ADOPTED RULES 
 
 An agency may take final action on a section 30 days after a proposal has been 
published in the  Texas Register. The section becomes effective 20 days after 
the agency files the correct document with the  Texas Register, unless a later 
date is specified or unless a federal statute or regulation requires 
implementation of the action on shorter notice. 
 If an agency adopts the section without any changes to the proposed text, only 
the preamble of the notice and statement of legal authority will be published. 
If an agency adopts the section with changes to the proposed text, the proposal 
will be republished with the changes. 
 
   
  TITLE 7. BANKING AND SECURITIES 
 Part II. Texas Department of Banking 
  Chapter 26. Perpetual Care Cemeteries 
  
  7 TAC sec.26.1 
 
  The Texas Department of Banking (the Department) adopts new Chapter 26 
entitled "Perpetual Care Cemeteries" containing new 7 TAC sec.26.1, with several 
changes to the proposed text as published in the December 14, 1993, issue of the 
Texas Register (18 TexReg 9250). The new section establishes fees applicable to 
regulated perpetual care cemetery corporations pursuant to Chapter 712 of the 
Health and Safety Code, as amended effective September 1, 1993 (the Act). The 
changes made are viewed as nonsubstantive for the purpose of eliminating a 
duplicate provision, clarifying the definition of "Examination," adding a 
definition of "Fund," and adding a new subsection (d) providing for a 
discretionary waiver or reduction of fees in the event of hardship. Former 
proposed subsection (d) is renumbered as subsection (e). 
 The fees imposed by sec.26.1 are mandated by statute. Two of the three fees are 
required to be set annually by the Commissioner. The third fee is set forth in 
the statute, and is included in the rule for convenience. 
 Section 712.042(a) of the Health and Safety Code provides that, on filing a 
statement of funds as required by law, a corporation shall pay a reasonable and 
necessary fee to the Commissioner, in an amount set annually by the Commissioner 
to defray the cost of administering the statute. Section 26.1(b) (2) of the 
regulation sets a reasonable and necessary fee to accompany this filing. 
However, the $500 fee can in some instances involving small trust funds exceed 
the earnings of the fund, and sec.26.1(d) has been added to provide an 
opportunity for reduction of the fee upon a showing of substantial hardship. 
 The Health and Safety Code, 712.044(b), provides that a corporation must pay a 
reasonable and necessary fee to the Commissioner for its examination, the amount 
of which is to be set annually by the Commissioner to defray the cost of 
administering the statute. The amount of this fee is set by sec.26.1(c). New 
sec.26.1(d) similarly provides an opportunity for reduction of this fee upon a 
showing of substantial hardship. 
 Filing fees set forth in sec.26.1(b) are nonrefundable and due at the time the 
related documentary filing is made except in certain instances when an 
application for reduced fee is submitted. Examination fees are nonrefundable, 
collectable in quarterly or fewer installments as directed by the Commissioner, 
due at the time of billing, and assessed against each corporation at a rate of 
not more than $0.0012 per dollar of the book value of the total perpetual care 
cemetery trust assets of the corporation, subject to possible reduction in the 
event of substantial hardship; provided, however, that the annual examination 
fee will not exceed $5,000 or be less than $25. The Department will levy this 
fee in such periodically adjusted amounts as reasonably appear necessary to 
defray the costs of examination and the administration of the Act. 
 A hearing was held to accept public comments on February 8, 1994. One commenter 
argued that the Commissioner is too narrowly focused on collecting funds 
sufficient to operate the Department, and is ignoring the Legislature's intent 
that examination fees collected should be based on actual examination time spent 
in the corporation's offices. Further, the commenter was critical of the 
definition of "examination" for two reasons. First, the definition refers to the 
process of evaluating the financial condition of the corporation while the 
statute limits the examination to books and records relating to the 
corporation's trust fund. All commenters at the public hearing uniformly 
concurred in this argument. Second, the commenter argues that an examination can 
only occur in the corporation's offices. 
 Finally, all commenters argued that the fees as proposed are too harsh for the 
smallest businesses in the industry, and proposed a tiered structure of fees 
based on the size of the affected business. All commenters also agreed that any 
assessment-based fee should be based on required contributions to the trust fund 
rather than the absolute size of the trust fund in order to continue to 
encourage voluntary, excess contributions. 
 The Texas Cemeteries Association, Restland Memorial Park, and Mount Olivet 
Cemetery Association commented against the new section. 
 The Department disagrees with the first argument. The Department firmly 
believes that an assessment-based examination fee was contemplated by the 
Legislature. The Act specifically requires the examination fee to be set in an 
amount sufficient to defray the cost of administering" the law. Assessment-based 
examination fees allow the Department to control its income stream to better 
match the very cost the Legislature has required to be considered, in that 
assessments may be deferred if costs unexpectedly decrease or if revenues exceed 
expectations. Examination fees based strictly on time and expenses cannot be so 
adjusted, and nothing in the statute explicitly or implicitly refers to the time 
and expense involved in individual examinations. The burden of regulatory cost 
is thus fairly shared by all regulated entities based on the size of the 
regulated fund. 
 However, while the Department believes the adopted fee structure is statutorily 
supportable, the arguments regarding adverse impact on the smallest businesses 
and the corresponding need for a tiered fee structure based on required trust 
fund contributions are reasonable. The Department has therefore added new 
sec.26.1(d) as an interim measure to provide for a waiver or reduction of fees 
upon a showing of substantial hardship, and will actively seek to develop 
proposed amendments to sec.26.1 to convert to a tiered fee structure based at 
least in part on required trust fund contributions. A definition of the term 
Fund" has been added as sec.26.1(a)(7) to facilitate drafting the additional 
subsection. 
 The Department agrees with the commenters that examinations are for the purpose 
of evaluating the books and records related to the trust fund of the 
corporation, and is modifying the definition of examination to clearly state the 
purpose of the process. 
 Finally, the Department disagrees that an examination" can only occur at the 
offices of the corporation. An examination is a process that can involve 
analysis at Department headquarters as well as field investigations. 
Nevertheless, the Department assures the commenter that every regulated 
corporation can expect at least one annual visit to the corporation's office by 
examiners. 
 The new section is adopted pursuant to the Health and Safety Code, sec.712. 
042(a) and sec.712.044(b), which empowers the Department to set fees in 
sufficient amount to defray the cost of administering Chapter 712 of the Health 
and Safety Code, and sec.712.0031 of the Health and Safety Code, which sets a 
fee incorporated into this regulation for the convenience of the user. 
 
