ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the 63>Texas Register. The section becomes effective 20 days after the agency files the correct document with the 63>Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 1. ADMINISTRATION Part XIII. Texas Incentive and Productivity Commission Chapter 273. State Employee Incentive Program 1 TAC sec.sec.273.1, 273.7, 273.27 The Texas Incentive and Productivity Commission adopts amendments to sec.sec.273.1, 273.7, and 273.27. Section 273.7 and sec.273.27 are adopted with changes to the proposed text as published in the November 12, 1993, issue of the Texas Register (18 TexReg 8297). Section 273.1 is adopted without changes and will not be republished. Section 273.9, concerning the award eligibility period for a suggestion, is withdrawn and will be proposed at a later date. A non- substantive change is made regarding the fiscal implications contained in the proposed preamble. There will be a cost to those state agencies that participate in the State Employee Incentive Program in the form of the employer's share of social security taxes. The cost cannot be defined at this time because it depends on the participation levels and amount of the cash awards distributed. These amendments are adopted so that the rules will facilitate compliance with Internal Revenue Service determinations. Section 273.1 amends a definition to reflect change in Government Code and adds a definition to differentiate bonus payment and the amount the employee will receive after taxes. Section 273.7 further defines the agency role in processing the award payment. Section 273.27 amends provisions concerning the tax treatment of an award payment to have taxes withheld from the cash award and gives a beginning date that cash awards will be affected. No comments were received regarding adoption of the rules. The amendments are adopted under Government Code, Chapter 2108, sec.2108. 004(b), which provides the Texas Incentive and Productivity Commission with the authority to promulgate rules for the State Employee Incentive Program. sec.273.7. Agency's Role. (a) Agency coordinator appointments. The executive director of each eligible state agency shall designate an agency coordinator. (b) Intra-agency review. The executive director of agencies with 25 or more employees shall designate at least two individuals employed by the agency to assist the agency coordinator in impartially evaluating all eligible employee suggestions as part of the internal review process provided for under the Act. One of the individuals should be experienced and familiar with the various cost centers, accounts, and line items which will be affected by a variety of implemented suggestions. Another of the individuals should have experience in the technical, engineering, procedural, management, or other areas required to objectively evaluate the feasibility of a variety of eligible suggestions. Executive directors of agencies with fewer than 25 employees shall designate at least one other person employed by the agency to assist the agency coordinator in evaluating suggestions. Additional members may be added to the intra-agency review staff as needed to evaluate the suggestions appropriately. (c) Submission of suggestions. Agencies shall submit all suggestions, whether eligible or ineligible, to the Commission. (d) Suggestion adoptions. The final adoption of an employee suggestion is at the discretion of the chief administrative officers of each agency. (e) Establishment of Savings Measurement Account. Upon implementation of an approved employee suggestion, an agency shall establish a Savings Measurement Account and transfer into this account the share of the projected net first-year savings/revenues attributable to the suggestion during that fiscal year. Savings/revenue attributable to implementation of subsequent approved employee suggestions may be transferred into the agency's initial Savings Measurement Account or may be transferred into a newly established Savings Measurement Account. If a new fiscal year begins prior to the agency's certification of savings, at the beginning of the fiscal year the agency shall transfer into the Savings Measurement Account(s) the share of the projected net savings/revenues attributable to the suggestion(s) during the fiscal year. In the event that the certified savings/revenue amount differs from the balance in a Savings Measurement Account, the agency shall use the procedures outlined in the General Appropriations Act. (f) Calculation and certification of net savings. Upon implementation of an approved suggestion, an agency shall track savings for one year in preparation for making the certification and funds transfers described in the Act, sec.2108.037. The Commission may certify a savings amount prior to the completion of a full implementation year if the suggestion involves a one-time savings or if the Commission finds the agency's projected savings to be based on a reasonable and reliable method. (g) Allocation of net annual savings. Net annual savings realized from employee suggestions adopted by a state agency must be allocated by the state agency as provided in the Act, sec.2108.037, the General Appropriations Act, and Comptroller's Accounting Policy Statement #34. Necessary amounts for withholding of employee income and Social Security taxes will be deducted from the cash award and the originating agency will pay the employer share of the Social Security taxes. sec.273.27. Awards. (a) Amount. An employee whose suggestion results in a net annual savings or increase in revenues of $100 or more is eligible for a bonus of 10% of the net savings or revenue increase, up to a maximum of $5,000. If the suggestion is submitted by more than one employee, the bonus shall be divided among the employees. (b) Suggestion eligibility. Only an approved and implemented employee suggestion is eligible for an award. (c) Award prior to full one-year implementation. The Commission may grant an award before the completion of the first year in which the suggestion is implemented, based on actual or projected annual savings or increased revenues that are certified by the affected state agency and the Commission. (d) Taxes on cash awards. Cash awards are considered wages for Social Security and income tax purposes. (e) Processing cash awards. Upon Commission receipt of notification that savings have been transferred by the affected agency according to the allocations provided in the Government Code, sec.2108.037, General Appropriations Act, and Comptroller's Accounting Policy #34, the Commission will initiate processing payment of the net cash award. The Commission will process a supplemental pay transaction or cause a supplemental pay transaction to be made for the employee(s) submitting the suggestion. Necessary amounts for withholding of employee income and Social Security taxes will be deducted from the cash award. The originating agency will pay the employer share of Social Security taxes. This section will affect cash awards made in the period beginning January 1, 1994. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 21, 1993. TRD-9333882 M. Elaine Powell Executive Director Texas Incentive and Productivity Commission Effective date: January 25, 1994 Proposal publication date: November 12, 1993 For further information, please call: (512) 475-2393 TITLE 4. AGRICULTURE Part I. Texas Department of Agriculture Chapter 26. Texas Agricultural Diversification Program: Linked Deposits 4 TAC sec.sec.26.1-26.3, 26.5, 26.6, 26.8, 26.10, 26.12 The Texas Department of Agriculture (the department) adopts amendments to sec.sec.26.1-26.3, 26.5, 26.6, 26.8, 26.10, and 26.12, concerning the administration, implementation, practice, and procedure for participation in the Texas Department of Agriculture Linked Deposit Program. Section 26.1 has been adopted with changes to the proposed text as published in the November 2, 1993, issue of the Texas Register (18 TexReg 7904). Sections 26.2, 26. 3, 26.5, 26.6, 26.8, 26.10, 26.12 have been adopted without changes and will not be republished. The definition "linked deposit" in sec.26.1 has been changed. In subparagraph (A)(i) of the definition, 2.09% has been changed to 2.0% to correct a printing error. The amendments provide new definitions, clarify the program's purpose, make application procedures consistent with new definitions, allow for use of loan proceeds for the purchase of water conservation equipment, establish new program limitations, correct information on submitting communications regarding the program and comply with House Bill 1622 passed by the Texas Legislature, 73rd Session. The amendments will function by providing for more efficient operation of the linked deposit program, facilitating the generation of up to $5 million in new agricultural loans, and ensuring consistency with recent statutory changes. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Agriculture Code, sec.44.007, which provides the Texas Department of Agriculture with the authority to adopt rules and procedures for administration of the linked deposit program. sec.26.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Current market rate-The rate of interest on a United States treasury bill or note, the maturity date of which most closely matches the maturity date of the loan, or the end of the next biennium of the state, whichever is sooner, as determined by reference to the United States treasury bill or note section of the Wall Street Journal published on the day the loan is priced. Customarily grown -Crops, including grapefruit, produced in this state that utilize conventional management systems, and have cash receipts equal to or exceeding $5 million as listed in the 1991 Texas Agricultural Cash Receipts and Price Statistics, compiled by the Texas Agricultural Statistics Service as published in November, 1992, for the period ending 1991, except for experimental varieties of these crops. Eligible borrower -A person who is in the business or entering the business of: (A) processing and marketing agricultural crops in this state; (B) producing alternative agricultural crops in this state; (C) producing agricultural crops in this state, the production of which has declined markedly because of natural disasters; or (D) producing agricultural crops in this state using water conservation equipment for agricultural production purposes. Lender-A financial institution that makes commercial loans, agrees to participate in the linked deposit program and is certified as a state depository by the treasury. Loan-The note or other evidence of indebtedness entered into between the eligible borrower and the lender under the program. Linked deposit -A time deposit governed by a written deposit agreement between the state and the lender that provides that: (A) the lender pay interest on the deposit at a rate that is not less than the greater of: (i) the current market rate minus 2.0%; or (ii) 1.5%; (B) the state note withdraw any part of the deposit before the expiration of a period set by a written advance notice of the intention to withdraw; and (C) the eligible lending institution agree to lend the value of the deposit to an eligible borrow at a maximum rate that is the current market rate plus 4.0%. Program-The Linked Deposit Program authorized by the Act, sec.44.007. 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 December 22, 1993. TRD-9333979 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: January 17, 1994 Proposal publication date: November 2, 1993 For further information, please call: (512) 463-7583 Chapter 28. Texas Agricultural Finance Authority: Loan Guaranty Program 4 TAC sec.sec.28.1-28.3, 28.6-28.11, 28.13, 28.14 The Board of Directors of the Texas Agricultural Finance Authority (TAFA) of the Texas Department of Agriculture adopts amendments to sec.sec.28.1-28.3, 28. 6-28.11, 28.13 and 28.14, concerning procedures for participation in the Texas Agriculture Finance Authority Loan Guaranty Program, without changes to the proposed text as published in the October 15, 1993, issue of the Texas Register (18 TexReg 7072). The amendments clarify and update sections that provide a general statement of authority, purpose of the program, definitions, general project eligibility requirements, application requirements and procedures for filing applications, general terms and conditions of the authority's financial commitment and criteria for approval of a guaranty, and make these sections consistent with statutory changes made by the 73rd Legislature, 1993. The amendments will function by providing for more efficient operation of the loan guaranty applications process, and by ensuring consistency with recent statutory changes. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Agriculture Code, sec.58.023, which provides the TAFA Board with the authority to adopt rules to establish criteria for eligibility of applicants and lenders under the TAFA Loan Guaranty Program; and sec.58.022, which provides the Board with the authority to adopt rules and procedures as necessary for the administration of its 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 December 22, 1993. TRD-9333980 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: January 17, 1994 Proposal publication date: October 15, 1993 For further information, please call: (512) 463-7583 Chapter 29. Texas Agricultural Diversification Program: Matching Grants 4 TAC sec.sec.29.2, 29.6, 29.7, 29.9, 29.12, 29.13 The Texas Department of Agriculture (the department) adopts amendments to sec.sec.29.2, 29.6, 29.7, 29.9, 29.12, and 29.13, concerning the administration, implementation, and procedure for participation in the Texas Department of Agriculture Matching Grants Program, without changes to the proposed text as published in the October 29, 1993, issue of the Texas Register (18 TexReg 7508). The amendments provide changes to definitions, program limitations, application procedures, schedule of awards and communications regarding the program to make these consistent with statutory changes made by the 73rd Legislature. The amendments will function by providing for more efficient operation of the matching grants programs, and will ensure consistency with recent statutory changes. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Agriculture Code, sec.12.016, which provides the department with general rule-making authority; and sec.44. 002 of the Code, which provides that the commissioner shall create an agricultural diversification 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 December 22, 1993. TRD-9333981 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: January 17, 1994 Proposal publication date: October 29, 1993 For further information, please call: (512) 463-7583 TITLE 7. BANKING AND SECURITIES Part I. State Finance Commission Chapter 1. Consumer Credit Commissioner Subchapter B. Miscellaneous 7 TAC sec.1.303 The State Finance Commission of Texas adopts an amendment to sec.1.303, without changes to the proposed text as published in the August 3, 1993, issue of the Texas Register (18 TexReg 4988). The amendment is adopted to reflect the changes in law concerning the amount of the annual fee and the repeal of late payment fees. No comments were received regarding the adoption of the section. The amended section is adopted under Texas Civil Statutes, Article 342-114A, which provide the State Finance Commission with the authority to prescribe such rules or procedure as may be necessary for supervising the Consumer Credit Commissioner and for ensuring compliance with Texas Civil Statutes, Title 79, Article 5069-1.01 et seq. 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 November 5, 1993. TRD-9333950 Al Endsley Consumer Credit Commissioner State Finance Commission Effective date: January 13, 1994 Proposal publication date: August 3, 1993 For further information, please call: (512) 479-1280 TITLE 10. COMMUNITY DEVELOPMENT Part I. Texas Department of Housing and Community Affairs Chapter 9. Texas Community Development Program Subchapter A. Allocation of Program Funds 10 TAC sec.9.3 The Texas Department of Housing and Community Affairs (TDHCA) adopts the repeal of sec.9.3, without changes to the proposed text as published in the November 26, 1993, issue of the Texas Register (18 TexReg 8739). The repeal of sec.9.3 is necessary because the activities and programs available for funding under this section are now part of the new adopted Texas Capital Fund section, sec.9.7. New sec.9.7 clarifies the available Texas Capital Fund programs and incorporates changes to the funding cycle, selection procedures, and selection criteria for the Main Street Improvements Program. The repeal provides for a greater a understanding of the available Texas Capital Fund programs and establishes selection cycle, procedures, and criteria through the adoption of new sec.9.7. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Government Code, Chapter 2306, sec.2306. 098, which provides the Texas Department of Housing Community Affairs with the authority to allocate Community Development Block Grant nonentitlement area funds to eligible counties and municipalities according to department rules. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 28, 1993. TRD-9334019 Henry Flores Executive Director Texas Department of Housing and Community Affairs Effective date: January 19, 1994 Proposal publication date: November 26, 1993 For further information, please call: (512) 475-3948 10 TAC sec.9.7 The Texas Department of Housing and Community Affairs (TDHCA) adopts new sec.9.7, without changes to the proposed text as published in the November 26, 1993, issue of the Texas Register (18 TexReg 8739). The new section covers the activities and programs available for funding under the Texas Capital Fund and replaces repealed sec.9.3. New sec.9.7 clarifies the available Texas Capital Fund programs and incorporates changes to the funding cycle, selection procedures, and selection criteria for the Main Street Improvements Program. The new section clarifies the available Texas Capital Fund programs and establishes a greater accountability for the selection of Main Street Improvements Programs grantees. No comments were received regarding adoption of the new section. The new section is adopted under Texas Government Code, Chapter 2306, sec.2306.098, which provides the Texas Department of Housing Community Affairs with the authority to allocate Community Development Block Grant nonentitlement area funds to eligible counties and municipalities according to department rules. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 28, 1993. TRD-9334018 Henry Flores Executive Director Texas Department of Housing and Community Affairs Effective date: January 19, 1994 Proposal publication date: November 26, 1993 For further information, please call: (512) 475-3948 Part V. Texas Department of Commerce Chapter 176. Enterprise Zone Program Rules 10 TAC sec.sec.176.1-176.12 The Texas Department of Commerce adopts amendments to sec. sec.176.1-176.4 and new sec.sec.176.5.-176.12, concerning the Texas Enterprise Zone Act, Texas Government Code Chapter 2303, and Article 5190.7, as amended. Section 176.1 is adopted with minor changes to the proposed text as published in the August 31, 1993, issue of the Texas Register (18 TexReg 5812). Sections 176.2-176. 12 are adopted without changes, and will not be republished. The minor changes to sec.176.1 are necessary to correctly cite to the new locations of most of the Texas Enterprise Zone Act, the Texas Open Records Act and the Administrative Procedure Act. The new citations became effective subsequent to publication of the proposed rules. Section 176.1, General Provisions, contains the general provisions and the definitions for the Texas Enterprise Zone Program. Section 176.2, Filing Requirements for Applications and Claims, provides application filing guidelines, qualified business certification guidelines and new zone designation guidelines. It also sets forth the Texas Department of Commerce's review procedure applicable to consideration of zone designations for previously granted zone designations and contains the fee requirements applicable to applications. Section 176.3, Eligibility Requirement for Designation of an Enterprise Zone, sets forth the eligibility requirements for zone designations; clarifies that advance approval is required if providing population estimates based on data provided by other than the Texas State Data Center; removes the requirements that supporting documentation for zone designations be no more than 90 days old and authorizes surveys to be no more than three years old; and allows recycling market development zone applications to be submitted simultaneously with, or separate from, zone designation applications. Section 176.4, Application Contents for Designation of Enterprise Zones, contains the requirements for zone applications, including recycling market development zone applications. Section 176.5, Requirement for Designation as a Recycling Market Development Zone and Respective Loans or Grants, and sec.176.6, Application Contents for Designation as a Recycling Market Development Zone, implement recycling market development zones, loans and grants which were established in Senate Bill 1051 by the enactment of sec.sec.481.371-481.375 of the Texas Government Code. Section 176.7, Requirements for Designation of Enterprise Projects, sets forth the requirements for enterprise project designation and provides that the Texas Department of Commerce may approve assumptions of enterprise projects, leasing or transferring ownership of the project designation to another entity, under certain circumstances. Section 176.8, Application Contents for an Enterprise Project, contains the content requirements for enterprise project applications as well as the procedures for receiving Texas Department of Commerce approval of an enterprise zone project name change. Section 176.9, Certification of Neighborhood Enterprise Associations, establishes the process for obtaining neighborhood enterprise association certification. Section 176.10, Approval Standards, sets forth the approval process for enterprise zones and projects, including recycling market development zones; establishes when applications will be received; sets out the deadlines for filing applications during the September, 1993, biennium for designated enterprise projects; specifies the number of new permanent and retained jobs which may be certified after August 31, 1993 for projects designated between September 1, 1993 and August 31, 1994; authorizes designation of up to six enterprise projects per zone per year and establishes a procedure under which the Texas Department of Commerce may allow an enterprise zone to exceed the maximum number of projects within it upon a showing of just cause and upon the governing body's agreement to concomitantly reduce the number of enterprise projects within another enterprise zone within its jurisdiction. It also establishes a term for recycling market development zones as well as certification and loan procedures for such zones; establishes procedures by which enterprise project designations may be assumed by another entity; and specifies that tax refunds under sec.151.429 or tax reductions under sec.151. 