waives notice of acceptance of this guarantee by the Texas Water Commission or by [owner or operator]. Guarantor also expressly waives notice of amendments or modifications of the plugging and abandonment plan. I hereby certify that the wording of this guarantee is identical to the wording specified in 31 Texas Administrative Code sec.331.147(g). Effective date:__________________________________. [Name of guarantor] [Authorized signature for guarantor] [Type name of person signing] [Title of person signing] Signature of witness or notary:__________________________ 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 February 22, 1993. TRD-9319331 Mary Ruth Holder Director, Legal Division Texas Water Commission Effective date: March 15, 1993 Proposal publication date: November 13, 1992 For further information, please call: (512) 463-8069 TITLE 34. PUBLIC FINANCE Part IV. Employees Retirement System of Texas Chapter 83. Texas Public School District Insurance Plan 34 TAC sec.sec.83.1-83.11 The Employees Retirement System of Texas adopts new sec. sec.83.1-83.11, concerning the Texas Public School District Insurance Plan, without changes to the proposed text as published in the October 23, 1992, issue of the Texas Register (17 TexReg 7523). As a result of House Bill 2885, 72nd Legislature, public school districts are required to make group health insurance available to their employees. The districts may make such coverage available and certify to the ERS that such coverage is comparable to that provided to state employees under the Texas Employees Uniform Group Insurance Program, or they may participate in a statewide insurance program administered by the ERS. These rules will establish a separate group health insurance program for employees of public school districts. No comments were received regarding adoption of the new sections. The new sections are adopted under the Insurance Code, sec.4A, Article 3. 50- 2, which provides the Employees Retirement System of Texas with the authority to adopt rules that provide standards for determining eligibility for participation in the program. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 18, 1993. TRD-9319259 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: October 23, 1992 Proposal publication date: March 12, 1993 For further information, please call: (512) 867-3336 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part I. Texas Department of Public Safety Chapter 1. Organization and Administration Personnel and Employment Policies 37 TAC sec.1.40 The Texas Department of Public Safety adopts new sec.1.40, concerning reasonable accommodations under the Americans with Disabilities Act, without changes to the proposed text as published in the January 12, 1993, issue of the Texas Register (18 TexReg 195). The adoption of this section is necessary to ensure the department is in compliance with the Americans with Disabilities Act regarding employment by providing reasonable accommodations. The department adopts this section to state its policy and commitment to provide reasonable accommodation under the Americans with Disabilities Act, Title 1, concerning employment practices. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Government Code, sec.411.6(4), which provides the director with the authority to adopt rules, subject to commission approval, considered necessary for the control of the department. 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 February 16, 1993. TRD-9319281 James R. Wilson Director Texas Department of Public Safety Effective date: March 12, 1993 Proposal publication date: January 12, 1993 For further information, please call: (512) 465-2000 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 79. Legal Services Subchapter S. Contracting Ethics The Texas Department of Human Services (DHS) adopts amendments to sec.79.1801 and sec.79.1802, adopts the repeal of sec. sec.79.1803-79.1807, and adopts new sec.sec.79.1803-79.1806 concerning contracting ethics, without changes to the proposed text as published in the January 5, 1993, issue of the Texas Register (18 TexReg 114). The justification for the amendments, repeals, and new sections is to update DHS's contracting ethics rules by simplifying the wording and by deleting references to statutory restrictions and notice requirements that no longer exist. The rules are amended to limit their application to situations other than enrollment contracts. The amendments, repeals, and new sections will function by making DHS's contracting ethics rules current and easier to comprehend. No comments were received regarding adoption of the amendments, repeals, and new sections. 40 TAC sec.79.1801, sec.79.1802 The amendments are adopted under the Human Resources Code, Title 2, sec.21. 0031, which restricts Board membership and employment, and sec.22.002, which provides the department with the authority to administer federal welfare 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 February 18, 1993. TRD-9319201 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: April 1, 1993 Proposal publication date: January 5, 1993 For further information, please call: (512) 450-3765 40 TAC sec.sec.79.1803-79.1807 The repeals are adopted under the Human Resources Code, Title 2, sec.21. 0031, which restricts Board membership and employment, and sec.22.002, which provides the department with the authority to administer federal welfare 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 February 18, 1993. TRD-9319200 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: April 1, 1993 Proposal publication date: January 5, 1993 For further information, please call: (512) 450-3765 40 TAC sec.sec.79.1803-79.1806 The new sections are adopted under the Human Resources Code, Title 2, sec.21.0031, which restricts Board membership and employment, and sec.22.002, which provides the department with the authority to administer federal welfare 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 February 18, 1993. TRD-9319199 Nancy Murphy Agency Liaison, Policy and Document Support Texas Department of Human Services Effective date: April 1, 1993 Proposal publication date: January 5, 1993 For further information, please call: (512) 450-3765 Part VI. Texas Commission for the Deaf and Hearing Impaired Chapter 183. Board for Evaluation of Interpreters and Interpreter Certification Subchapter E. Fees 40 TAC sec.183.573 The Texas Commission for the Deaf and Hearing Impaired adopts the amendment of sec.183.573, concerning the Board for Evaluation of Interpreters and Interpreter Certification, without changes to the proposed text as published in the December 8, 1992, issue of the Texas Register (17 TexReg 8518). The TCDHI Commissioners have established April 1, 1993, as the effective date of the adopted subsection. The adoption of this rule change, relating to fees, will provide updated procedures and clarification in the operation of the Board for Evaluation of Interpreters. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Human Resources Code, sec.81.6(b)(3) and sec.81.7, which provides the Texas Commission for the Deaf and Hearing Impaired with the authority to adopt such rules and amendments. 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 February 18, 1993. TRD-9319280 Ralph H. White Interim Executive Director Texas Commission for the Deaf and Hearing Impaired Effective date: April 1, 1993 Proposal publication date: December 8, 1992 For further information, please call: (512) 444-3323 The State Board of Insurance of the Texas Department of Insurance, at a public meeting held at 9 a.m. February 10, 1993, in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street, Austin has adopted a filing by the Texas Department of Insurance for revised bond forms for the Reinsurance Intermediary Bond and the Corporate Agents Bond. The Texas Department of Insurance's filing (Reference Number A-0198-71) was published in the January 15, 1993 issue of the Texas Register (18 TexReg 296). Title 28 TAC sec.19.1403, subsection (1) requires a Reinsurance Intermediary Bond to be executed by the reinsurance intermediary as principal and as surety, a surety company authorized to do the business of insurance in this state, or a surplus lines insurer eligible in this state. The bond form has been amended to include as surety a surplus lines insurer eligible in this state. Also the counter signature block on the bond has been revised from "Texas Local Recording Agent" to "Licensed Agent" to allow surplus lines agents to countersign the bond. The corporate insurance agents bond is being revised to include requirements under Title 28 TAC sec.11.404, subsection (b)(2) regarding the licensing requirements of HMO corporate agents to purchase a bond in lieu of an errors and omissions policy or depositing $25,000 with the State Treasurer. The State Board of Insurance has jurisdiction over this matter pursuant to the Insurance Code Articles 5.13, 5.15, and 5.97. The full text of the filing for the revised bond forms for the Reinsurance Intermediary Bond and the Corporate Insurance Agents Bond as adopted by the State Board of Insurance is filed with the Chief Clerk under Reference Number A- 0198-71 and is incorporated by reference by Board Order Number 60189. This notification is made pursuant to the Insurance Code, Article 5.97, 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 February 19, 1993. TRD-9319307 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: March 13, 1993 Proposal publication date: January 15, 1993 For further information, please call: (512) 463-6327 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 public meeting held at 9 a.m. February 10, 1993, in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street, Austin adopted a filing by the Texas Department of Public Safety for a Special Rangers Bond form which was filed in the Chief Clerk's Office on January 6, 1993. The Special Rangers Bond is a requirement of the Government Code, Article 411.023, and is conditioned on the principal performing all the duties of a Special Ranger. The penalty amount of the bond is $2,500. The Texas Department of Public Safety's filing (Reference Number A-0193-72) was published in the January 15, 1993, issue of the Texas Register (18 TexReg 296). The State Board has jurisdiction over this matter pursuant to the Insurance Code, Articles 5.13, 5.15, and 5.97. The full text of the filing for a Special Rangers Bond Form as adopted by the State Board of Insurance is filed with the Chief Clerk under Reference Number A0193-72 and is incorporated by reference by Board Order Number 60188 This notification is made pursuant to the Texas Insurance Code, Article 5. 97, 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 February 19, 1993. TRD-9319306 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: March 13, 1993 Proposal publication date: January 15, 1993 For further information, please call: (512) 463-6327 The State Board of Insurance of the Texas Department of Insurance, at a public meeting held at 9 a.m. February 10, 1993, in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street, Austin has adopted a filing by the Texas Department of Insurance for revised bond forms for the Reinsurance Intermediary Bond and the Corporate Agents Bond. The Texas Department of Insurance's filing (Reference Number A-0198-71) was published in the January 15, 1993 issue of the Texas Register (18 TexReg 296). Title 28 TAC sec.19.1403, subsection (1) requires a Reinsurance Intermediary Bond to be executed by the reinsurance intermediary as principal and as surety, a surety company authorized to do the business of insurance in this state, or a surplus lines insurer eligible in this state. The bond form has been amended to include as surety a surplus lines insurer eligible in this state. Also the counter signature block on the bond has been revised from "Texas Local Recording Agent" to "Licensed Agent" to allow surplus lines agents to countersign the bond. The corporate insurance agents bond is being revised to include requirements under Title 28 TAC sec.11.404, subsection (b)(2) regarding the licensing requirements of HMO corporate agents to purchase a bond in lieu of an errors and omissions policy or depositing $25,000 with the State Treasurer. The State Board of Insurance has jurisdiction over this matter pursuant to the Insurance Code Articles 5.13, 5.15, and 5.97. The full text of the filing for the revised bond forms for the Reinsurance Intermediary Bond and the Corporate Insurance Agents Bond as adopted by the State Board of Insurance is filed with the Chief Clerk under Reference Number A- 0198-71 and is incorporated by reference by Board Order Number 60189. This notification is made pursuant to the Insurance Code, Article 5.97, 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 February 19, 1993. TRD-9319307 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: March 13, 1993 Proposal publication date: January 15, 1993 For further information, please call: (512) 463-6327