 
  sec.26.1. Fees and Assessments. 
 
  (a) Definitions. The following words and terms, when used in this section, 
have the following meanings, unless the text clearly indicates otherwise. 
 
  (1)  Act-Chapter 712, Health and Safety Code, as amended. 
   
  (2)  Commissioner-The Banking Commissioner of Texas. 
   
  (3)  Corporation-A corporation subject to the Act that is organized under 
Chapter 712 of the Act, or any corresponding statute in effect before September 
1, 1993, to operate one or more perpetual care cemeteries in Texas. 
   
  (4) Department-The Texas Department of Banking. 
   
  (5)  Examination-The process of evaluating the books and records of a 
Corporation relating to its Fund, either by field examination or internal 
Department review in lieu of or in addition to field examination. 
   
  (6)  Fiscal year-The 12-month period from September 1st to August 31st of the 
next succeeding calendar year. 
   
  (7) Fund-The perpetual care cemetery trust fund maintained by one or more 
Corporations pursuant to the Act. 
     
  (b) Filing Fees. The filing fees set forth in this subsection are either 
specifically set out in the Act or have been set in accordance with the Act to 
reasonably approximate the agency's cost of administering the Act with respect 
to each particular filing. 
 
  (1) Notice Fee. Pursuant to the Act, sec.712.0031, each Corporation required 
to file notice of intent to operate a perpetual care cemetery with the 
Department shall submit with such notice a fee of $500. 
   
  (2)  Annual Statement Fee. A Corporation shall pay an annual $500 fee in 
connection with the filing of the annual statement of funds required under the 
Act. 
   
  (3) Time of payment. Except as otherwise provided in this section, all fees 
are nonrefundable and due at the time the related documentary filing is made. 
Failure to timely pay fees or costs under this section shall be grounds for 
enforcement action by the Department under the Act. 
     
  (c) Examination Fees. The Department shall assess and collect nonrefundable 
examination fees in accordance with this subsection. Except as otherwise 
provided in this section, any assessed fee or an installment payment as part of 
a fee is due at the time of billing. The Department shall annually assess each 
Corporation an examination fee, not to exceed $5,000 in a fiscal year, at a rate 
of not more than $0.0012 per dollar of the book value of the total assets in the 
Fund. The Department may levy this fee in quarterly or fewer installments in 
such periodically adjusted amounts as reasonably appear necessary to defray the 
costs of examination and the administration of the Act. If the examination fee 
as computed in this subsection is less than $25, a minimum examination fee of 
$25 shall be levied and collected. 
   