1015 of the Tax Code may not be applied for prior to September 1, 1995 for projects designated after August 31, 1993. Finally, sec.176.10 establishes certification standards for builders to be approved as qualified businesses under the Texas Enterprise Zone Act. Section 176.11, Reporting Requirements, establishes certain reporting requirements; requires local governing bodies to notify the Texas Department of Commerce of each commitment made to a qualified business for one-time state sales and franchise tax refunds; delineates factors to be considered in evaluating the public entity's effort relating to the sale of publicly owned land when such property is sold at less than fair market value; includes a provision concerning the annual cost-benefit analysis of the Program which the Texas Department of Commerce must prepare annually for the state auditor and the requirement that neighborhood enterprise associations furnish an annual statement, by September 1 of each year, to the appropriate governing body concerning the programmatic and financial status of approved projects, together with an audited financial statement for such projects. The information is to be provided annually to the Texas Department of Commerce by the governing body. Section 176.12, Boundary Agreements, establishes the process to be used for amending enterprise zone boundaries and clarifies that proposed zone boundaries may be amended to delete land area prior to the enterprise zone designation being approved. Comments in opposition to the applicability of application fees to small cities were received from the Texas Municipal League. The Texas Department of Commerce staff frequently spends more time and resources in providing technical assistance to, and in processing applications from, small governing bodies than it does for larger governing bodies' applications. It is unwilling, therefore, to waive the application fee requirement for any governing body. The Legislature has directed the Texas Department of Commerce to implement cost recovery efforts for the programs and services it provides when feasible to do so. Comments in opposition to portions of the proposed rules, or requesting changes to the proposed rules, were received from Texas Utilities Electric Company and Small Business Advisors. Texas Utilities Electric Company requested that sec.176.2(6)(ii) of the rules be changed to harmonize with Texas Utilities Electric Company's own requirements for qualified businesses under 3. 2.6 Rider ES-Enterprise Zone Service of the Company's tariff. The Texas Department of Commerce believes that the requested change is neither necessary nor in the public interest. The certification requirements of sec.176.2 do not conflict with Texas Utilities Electric Company's tariff, and any effort to tailor the Program rules precisely to a particular utility's current tariff may create a situation which inhibits other utilities with different tariff provisions, and customers on other utility's systems, from qualifying for the discounted utility rates which the Texas Enterprise Zone Act is designed to encourage. Small Business Advisors commented against the definition of "new permanent job" in sec.176.1(20) of the rules due to its concern that many builders would be unable to benefit from the $2,000 refund since they generally employ contractors and subcontractors to provide construction work within an enterprise zone. The definition of "new permanent job" is taken directly from the definition in sec.3(a)(10) of the Texas Enterprise Zone Act; therefore, the Texas Department of Commerce is without discretion to change the definition. Small Business Advisors also suggested expanding the definition at sec.176.1(21) (D) of the rules to cover builders who substantially rehabilitate existing housing. House Bill 1872, which added builders to the definition of "qualified business", does not appear to provide for the expanded definition requested by Small Business Advisors. It appears to contemplate new construction, not rehabilitation of existing housing stock. Small Business Advisors commented that sec.176.3 makes clear that the rehabilitation of existing, substandard housing falls within the general framework. The Texas Department of Commerce is unsure what "falls within the general framework" is intended to mean. It disagrees, however, that the eligibility requirements for enterprise zone designation set forth in sec.176.3 have anything to do with whether the rehabilitation of existing housing within an enterprise zone confers qualified business status upon a builder. All builders must meet the statutory criteria in order to be qualified businesses under the Texas Enterprise Zone Act. Small Business Advisors also asked whether sec.176.5(b) would enable developers rehabilitating existing housing stock in need of substantial work to qualify for loans and grants. The answer is no. Section 176.5 is applicable only to recycling market development zones. Loans and grants are available for certain recycling activities under the statute which are not available to other entities. Small Business Advisors also commented that sec.176.8(a)(3)(B)(i)-(viii) deals with a variety of employment issues that are not very relevant to the development of housing. The Texas Department of Commerce disagrees that these provisions are not relevant. These are statutory enterprise project requirements set forth in sec.10 of the Texas Enterprise Zone Act. Small Business Advisors asked how housing projects are impacted by sec.176.10(b)(1) of the rules. Builders must meet the same requirements as any other qualified business to gain enterprise project benefits under the Texas Enterprise Zone Act. Small Business Advisors stated that the standards set forth in sec.176.10(f) (1)(B) and (E) will not work for multifamily builders and that it might be appropriate to request another form of reference, such as a lender's recommendation to fulfill the requirement. The requirements set forth in sec.176.10(f) are statutory requirements that builders must meet in order to be qualified businesses under sec.3(a)(11) of the Texas Enterprise Zone Act. Small Business Advisors commented that sec.176.10(f)(2) needs to include language for rehabilitation and be specific to rental housing. The Texas Department of Commerce cannot make the requested changes under the statutory language currently in place. Section 10(b)(5) of the Texas Enterprise Zone Act contains the precise language that is set forth in sec.176.10(f)(2). Small Business Advisors also commented that, after reviewing Senate Bill 405, the tax code might have to be modified to accept any changes regarding "permanent job". It also commented that it was unclear as to whether the Texas Department of Commerce is making recommendations to the local governments regarding local incentives, but that real estate tax abatements for some period of time would be very inviting to some developers. These comments are not relevant to the rules and, thus, are not addressed herein. Sections 176.1-176.12 are adopted under the authority of the Texas Government Code, Chapter 2303 and Texas Civil Statutes, Article 5190.7, which give authority to the Texas Department of Commerce to implement the Texas Enterprise Zone Act Program; the Administrative Procedure Act, Texas Government Code Subchapter B, which sets forth the requirements for administrative rulemaking by state agencies; and the Texas Government Code, sec.481.005(d), which requires, among other things, that the Policy Board of the Texas Department of Commerce shall establish policy and adopt rules that it may adopt under law. sec.176.1. General Provisions. (a) Introduction. Pursuant to the authority granted by the Texas Enterprise Zone Act, Texas Government Code, Chapter 2303, Texas Civil Statutes, Article 5190.7, as amended, and the Administrative Procedure Act, Texas Government Code, Subchapter B, the Texas Department of Commerce prescribes the following sections regarding practice and procedure before the department in the administration and implementation of the Enterprise Zone Program. (b) Purpose. It is the purpose of the Texas Enterprise Zone Act to establish a process that clearly identifies those distressed areas and provides incentives by both state and local government to induce private investment in those areas by means of the removal of unnecessary governmental regulatory barriers to economic growth and the provision of tax incentives and economic development program benefits. The purpose of these sections is to provide standards of eligibility and procedures for applications for designation of qualified areas as enterprise zones and recycling market development zones and for designation of qualified businesses as enterprise projects. (c) Definition of terms. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Act-The Texas Enterprise Zone Act, Chapter 2303, Texas Government Code (Vernon's Session Laws 1993) and Texas Civil Statutes, Article 5190.7, as amended. (2) Administrative authority-A board, commission, or committee appointed by the governing body to administer the Act within an enterprise zone. (3) Affected entity-The applicant, qualified business, qualified employee, or any other person that is a party to a transaction involving the designation of an enterprise zone or project. (4) Applicant-The municipality, county, or combination of municipalities or counties filing an application with the department for designation of an enterprise zone or enterprise project or affected entity filing with the department for certification under the Act, sec.3(a)(9) or (11) and this chapter. (5) Application-An application, including supporting and supplemental instruments and documentation, for designation of an enterprise zone or for designation of an enterprise project or for certification by the department or local governing body as a qualified business or neighborhood enterprise association under the Act and this chapter. (6) Board-The Board of Directors of the Texas Department of Commerce. (7) Day-The period of time between 8:00 a.m. and 5:00 p.m. on any day other than a Saturday, Sunday, or state or federal holiday. (8) Department-The Texas Department of Commerce. (9) Depressed area-An area within the jurisdiction of a county or municipality designated by ordinance, or order that is an area with pervasive poverty, unemployment, and economic distress. An area is an area of pervasive poverty, unemployment, and economic distress if: (A) the average rate of unemployment in the area during the most recent 12- month period for which data is available was at least one and one-half times the local, state, or national average for that period or if the area has had at least a 9.0% population loss during the most recent six-year period or a population loss of at least 3.0% for the most recent three-year period; and (B) the area meets one or more of the following criteria: (i) the area was a low-income poverty area; (ii) the area is in a jurisdiction or pocket of poverty eligible for urban development action grants under federal law according to the most recent certification available from the United States Department of Housing and Urban Development; (iii) at least 70% of the residents or households of the area have an income below 80% of the median income of the residents or households of the locality or state, whichever is lower; (iv) the nominating government establishes to the satisfaction of the department that: (I) chronic abandonment or demolition of commercial or residential structures exists in the area; (II) substantial tax arrearages for commercial or residential structures exist in the area; (III) substantial losses of businesses or jobs exist in the area; or (IV) the area is part of a disaster area declared by the state or federal government during the most recent 18-month period. (10) Economically disadvantaged individual-An individual who: (A) for at least three months before obtaining employment with a qualified business was unemployed; (B) receives public assistance benefits, such as welfare payments and food stamp payments, based on need and intended to alleviate poverty; (C) is an economically disadvantaged individual, as defined by the Job Training Partnership Act, sec.4(8), (29 United States Code, sec.1503(8)); (D) is an individual with handicaps, as defined by 29 United States Code, sec.706(8); (E) is an individual who is an inmate, as defined by the Government Code, sec.498.001, or who is entering the workplace after being confined in a unit of the institutional division of the Texas Department of Criminal Justice or a correctional facility authorized by the Government Code, Chapter 494; or (F) is an individual who meets the current low income or moderate income limits developed under the United States Housing Act of 1937, sec.8 (42 United States Code, sec.1437f). (11) Eligible taxable proceeds-means taxable proceeds generated, paid, or collected by a qualified hotel project or a business at a qualified hotel project including hotel occupancy taxes, ad valorem taxes, sales and use taxes, and mixed beverage taxes. (12) Enterprise project-A qualified business designated by the department as an enterprise project under the Act, sec.10, and sec.176.5 of this title (relating to Requirements for Designation of Enterprise Projects) that is eligible for the state tax incentives provided by law for an enterprise project. (13) Enterprise zone-An area of the state designated by the department as an enterprise zone under the Act, sec.9, and sec.176.3 of this title (relating to Eligibility Requirements for Designation of an Enterprise Zone). (14) Enterprise project eligible enterprise zone-means a state- designated enterprise zone that meets economic distress levels set forth in the Act, sec.1O(a). (15) Executive director-The executive director of the department or his or her authorized designee. (16) Extraterritorial jurisdiction-Territory in the extraterritorial jurisdiction of a municipality that is considered to be in the jurisdiction of the municipality. Except in a county with a population of 750,000 or more, according to the most recent federal census, the governing body of a county may not nominate territory in a municipality or in the extraterritorial jurisdiction of a municipality to be included in an enterprise zone unless the governing body of the municipality also nominates the territory pursuant to a joint application made with the county. (17) Governing body-The governing body of a municipality or county that has applied to have an area within its jurisdiction designated as an enterprise zone. (18) Local Government-A municipality or county. (19) Neighborhood enterprise association-A private sector neighborhood organization within an enterprise zone that meets the criteria set forth in the Act, sec.21, and sec.176.7 of this title (relating to Certification of Neighborhood Enterprise Associations). (20) New permanent job-A new employment position created by a qualified business that has provided employment to a qualified employee of at least 1,040 hours annually and intended to be an employment position retained during the period the business is designated as an enterprise project. (21) Qualified business-A person, including a corporation or other entity that the department, for purposes of state benefits under the Act, and a governing body, for purposes of local benefits, certifies to have met the following criteria: (A) the person is engaged in or has provided substantial commitment to initiate the active conduct of a trade or business in the zone; and (B) at least 25% of the business's new employees in the zone are residents of any zone within the governing body's or bodies' jurisdiction or economically disadvantaged individuals; and (C) a franchise or subsidiary of a new or existing business may be certified by the governing body or an enterprise zone as a qualified business if the franchise or subsidiary is located entirely in the zone and maintains separate books and records of the business activity conducted in the zone; or (D) as a builder that has demonstrated proficiency in residential construction, financial stability, and participation in a 10-year insured warranty program in accordance with the Act and sec.176.10(f) of this title (relating to Certification of Qualified Business); or (E) is a qualified hotel project that is owned by a municipality with a population of 1,500,000 or more or a nonprofit municipality sponsored local government corporation created pursuant to the Texas Transportation Corporation Act (Texas Civil Statutes, Article 1528(l)) proposed to be constructed within 1,000 feet of a convention center owned by a municipality having a population of 1,500,000 or more, including all facilities ancillary thereto such as shops and parking facilities. (22) Qualified employee-An employee who works for a qualified business and who performs at least 50% of his service for the business within the enterprise zone. (23) Qualified property-Any one or more of the following: (A) tangible personal property located in the zone that was acquired by a taxpayer not earlier than the 90th day before the date of designation of the area as an enterprise zone or enterprise project, as applicable, and was used predominantly by the taxpayer in the active conduct of a trade or business; (B) real property located in a zone that: (i) was acquired by the taxpayer not earlier than the 90th day before the date of designation of the zone or enterprise project, as applicable, and used predominantly by the taxpayer in the active conduct of a trade or business; or (ii) was the principal residence of the taxpayer on the date of the sale or exchange; or (C) interest in a corporation, partnership or other entity if, for the most recent taxable year of the entity ending before the date of sale or exchange, the entity was a qualified business. (24) Recycling market development loan or grant-means a loan or grant that may be made by the department to the governing body of an enterprise zone designated as a recycling market development zone to fund an activity that sustains or increases recycling efforts. (25) Recycling market development zone-means an enterprise zone that the department may designate for the development of local business and industry in the zone to recycle materials that have served their intended use or that are scrapped, discarded, used, surplus, or obsolete by collecting, separating or processing the materials for use in the production of new products. (26) Retained job-means a job that existed with a business prior to designation as an enterprise project or certification as a qualified business that has provided employment to a qualified employee of at least 1,820 hours annually intended to be an employment position retained during the period the business is designated as an enterprise project or certified as a qualified business in accordance with Texas Tax Code, Chapter 151. (27) Staff-The staff of the department. (d) Amendment and suspension of rules. These sections may be amended by the executive director at any time in accordance with the Administrative Procedure Act, Texas Government Code, Subchapter B, as amended. The executive director may suspend or waive a section, not statutorily imposed, in whole or in part, upon the showing of good cause or when, at the discretion of the executive director, the particular facts or circumstances render such waiver of the section appropriate in a given instance. (e) Application of sections. All sections shall be applied collectively, to the extent relevant, in connection with specific determinations made by the department in the course of its administrative functions. The department will make its determination on the basis of specific characteristics and circumstances of the individual application, and in light of the basic statutory purposes in the particular area. (f) Examination of records. Any party requesting the examination of records pursuant to the Texas Open Records Act, Texas Government Code, Chapter 552, shall indicate in writing the specific nature of the documents to be viewed, and if photocopying is desired, the prevailing standard fee of the department will be charged to cover the cost of the request. (g) Written communication with the department. Applications and other written communications to the department should be addressed to the attention of the Texas Enterprise Zone Program, Business Development Division, Texas Department of Commerce, P.O. Box 12728, Austin, Texas 78711. 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 December 23, 1993. TRD-9333939 Cathy Bonner Executive Director Texas Department of Commerce Effective date: January 13, 1993 Proposal publication date: August 31, 1993 For further information, please call: (512) 320-9401 10 TAC sec.sec.176.5-176.10 The Texas Department of Commerce adopts the repeal of sec. sec.176.5-176.10, concerning Enterprise Zone Program Rules, without changes to the proposed text as published in the August 31, 1993, Texas Register (18 TexReg 5826). The repeal is necessary due to new and amended final rules being adopted simultaneously with the repeal. No comments were received regarding adoption of the repeal(s). The repeal is authorized by Texas Government Code, Chapter 2303; Texas Civil Statutes, Article 5190.7 as amended; Texas Government Code, sec.481.005, and Texas Government Code Subchapter B. 