  (d)  Reduction of Fees. Upon a showing of substantial hardship by an affected 
Corporation, the Commissioner may in the exercise of discretion reduce or waive 
the annual fee imposed by subsection (b)(2) of this section or any examination 
fee installment imposed by subsection (c) of this section. An application for 
reduced fee shall be made in writing no later than 15 days after the due date 
for such fee, specifically describing the anticipated financial hardship, and 
any approved reduction or waiver of fees shall not be deemed to be a continuing 
reduction or waiver with respect to future fees. In the event a Corporation with 
less than $25,000 in assets in its Fund applies for a reduced fee on or before 
the due date for such fee, the application for reduction may be submitted in 
lieu of the fee, provided that the Corporation submits the fee determined by the 
Commissioner to be due within 15 days after receipt of the Commissioner's 
determination. Any other Corporation that applies for a reduced fee shall pay 
the fee when due subject to possible reduction and rebate of the fee. 
   
  (e) Severability. If any fee in this section or the manner of its calculation 
is determined to be unlawful or in excess of the authority of the Department to 
adopt and impose, the remainder of this section shall be unaffected, and other 
fees specified herein shall continue to be due and collected. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 14, 1994. 
 TRD-9436139 
  Everette D. Jobe 
 General Counsel 
 Texas Department of Banking 
    Effective date: March 7, 1994 
 Proposal publication date: December 14, 1993 
 For further information, please call: (512) 475-1300 
         
                 
  TITLE 16. ECONOMIC REGULATION 
 Part VIII. Texas Racing Commission 
  Chapter 305. Licenses for Pari-mutuel Wagering 
  
  Subchapter C. Racetrack Licenses 
 
  Application Procedure 
 
  16 TAC sec.305.82 
 
  The Texas Racing Commission adopts an amendment to sec.305.82, concerning 
application process, without changes to the proposed text as published in the 
October 15, 1993, issue of the  Texas Register (18 TexReg 7085). 
 The amendment is adopted to increase the efficiency and effectiveness of the 
commission's racetrack licensing program. 
 The amendment deletes the requirement that the commission establish a period 
for accepting racetrack applications at least once a year. 
 No comments were received regarding adoption of the amendment. 
 The amendment is adopted under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; and the Texas 
Government Code, sec.2001.004, which requires the commission to adopt rules of 
practice and procedure. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 10, 1994. 
 TRD-9435978 
  Paula Cochran Carter 
 General Counsel 
 Texas Racing Commission 
    Effective date: March 4, 1994 
 Proposal publication date: October 15, 1994 
 For further information, please call: (512) 794-8461 
         
             Chapter 309. Operation of Racetracks 
  
  Subchapter A. General Provisions 
 
  Facilities and Equipment 
 
  16 TAC sec.309.25 
 
  The Texas Racing Commission adopts an amendment to sec.309.25, concerning 
external communication, without changes to the proposed text as published in the 
October 15, 1993, issue of the  Texas Register (18 TexReg 7085). 
 The amendment is adopted to ensure the commission's rules for racetrack 
operations are consistent with other racing jurisdictions. 
 The amendment removes the prohibition against having operational telephones 
during live racing. 
 The Department of Public Safety filed written comment regarding the proposal. 
The Department believes increased availability of telephones on racetrack 
grounds will increase the likelihood of illegal gambling at the racetracks. The 
Commission disagrees with the comment because it believes the telephones be 
monitored sufficiently to deter illegal gambling. Further, making telephones 
unavailable at pari-mutuel racetracks will put this state at a disadvantage in 
its efforts to draw quality race animals and trainers to the new Class 1 
racetracks. Therefore, the Commission believes the risks of illegal gambling by 
telephone are outweighed by the benefits of increased competitiveness. 
 The amendment is adopted under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; and sec.6.06, which 
authorizes the commission to adopt rules relating to the operation of 
racetracks. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 10, 1994. 
 TRD-9435977 
  Paula Cochran Carter 
 General Counsel 
 Texas Racing Commission 
    Effective date: March 4, 1994 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 794-8461 
         
             Chapter 313. Officials and Rules of Horse Racing 
  
  Subchapter D. Running of the Race Jockeys 
 
  16 TAC sec.313.405 
 
  The Texas Racing Commission adopts an amendment to sec.313.405, concerning 
whips and other equipment, without changes to the proposed text as published in 
the December 7, 1993, issue of the Texas Register (18 TexReg 9040). 
 The amendment is adopted to ensure that pari-mutuel racing will be safer for 
jockeys. 
 The amendment requires a jockey or apprentice jockey to wear a safety vest 
while riding a horse in a race. 
 No comments were received regarding the proposal. 
 The amendment is proposed under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act and sec.6.06, which 
authorize the commission to adopt rules relating to the operation of racetracks. 
The proposed rule implements Texas Civil Statutes, Article 179e. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 10, 1994. 
 TRD-9435976 
  Paula Cochran Carter 
 General Counsel 
 Texas Racing Commission 
    Effective date: March 4, 1994 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 794-8461 
         
           Chapter 321. Pari-mutuel Wagering 
  
  Subchapter A. Regulation and Totalisator Operations 
 
  Regulation of Wagering 
 
  16 TAC sec.321.66 
 
  The Texas Racing Commission adopts an amendment to sec.321.66, concerning 
minimum wager, without changes to the proposed text as published in the October 
15, 1993, issue of the Texas Register (18 TexReg 7088). 
 The amendment is adopted to ensure that patrons will be better able to 
understand pari-mutuel wagering, such as the calculation of odds and the 
distribution of pools. 
 The amendment reduces the minimum amount of a pari-mutuel wager on all pools 
from $2.00 to $1.00. 
 No comments were received regarding the proposal. 
 The amendment is adopted under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; and sec.11.01, which 
authorizes the commission to adopt rules regulating pari-mutuel wagering. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 10, 1994. 
 TRD-9435975 
  Paula Cochran Carter 
 General Counsel 
 Texas Racing Commission 
    Effective date: March 4, 1994 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 794-8461 
         
             Chapter 321. Pari-mutuel Wagering 
  
  Subchapter B. Distribution of Pari-mutuel Pools 
 
  16 TAC sec.321.110 
 
  The Texas Racing Commission adopts an amendment to sec.321.110, concerning 
trifecta, with changes to the proposed text as published in the October 15, 
1993, issue of the Texas Register (18 TexReg 7089). 
 The amendment is adopted to expand the availability of trifecta wagering, 
thereby encouraging pari-mutuel wagering generally. 
 The amendment permits coupled entries and mutuel fields to participate in a 
race with trifecta wagering provided the race is a stakes race with a purse of 
at least $100,000 and there are at least seven wagering interests. The change 
from the proposed text restricts the section's applicability to horse races. 
 No comments were received regarding adoption of the amendment. 
 The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 
02, which authorize the commission to adopt rules for conducting racing with 
wagering and for administering the Texas Racing Act; and sec.11.01, which 
authorizes the commission to adopt rules regulating pari-mutuel wagering. 
 
 
  sec.321.110. Trifecta. 
 
  (a)-(b) (No change.) 
   
  (c) A coupled entry or mutuel field may not start in a horse race with 
trifecta wagering unless the race is a stakes race with a purse of at least 
$100,000 and there are seven or more wagering interests. 
   
  (d)-(m) (No change.) 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 10, 1994. 
 TRD-9435974 
  Paula Cochran Carter 
 General Counsel 
 Texas Racing Commission 
    Effective date: March 4, 1994 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 794-8461 
         
                   
  TITLE 25. HEALTH SERVICES 
 Part I. Texas Department of Health 
  Chapter 289. Radiation Control 
  