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 December 23, 1993. TRD-9333938 Cathy Bonner Executive Director Texas Department of Commerce Effective date: August 31, 1993 Proposal publication date: January 13, 1994 For further information, please call: (512) 320-9401 TITLE 16. ECONOMIC REGULATION Part I. Railroad Commission of Texas Chapter 3. Oil and Gas Division Conservation Rules and Regulations 16 TAC sec.3.31 The Railroad Commission of Texas adopts an amendment to sec.3.31, regarding gas well allowables. The amendments are adopted with changes to the proposed text as published in the November 9, 1993, issue of the Texas Register (18 TexReg 8071). The amendment is adopted to increase the accuracy and efficiency of the proration system. The amendment will enable the commission to fulfill its statutory mandate to accurately determine market demand, set the reservoir allowable to market demand, and protect correlative rights. The commission has made changes to the proposed rule based on comments received. The changes are as follows: The first change is to sec.3.31(d)(E)(i)-(iii) which "reset" the Forecast Correction Adjustment. These changes will negate the effect on the Forecast Correction Adjustment of underage accumulated by wells not capable of making up underage. The change will result in a more accurate assignment of allowables. The second change is to add the word "allowable" in sec.3.31(d)(E)(iv) for clarification. The third change is to sec.3.31(j)(3)(A). The change deletes the requirement that operators provide a written explanation for substantial fluctuations in production from wells in a field with a suspended allocation formula. The commission has determined that this proposed section would have placed a heavy burden on both operators and the commission without significantly advancing the purpose of the rule. Furthermore, the commission has determined that internal auditing of production records from fields with suspended allocation formulas will allow the commission to protect the correlative rights of the field's mineral interest owners. The change also places a continuing duty on the operator to inform the commission of a loss of market and provides for reinstatement of the allocation formula on such notice. The fourth change is to sec.3.31(j)(4) which provides that a hearing may be requested if the commission reinstates the allocation formula and deletes the word "administratively." These changes are for procedural clarity. The fifth, sixth, and seventh changes are to sec.3.31(k)(2). The term "cut off" has been changed to one word, the initial cutoff set at 70%, and administrative special allowable wells qualifying under sec.3.31(k)(1) are exempted from consideration under sec.3.31(k)(2). The initial cutoff change is necessary as a starting point and the other changes are for clarification. The adopted amendment better enables the commission to protect the correlative rights of mineral interest owners in a common reservoir by insuring a more accurate assignment of allowables in a reservoir. The adopted amendment also better enables the commission to determine when suspension of the allocation formula is warranted. This determination allows reservoirs that can, and do, produce at a rate equal to their current deliverability, and therefore ratably, to have the flexibility to do so without unnecessary regulatory burdens while assuring the protection of the correlative rights of the fields mineral interest owners. The following is a summary of comments: One commenter suggested that one-well gas fields have as a maximum allowable the greater of the latest G-10 deliverability or the field's most recently reported production. The Commission disagrees. Such a change could result in over-assigning allowables and might be detrimental to the proration system goals of accurately assigning allowables. Several commenters opposed, as unnecessary, the requirement of sec.3.31(j) (3) which requires operators of fields with suspended allocation formulas to report substantial production deviations. These commenters also consider the terms "substantially " and "immediately" to be vague. The commission agrees. The commission has determined through internal auditing of production data that the proposed reporting requirement would be prohibitively burdensome and that the goals of the proposed reporting requirement can be met by computer monitoring of fields with suspended allocation formulas and by more detailed inquiry as necessary. One commenter proposed that transporters of gas be required to certify that they have pipeline capacity for 100% of a field's production prior to suspension of that field's allocation formula. This commenter is concerned that a field's producing at capacity under sec.3.31(j) may cause a pipeline limitation to another field. If that curtailed field is prorated, the correlative rights of the mineral interest owners are protected by the proration system. If the curtailed field is operating with a suspended allocation formula, the commission's production monitoring of fields with suspended allocation formulas will allow the commission to recognize this situation and reinstate the allocation formula if warranted. One commenter objected to requiring consent from operators in a field prior to suspension of the allocation formula. The commission believes it is appropriate for an operator who is waiving correlative rights protection under the gas proration rules to do so affirmatively. Several commenters proposed that the reinstatement of the allocation formula occur only after an opportunity for a hearing. The commission disagrees. The commission will reinstate the allocation formula only if the correlative rights of the mineral interest owners are considered to be in jeopardy. An operator can request a hearing to consider suspension of the allocation formula at this time and the correlative rights of all parties will be protected by the proration system during the pendency of the hearing. Several commenters proposed that the requirement for allocation formula suspension under sec.3.31(j)(1)(A) be changed from deliverability to capability. The commission disagrees. The commission's statutory mandate is to prorate whenever demand falls below a point that may allow for nonratable production from a common reservoir. Nonratable production from a nonprorated reservoir threatens the correlative rights (i.e. the right of all gas owners to have an opportunity to produce and use or sell gas their gas) of the owners of the gas in that reservoir. Because using capability would allow a well's production to be restricted (for instance, by a substitute capability determination) the commission cannot meet its statutory mandate if capability is substituted for deliverability in sec.3.31(j)(1)(A). One commenter proposed that fields operating with a suspended allocation formula be required to renew the exception annually due to the possibility of changed conditions. The commission disagrees. The commission's production monitoring of fields with suspended allocation formulas will allow the commission to recognize changed conditions that warrant reinstatement of the allocation formula. One commenter proposed that applications for suspension of the allocation formula be sent to gatherers and first purchasers in the field prior to suspension of the formula so that the gatherers and purchasers might inform the commission of potential curtailments that will occur in other fields as a result of the requested suspension. The commission disagrees. An operator cannot make application for suspension of the allocation formula unless that operator has the ability to market 100% of the field's deliverability. If a pipeline limitation occurred, the operator could not meet this requirement. One commenter proposed that the amendments be adopted as an emergency measure. The commission believes that normal rulemaking procedures are adequate for the amendments. One commenter proposed to exclude administrative special allowable wells under sec.3.31(k)(1) from consideration under sec.3.31(k)(2). The commission agrees. The commenter's language is more precise and the change has been made. Several commenters proposed that the commissions ability to change the cutoff percentage for administrative special allowable wells under sec.3.31(k) (2) be limited to twice a year, with most commenters suggesting the change coincide with balancing periods. The commission disagrees. These commenters are concerned that the commission will change this cutoff percentage monthly. No such frequent change in the cutoff percentage is anticipated. However, the commission must have the flexibility to react to changes when necessary. One commenter proposed that administrative special allowable wells under sec.3.31(k)(2) not qualify for Category Five priority under sec.3.34 because the changing of the cutoff percentage at the monthly statewide hearing would make it impossible for a purchaser to keep track of the wells that change priority. The commission disagrees. As stated in the previous paragraph, the cutoff percentage is not anticipated to fluctuate unless changes in the production environment so warrant. One commenter proposed that the Forecast Correction Adjustment be augmented when an operator of overproduced wells voluntarily reduces the rate of production to make up overproduction. The commenter believes this is necessary to prevent a reduction in reservoir allowable. The commission disagrees. While it is true that, all other things being equal, the reservoir allowable will be reduced, this reduction merely offsets the increased allowable that resulted from a positive Forecast Correction Adjustment from the months when the overproduction occurred. If the positive effect on the Forecast Correction Adjustment is allowed to occur during overproduction but the negative effect is not allowed to occur when the overproduction is made up, wells that overproduce are given an advantage to the detriment of other wells in the reservoir. An operator can request field balancing if the situation so warrants. One commenter proposed that limited wells not be allowed to accrue underproduction because these wells cannot make up the underage. The commission disagrees. The provisions of proposed subparagraph sec.3.31(k)(2) will allow the commission the flexibility to prevent limited wells from accruing underage that they cannot make up. This commenter also suggested that an operator be allowed to cancel underage on request. The commission disagrees. An operator may request field-wide balancing as needed, and the adopted sec.3. 31(k)(2) will greatly reduce or eliminate the accumulation of underproduction that cannot be produced. One commenter proposed that the Forecast Correction Adjustment be defined as the difference between the allowables assigned and the production reported from the most recent production month. The commission disagrees. Allowables are assigned based on the forecast and the forecast must be as accurate as possible because individual well allowables are based on the forecast. The proposed change would not foster the goal of the Forecast Correction Adjustment which is to refine the forecast so that accurate allowables are assigned. The proposed change would be detrimental to correlative rights because any production in excess of, or less than, the forecasted amount would not be accounted for ratably. One commenter proposed that the filing of a substitute capability determination for a well be accepted only from the operator of record for that well. The commission considers this proposal unnecessary. The required form expressly limits such a filing to those who are duly authorized to make the filing. One commenter proposed that the allowable for an administrative special allowable well under sec.3.31(k)(1) receive the lesser of 100 MCFPD or the allowable calculated by the field's allocation formula if that formula contained an acreage factor. The commission disagrees. The commission considers it inappropriate to limit these low volume wells by a statewide rule. If individual situations warrant such a limitation, they can be considered on a case-by-case basis. One commenter proposed that the forecast for special administrative allowable wells with no production in the most recently reported production month be equal to the lowest reported monthly production during any of the three most recently reported production months rather than to the highest. The commenter believes the forecast could be greater than capability. The commission disagrees. If such a situation arose, it would be rectified by the reduction to capability required by sec.3.31(d)(1)(B). The Permian Basin Petroleum Association filed comments supporting the adoption of the rule. The following entities filed comments generally supporting adoption of the rule but with suggested changes to the rules as published: Shell Western E and P Inc., Mesa, TransTexas Gas Corporation, Mobil Exploration and Production U.S. Inc., Conoco, Amoco, Texas Mid-Continent Oil and Gas Association, Maxxus Exploration Company, Chevron U.S.A. Production Company, Union Pacific Resources Company, Phillips Petroleum Company, Goldston Oil Corporation, Amax Oil and Gas Inc., and Association of Texas Intrastate Natural Gas Pipelines. These amendment is adopted under the Texas Natural Resources Code, sec.sec.81. 051, 81.052, 85.046, 85.053, 85.055, 85.201-85.203, 86.011, 86.012, 86.041, 86. 042, 86.081, 86.083-86.090, 86.094, 111.083, 111.090 and 111.133, which provide the Railroad Commission of Texas with the authority to adopt rules for the following purposes: to govern and regulate persons and their operations under the jurisdiction of the commission; to prevent waste of oil and gas in drilling and producing operations; to determine the status of gas production from all gas reservoirs; to distribute, prorate, and apportion allowable production; to determine the lawful market demand for gas to be produced from each reservoir; to adjust correlative rights and opportunities; to determine the daily allowable production for each gas well; to effectuate the provisions and purposes of the Texas Natural Resources Code, Chapter 86; to conserve and prevent waste of gas; to prevent discrimination in the production and purchasing of gas; to prevent monopolistic practices which may be injurious to the general public; and to regulate common purchasers of gas to achieve the prior purposes. sec.3.31. Gas Reservoirs and Gas Well Allowable. (a)-(c) (No change.) (d) Determining prorated reservoir allowable and lawful market demand. (1) On or before the 25th day of each month, the commission will determine the lawful market demand for gas to be produced from each reservoir during the upcoming allowable month. The monthly reservoir allowable shall be equal to the lawful market demand for that reservoir. The lawful reservoir market demand for prorated reservoirs shall be equal to the adjusted reservoir market demand forecast adjusted by a forecast correction adjustment, and a commission adjustment (i.e., lawful reservoir market demand = adjusted reservoir market demand forecast + forecast correction adjustment + commission adjustment). (A) (No change.) (B) Adjusted reservoir market demand forecast-the sum of all operator reservoir market demand forecasts for a reservoir after any necessary downward adjustments have been made to individual operator reservoir market demand forecasts and optional operator forecasts so that no such forecast will exceed the total capability of the operator's wells for the reservoir during the allowable month. (C) Operator reservoir market demand forecast-the sum of the operator's well forecasts for a reservoir determined by the commission pursuant to this subsection. (i) The commission will determine a forecast for each well that will be active during the allowable month that: (I) for prorated and limited wells is equal to the well's production during the same allowable month in the prior year; and (II) for special or administrative special allowable wells is equal to the well's production during the most recently reported production month. (ii) If the well had no reported production during the same allowable month in the prior year or if a special or administrative special allowable well had no reported production in the most recently reported production month, the forecast shall be equal to: (I) the well's highest reported monthly production during any of the three most recently reported production months; or, if no production has been reported for those months; (II) the well's capability. (iii) Alternatively, the operator reservoir market demand forecast may be determined by an optional operator forecast. (D) Optional Operator Forecast-the commission designated operator may file an optional market demand forecast for all of the operator's wells in the reservoir that is equal to the anticipated market demand for the production from the operator's wells in the field during the allowable month. The optional operator forecast for the operator's wells in the reservoir can be no greater than the total capability of the operator's wells or less than zero. An optional operator forecast must be filed by the tenth day of the month preceding the allowable month. (E) Forecast Correction Adjustment- (i) The February 1994 Forecast Correction Adjustment shall be the reservoir market demand for November 1993 for all wells in a reservoir that are not administrative special allowable wells for February 1994, subtracted from the production reported for November 1993 for those wells; (ii) The March 1994 Forecast Correction Adjustment shall be the reservoir market demand for December 1993 for all wells in a reservoir that are not administrative special allowable wells for March 1994, subtracted from the production reported for December 1993 for those wells; (iii) The April 1994 Forecast Correction Adjustment shall be the reservoir market demand for January 1994 for all wells in a reservoir that are not administrative special allowable wells for April 1994, subtracted from the production reported for January 1994 for those wells; (iv) For May 1994 and subsequent months, the Forecast Correction Adjustment shall be equal to the total reservoir production from most the recent reported month, minus (total adjusted reservoir market demand forecast for the production month + supplemental change adjustment for that month + commission adjustment for that month), minus (production from all special and administrative special allowable wells minus allowable assigned to those special wells for that month). (F)-(G) (No change.) (2) (No change.) (e) Well Capability. (1) No gas well shall be given an initial allowable in excess of its capability. (A) Except as provided in subparagraphs (l)(B) and (C) of this subsection, a well's capability is defined as the lesser of: (i) the well's latest deliverability test on file with the commission; or (ii) the well's highest monthly production during any of the three most recently reported production months. (B) If a well is a special or an administrative special allowable well, its capability is defined as the lesser of: (i) the well's latest deliverability test on file with the commission; or (ii) the well's most recently reported monthly production. (C) If a well is new to a reservoir and has been active for less than six months, its capability shall be defined as the well's latest deliverability test on file with the commission. (2) An operator may submit a substitute capability determination for any well in a prorated field that represents the maximum monthly production capability of the well under normal operating conditions for a specific six-month period. (A)-(B) (No change.) (C) The capability determined pursuant to this paragraph shall be used as the well's capability for a period of six months from the effective date of the determination unless: (i) the operator files a written request that the substitute capability determination be cancelled. If such a request is submitted, the substitute capability may be cancelled by the commission or commission designee; or (ii) an affected person files a protest alleging, with specificity, the inaccuracy or invalidity of the determination. If a protest is filed, the commission may set the matter for hearing. A protested substitute capability determination shall be effective on the intended effective date, unless the commission orders otherwise. If the commission determines that the protested substitute capability was incorrect, appropriate allowable or status adjustments will be made for the affected well. (f) Fields operating under statewide rules. (1) (No change.) (2) A statewide exempt field is any gas field in which no special field rules have been adopted and in which no well in the field has a current reported deliverability test of greater than 200 Mcf a day. Wells in statewide exempt fields shall be assigned allowables equal to their capability to produce but in no event greater than 200 Mcf a day. (g) Definitions of prorated and nonprorated wells and fields. (1)-(6) (No change.) (7) An administrative special allowable well is a nonprorated well that has been granted an allowable pursuant to subsection (k) of this section. (8) The maximum allowable for a well is the largest allowable that can be assigned under applicable rules. For a limited well, the maximum allowable is the allowable the well would receive under the allocation formula. For a special allowable well, the maximum allowable is the allowable assigned pursuant to subsection (g)(6) of this section. For administrative special allowable wells, the maximum allowable is 100 Mcf/day for wells qualifying as administrative special allowable wells under subsection (k)(l) of this section and is the allowable the well would receive under the allocation formula for wells qualifying as administrative special allowable wells under subsection (k) (2) of this section. For a well in a one-well field, the maximum allowable is the well's deliverability based on the latest deliverability test of record. For an associated gas well, the maximum allowable is the gas well allowable calculated by sec.3.49(b)(1) or (2) of this title (relating to Gas-Oil Ratio) (h) Allowable adjustments and balancing provisions for nonprorated wells. (1) (No change.) (2) If the most recent production figures reported to the commission show a nonprorated well to be overproduced, the alllowable will be revised to cover overproduction that is in excess of the well's accumulated underproduction, up to the maximum allowable. A nonprorated well with accumulated overproduction will be assigned a supplemental allowable that will balance the accumulated overproduction or a supplemental allowable equal to the well's maximum allowable, whichever is smaller. (3) The allowable for wells in nonprorated fields, except for special and administrative special allowable wells, shall be limited to the lesser of: (A) the wells maximum allowable; (B) the well's capability as determined by subsection (e) of this section. (4) The initial allowable for special and administrative special allowable wells