  Texas Regulations for the Control of Radiation 
 
  25 TAC sec.sec.289.111, 289.113, 289.116, 289.122, 289.126 
 
  The Texas Department of Health (Agency) adopts sec.289.111, 289.113, 289. 116, 
289.122, and 289.126, with changes to the proposed text as published in the 
November 9, 1993, issue of the Texas Register (18 TexReg 8120) and with changes 
to the material the section adopts by reference. 
 Section 289.111 adopts by reference Part 11 of the Texas Regulations for 
Control of Radiation (TRCR) titled, "General Provisions." Section 289.113 adopts 
by reference Part 21 of the Texas Regulations for Control of Radiation (TRCR) 
titled, "Standards for Protection Against Radiation." Section 289.116 adopts by 
reference Part 32 of the Texas Regulations for Control of Radiation (TRCR) 
titled, "Use of Radiation Machines in the Healing Arts and Veterinary Medicine." 
Section 289.122 adopts by reference Part 42 of the Texas Regulations for Control 
of Radiation (TRCR) titled, "Registration of Radiation Machine Use and Service." 
Section 289.126 adopts by reference Part 12 of the Texas Regulations for Control 
of Radiation (TRCR) titled, "Fees for Certificates of Registration, Radioactive 
Material(s), Emergency Planning and Implementation, and Other Regulatory 
Services." Following are the changes that were made to the each part of the 
TRCR, and comments and agency responses to those comments. 
 TRCR, Part 11 was amended to provide for inspection and inspection intervals 
for mammography systems; deletion of the term "controlled area;" and revision of 
other definitions which referenced the deleted definition. The definition of 
"controlled area" was deleted. The definition of "member of the public" was 
changed to add "except an individual who is performing assigned duties for a 
licensee or registrant involving exposure to sources of radiation" after "any 
individual" and "in a controlled or unrestricted area. "However, an 
individual...dose" was deleted. The definition of "public dose" was changed to 
add "from licensed or registered operations" after "sources of radiation." The 
wording "either within a licensee's or registrant's controlled area or in 
unrestricted areas" was deleted. A definition of "transport index" was added. In 
sec.11.5(d)(5), "violations of a health-related or potentially health-related 
nature" was deleted and "violations of Severity Levels I, II, or III, as defined 
in sec.13.9" was added. In sec.11.5(d)(6), the first paragraph was deleted and 
the following inserted: "Any Severity Level I and/or II violation, as described 
in sec.13.9, found by the Agency, constitutes ground for posting a failure of 
the mammography system to satisfy Agency standards. Notification of such failure 
shall be posted:" In sec.11.5(d)(6)(i), "and" was changed to "or." In 
sec.11.5(d)(6)(ii), "if the system is an individual" was changed to "if the 
violation is personnel-related; and..." In sec.11.5(d)(7)(i), the language was 
deleted and the following inserted: "The Agency may require registrants to 
notify patients whose health or safety may have been or may be adversely 
affected by failure of a mammography system to meet the Act or these rules." In 
sec.11.5(d)(7)(iii), the language was modified to add the date a patient is 
notified. In sec.11.5(e), the reference was changed to sec.42.24(c). 
 The following comments were received concerning the proposed amendment to TRCR, 
Part 11. 
 COMMENT. Three commenters expressed concern over several sections of the 
proposed rule. The commenters indicate mammography facilities throughout Texas 
and the country are being asked to achieve ACR accreditation, HCFA certification 
for Medicare, and now certification by the State and soon certification relative 
to the MQSA will be required. The commenters indicate it is excessive to have so 
many different kinds of certifications and one certification should be adequate 
to maintain the quality needed. The commenters suggest provision should be made 
in this proposal for exempting ACR-accredited facilities, consistent with MQSA 
standards. One of the commenters also indicates that implementation of the 
proposed rules will threaten to curtail the availability of this important 
service to our patient population and enforcement at the level envisioned by 
this proposal will drive even quality mammographers out of this critical sub 
specialty. 
 RESPONSE. House Bill 63 requires that standards shall be no less stringent than 
the standards applicable under MQSA. Additionally, it requires certification for 
all mammography systems in the state and annual inspections under MQSA. The 
implementation of House Bill 63 is assigned to the Texas Department of Health, 
Bureau of Radiation Control because of its authority to regulate sources of 
radiation under the Texas Radiation Control Act. The Legislature has likewise 
required state agencies to recover 100% of the costs of regulation in Texas. 
When MQSA is implemented, it is assumed that there will be one certification and 
one inspection process that will take the place of all other state and federal 
certifications and inspections. MQSA will not totally exempt ACR-accredited 
facilities from these processes. The Agency made no change to the rule as a 
result of the comment. 
 COMMENT. Three commenters indicate that the date of the public hearing 
conflicts with the Radiological Society of North America's (RSNA) annual meeting 
and wants the hearing postponed until after December 5, 1993. 
 RESPONSE. The Agency acknowledges the date of the public hearing conflicts with 
the RSNA annual meeting. The Agency is bound to implement the requirements of 
House Bill 63 in accordance with timeframes set by the Legislature. Notification 