shall be the least of the well's: (A) capability; (B) its amount of production during the most recently reported production month; or (C) the amount provided for by the allocation formula. (i) (No change.) (j) Suspension of allocation formula. (1) The commission or a commission designee may administratively suspend the allocation formula for a particular gas field if: (A) each operator from that field has a market, for 100% of the deliverability, as determined by the deliverability tests on file with the commission, for its respective wells; and (B) all operators in the field consent to suspension of the formula. (2) Suspension of the allocation formula may be initiated by the commission or a commission designee, or by one of the operators in the field. The commission or a commission designee will determine which fields are appropriate for suspension utilizing the criteria of paragraph (1) of this subsection. The allocation formula may be administratively suspended if the applicant provides the commission with a declaration, subject to the false filing penalties provided for in the Natural Resources Code, sec.91.143, from all operators in the field stating that they have a market for 100% of the deliverability of their wells. If the commission or a commission designee declines to administratively suspend the allocation formula, the applicant may request a hearing as provided for in paragraph (4) of this subsection. (3) Reinstatement of the allocation formula may be initiated by the commission, commission designee, or by one of the operators in the field. (A) If, for any month, the market for gas production from a well in a field with a suspended allocation formula is less than 100% of the wells deliverability as determined by the deliverability tests on file with the commission, the operator of the field must inform the commission or a commission designee; upon such notification, the commission or commission designee will, with prior notice to the operators in the field, reinstate the allocation formula. (B) The allocation formula will be reinstated at the request of an operator from a field with a suspended allocation formula or at any time the commission deems reinstatement necessary to protect correlative rights or prevent waste. (4) If the commission or a commission designee reinstates the allocation formula or denies a request to suspend or reinstate the allocation formula in a particular field, the applicant may request a hearing. In addition to the criteria set forth in paragraph (1) of this subsection, the commission will consider whether suspension or reinstatement is necessary to prevent waste or protect correlative rights. An applicant may also request a hearing when unable to obtain written consent from all operators in a field pursuant to subparagraph (1)(B) of this subsection. (5) Suspension of the allocation formula will balance the fields production status at zero, and provide for a 100% capacity allowable. (k) Administrative Special Allowable. (1) A well which has a deliverability, capability, and six consecutive months of production of 100 Mcf per day or less will be assigned an administrative special allowable pursuant to subsection (h) of this section. (2) A well, other than an administrative special allowable well defined in subparagraph (k)(1), in a prorated field whose average monthly production during the last six consecutive months falls below the cutoff percentage (determined by the commission at the monthly statewide hearing) of the well's top allowable averaged over that six-month period, will be assigned an administrative special allowable pursuant to subsection (h) of this section. The initial cutoff percentage is 70% and will remain at 70% until changed in accordance with this subparagraph. Administrative special allowable wells under this subsection will remain administrative special allowable wells until: (A) they overproduce the top allowable available under the applicable allocation formula; or (B) they receive a substitute capability pursuant to subsection (e) of this section; or (C) the commission resets the cutoff percentage below the well's average production level for the last six consecutive months. 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 December 20, 1993. TRD-9333859 Mary Ross McDonald Assistant Director, Legal Division-Gas Utilities/LP Gas Division Railroad Commission of Texas Effective date: January 11, 1994 Proposal publication date: November 2, 1993 For further information, please call: (512) 463-6923 Chapter 5. Transportation Division Subchapter Q. Miscellaneous Provisions 16 TAC sec.sec.5.303, 5.308, 5.312 The Railroad Commission of Texas adopts the repeal of sec.5.303, relating to interstate commerce proceedings; sec.5.308, relating to affidavits in exempt commodity applications; sec.5.312, relating to requirements and additional fee for temporary emergency authority in interstate commerce, without changes to the proposed text as published in the October 26, 1993, issue of the Texas Register (18 TexReg 7451); and the repeal of sec.5.333, relating to the registration of ICC operating authority, and sec.5.346, relating to evidence of self-insurance, and adopts, amendments to sec.5.334, relating to registration of motor carrier operations exempt from economic regulation by the ICC; sec.5. 335, relating to designation of process agent; sec.5.337, relating to form and execution of application for identification stamps; sec.5.344, relating to evidence of liability insurance; and sec.5.347, relating to certificated interstate operations by intrastate carriers, without changes to the proposed text as published in the October 22, 1993, issue of the Texas Register (18 TexReg 7338). Existing sec.sec.5.303, 5.308, and 5.312 have become obsolete as a result of enactment of House Bill 1590, 73rd Legislature, 1993, which authorizes the commission to participate in the new federal single-state registration system established by the Intermodal Surface Transportation Act of 1991 (49 United States Code sec.11506) and Interstate Commerce Commission rules in 49 Code of Federal Regulations, Part 1023, Standards for Registration with States. These federal statute and regulations require all motor carriers licensed by the Interstate Commerce Commission to comply with the single-state registration standards in one participating state. The amendments reflect changes made to the authority of the Railroad Commission by House Bill 1590, 73rd Legislature, 1993, which authorizes the commission to implement the new single-state registration system provided by 40 United States Code, sec.11506 and Interstate Commerce Commission (ICC) rules at 49 Code of Federal Regulations, Part 1023, Standards for Registration with States. Under the new standards, ICC-licensed motor carriers can comply with the statutory requirements by registering with one state participating in the single-state registration system. Upon compliance with the program requirements, the motor carriers are authorized to operate in all states of travel for which they paid registration fees. The new sections relating to single-state registration have been published as Subchapter T of this title. In addition, the repeals are adopted so that all necessary rules for interstate motor carriers which are exempt from economic regulation by the Interstate Commerce Commission will be contained in Subchapter R of this title. No comments were received regarding adoption of the repeals. The repeals are adopted pursuant to Texas Civil Statutes, Article 911b, sec.4(a) and sec.18(a), which authorize the Railroad Commission of Texas to prescribe all rules and regulations necessary for the government of motor carriers and to take all actions necessary to participate to the fullest extent possible in the federal single-state registration system. 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 December 20, 1993. TRD-9333848 Mary Ross McDonald Assistant Director, Legal Division-Gas Utilities/LP Gas Division Railroad Commission of Texas Effective date: January 10, 1994 Proposal publication date: October 26, 1993 For further information, please call: (512) 463-7096 Subchapter R. Registration of Operations Exempt from ICC Regulations 16 TAC sec.5.333, sec.5.346 The repeals are adopted under Texas Civil Statutes, Article 911b, sec.4(a) and sec.18a, which vest the commission with power and authority to prescribe all rules and regulations necessary for the government of motor carriers and to take all actions necessary to participate to the fullest extent possible in the single state registration system. 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 December 20, 1993. TRD-9333849 Mary Ross McDonald Assistant Director, Legal Division-Gas Utilities/LP Gas Division Railroad Commission of Texas Effective date: January 10, 1994 Proposal publication date: October 22, 1993 For further information, please call: (512) 463-7094 16 TAC sec.sec.5.334, 5.335, 5.337, 5.344, 5.347 The amended sections are adopted pursuant to Texas Civil Statutes, Article 911b, sec.4(a) and sec.18(a), which vest the commission with power and authority to prescribe all rules and regulations necessary for the government of motor carriers and to take all actions necessary to participate to the fullest extent possible in the single-state registration system. 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 December 20, 1993. TRD-9333850 Mary Ross McDonald Assistant Director, Legal-Gas Utilities/LP Gas Division Railroad Commission of Texas Effective date: January 10, 1994 Proposal publication date: October 22, 1993 For further information, please call: (512) 463-7096 Subchapter T. Standards for Registration of ICC Motor Carriers 16 TAC sec.sec.5.371-5.381 The Railroad Commission of Texas adopts new sec.5.373 concerning Single-State Registration of Interstate Motor Carrier Operations, with changes to the proposed text as published in the October 26, 1993, issue of the Texas Register (18 TexReg 7451). Sections 5.371, 5.372, and 5.374-5.381 are adopted without changes and will not be republished. The adoption of the proposed rules is necessary to allow ICC-licensed motor carriers to register with the commission those operations authorized by the Interstate Commerce Commission. The rules conform with House Bill 1590, 73rd Legislature, 1993, which authorizes the commission to implement the single state registration system provided by 49 United States Code, sec.11506 and Interstate Commerce Commission (ICC) rules at 49 Code of Federal Regulations, Part 1023, Standards for Registration with States. These federal statutes and regulations require all ICC-licensed motor carriers to comply with the single-state registration standards to operate in all states of travel for which the motor carrier paid registration fees. Two comments regarding the proposed rules were received at a public hearing called by the commission and held on November 3, 1993. The commenters stated that under the proposed rules a motor carrier would have to pay two fees to register each motor vehicle in intrastate and interstate commerce. The commission agrees. To eliminate two payments by motor carriers, the commission revised the adopted rules by adding the following language to the second sentence of sec.5.373(c), relating to payment of fees: "on all of its vehicles for which an annual fee has not been paid to the commission pursuant to sec.5. 152(f) of this title (relating to cab cards)." The ICC rules governing the single-state registration system are currently under appeal in federal district court, in the District of Columbia, in two cases styled NARUC, et al. v. ICC, et al, Number 93-1362 and American Insurance Association, et al. v. ICC, et al.; Number 93-1450. The commission is a party appealing the ICC rules in case Number 93-1362. Issues in these appeals include the validity of the ICC's rules on the maximum fee that participating states may charge carriers and the type of documents that each carrier must carry in vehicles as proof of registration. The rules follow and are consistent with the ICC rules; however, the commission in no way is waiving any issue or claim that it may assert in the above-styled litigation. The proposed fee schedule in sec.5.373 reflects the maximum amounts determined proper by the ICC. This proposed fee schedule will be adopted pending resolution of the appeal of the ICC rules. The commission gives notice that it reserves the right to readjust these fees if the ICC rules are determined by the court to be invalid. Similarly, other amendments to the commission's rules may be made pursuant to a final court ruling. sec.5.373. The Registration Process. (a) Initial Registration. To register under the single-state registration system for a first time, a motor carrier shall file with the commission a complete application on the commission's Forms RRC-1 and RRC-1A prescribed for registering all ICC motor carriers. The application must include: (1) a copy of the applicant's full interstate authority, unless the commission waives such requirement; (2) a copy of ICC form BOC-3 concerning applicant's designation of agent(s) for service of process or a completed ICC form BOC-3; and (3) the original signature of an authorized representative or its agent. In addition, the applicant must file proof of insurance showing its business address. The proof of insurance must be filed with the application form or that form will remain incomplete until proof of insurance is filed with the commission. The applicant shall indicate its legal status as a sole proprietor, partnership, corporation, or other valid legal entity and the type of authority issued by the ICC. The application must contain the names of all owners, partners, officers, or persons with operation control; any d/b/a (doing business as) name it uses; and its business address. The applicant shall include in the application form whether it will be transporting hazardous commodities in interstate or foreign commerce. All information that the applicant submits to the commission must agree with information in the most recent ICC certificate or permit issued to the applicant. (b) Renewal of Registration. To renew its registration, a registrant shall follow the procedure outlined in subsection (a) of this section during the registration period before December 1st of the existing registration period. To renew its registration, the registrant will not be required to refile a full copy of its ICC authority. (c) Payment of Fees. An applicant or registrant must submit with its original, renewal, or supplemental application the commission's Forms RRC-1 and RRC-1A with applicable information completed for all vehicles, whether owned or leased, that the applicant or registrant operates under ICC authority. The applicant or registrant shall remit to the commission the appropriate total fees due as indicated in the commission's Form RRC-1A, by cashier's check or money order in U.S. dollars, payable to the Texas State Treasurer, on all of its vehicles for which an annual fee has not been paid to the commission pursuant to sec.5.152(f) of this title, relating to cab cards. If an applicant or registrant has evidence of fees, collected or charged as of November 15, 1991, which are different from the fees specified in the commission's Form RRC-1A, the applicant or registrant should submit such evidence to the commission with the application. After considering any such evidence, the commission will notify the applicant or registrant if the proper fee has not been paid. (d) Fees from Other States. Each participating state, in computing the appropriate portion of the revenue due the commission for its registrants, may utilize the commission's Form RRC-2 to determine the registrant's per-vehicle fee. (e) Temporary and Emergency Authorities. A motor carrier that receives emergency temporary autority (ETA) or temporary authority (TA) from the ICC for 120 days or less must comply with all the commission's registration requirements, except filing a copy of the authority granted by the ICC. However, within 120 days after receiving an ETA or TA, the motor carrier shall comply with all registration procedures, or its registration may be revoked or suspended. (f) Waiver of Filing Complete ICC Authority. If the commission waives, in writing, the filing of the complete ICC authority that is longer than 20 pages, the applicant shall: (1) provide the commission a copy of the portion of the ICC order that shows the service date and order section; and (2) file a prepared synopsis of the ICC authority. (g) Documents Improperly Filed. If an applicant files or causes to be filed any document that contains any misrepresentation, misstatement, or omission of required information, ow which does not include the payment of fees, the document shall be deemed to be incomplete and will not be processed by the commission until all items have been corrected. 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 December 20, 1993. TRD-9333847 Mary Ross McDonald Assistant Director, Legal Division-Gas Utilities/LP Gas Railroad Commission of Texas Effective date: January 10, 1994 Proposal publication date: October 26, 1993 For further information, please call: (512) 463-7095 Part II. Public Utility Commission of Texas Chapter 23. Substantive Rules Customer Service and Protection 16 TAC sec.23.55 The Public Utility Commission of Texas adopts an amendment to sec.23.55, concerning Live Operator Service, with changes to the proposed text as published in the September 24, 1993 issue of the Texas Register (18 TexReg 6507). The purpose of the amendment is to reflect changes in state law, enacted by Senate Bill 162 (73rd Texas Legislature, Regular Session.) That bill amends sec.18A of the Public Utility Regulatory Act (Article 1446c, Texas Civil Statutes). Adoption of the amendment will benefit the general public by allowing a caller in distress to access a live operator from a automated operator service simply by pressing a "0", thereby reaching a human being capable of responding to the circumstances. The telecommunications utility that provides operator service must ensure that a caller reach a live operator at the beginning of all automated operator assisted calls through a method easily and clearly understandable to the caller. Three commenters filed comments in response to the September 24, 1993, issue of the Texas Register : GTE Southwest Incorporated and Contel of Texas, Inc. (GTE/Contel); AT&T Communications of the Southwest, Inc. (AT&T); and MCI Telecommunications Corporation (MCI). The comments generally support the amendment but two commenters, AT&T and MCI, suggested the inclusion of some clarifying language. There were no comments opposing the amendment. In addition, there were no further comments received in response to the initial recommendation filed on November 18, 1993. GTE/Contel stated that it supports the proposed amendment as drafted and believes that it is in compliance with the proposed rule. However, the bill as passed requires that a live operator be made available at the beginning of all automated operator service before any other automated message is provided. GTE's comments demonstrate that a live operator is not made available before other automated messages are provided and therefore the Commission wishes to clarify that in order to comply with this rule a live operator must be made available before any other automated message is provided. Additionally, the Commission is concerned that the automated operator services provide a message that is understandable to all Texas citizens, including those who speak Spanish exclusively. The Commission has concluded that this is a concern that is applicable to all operator services and should be addressed in a separate rulemaking. The Commission is also concerned that amending the rule to require the message be provided in Spanish may be beyond the scope of notice provided in this rulemaking. Accordingly, the Commission declines to add this requirement at this time and will address it in a separate rulemaking project. However, the Commission strongly encourages all telecommunication utilities who utilize an automated operator service to provide notification of the availability of, and the procedure for obtaining, a live operator in Spanish as well as English. MCI and AT&T commented that clarifying language was necessary in order to give full effect to the intent of the amendment to Section 18A of the Public Utility Regulatory Act (Article 1446c, Vernon's Texas Civil Statutes). Both commenters suggested that language be added stating clearly that a live operator is to be accessed when a caller specifically dials "0". A live operator need not be provided when a caller dials a 10-digit access code. The commission agrees that such clarifying language is reasonable in order to give the proper effect to sec.18A of the Public Utility Regulatory Act (Article 1446c, Texas Civil Statutes) and therefore, has incorporated such language into sec.23.55(j)(2). The amendment is adopted under Texas Civil Statutes, Article 1446c, sec.16(a) , which provide the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. sec.23.55. Operator Services. (a)-(i) (No change.) (j) Access to a live operator. (1) Each telecommunications utility that provides operator services shall ensure that a caller may access a live operator at the beginning of all automated operator-assisted calls through a method designed to be easily and clearly understandable and accessible to the caller. This requirement applies only to "0-" calls where the caller reaches an automated operator. By February 1, 1994, or within 30 days of initially providing operator services, whichever date comes later, each such telecommunications utility shall file in the Central Records Office of the Commission, for review, a document describing the method by which the utility is providing access to a live operator, as provided by Senate Bill 162 (73rd Legislature). (2) This subsection applies regardless of the method by which the telecommunications utility provides the operator service. (3) The requirements of this subsection shall not apply to telephones located in confinement facilities. (k) Local exchange carrier requirements. (1)-(3) (No change.) (l) Call splashing. Call splashing shall not be allowed unless a waiver of the access requirements in subsection (i)(1) (A) of this section has been granted pursuant to subsection (i)(3) of this section and unless: (1)-(2)(No change.) (m) Other requirements. (1)-(2) (No change.) (n) Enforcement. The commission may investigate any complaint against any OSP, interexchange carrier or local exchange carrier alleged to have violated the provisions of this section. The company shall be given an opportunity to informally resolve any complaint involving violation of these rules. If no resolution is achieved informally, the commission may upon its own motion or upon request of the original complaint formally investigate the complaint, and, upon proper notice, evidentiary hearing, and determination that a violation has occurred or is about to occur, may take action to stop, correct or prevent the violation. (o) Severability. If any provision of this section or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this section that can be given effect without the invalid provision or application. It is the intent of the commission that the provisions of this section are severable. 