of the public hearing was published in the Texas Register on November 9, 1993. 
By the time the comment was received, there was not sufficient time to change 
the date and publish notification of it. The Agency accepts written comments for 
those unable to attend the public hearing and considers all comments equally. 
The Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter suggests rewriting the definition for "Controlled Area" 
to say "means an area, outside of a restricted area but inside the site boundary 
to which access and/may be limited by the site owner." (See sec.11.2) 
 RESPONSE. The definition is being deleted. Therefore, the Agency made no change 
to the rule as a result of the comment. 
 COMMENT. One commenter indicates there are some discrepancies between House 
Bill 63 and the resulting regulations: sec.401.425(b), House Bill 63 states "A 
mammography system issued a certification under this part (ACR alternative 
certification) is exempt from the certification standards established under 
sec.401.424 and the inspection requirements established by or under sec.401.430. 
" The commenter indicates the proposed regulations as written do not indicate 
that alternative certification by the ACR will exempt them from the inspection 
requirements. All of the substantive changes are authorized under these two 
sections. Similarly, if ACR accredited institutions are exempt from these 
requirements, for what are the required fees used? Neither inspections nor 
extensive application reviews should be required. (See sec.11.5 and sec.42.24) 
 RESPONSE. In addition to sec.401.425(b) of House Bill 63, sec.401.425(c) reads: 
"If the board finds that application of this section would make the requirements 
of this chapter less stringent than the standards applicable under the MQSA, the 
board may not issue a certification under this section." MQSA will require 
certification and an annual inspection. Therefore, the Agency made no change to 
the rule as a result of the comment. 
 COMMENT. One commenter urges the consideration of a "phase-in" period for the 
implementation of the regulations so that professionals, organizations, and 
institutions may appropriately come into compliance with the regulations without 
an undue burden and without a break in service or loss of access to quality 
mammography by patients in Texas. (See sec.11.5 and sec.42.24) 
 RESPONSE. Section 401.431 of House Bill 63 makes no allowances for phase-in, 
but requires that the rules be effective July 1, 1994. The Agency made no change 
to the rule as a result of the comment. 
 COMMENT. One commenter indicates that mammogram appointments are made months in 
advance and inspections need to be scheduled so that patients are not 
inconvenienced. (See sec.11.5) 
 RESPONSE. The Agency will work with a facility so that patients are not 
inconvenienced. The Agency made no change to the rule as a result of the 
comment. 
 COMMENT. One commenter questions if there is a way to combine the number of 
required inspections from the different agencies: Texas Bureau of Radiation 
Control, federal agencies, and the ACR? (See sec.11.5) 
 RESPONSE. As a result of carrying out the requirements of House Bill 63, the 
state is obligated to certify all mammography systems in the state by July 1, 
1994, inspect them 60 days after the certification is issued, and annually 
thereafter. The Agency assumes that implementation of MQSA will eliminate the 
need for multiple inspections and require one annually. Because MQSA is to go 
into effect October 1, 1994, the state must conform to the requirements of House 
Bill 63 until that time. The Agency made no change to the rule as a result of 
the comment. 
 COMMENT. One commenter suggests that the information in  sec.11.5(d) on 
mammography should go in TRCR, Part 32. (See  sec.11.5(d)). 
 RESPONSE. Information on all inspections is contained in TRCR, Part 11. The 
Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter has several comments on sec.11.5(d): "There are a number 
of elements in this section which are confusing, vague, and perhaps 
inconsistent. In the first place, it should be stated explicitly that two 
certificates are required for a mammography system, namely one of registration 
and a second of inspection, where the former is issued before the latter. It 
should also be noted explicitly that the scope of the definition...of a "system" 
includes people, i.e. a medical radiological technologists and an interpreting 
physician, as well as mammography-related equipment. This point is important 
with respect to clarification of system failures. (See sec.11.5(d)) . 
 RESPONSE. House Bill 63, sec.401.422 requires issuance of a certification. 
Section 401.430 requires an inspection 60 days after the certification and 
annually thereafter as well as the issuance of a "certificate of inspection." 
The definition of "mammography system" is contained in sec.401.421. The 
indication of "system failure" includes equipment as well as personnel,i.e. that 
personnel are appropriately qualified. The Agency made no change to the rule as 
a result of the comment. 
 COMMENT. One commenter asks several questions: Question 1: What constitutes 
system failure? Section 11.5(d) states that a "satisfactory" inspection is one 
in which no "health-related" violations are identified. Examples of "health-
related" violations should be provided, and any ties to the "system" 
requirements listed in sec.11.5(d)(7)(i) should be made clear. What about the 
reference in sec.11.5(d)(6) to system "failure" to satisfy Agency requirements? 
Is such a failure equivalent to a health-related violation which would preclude 
issuance of a certificate of inspection? (See sec.11.5(d)(6) and (7) Question 2: 