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 December 21, 1993. TRD-9333937 John M. Renfrow Secretary of the Commission Public Utility Commission of Texas Effective date: January 13, 1994 Proposal publication date: September 24, 1993 For further information, please call: (512) 458-0100 Part IX. Texas Lottery Commission Chapter 401. Administration of State Lottery Act (Editor's Note: House Bill 1587, sec.38 and sec.39, 72nd Legislature, created the Texas Lottery Commission and transferred all duties and functions of the lottery from the Comptroller of Public Accounts to the new agency effective December 27, 1993. The Texas Register is administratively transferring the following rules listed in the table below from Title 34., Part I. Comptroller of Public Accounts to Title 16., Part IX. Texas Lottery Commission. The table lists the old rule numbers and the new rule numbers that correspond to them.) TITLE 22. EXAMINING BOARDS Part XXIV. Texas Board of Veterinary Medical Examiners Chapter 573. Rules of Professional Conduct Other Provisions 22 TAC sec.573.64 The Texas Board of Veterinary Medical Examiners adopts new sec.573.64, concerning Continuing Education, without changes to the proposed text as published in the November 19, 1993, issue of the Texas Register (18 TexReg 8506). This continuing education requirement will ensure that practitioners are aware of current advances in the field of veterinary medicine. The new section will require that licensees obtain a minimum of 15 hours of continuing education within the 12-month period immediately preceding renewal of their license to practice veterinary medicine in the State of Texas. No comments were received concerning adoption of this rule. The new section is adopted under the Veterinary Licensing Act, Article 8890, sec.7(a), which provides the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary to carry into effect the provisions of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 20, 1993. TRD-9333921 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: January 13, 1994 Proposal publication date: November 19, 1993 For further information, please call: (512) 447-1183 22 TAC sec.573.65 The Texas Board of Veterinary Medical Examiners adopts new sec.573.65, concerning Definitions, without changes to the proposed text as published in the November 19, 1993, issue of the Texas Register (18 TexReg 8507). The new section will provide consumers and practitioners with a definition for terms utilized in the revised Veterinary Licensing Act when determining compliance with the Act. The new section will provide interested individuals with definitions for terms which require clarification as they are utilized in the Veterinary Licensing Act. There were no comments received concerning adoption of the rule. The new section is adopted under the Veterinary Licensing Act, Article 8890, sec.7(a), which provides the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary to carry into effect the provisions of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 20, 1993. TRD-9333920 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: January 13, 1994 Proposal publication date: November 19, 1993 For further information, please call: (512) 447-1183 22 TAC sec.573.66 The Texas Board of Veterinary Medical Examiners adopts new sec.573.66, concerning Monitoring Licensees' Compliance With Article 8890, without changes to the proposed text as published in the November 19, 1993, issue of the Texas Register (18 TexReg 8507). The new section reduces to writing the Board's current compliance program in which licensees' veterinary practices are inspected for compliance with the Licensing Act and Rules of Professional Conduct. The new section will provide interested parties with written guidelines for the compliance program and ensure that licensees are adhering to the laws and regulations pertaining to the practice of veterinary medicine. There were no comments received concerning adoption of the rule. The new section is adopted under the Veterinary Licensing Act, Article 8890, sec.7(a), which provides the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary or desireable to carry into effect the provisions of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 20, 1993. TRD-9333919 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: January 13, 1994 Proposal publication date: November 19, 1993 For further information, please call: (512) 447-1183 22 TAC sec.573.67 The Texas Board of Veterinary Medical Examiners adopts new sec.573.67 concerning Temporary Suspension of License, without changes to the proposed text as published in the November 19, 1993, issue of the Texas Register (18 TexReg 8506). The new section will provide the consumer with protection against licensed practitioners which represent imminent peril to the public. The new section will function by providing the Board with the authority to temporarily suspend the license of any practitioner representing imminent peril to the public, in a timely and efficient manner. No comments were received concerning adoption of the rule. The new section is adopted under the Veterinary Licensing Act, Article 8890, sec.7(a), which provides the Texas Board of Veterinary Medical Examiners with the authority to make, alter, or amend such rules and regulations as may be necessary to carry into effect the provisions of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 20, 1993. TRD-9333918 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: January 13, 1994 Proposal publication date: November 19, 1993 For further information, please call: (512) 447-1183 TITLE 25. HEALTH SERVICES Part I. Texas Department of Health Chapter 1. Texas Board of Health Procedures and Policies The Texas Department of Health (department) adopts the repeal of existing sec.sec.1.1-1.11 and adopts new sec.sec.1.1-1.8 concerning the policies and procedures of the Board of Health. Section 1.5 and sec.1.6 are adopted with changes to the proposed text as published in the September 28, 1993 issue of the Texas Register (18 TexReg 6601). Sections 1.1-1.4 and 1.7-1.8 are adopted without changes and will not be republished. The new sections will replace and update the existing sections in order to assist the new Board of Health in implementing its responsibilities under House Bill 7, 72nd Legislature, 1991; House Bill 1510, 73rd Legislature, 1993; and the Health and Safety Code, Chapters 11 and 12. The new sections cover the following areas: purpose; membership; organization; general powers and duties; meetings; actions requiring approval; responsibilities of the Commissioner of Health; and press and public relations. No public comments were received; however, department staff have made some nonsubstantive changes to the rules as follows. In sec.1.5(c), the legal citation has been changed to Government Code, Chapter 551, because of recent legislative codification of the open meetings law. In sec.1.6(a), the provisions concerning the strategic plan have been modified for clarification purposes. 25 TAC sec.sec.1.1-1.11 The repeals are adopted under the Health and Safety Code, sec.12.001, which provides the Board of Health with authority to adopt rules for its own procedure and for the performance of every duty imposed by law on the Board of Health, the Department of Health, and the Commissioner of Health. 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 December 21, 1993. TRD-9333877 Susan K. Steeg General Counsel Texas Department of Health Effective date: January 11, 1994 Proposal publication date: September 28, 1993 For further information, please call: (512) 458-7236 25 TAC sec.sec.1.1-1.8 The new rules are adopted under the Health and Safety Code, sec.12.001, which provides the Board of Health with authority to adopt rules for its own procedure and for the performance of every duty imposed by law on the Board of Health, the Department of Health, and the Commissioner of Health. sec.1.5. Meetings of the Board of Health. (a) The board shall meet in the city of Austin or in other places determined by the board. (b) The board shall meet at least once each calendar quarter on dates determined by the board and shall hold special meetings at the call of the chair. The chair shall give timely notice to each member of any special meeting. (c) All meetings shall comply with the Texas Open Meetings Act, Texas Government Code, Chapter 551. (1) The department shall post notice of each meeting with the Secretary of State's Office at least seven days prior to the date of the meeting. The notice shall specify the date, time and subject(s) of the meeting. (2) Special rules exist for a meeting which needs to be convened in a case of emergency or urgent public necessity. (A) A case of emergency or urgent public necessity is limited to imminent threats to public health and safety or reasonably unforeseeable situations requiring immediate action. (B) The department shall post notice of a meeting involving an emergency or urgent public necessity with the Secretary of State at least two hours before the meeting is convened. (3) All meetings shall be open to the public, except for executive sessions which are discussed in paragraph (4) of this subsection. All or any part of the public meeting may be recorded by any person in attendance by means of tape recorder, video camera, or any other means of sonic or visual reproduction. The chair will determine the location of any such equipment and the manner in which the recording is conducted, provided that the determination does not prevent or unreasonably impair camera coverage or tape recording. (4) Executive sessions are closed meetings of the board which may be held only as expressly authorized by the Open Meetings Act (Act). Persons who may attend and subjects which may be discussed are described in the Act. (5) The board must have a quorum present to convene a meeting and to conduct official business. A quorum of the board is four members. (6) The board shall conduct a meeting in accordance with Robert's Rules of Order, latest edition, unless there are rules or statutes that require otherwise. (7) An affirmative vote by a majority of the board membership present and voting is required for the adoption of a rule, policy, or procedure. (8) During a meeting, a board member may dissent against any board action and may enter a written statement of such dissent into the official minutes of the meeting. (9) The board shall keep official minutes of the meetings as required by the Open Meetings Act. The Office of the Board of Health prepares the minutes, the board approves them, and the chair and vice-chair sign them. Before the board approves them, the minutes are sent to each member for review, comment or correction prior to approval. The official minutes of all board meetings are kept in the Office of the Board Health and are available for public review as authorized by the Open Meetings Act. (10) Board members, in performing official duties, shall receive no fixed salary but shall be paid compensatory per diem and reimbursed for meals, lodging, and transportation in accordance with the General Appropriations Act. sec.1.6. Actions Requiring Board Approval. (a) Strategic plan. The strategic plan is subject to approval by the Board of Health. (b) Appropriation request. The department's appropriation request and annual operating budget are subject to approval by the board prior to submission to the Legislature. (c) Rules. The board shall adopt rules for its own procedure and for the performance of each duty imposed by law on the board, the department, and the Commissioner. (d) Appointment of the Director of the Internal Audit Division. The appointment or removal of the Director of the Internal Audit Division by the commissioner is subject to approval by the board. (e) Other actions. The board may approve any other action by the commissioner or the department where the approval of the board is required by law or requested by the commissioner. 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 December 21, 1993. TRD-9333878 Susan K. Steeg General Counsel Texas Department of Health Effective date: January 11, 1994 Proposal publication date: September 28, 1993 For further information, please call: (512) 458-7236 Chapter 28. Third-Party Resources Program Requirements 25 TAC sec.sec.28.101, 28.111, 28.121, and 28.131 On behalf of the State Medicaid Director, the Texas Department of Health (department) submits adopted new sec.sec.28.101, 28.111, 28.121, and 28.131 concerning Third Party Resources. The rules for the operation of the Third Party Resource Program were inadvertently repealed in 1990 with the adoption of the Omnibus Budget Reconciliation Act of 1990 nursing home standards. These sections are adopted without changes to the proposed text as published in the July 27, 1993 issue of the Texas Register (18 Tex Reg 4942). The new sections will enable the department to collect funds from third-party resources to reduce Medicaid cost. These sections describe Medicaid's right of assignment of funds paid by third- party resources and the provider's and recipient's rights for recovery of payments for medical expenses from third-party resources. Third-party resources include payments for both private and public health insurance and from other liable third parties that can be applied toward a Medicaid recipient's medical and health benefit expenses. One comment was received from the American Health Services, Inc. recommending that the state continue to "pay and chase" nursing home claims. The department made no changes as a result of the comment. The department, however, changed all references to the Department of Human Services to the Texas Department of Health to reflect the administrative transfer of these rules to the Texas Department of Health from the Department of Human Services. The amendments are adopted under the Human Resources Code, sec.32.021 and Texas Civil Statutes, Article 4413 (502), sec.16, which provides the Health and Human Services Commission with the authority to adopt rules to administer the state's medical assistance program and are submitted by the Texas Department of Health under its agreement with the Health and Human Services Commission to operate the purchased health services program and as authorized under Chapter 15, sec.1.07, Acts of the 72nd Legislature, First Called Session (1991). sec.28.101. Basis and Scope. (a) Reimbursement from third-party resources for medical care services paid on behalf of a Texas Medical Assistance (Medicaid) Program recipient is assigned to the Texas Department of Health (department) or its health insuring agent under Human Resources Code sec.32.033. Third-party resources include, but are not limited to, the following: (1) health and accident insurance; (2) workers' compensation; (3) casualty insurance including uninsured/underinsured motorist coverage; (4) assignable indemnity contracts; (5) health maintenance organizations; (6) Employee Retirement Income Security Act (ERISA) health plans; (7) no-fault automobile insurance including Personal Injury Protection (PIP) and automobile medical insurance; (8) another person for personal injury caused by that person's negligence or wrong; and (9) any claim filed on behalf of or payment made to a Medicaid recipient for injuries requiring Medicaid services including payments for mental anguish, pain and suffering, and future medical expenses when the injury causing the need for Medicaid services was the basis for those claims or payments. (b) The right of recovery by the department is limited to the amount of the cost of medical services paid by the department or its health insuring agent on behalf of the recipient. Amounts available from third-party resources in excess of payments made by the department or its health insuring agent are available to the recipient. (c) The right of recovery by the department includes any amounts paid to a recipient's parent or legal guardian for Medicaid-covered services. sec.28.111. Provider Right of Recovery. (a) The Texas Medical Assistance (Medicaid) Program pays medical claims only after all other available resources have been exhausted. (b) Medicaid providers must collect and/or recover funds from any source to which the Texas Department of Health (department) has a right of recovery under sec.28.101 of this title (relating to Basis and Scope), before submitting Medicaid claims for reimbursement. (c) The department authorizes Medicaid providers to collect and/or recover funds for recipients' medical expenses claimed from any other source. (d) When the payment by a third-party resource is equal to or greater than the amount allowable by the department or its health insuring agent for covered services, Medicaid recipients are not liable for charges billed in excess of the amount paid by the third-party for the medical care and services within the amount, duration, and scope of benefits provided by Medicaid. sec.28.121. Recipient Right of Recovery. (a) The Texas Department of Health (the department) is not responsible for pursuing claims against third-party resources outside the limits of the recovery that the department is authorized to seek. The recipient is responsible for pursuing these claims. (b) The department's right of recovery does not include recovery from the following: (1) Texas Rehabilitation Commission; (2) Texas Commission for the Blind; (3) Texas Kidney Health Care Program; (4) Muscular Dystrophy Association; (5) Chronically Ill and Disabled Children's Services; (6) Texas Band of Kickapoo Equity Health Program; (7) Maternal and Child Health (Title V); (8) State Legislative Impact Assistance Grant (SLIAG); (9) Crime Victim's Compensation Program; and (10) adoption agencies or adopting parents with medical contractual obligations to the Medicaid client. sec.28.131. Notice of Assignment. (a) The Texas Department of Health (department) will provide information about third-party resources for individual recipients on the monthly medical care identification card. This information includes a code indicating whether the recipient has a third-party resource. Recipients must sign a statement on the back of the card acknowledging that they are aware that assignment of third- party resources has been made to the department, and they must show the card to Texas Medical Assistance (Medicaid) Program providers before receiving medical services. (b) Medicaid providers must indicate on the third-party resources claim form that the recipient has Medicaid coverage and must indicate the recipient's individual identification number. (c) Medicaid payments and reasonable attorney fees, not to exceed 10% of the recouped amount, may be recouped from a provider who was aware of third-party resources when the services were provided. (d) Neither the department, nor its health insuring agent will seek to recover from third-party resources any payments made to the recipient in good-faith prior to the department's notification of claim. (e) Notification by the department of its right of assignment, as authorized under Article 3.76 of the Insurance Code, is made when the department's claim is submitted to the third-party. (f) If a recipient, an insurer, agent, or attorney receives a notice of assignment and then releases funds without paying Medicaid's claim, they are liable to the department for the full amount of the Medicaid claim plus reasonable attorney fees necessary for recovering the money. 