What is the consequence of system failure? It's clear that... consequences are 
for posting a notice and patient notification. What's not addressed 
explicitly...if there is system failure, will a certificate of inspection be 
issued? If a certificate of inspection is issued despite system failure, can a 
mammography system continue operation? Does a certificate of inspection have 
operational relevance? (See  sec.11.5(d)(6) and (7) Question 3: What is a 
patient going to do with information of a technical nature-11.5(d) (7)(i)(a)-
(d), which warrants notification of "failure?" What's a patient supposed to do 
as a follow-up to such a notice? (See sec.11.5(d)(7)). 
 RESPONSE. The Agency changed the language in sec.11.5(d)(6) and (7) to clarify 
the intent of the rule and carry out the intent of House Bill 63, sec.401.430. 
The new language references Severity Levels in TRCR, Part 13.9. 
 COMMENT. Two commenters indicate it is their understanding that clinical 
examinations may not be performed until the equipment passes inspection and that 
it would be 60-90 days before it could be used. (See sec.11.5(d)). 
 RESPONSE. House Bill 63, sec.401.422 requires that a mammography system must be 
issued a certification prior to being used. There is no requirement to wait 
until the equipment passes inspection. The Agency made no change to the rule as 
a result of the comment. 
 COMMENT. Twenty-nine commenters offered comments on sec.11.5(d)(6) and (7). The 
majority indicated it is of a punitive nature and that posting a "notice of 
failure" and notifying patients will only serve to unnecessarily alarm patients 
and increase the liability of facilities, resulting in litigation. This would 
ultimately result in increased costs to patients. Several commenters indicated 
this would discourage good people from setting up mammography facilities because 
it would create situations that would be administratively impossible. Several 
commenters indicated the need for establishing levels for a system's "failure," 
and indicated if the violation were severe enough, i.e. affecting public health 
and safety, the facility should be issued a "Cease and Desist" notice and should 
be shut down. They also indicated that "paperwork violations" should be cited 
but that a facility should be given a specific amount of time to correct the 
violations. Several commenters gave examples of severity levels of violations 
and a time frame to respond. Two commenters also indicated state inspectors were 
not qualified to perform the inspections. (See sec.11.5(d)(6) and (7)). 
 RESPONSE. The Agency agrees with the majority of commenters and has changed the 
language to clarify the intent of the rule. Posting requirements now reference 
Severity Levels of violations in TRCR, sec.13.9. The requirements for posting 
and notification of patients are contained in House Bill 63 and as such, are 
law. The implementation of MQSA will provide for intensive training of 
mammography inspectors. 
 COMMENT. One commenter indicates that this proposed rule requires notification 
to patients if the physician(s) or technologist(s) are not qualified and 
suggests that this should also include physicists who are not qualified. (See 
sec.11.5(d)(7)). 
 RESPONSE. This section has been deleted. Therefore, the Agency made no change 
to the rule as a result of the comment. 
 COMMENT. One commenter questions this puzzling reference. (See sec.11.5(e)). 
 RESPONSE. The Agency acknowledges that the reference should be to sec.42. 24(c) 
and has made the change. 
 TRCR, Part 21 was amended to clarify sections of the rule which referenced the 
deleted and revised definitions in TRCR, Part 11. In sec.21.302, the word "area" 
was reinserted after the second "unrestricted." In sec.21.501(b), first 
paragraph, the words "at intervals not to exceed 12 months for the radiation 
measured" was deleted and language clarifying specific calibration requirements 
was added. In sec.21.501(f), language was added to clarify the personnel 
monitoring requirements for minimal threat devices. In sec.21.801, the words "or 
registrant" and "or registered" were added to clarify the intent of the rule. In 
sec.21.1001(a)(1), references to Parts 43 and 45 were deleted as authority for 
those portions of the rule has been transferred to the Texas Natural Resource 
Conservation Commission. In  sec.21.1001(b)(4), the words "licensed pursuant to 
Part 45 of these rules" has been deleted. In sec.21. 1006(e), language has been 
added to clarify the inspection requirements for shipments of waste. In 
sec.21.1009, "and Part 45 of these rules" has been deleted. In sec.12.11(b)(3), 
some of the reference numbers were deleted to better clarify the intent of the 
rule. In  sec.12.21(a)(1), language was added to indicate the use for production 
of radioactive materials. In sec.12.21(a)(46) on uranium recovery fees was 
deleted and the rest of the items renumbered accordingly. 
 The following comments were received concerning the proposed amendment to TRCR, 
Part 21. 
 COMMENT. One commenter indicates that this section allows a dose of 100 
millirems per year while sec.21.302(b)(2(ii) allows a dose of 50 millirem per 
year and questions "why not 100 millirem for both?" (See sec.21.301(a)(1)). 
 RESPONSE. TRCR, sec.21.302(b)(2) allows a licensee to consider internal and 
external exposure to members of the public. However, when considering them 
separately, 100% occupancy must be assigned and the 100 millirem limit must be 
divided equally. Therefore, 50 millirem per year is the limit for external 
exposure to a member of the public when demonstrating compliance with sec.21. 