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 December 27, 1993. TRD-9333961 Susan K. Steeg General Counsel Texas Department of Health Effective date: January 27, 1994 Proposal publication date: July 27, 1993 For further information, please call: (512) 338-6518 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 293. Water Districts Appeal of Decision Regarding Facilities Constructed 30 TAC sec.293.180 The Texas Natural Resource Conservation Commission (TNRCC) adopts new sec.293.180, which provides for the appeal of a municipal utility district board decision concerning the cost, purchase, or use of facilities constructed for the district. New sec.293.180 is adopted with changes to the proposed text as published in the October 8, 1993, issue of the Texas Register (18 TexReg 6916). The section establishes an appeals procedure, outlines minimum criteria to be considered by the commission, establishes a mechanism for the agency to recover the costs associated with processing the appeals, and provides a public hearing notice form. A public hearing was held on November 3, 1993, and no persons wishing to give testimony appeared. The Commission received several comment letters during the comment period. One commenter questioned the applicability of the rule when a developer happens to be the only property owner in the district or when a developer has completely sold off property in a district, and also requested that the rule reflect a petitioner's ability to seek alternative forms of relief. The Commission agreed with this comment and modified the rule to more clearly identify persons qualified to prosecute these appeals. The question of allowing a petitioner to seek alternative forms of relief is addressed in sec.293.180(a)(1), which states that a petition may seek "appropriate relief". The commission does not recommend changes to the rule in regard to these comments. Two commenters requested that specific processing timelines be set forth in the rule. The Commission has rules and guidelines in place to timely process these appeals. A commenter requested that language be added to allow charging district expenses incurred in defense of an appeal to an unsuccessful appellant. The authorizing statute allows for the Commission to recover from a petitioner the costs of notice and hearing. Awarding of legal and consultant fees is not authorized, so no change is recommended. A commenter expressed concern that the proposed deposit amount ($10,000) serves to exclude persons with legitimate grievances to appeal a board decision. The commenter suggested a revision that requires a deposit in the amount of $5,000 upon filing, and that the remaining portion of the deposit be required if a settlement is not negotiated. The Commission considered this a reasonable suggestion and revised the rule accordingly. One commenter requested that the rule require an affidavit from a petitioner affirming that the same issues concerning cost, purchase of use of facilities are not already pending in another forum. This comment reflects an issue often encountered by the Commission's hearings examiners. Existing Commission procedural rules and rules applicable to civil suites are available to determine whether a matter in the civil courts should also be litigated at the Commission. Therefore, no change is recommended. The commneter also suggested the rules require verification that the facilities made the subject of an appeal were constructed pursuant to an agreement between the petitioner and district to ensure the district is made of and can monitor development within its boundaries. The Commission revised the rule to make clear that such documents will be required with a filing. The commenter requested that the rule include provisions allowing dismissal or refusal to docket if a petition is frivolous, such as an instance where the district did not approve construction of the facilities made the subject of the appeal. The Commission has adopted procedural rules to address issues of this type and where Commission rules are silent the Commission can and has relied on procedural rules applicable in civil suits. Therefore, no change is necessary based on this comment. The final issue raised by this commenter is that the notice requirements imposed on a district are onerous and costly, and suggests that only newspaper publication be required. The rules require that a certification of mailing from the postal service be obtained to verify the mailing. This is different from a "certified return receipt" mailing and the related cost is minimal; therefore, no change is recommended. Comments were received from the following: Milburn Investments, Inc.; Leonard, Hurt, Terry and Blinn; Butler, Porter, Gay and Day; and Cliff Johnson, Consultant. The new section is adopted under the Texas Water Code, sec.5.103 and sec.5. 105, which authorizes the Texas Natural Resource Conservation Commission to adopt any rules necessary to carry out its powers, duties, and policies, and Texas Water Code, sec.54.238, concerning appeal of municipal utility district board decisions regarding facilities constructed for the district. sec.293.180. Appeal of a Decision of the Board of a Municipal Utility District Regarding Facilities Constructed for the District. (a) A person aggrieved by a decision of a board of directors of a Municipal Utility District operating under the Water Code, Chapter 54 may appeal a decision that involves the cost, purchase, or use of improvements constructed by a developer for the district to the commission. Before such an appeal will be considered the following must be submitted: (1) A petition signed by the present or former property owners affected by the decision of the district board of directors must be filed with the commission seeking appropriate relief within 30 days after the date of the decision. The petition shall contain: (A)-(B) (No change.) (2) an initial deposit in the amount of $5,000 to be applied toward the commission's estimated costs to initiate the hearing on the appeal. An additional deposit in the amount of $5,000 shall be submitted by petitioner prior to an evidentiary hearing. (3)-(7) (No change.) (8) copies of any agreements with the district or other documentation from the district authorizing the petitioner to construct the improvements or to enter into contracts for the improvements. (9) copies of any reimbursements agreements executed by the district involving the improvements in question. (b)-(d) (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 December 20, 1993. TRD-9333904 Mary Ruth Holder Director, Legal Division Texas Natural Resource Conservation Commission Effective date: January 12, 1994 Proposal publication date: October 8, 1993 For further information, please call: (512) 463-8069 Title 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter O. State Sales and Use Tax 34 TAC sec.3.333 (Editor's note: The text of the following section was erroneously left out of the November 12, 1993 issue.) The Comptroller of Public Accounts adopts an amendment to sec.3.333, concerning security services, with changes to the proposed text as published in the August 3, 1993, issue of the Texas Register (18 TexReg 5059). For purposes of clarification, grammatical changes have been made to subsections (n) and (o)(4). The amendment deletes the distinction between guarding, surveillance, and security services and courier services since all these services require a license under Texas Civil Statutes, Article 4413(29bb), Private Investigators and Private Security Agencies Act, sec.13. The amendment also adds a subsection on the provision of temporary security services and a discussion of multistate benefit of services. No comments were received regarding adoption of the amendment. This amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Texas Tax Code, sec.sec.151.0075, 151.0101, and 151.047. sec.3.333. Security Services. (a) What a security service is. Security service means any service for which a license is required under the Texas Civil Statutes, Article 4413(29bb), Private Investigators and Private Security Agencies Act, sec.13, and includes any service provided within the scope of the required license as an investigations company, guard company, alarm systems company, armored car company, courier company, guard dog company, security services contractor, private security officer, detective service, or private investigator. (b) Hold permits. A provider of security services must obtain a Texas sales and use tax permit and collect tax on the total amount charged for security services, or accept a properly completed resale or exemption certificate in lieu of collecting tax. See sec.3.285 of this title (relating to Resale Certificate; Sales for Resale), and sec.3.287 of this title (relating to Exemption Certificates). (c) Employees. Security services performed by an employee for his employer in the regular course of business, within the scope of the employee's duties, and for which the employee is paid his regular wages or salary are not taxable. (d) Temporary security service personnel. A security service is taxable even when provided on a temporary basis unless: (1) the security service is performed by a temporary help service for an employer to supplement the employer's existing security service personnel on a temporary basis; (2) the security service is normally performed by the employer's own employees; (3) the employer provides all supplies and equipment necessary; and (4) the temporary employee is under the direct or general supervision of the employer to whom the security service is furnished. (e) Security services provided in Texas. Charges for providing security service to property or persons located in Texas are subject to Texas sales tax. Unless a customer claims multistate benefit as provided in subsection (o) of this section, if any portion of the security service originates in Texas, Texas sales tax is due even though a portion of the service may be performed in another state. Credit will not be allowed against Texas sales tax for use tax imposed by another state when the service benefit location is in Texas. Detective and investigation services of corporate locations or premises located outside Texas are not taxable if the investigation is unrelated to any investigation of corporate locations in Texas. (f) Credit for security services originating in another state. If a security service originates in another state and sales tax is legally paid on that service in the other state, credit against the Texas use tax will be allowed. See sec.3.340 of this title (relating to Multistate Tax Credits). (g) Resale certificates. (1) A seller of a security service may issue a resale certificate in lieu of tax to a supplier of tangible personal property only if care, custody, and control of the property will be transferred to the service provider's client. For example, a security service provider purchases magnetic tape to transfer the results of an investigation to a customer. The tape is transferred to the customer, and the customer owns and uses the tape to review the results of the security service. The security service provider may purchase the tape tax free by issuing a resale certificate. Tax is due on the total amount charged the customer, including amounts for the tape and for the services. (2) A resale certificate may be issued for a taxable service if the buyer intends to transfer the service as an integral part of a taxable service. A service will be considered an integral part of a taxable service if the service purchased is essential to the performance of the taxable service and without which the taxable service could not be rendered. (3) A resale certificate may be issued for a taxable service if the buyer intends to incorporate the service into tangible personal property that will be resold. If the entire service is not incorporated into the tangible personal property, it will be presumed the service is subject to tax and the service will be exempt only to the extent the buyer can establish the portion of the service actually incorporated into the tangible personal property. If the buyer does not intend to incorporate the entire service into the tangible personal property, no resale certificate may be issued, but credit may be claimed at the time of sale of the tangible personal property to the extent the service was actually incorporated into the tangible personal property. (h) Unrelated services. (1) A service will be considered unrelated if: (A) it is not a security service, nor a service taxable under other provisions of the Tax Code, Chapter 151; (B) it is of a type that is commonly provided on a stand-alone basis; and (C) the performance of the unrelated service is distinct and identifiable. Examples of unrelated services that may be excluded from the tax base include a service for which no license is required, such as coin-wrapping services by a courier or armored car service, or providing court testimony, training, or filing legal documents. (2) Where nontaxable unrelated services and taxable services are sold or purchased for a single charge and the portion relating to taxable services represents more than 5.0% of the total charge, the total charge is presumed to be taxable. The service provider may overcome the presumption by separately stating to the customer at the time the transaction occurs a reasonable charge for the taxable services. The service provider's books must support the apportionment between taxable and nontaxable activities based on the cost of providing the service or on a comparison to the normal charge for each service if provided alone. If the charge for nontaxable services is unreasonable when the overall transaction is reviewed, the comptroller will adjust the charges and assess additional tax, penalty, and interest on the taxable services. (3) Charges for services or expenses directly related to and incurred while providing a taxable service are taxable and may not be separated for the purpose of excluding those charges from the tax base. Examples include charges for meals, telephone calls, hotel rooms, or airplane tickets. (i) Excepted persons. Persons excepted from the licensing requirements of the Private Investigators and Private Security Agencies Act, sec.13, are not providing security services subject to the sales tax because they are not required to hold a license to provide their services. Examples include, but are not limited to: (1) persons employed exclusively and regularly by one employer in connection with the affairs of the employer; (2) officers or employees of the United States, this state, or a political subdivision of either, while engaged in the performance of official duties; (3) persons who have full-time employment as peace officers as defined by Code of Criminal Procedure, Article 2.12, and who receive compensation for private employment on an individual or an independent contractor basis as patrolmen, guards, or watchmen; (4) locksmiths who do not install or service detection devices, do not conduct investigations, and are not security service contractors; (5) persons who sell burglar alarm or other protective devices exclusively over-the-counter or by mail order; and (6) persons who sell or install automobile burglar alarm devices. (j) Taxable under other provisions. Persons whose activities are not defined as security services may nonetheless be performing a service that is taxable under other provisions. Examples include, but are not limited to: (1) persons engaged in the business of obtaining and furnishing credit information. See sec.3.343 of this title (relating to Credit Reporting Services) ; (2) insurance adjusters, insurance investigators, and/or claims processors performing services in connection with a policy of insurance. Although not taxable as security services, some insurance services are subject to sales and use tax. See sec.3.355 of this title (relating to Insurance Services). (k) Undercover agents. The fact that a security service provider may be performing his services by furnishing an undercover agent will not affect the applicability of sales tax to the service transaction between the employer and the consumer. The employer of the undercover agent is considered to be providing security services to a client, and that transaction is subject to the sales tax. (l) Local taxes. Local sales and use taxes (city, county, transit authority, and special purpose district) apply to services in the same way as they apply to tangible personal property. Generally, a service provider must collect local sales taxes if the service provider's place of business is within a local taxing jurisdiction, even if the service is actually provided at a location outside that jurisdiction. However, transit sales taxes do not apply to services provided outside the boundaries of the transit area. If the place of business is outside such a jurisdiction but the service is provided to a customer within a local taxing jurisdiction, local use taxes apply and the service provider is responsible for collecting them. For information on the collection and reporting responsibilities of providers and purchasers of taxable services, see sec.3.374 of this title (relating to Collection and Allocation of the City Sales Tax), sec.3.375 of this title (relating to City Use Tax), sec.3.424 of this title (relating to Collection and Allocation of Transit Sales Tax), and sec.3.425 of this title (relating to Transit Use Tax). (m) Use tax. If a seller of a service is not doing business in Texas or in a specific local taxing jurisdiction and is not required to collect Texas state or local tax, it is the Texas customer's responsibility to report the use tax directly to this office. (n) Service benefit location. If the security service provider is in Texas and the customer is located only in Texas, Texas tax is due. (o) Service benefit location-multistate customer. (1) To the extent a security service is provided for a separate, identifiable segment of a customer's business, the service is presumed to benefit the location where that part of the customer's business is conducted. (2) To the extent the use of the service cannot be assigned to an identifiable segment of a customer's business, the service is presumed to be used to support the administration or operation of the customer's business generally. The security service is presumed to be used at the customer's principal place of business. The principal place of business means the place from which the trade or business is directed or managed. (3) If a multistate customer claims that part of the security service benefits the customer's business at locations both within and outside the state, the customer must provide the security service provider with an exemption certificate in lieu of tax. It will then be the customer's responsibility to report the tax to this office for that portion of the security service that benefits Texas locations. The security service will not be taxable to the extent the customer can establish benefit outside Texas. A multistate customer may use any reasonable method for allocation that is supported by business records. (4) A security service provider who accepts an exemption certificate in good faith is relieved of responsibility for collecting and remitting tax on transactions to which the certificate relates. 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 November 5, 1993. TRD-9331609 Martin E. Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: November 26, 1993 Proposal publication date: August 3, 1993 For further information, please call: (512) 463-4028 Chapter 7. Administration of State Lottery Act (Editor's Note: House Bill 1587, sec.38 and sec.39, 72nd Legislature, created the Texas Lottery Commission and transferred all duties and functions of the lottery from the Comptroller of Public Accounts to the new agency effective December 27, 1993. The Texas Register is administratively transferring the following rules listed in the table below from Title 34., Part I. Comptroller of Public Accounts to Title 16., Part IX. Texas Lottery Commission. The table which lists the old rule numbers and the new rule numbers that correspond to them is being published in this section of the Register under Title 16. Part I. Texas Lottery Commission.) Part III. Teacher Retirement System of Texas Chapter 25. Membership Credit Military Service 34 TAC sec.25.67 The Teacher Retirement System of Texas (TRS) adopts new sec.25.67, without changes to the proposed text as published in the November 9, 1993, issue of the Texas Register (18 TexReg 8166). The 73rd Texas Legislature, Regular Session, added Government Code, sec.823. 3021, which offers TRS retirement credit incentives to attract into Texas public education employment United States military personnel who cannot otherwise qualify for retirement because of an early separation from military duty under reduction in force policies of the federal government. The statute conditions this special TRS service credit upon payment to TRS of the actuarial cost of the credit. This section provides for the determination of the actuarial cost of the credit. The adopted rule adopts by reference the specific actuarial tables, published by the TRS actuary, The Wyatt Company, which make the actuarial cost for this service credit a definitely determinable amount. The adopted rule also clarifies how the amount of the service credit is to be determined and the elements of the costs required to purchase the credit. The rule was first adopted as an emergency basis on September 10, 1993. No comments were received regarding adoption of the rule. The new section is adopted under the Texas Government Code, sec.823.3021(f) (1), which specifically provides for adoption of actuarial rates and tables for the purchase of the special military service credit, and sec.825.102, which authorizes TRS to adopt rules governing the administration of its funds and the transaction of its business. 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 December 20, 1993. TRD-9333907 Wayne Blevins Executive Director Teacher Retirement System of Texas Effective date: January 12, 1994 Proposal publication date: November 9, 1993 For further information, please call: (512) 370-0506 Joint Service with Employees Retirement System 34 TAC sec.25.113 The Teacher Retirement System of Texas (TRS) adopts new sec.25.113, without changes to the proposed text as published in the November 9, 1993, issue of the Texas Register (18 TexReg 8167). Section 25.113 concerns the transfer of credit between TRS and the Employees Retirement System (ERS) implementing Government Code, Chapter 805, which allows persons with both TRS and ERS credit to retire under one system. The rule clarifies the benefits available under the transfer legislation and the procedures by which the legislation is to be implemented. The rule establishes the procedures for eligible members to apply for the transfer of credit and to establish credit for withdrawn accounts in the respective systems. It provides procedures for determining the amount of average salary and service credit for those transferring credit between the systems. It applies the respective systems' laws requiring one month's separation from employment after an effective retirement date to those with transferred credit. It provides special provisions necessary for certain state employees subject to a mandatory transfer from TRS to ERS membership and for participants in the Optional Retirement Program. The rule states necessary conditions for applying the transfer law to death benefits. Finally, the rule provides for the interagency procedures to administer the law, including provisions for the determination of the funds to be transferred between the agencies. The rule was adopted on an emergency basis on September 10, 1993, except that subsection (i) relating to cancellation of retirement upon employment within 30 days has been substantially reworded. No comments were received regarding adoption of the rule. The new section is adopted under the Texas Government Code, sec.805.009, which authorizes the Board of Trustees to adopt rules to administer the transfer law. The new section is also adopted under the Texas Government Code, sec.825.102, which authorized the Board of Trustees of the Teacher Retirement System to adopt rules for eligibility for membership, administration of the funds of the system and the transaction of its business. 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 December 20, 1993. TRD-9333908 Wayne Blevins Executive Director Teacher Retirement System of Texas Effective date: January 12, 1994 Proposal publication date: November 9, 1993 For further information, please call: (512) 370-0506 Chapter 41. Insurance 34 TAC sec.41.11 The Teacher Retirement System of Texas (TRS) adopts new sec.41.11, without changes to the proposed text as published in the November 9, 1993, issue of the Texas Register (18 TexReg 8168). The section concerns the collection by TRS of an annual fee required by law to be paid by each person employed full-time by a public school district in order to obtain funds to initiate a possible statewide group health insurance program for public school district employees. The rule clarifies who is to pay the fee and how it is to be submitted to TRS. Section 44(d), Chapter 812 (House Bill 2711), Acts of the 73rd Texas Legislature, Regular Session 1993, requires a study of group health insurance for public school employees, with a report due June 30, 1994, to be funded in whole or in part by a portion of these funds. Further, the funds will be placed in a trust fund to establish the insurance reserves which may be needed if a public school employees group health insurance program is implemented by the 74th Texas Legislature. The rule clarifies who is a full-time employee, what is a public school district, how the fees are to be obtained by the school districts from their employees, and how they are to be submitted to TRS. The rule was first adopted on an emergency basis on September 10, 1993. No comments were received regarding adoption of the rule. The new section is adopted under sec.44(d), Chapter 812, Acts of the 73rd Texas Legislature, Regular Session, 1993, which specifically authorizes adoption of rules for the collection of these fees and under the Texas Government Code, sec.824.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for eligibility for membership administration of the funds of the system and the transaction of its business. 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 December 20, 1993. TRD-9333909 Wayne Blevins Executive Director Teacher Retirement System of Texas Effective date: January 12, 1994 Proposal publication date: November 9, 1993 For further information, please call: (512) 370-0506 34 TAC sec.41.12 The Teacher Retirement System of Texas (TRS) adopts new sec.41.12, without changes to the proposed text as published in the November 9, 1993, issue of the Texas Register (18 TexReg 8169). The section concerns the certification by school districts of their compliance with sec.13.913(a), Education Code, which requires Texas public school districts to provide employee health insurance coverage to its employees comparable to that provided by the State of Texas to its employees. Section 32, Chapter 812 (House Bill 2711), Acts of the 73rd Texas Legislature, Regular Session, 1993, requires each school district to certify compliance with Education Code, sec.13.913(a) to the executive director of TRS in the manner required by the TRS board of trustees. The adopted rules establishes February 1 of each year as the deadline by which the certification for a school year must be filed and provides that the TRS executive director may promulgate the specific format of the certification. No comments were received regarding adoption of the rule. The new section is adopted under Education Code, sec.13.913(a), which authorizes the TRS board of trustees to specify the manner of the certification and under the Texas Government Code, sec.825.102, which authorizes the Board of Trustees of the Teacher Retirement System to adopt rules for eligibility for membership, administration of the funds of the system and the transaction of its business. 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 December 20, 1993. TRD-9333910 Wayne Blevins Executive Director Teacher Retirement System of Texas Effective date: January 12, 1994 Proposal publication date: November 9, 1993 For further information, please call: (512) 370-0506 Chapter 51. General Administration 34 TAC sec.51.1 The Teacher Retirement System of Texas (TRS) adopts new sec.51.1, without changes to the proposed text as published in the November 9, 1993, issue of the Texas Register (18 TexReg 8169). The section concerns the determination of the amount and manner of compensation to its various advisory committee members. This section is being adopted to comply with state law that may require a rule governing payments of members of these committees in order for TRS to continue to receive these services which the board has found to be necessary for the performance of its duties. The rule was adopted on an emergency basis on September 10, 1993. The section recognizes four TRS advisory committees: a medical board, an investment advisory committee, a real estate finance committee, and a retired public school employee health insurance advisory committee. All but the latter committees are composed of consultants paid in accordance with their contracts. The health insurance advisory consultant is to receive reimbursement for actual expenses only. No comments were received regarding adoption of the rule. This new section is adopted under the Texas Government Code, sec.825.102, which authorizes TRS to adopt rules governing the administration of its funds and the transaction of its business, and Government Code, sec.825.114, which specifically authorizes the rule. 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 December 20, 1993. TRD-9333911 Wayne Blevins Executive Director Texas Retirement System of Texas Effective date: January 12, 1994 Proposal publication date: November 9, 1993 For further information, please call: (512) 370-0506. TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part III. Texas Youth Commission Chapter 91. Discipline and Control Disciplinary Practices 37 TAC sec.91.3 The Texas Youth Commission (TYC) adopts an amendment to sec.91.3, concerning rules of conduct, contraband, and dress, without changes to the proposed text as published in the November 2, 1993, issue of the Texas Register (18 TexReg 7917). The justification for amending the section is to provide a safe environment for TYC staff and visitors, and Youth in the custody of the Texas Youth Commission. The amendment allows individual superintendents or the facility administrator with approval of the director of institutions or director of community services, to prohibit symbolic expressions that have been shown to precipitate violence or potentially violent behavior which presents an imminent peril to the health and safety of our youth, staff, and visitors. No comments were received regarding adoption of the amendment. The amendment is adopted under Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. 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 December 16, 1993. TRD-9333989 Steve Robinson Executive Director Texas Youth Commission Effective date: January 18, 1994 Proposal publication date: November 2, 1993 For further information, please call: (512) 483-5244 37 TAC sec.91.10 The Texas Youth Commission (TYC) adopts an amendment to sec.91.10, concerning protective custody for treatment, without changes to the proposed text as published in the November 9, 1993, issue of the Texas Register (18 TexReg 8170). The justification for amending the section is to have a more efficient method of treating youth at risk of causing substantial bodily injury to himself or herself. The amendment clarifies that procedures herein apply to youth in community placements rather than TYC institutions. Existing procedures provide for movement of a TYC youth to a residential treatment center or psychiatric hospital. No comments were received regarding adoption of the amendment. The amendment is adopted under Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. 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 December 16, 1993. TRD-9333988 Steve Robinson Executive Director Texas Youth Commission Effective date: January 18, 1994 Proposal publication date: November 9, 1993 For further information, please call: (512) 483-5244 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 4. Medicaid Programs-Children and Pregnant Women Eligibility Requirements 40 TAC sec.4.1006 The Texas Department of Human Services (DHS) adopts an amendment to sec.4. 1006, concerning requirements for application, in its Medicaid Programs-Children and Pregnant Women rule chapter. The purpose for the amendment is to comply with federal regulations that mandate states to apply the Aid to Families with Dependent Children (AFDC) resource policy to loans when determining Medicaid program eligibility, because AFDC policy is less restrictive. The amendment will function by making DHS's Medicaid Program -Children and Pregnant Women rules consistent with federal regulations. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs and under Texas Civil Statutes, Article 4413 (502), sec.16, which provide the Health and Human Services Commission with the authority to administer federal medical assistance funds. The amendment implements the Human Resources Code, sec.22.002 and sec.32.001. The amendment is adopted in compliance with federal requirements to be effective January 1, 1994. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 21, 1993. TRD-9333854 Nancy Murphy Section Manager, Policy and Document Support Texas Department of Human Services Effective date: February 1, 1994 For further information, please call: (512) 45-3765 Chapter 27. Intermediate Care Facilities for the Mentally Retarded (ICFs-MR) Subchapter G. Additional Facility Responsibilities 40 TAC sec.27.719 The Texas Department of Human Services (DHS) adopts new sec.27.719, concerning consent to treatment by surrogate decision-makers, in its Intermediate Care Facilities for the Mentally Retarded (ICFs-MR) rule chapter. The section is adopted without changes to the proposed text as published in the November 12, 1993, issue of the Texas Register (18 TexReg 8350). The justification for the new section is to comply with Senate Bill 1142. This legislation requires the Texas Department of Mental Health and Mental Retardation (TXMHMR) to implement a surrogate decision-making process in which clients deemed incompetent by the interdisciplinary team may have individuals appointed to make specific decisions for them. The new section will function by increasing protection of clients' rights in ICFs-MR. No comments were received regarding adoption of the new section. The new section is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs and under Texas Civil Statutes, Article 4413 (502), sec.16, which provide the Health and Human Services Commission with the authority to administer federal medical assistance funds. The new section implements the Health and Safety Code, Title 7, Subtitle D, sec.sec.597.001- 597.055. 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 December 21, 1993. TRD-9333855 Nancy Murphy Section Manger, Policy and Document Support Texas Department of Human Services Effective date: February 1, 1994 Proposal publication date: November 12, 1993 For further information, please call: (512) 450-3765 Chapter 90. Nursing Facilities and Related Institutions Subchapter C. Standards for Licensure 40 TAC sec.90.41 The Texas Department of Human Services (DHS) adopts an amendment to sec.90. 41, concerning standards for nursing facilities, in its Nursing Facilities and Related Institutions rule chapter. The amendment is adopted without changes to the proposed text as published in the November 19, 1993, issue of the Texas Register (18 TexReg 8508). The justification for the amendment is to allow nurse aides actively employed at non-Medicaid-certified nursing facilities as of September 1, 1993, to challenge the nurse aide competency test once during the 12-month period beginning on that date and ending August 31, 1994. Persons who challenge the test and fail must go through a complete training course. The amendment will function by improving quality of care provided at non- Medicaid-certified nursing facilities. During the public comment period, DHS received comments from the Texas Health Care Association. A summary of the comment and DHS's response follow: Comment: The commenter suggested adding clarifying language to indicate that nurse aides failing the competency test must complete a training course by August 31, 1994. Response: The intent of the amendment is not to expect nurse aides failing the competency test to complete the competency training by August 31, 1994. The August 31, 1994, deadline only refers to the date by which nurse aides must challenge the competency exam; therefore, DHS is adopting the amendment as proposed. The amendment is adopted under the Health and Safety Code, Chapter 242 which provides the department with the authority to license long-term care nursing facilities and under Texas Civil Statutes, Article 4413 (502), 72nd Legislature, which transferred all functions, programs, and activities related to long-term care licensing, certification, and surveys from the Texas Department of Health to the Texas Department of Human Services. The amendments implement the Health and Safety Code, sec.sec.242.001-242.186. 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 December 22, 1993. TRD-9333893 Nancy Murphy Section Manager, Policy and Document Support Texas Department of Human Services Effective date: January 15, 1994 Proposal publication date: November 19, 1993 For further information, please call: (512) 450-3765 Chapter 101. General Rules 40 TAC sec.101.10 The Texas Rehabilitation Commission (TRC) adopts an amendment to sec.101. 10, concerning Confidentiality, without changes to the proposed text as published in the November 26, 1993, issue of the Texas Register (18 TexReg 8777). The justification for the new section is to implement Texas Human Resource Code, sec.111.057. The section will function by providing the Texas Rehabilitation Commission with the authority to make regulations governing personnel standards, the protection of records and confidential information, the manner and form of filing applications, eligibility, investigation, and determination for rehabilitation and other services, procedures for hearings, and other regulations subject to this section as necessary to carry out the purposes of this chapter. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, Title 7, 111.058, which provides the Texas Rehabilitation Commission with the authority to make regulations governing personnel standards, the protection of records and confidential information, the manner and form of filing applications, eligibility, investigation, and determination for rehabilitation and other services, procedures for hearings, and other regulations subject to this section as necessary to carry out the purposes of this chapter. 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 December 28, 1993. TRD-9334007 Charles W. Schiesser Associate Commissioner for Legal Services Texas Rehabilitation Commission Effective date: January 18, 1994 Proposal publication date: November 26, 1993 For further information, please call: (512) 483-4051 TITLE 43. TRANSPORTATION Part I. Texas Department of Transportation Chapter 1. Administration The Texas Department of Transportation adopts amendments to sec.sec.1.80-1.82, and sec.1.84, new sec.1.83 and sec.1.85, and the repeal of sec.1.83, without changes to the proposed test as published in the October 15, 1993, issue of Texas Register (18 TexReg 7142). Senate Bill 383, 73rd Legislature, 1993, added Texas Civil Statutes, Article 6252-33, to require the department to adopt rules that state the purpose of each of its advisory committees and describe each committee's task and the manner in which it will report to the agency; and establish a date on which each committee will automatically be abolished unless continued in existence by affirmative vote of the Texas Transportation Commission. These rules were adopted on an emergency basis in order to comply with the mandates of Senate Bill 383, which became effective on September 1, 1993, to provide for flexibility in the process for statutory advisory committee review of department rules, to clarify existing provisions, and to assure that critical roles of the advisory committees continue without interruption, thereby protecting the vital interests, safety and welfare of the taxpayers and the travelling public. The repeal of sec.1.83 is necessary because of the contemporaneous of new sec.1.83, which incorporates the provisions of the repealed section as rewritten and expanded. Section 1.80 is amended to include advisory committees created by the department. Section 1.81 is amended by deleting some unnecessary terms and also by adding definitions of department advisory committee, district engineer, and statutory advisory committee. Section 1.82 is amended to clarify that the section only applies to statutory advisory committees; remove the requirement that the commission designate the chair of the aviation and bicycle rules committees and allow those committees to elect a chair and vice-chair; remove provisions concerning the frequency of meetings; lower the advance notice of meetings from 14 to 10 days; and require the department to report advice of statutory advisory committees to the commission and to invite the committee chair to appear before the commission. Section 1. 84 is amended by adding a provision for the department to submit emergency rules to the commission without prior review by the advisory committee; by authorizing the committee to waive preliminary or final review of draft rules; and by authorizing the committee to defer the committee's review of rules until the public comment period. New sec.1.83 replaces the existing section and outlines the duties of the statutorily appointed advisory committees, the frequency of meetings, and the expiration date of each committee. New sec.1.85 lists committees created by the department and states their purpose, duties, and manner of reporting; and provides for membership requirements, frequency of meetings, requisites for formal committee action, election of officers, and duration of existence of committees. On October 25, 1993, the department conducted a public hearing on the proposed sections. No written or oral comments were received concerning adoption of the proposed rules. Advisory Committees 43 TAC sec.sec.1.80-1.82, 1.84 The repeal, amendments, and new sections are adopted under Texas Civil Statutes, Article 6666, which provide the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically by Texas Civil Statutes, Articles 46c-3, 6663b, 6673g, and 6673h, which create four specific advisory committees and authorizes the commission to adopt rules to govern the operations of those committees. In addition, Texas Civil Statutes, Article 6252-33, direct state agencies to adopt rules concerning the operation of advisory committees. 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 December 23, 1993. TRD-9333932 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: January 13, 1994 Proposal publication date: October 15, 1993 For further information, please call: (512) 463-8630 43 TAC sec.1.83 The repeal is adopted under Texas Civil Statutes, Article 6666, which provide the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically by Texas Civil Statutes, Articles 46c-3, 6663b, 6673g, and 6673h, which create four specific advisory committees and authorizes the commission to adopt rules to govern the operations of those committees. In addition, Texas Civil Statutes, Article 6252-33, direct state agencies to adopt rules concerning the operation of advisory committees. 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 December 23, 1993. TRD-9333933 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: January 13, 1994 Proposal publication date: October 15, 1993 For further information, please call: (512) 463-8630 43 TAC sec.1.83, sec.1.85 The new sections are adopted under Texas Civil Statutes, Article 6666, which provide the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically by Texas Civil Statutes, Articles 46c-3, 6663b, 6673g, and 6673h, which create four specific advisory committees and authorizes the commission to adopt rules to govern the operations of those committees. In addition, Texas Civil Statutes, Article 6252-33, direct state agencies to adopt rules concerning the operation of advisory committees. 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 December 23, 1993. TRD-9333931 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: January 13, 1994 Proposal publication date: October 15, 1993 For further information, please call: (512) 463-8630 Chapter 31. Public Transportation General 43 TAC sec.31.3 The Texas Department of Transportation adopts an amendment to sec.31.3, without changes to the proposed text as published in the October 15, 1993, issue of the Texas Register (18 TexReg 7144). The definition of "new start" is being replaced with the broader term "service expansion," which encompasses both new starts as well as existing transit systems. A definition is being added for RPT (rural public transportation) as that is a common short-form reference used by the department as well as the transit industry. This action is necessary to explain contemporaneous amendments to sec.31.36 of this chapter concerning the sec.18 grant program. A public hearing was held on November 2, 1993, and no comments were received regarding adoption of the proposed amendment. The amendment is adopted under Texas Civil Statutes, Articles 6666, 6663b, and 6663c, which provide the Texas Transportation Commission with the authority to promulgate rules for the conduct of the work of the Texas Department of Transportation, and specifically to administer the state public transportation fund and state and federal public transportation 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 December 23, 1993. TRD-9333934 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: January 13, 1994 Proposal publication date: October 15, 1993 For further information, please call: (512) 463-8630 State Programs 43 TAC sec.31.11 The Texas Department of Transportation adopts an amendment to sec.31.11, without changes to the proposed text as published in the October 15, 1993, issue of the Texas Register (18 TexReg 7144). This action is necessary to conform to language contained in House Bill 1942, 73rd Legislature, Regular Session, which amended Article 6663c, Texas Civil Statutes. Formula program funding for urbanized areas is based on population and population density. Amendments enacted by the 72nd Legislature resulted in the inclusion of large unincorporated areas which were not served by transit systems and which skewed the formula program funding. The 73rd Legislature addressed this problem by defining more carefully the populations and densities to be used in such instances. The amendment adds new subsection (b)(1)(A)(iii) and (iv) to describe the calculations of population and population density. There are also a number of technical corrections to update the name of the federal enabling legislation and grantor agency. Those corrections do not alter the original intent of the existing rules. A public hearing was held on November 2, 1993, and no comments were received regarding adoption of the proposed amendment. The amendment is adopted under Texas Civil Statutes, Articles 6666, 6663b, and 6663c, which provide the Texas Transportation Commission with the authority to promulgate rules for the conduct of the work of the Texas Department of Transportation, and specifically to administer the state public transportation fund and state and federal public transportation 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 December 23, 1993. TRD-9333935 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: January 13, 1994 Proposal publication date: October 15, 1993 For further information, please call: (512) 463-8630 Chapter 31. Public Transportation Federal Programs 43 TAC sec.31.36 The Texas Department of Transportation adopts an amendment to sec.31.36, with changes to the proposed text as published in the October 15, 1993, issue of the Texas Register (18 TexReg 7146). The adoption of this amended section is necessary to establish an alternate to the current funding allocation methodology in sec.31.36. Transit industry representatives have made a compelling argument in favor of system-specific performance goals and management objectives that will ensure that the public's interests are protected. It is also important to provide for service expansions by existing operators as well as new starts. The amended section establishes a process by which the Texas Transportation Commission can terminate funding to a transit operator that does not make a good-faith effort to meet the performance goals and management objectives. On November 2, 1993, the department held a public hearing to receive data, comments, views, and/or testimony concerning the proposed amendment. The following groups and associations commented in opposition to proposed changes: Public Transportation Advisory Committee; Texas Transit Association; Capital Area Rural Transportation System; Kaufman County Senior Citizens Services, Inc. ; Ark-Tex Council of Governments; Community Transit Service/Community Services, Inc.; Rolling Plains Management Corporation; Hill Country Transit; and Caprock Community Action Association, Inc. The department's responses to the comments are presented in the order in which they appear in the proposed rules. Various parties indicated support for the department's decision, discussed in the proposed preamble, to establish an ad hoc advisory committee to work with staff in developing a new methodology for the allocation of Section 18 funds. However, those commenters also expressed objections to the way that advisory process concluded. As these comments are not germane to the proposed text, they will be addressed separately to the individual commenters. Several commenters challenged statements in the proposed preamble as being inconsistent with or more lenient than the text of the proposed rules. Another interpreted the fiscal implications cited in the proposed preamble as evidence that the department has excess staff and/or excess administrative funds. As the responses to other comments will indicate, the department believes that the statements in the preamble were consistent with the proposed rules. Additional language has been added to clarify those points that were specifically questioned. With respect to the implication that TxDOT has excess staff and/or funds, the proposed policy and companion procedures would replace those currently in place. The department and the RPT contractors presently devote certain resources to the allocation of funds and monitoring of performance. The proposed revisions are not expected to increase the resources needed to address these requirements. Several commenters expressed concern over the reference in sec.31.36(c)(3)(A) to funds awarded for fiscal year 1994. They noted that certain monies appropriated for the fiscal 1994-1995 biennium were restricted and recommended that the text be clarified to eliminate the effect of those restrictions. The earlier language in sec.31.36(c)(3) cites the "annual sec.18 federal apportionment and any state funds appropriated specifically for the purpose of funding nonurbanized public transportation service." Subparagraph (A) refers to the same pool of funds. However, it must be noted that administrative rules do not take precedence over statutes or other legislative actions. The allocations approved by the Texas Transportation Commission on July 29, 1993, and October 28, 1993, mitigated the impact of the appropriation constraints and established an equitable funding base for fiscal year 1994. This comment prompted changes in subsection (c)(2) and (3) to explicitly include carryover funds from previous federal apportionments. The amounts available from these sources is expected to be limited, as they are dependent on deobligations from earlier projects, but it is important to specify how those dollars will be applied. A number of comments suggested tabling the revisions proposed in sec.31.36(c) (4). Some favored the establishment of another ad hoc advisory committee. Several recommended that the categories of measures listed in the clauses under subparagraphs (A) and (B) be eliminated in favor of a more general reference. Questions were posed as to why approval of performance goals and management objectives is reserved to the commission and the department rather than negotiated with each RPT contractor. The department has been designated to administer the Section 18 program and cannot delegate those fiduciary responsibilities to another entity. In promulgating these rules, the commission establishes priorities for staff as well as external contractors. None of the commenters took exception to a specific category of performance goals or management objectives. One may conclude that the categories are, in fact, reasonable and appropriate. The department values its partnership with transit operators in meeting the mobility needs of the public. The language in sec.31.36(c)(4) outlines the framework for a process of continuous improvement in providing those transit services. Subparagraphs (A) and (B) have been revised to specify that measures must also be deemed appropriate by the contractors and that each RPT contractor will be consulted. Department staff will meet with each operator to discuss improvements that would enhance service to the public. Local input is critical to the ultimate success of this continuous improvement effort. Although the commission must retain final approval authority in this matter, it is important that the measures and targets also represent the RPT contractor's priorities. The department believes the revised text is a significant improvement over current rules. Although further refinements are always possible, it does not appear reasonable to defer final adoption and create another advisory panel. The implementation of this process should allay those concerns as that will be the ultimate test of all parties' good faith. Other comments on sec.31.36(c)(4) indicated that TxDOT had not, as stated in the preamble, allowed for system-specific goals and objectives. The reference in subparagraph (A) "for that RPT contractor" indicates that system-specific goals will be developed. Similar language was inadvertently left out of subparagraph (B) and has now been added. Several commenters took exception to the phrase "but not limited to" in clauses under subparagraphs (A) and (B). The category for other measures in sec.31.36(c)(4)(A)(iv) was particularly troublesome to some. Another asked that a maximum number of measures be specified to deter TxDOT from imposing a burdensome number of goals and objectives on each operator. The examples listed in the clauses are for purposes of illustration because of the large number of possibilities that exist within each category. The department believes flexibility on the total number of measures is important as a particular RPT contractor may identify several priorities within the same category. For example, the transit operator may seek to improve the revenue recovery ratio by 5.0% and reduce the cost per vehicle mile by $0.05 during the year. In most cases, however, the department and the operator may agree to focus on a single target for each category. Section 31.36(c)(4)(A) has been revised to clarify that measures will be selected from each of the categories listed in clauses (i)-(iii). This conforms to the language in subparagraph (B). The need for other measures, as provided in sec.31.36(c)(4)(A)(iv), is expected to be apparent to both the RPT contractor and the department. This clause has also been revised to specify the contractor's role in developing such measures. As noted in response to an earlier comment, the department views this as a means of helping each RPT contractor continuously improve so as to provide better service to the public. The flexibility to tailor these measures for individual transit systems will yield tangible benefits for each. If this process instead becomes burdensome, the RPT contractor should bring that to TxDOT's attention immediately and ask that the measures be reviewed. A number of commenters viewed the proposed text in sec.31.36(c)(4) as evidence of the department's intent to "micromanage" the rural transit systems. Others asked how the objectives would be measured and who would determine if the measures are being met. Previous responses have described the continuous improvement process and the opportunity for RPT contractors to contribute their opinions. The department agrees that most decisions are best left to local officials as long as program requirements are met. The rules establish the commission's priorities in the categories of performance goals and management objectives. Precise numerical targets will be established for each category along with the methodology for tracking performance. For example, an RPT contractor's target for cost effectiveness may be to reduce the cost per passenger trip by 5.0%. In approving that target, the department and the contractor would also agree that performance statistics would be derived from the standard quarterly operations reports. The department is responsible for determining if targets are met. However, the use of precise numerical indicators will eliminate any subjective judgments. The department does not propose to tell a transit manager how to meet the agreed-upon targets but will instead focus upon providing the technical assistance requested by that manager. However, this is another concern that perhaps can only be laid to rest when the process is implemented. Other comments stated that the proposed rule would duplicate or even supplant existing statutory requirements specified in Texas Civil Statutes, Article 6663c. It was noted that RPT contractors already submit regular performance reports and that the current measures are adequate. The rule clearly cannot supplant statutory requirements. Instead, TxDOT will use those requirements as a guide in consultations with the RPT contractors. Data that is currently being provided will receive priority consideration as a means of complying with sec.31.36(c)(4). The department also intends to consolidate the performance goals and management objectives reports into the existing reporting processes. TxDOT staff can then perform various calculations using the same baseline information from the RPT contractor and track progress toward the annual targets. The comment that current performance measures are adequate is contradicted by statements from other parties, both in response to the proposed rule and in ongoing discussions since sec.31.36 was adopted in 1989. There was also concern over the interpretation of "good-faith effort" as stipulated in sec.31.36(c)(4)(C). Several suggested that decisions to terminate funding be made only after a public hearing was conducted. The determination of "good-faith effort" is admittedly subjective. However, the provisions for a grace period and technical assistance, as described in sec.31.36(c)(4)(C)(i) are evidence that the department would consider terminating financial support as the last option. Although the opportunity for a public hearing was implicitly considered part of the termination process, an explicit reference to the provisions of 43 TAC sec.1.5 has been added to sec.31.36(c)(4)(C)(ii). In order to accommodate this rulemaking process, the effective dates and due dates in subsection (c) and paragraph (2) of subsection (c) have been revised to January 15, 1994. The amendments are adopted under Texas Civil Statutes, Articles 6666, 6663b, and 6663c, which provide the Texas Transportation Commission with the authority to promulgate rules for the conduct of the work of the Texas Department of Transportation, and specifically to administer the state public transportation fund and state and federal public transportation programs. sec.31.36. Section 18 Grant Program. (a) Purpose. The Federal Transit Act of 1964, Section 18, as amended (49 United States Code, sec.1614), authorizes the Secretary of the United States Department of Transportation to make grants for public transportation projects in nonurbanized areas. The department has been designated by the governor to administer the Section 18 program. (b) Eligible recipients. State agencies, local public bodies, private nonprofit organizations, Indian tribes and groups, and operators of public transportation services are eligible to receive Section 18 funds through the department. Private for-profit operators of public transportation services may participate in the program through contracts with eligible recipients. (c) Allocation of funds. As part of its administration of the Section 18 program, the department is charged with ensuring that there is a fair and equitable distribution of program funds within the state (FTA Circular 9040.lC, Chapter 1, sec.4). Effective January 15, 1994, the department will allocate Section 18 funds to local contractors in the following manner. (1) Unless the governor certifies to the Secretary of the United States Department of Transportation that the intercity bus service needs of the state are being adequately met, the department will reserve not less than 5.0% of the fiscal year 1992 Section 18 federal apportionment for the development and support of intercity bus transportation. The percentage to be reserved for intercity bus transportation will rise to 10% in fiscal year 1993 and 15% in fiscal year 1994 and beyond unless the governor certifies that such expenditures are not necessary. If it is determined that all or a portion of the set-aside monies are not required for intercity bus service, those funds shall be applied to the formula apportionment process described in paragraph (3) of this subsection. (2) An amount not to exceed 10% of the balance of the annual Section 18 federal apportionment, after the set-aside for intercity bus service described in paragraph (1) of this subsection and department administrative expenses are deducted, and 10% of the remaining balance of previous Section 18 federal apportionments shall be reserved for the expansion of nonurbanized public transportation services. No later than January 15 of each year, all applicants requesting funding under this paragraph shall file a notice of their intentions to expand services. All service expansions shall be initiated on September 1 following the filing of the notice of intent unless otherwise authorized by the department. The amounts to be awarded for each service expansion shall be determined by the commission. After receiving an award under this paragraph, service expansions shall become subject to the funding allocation process described in paragraph (3) of this subsection in succeeding fiscal years. If it is determined that all or a portion of the funds made available under this paragraph are not needed for the purposes described, those monies shall be distributed in accordance with the provisions of paragraph (3) of this subsection. (3) Except as provided in paragraphs (1) and (2) of this subsection, the balance of the annual Section 18 federal apportionment, plus the remaining balance of previous Section 18 federal apportionments, and any state funds appropriated specifically for the purpose of funding nonurbanized public transportation services will be allocated to existing RPT contractors as described in this paragraph. No later than June 1 of each calendar year, the department will announce the allocations for the fiscal year beginning on September 1 of the same year. (A) Subject to the following limitations and adjustments, each RPT contractor shall receive the same percentage of funds as were awarded to that contractor by the commission for fiscal year 1994. (i) The percentage awards to each RPT contractor will be adjusted annually to include any projects funded under paragraph (2) of this subsection during the previous fiscal year. (ii) If a portion of an RPT contractor's service area is declared an urbanized area by the United States Census Bureau or the service area is otherwise reduced, the department and that contractor shall negotiate an appropriate adjustment in the award of nonurbanized public transportation funding to that contractor. (iii) If a previously designated urbanized area is declared nonurbanized by the United States Census Bureau, a public transportation contractor serving that area shall apply for funds in accordance with paragraph (2) of this subsection. (B) Prior to receiving funds, a contractor must complete and comply with all application requirements, rules and regulations applicable to the Section 18 program, and must negotiate a contract with the department pursuant to paragraph (4) of this subsection. (4) A contract for the allocation of funds pursuant to paragraph (3) of this subsection shall have an effective date of September 1, shall be for a 12-month period unless otherwise authorized by the department, and shall provide for performance goals and management objectives for the RPT contractor that are acceptable to the commission. (A) Performance goals for each fiscal year shall at a minimum include at least one measure deemed appropriate by that RPT contractor and the department after consultation with the affected RPT contractor from each of the categories listed in clauses (i)-(iii) of this subparagraph and may include at least one measure as provided in clause (iv) of this subparagraph. (i) Cost efficiency. Examples include, but are not limited to, specific performance targets related to revenue recovery ratio, cost per vehicle mile, or cost per service hour. (ii) Cost effectiveness. Examples include, but are not limited to, specific performance targets related to cost per passenger trip or cost per passenger mile. (iii) Service utilization. Examples include, but are not limited to, specific performance targets related to passenger trips per capita, passenger trips per mile, or passenger trips per hour. (iv) Other measures. The department and the RPT contractor may also adopt other performance goals that are deemed appropriate by the department and that RPT contractor to address particular operational issues. For example, if an RPT contractor has experienced a number of vehicular accidents during the preceding year, the department and that RPT contractor might agree to institution of a safety program with the goal of reducing the number of accidents by a specified percentage. (B) Management objectives for each fiscal year shall at a minimum include at least one measure deemed appropriate by that RPT contractor and the department after consultation with the affected RPT contractor from each of the following categories. (i) Training. Examples include, but are not limited to, a target for hours of training to be provided to drivers, renewal of first aid and related certifications for all drivers and management employees, or completion of a total quality management course by a specified number of supervisory staff members. (ii) Marketing and public involvement. Examples include, but are not limited to, the expenditure of a specified budget percentage or amount on marketing activities, the completion of a specified number of public meetings to obtain comments on system operations, or the administration of a passenger survey on quality of service. (iii) Disadvantaged business enterprise participation. Examples include, but are not limited to, achievement of a specified percentage increase in the use of disadvantaged business enterprises, or recruitment and certification of a specified number of disadvantaged business enterprises. (iv) General management activities. Examples include, but are not limited to, the automation of all financial and personnel records, preparation of a business plan to foster private sector partnerships, or completion of a staffing plan that identifies funding resources for anticipated personnel increases. (C) A contractor's performance goals and management objectives will serve as a basis for the department's annual review of the contractor's efficiency and effectiveness in providing public transportation services. If the contractor fails to meet those goals or objectives, and fails to demonstrate a good faith effort for their accomplishment, the commission may rule the contractor ineligible to receive nonurbanized public transportation funding. However, the department will make all possible efforts to ensure continuity of service in that area to accommodate the needs of public transportation riders. (i) The department will notify the contractor of any deficiencies noted in the annual review, and will allow the contractor a minimum grace period of one calendar year from the date of notification to correct those deficiencies. During the grace period, the department will make every reasonable effort to provide appropriate technical assistance to the RPT contractor. (ii) If at the end of the grace period the deficiencies have not been corrected, the commission may by written order authorize the department to terminate funding to the RPT contractor. The RPT contractor may request a public hearing before the commission to present input on why termination is not warranted in accordance with the provisions of sec.1.5 of this title (relating to Public Hearing). 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 December 23, 1993. TRD-9333936 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: January 13, 1994 Proposal publication date: October 15, 1993 For further information, please call: (512) 463-8630