302(b)(2). The Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter indicates the word "areas" was included in the deleted 
language and should not have been. (See sec.21.302(a)). 
 RESPONSE. The Agency agrees and has made the correction. 
 COMMENT. Three commenters indicate that sec.21.501(b)(2) requires calibration 
of instruments used for quantitative measurement of radiation to be calibrated 
at intervals not to exceed 12 months unless a more restrictive time interval is 
specified in another part of the rules. The commenters indicate this conflicts 
with sec.32.20(h), which requires a two year interval for calibration of 
instruments. One commenter suggests that this section probably was intended to 
apply only to instrumentation used under a license agreement in nuclear medicine 
and indicates that ionization chambers used to monitor radiation outputs of 
machines need be calibrated only once every two years as recommended by the 
American Association of Physicists in Medicine. (See sec.21.501(b)(2)). 
 RESPONSE. TRCR, sec.32.20(h) requires that instruments be calibrated at 
intervals not to exceed 24 months with a calibration traceable to a National 
Institute of Science and Technology Standard and during the calendar year in 
which radiation detection instruments are not calibrated, an intercomparison to 
an instrument calibrated within the previous 12 months shall be performed. The 
Agency made no change to the rule as a result of the comments. 
 COMMENT. One commenter indicated for registrants with multiple categories of 
equipment, the exemption from personnel monitoring does not appear to 
sufficiently indicate the exemption of operators of this equipment if the 
registrant's category includes other than those listed in Appendix 11-D. (See 
sec.21.501(f)). 
 RESPONSE. The Agency agrees and has added clarifying language to the section. 
 COMMENT. One commenter suggests rewriting the last line to read: "The transport 
index (at 1 meter from the package) shall not exceed 10 milliroentgens per 
hour." (See sec.21.906(d)(2)(i)). 
 RESPONSE. The Agency acknowledges the comment and has added a definition for 
"transport index" to sec.11.2. 
 COMMENT. One commenter indicates that Part 21 allows continuing use of the 
special units curie, rad, rem, and roentgen and asks if this means the SI units 
need not be used by licensees and registrants? 
 RESPONSE. The Agency acknowledges that licensees and registrants do not have to 
use the SI units. 
 COMMENT. One commenter indicates the word authorized has been added and the 
citation of the regulation deleted. The commenter questions: From whom does this 
"authorization" come?: the NRC, TNRCC, TWC, TBRC, TLLRWDA, whom? Most often "the 
Agency" will authorize providers of services and disposal is a service. The 
commenter recommends either stating the authorizing agency or rewording the 
paragraph to read "disposal at a land disposal facility authorized by this 
agency." (See sec.21.2002(b)(4)). 
 RESPONSE. The Agency no longer has the authority to authorize disposal. The 
Legislature has transferred this authority to the Texas Natural Resource 
Conservation Commission. The Agency made no change to the rule as a result of 
the comment. 
 COMMENT. One commenter wants clarification if this notification includes 
shipments from the generator to the broker and asks if the shipment schedule 
will be held up if the shipment is not inspected by the Agency after the proper 
72-hours notice? The commenter also requests a description of the acceptable 
methods of notification for this purpose and the person to contact. (See 
sec.21.1006(e)). 
 RESPONSE. The Texas Low-Level Radioactive Waste Disposal Authority Act, 
sec.402.221(b) requires an inspection prior to transport to a permanent disposal 
site. There is no requirement for an inspection for shipments from the generator 
to the broker. The Agency will make every reasonable effort to inspect within 
the 72 hours prior to the scheduled shipment. Because Texas has no licensed land 
disposal facility at this time, procedures for such inspections are pending. The 
Agency made no change to the rule as a result of the comment. 
 TRCR, Part 32 was amended to provide for expansion of quality control items for 
mammography; additional definitions for mammography; and clarifying language to 
more accurately reflect the intent of the rule. In sec.32.11, Table I, a 
correction was made to the Dental Intraoral section. In sec.32.17(a)(3), 
language was added and deleted to clarify requirements on quality assurance. In 
sec.32.17(a)(3)(iv) and the footnote, the word "recommended" was added after ACR 
and before "phantom." Language was also added in the paragraph to clarify the 
requirements for records of phantom evaluation. In sec.32.17(a)(3)(vii), (viii), 
and (xiv), reference numbers were changed to reflect changes in the rule. In 
sec.32.17(a)(4)(ii), language was added to allow for the use of viewing devices 
to block extraneous light. In sec.32.17(a)(4)(iii), subsection (b) was deleted. 
In sec.32.17(a)(5), language from House Bill 63 on retention of clinical images 
was inserted to more accurately reflect the intent of the rule. In 
sec.32.17(a)(6), language was added to allow batch processing of mammography 
clinical images within a ten-hour interval with certain parameters. In 
sec.32.17(a)(7), language was added to provide for quality assurance on 
xerography mammography units. In sec.32.17(b)(1), "and/or performing 
stereotactic biopsies..." was added. In sec.32.17(b)(1)(ii), " or have 
documented equivalent formal training and experience" was added after "be 
certified by the American Board of Radiology, or the American Osteopathic Board 
of Radiology." In sec.32.17(b)(2)(i),(ii), and (iii), language was added from 
House Bill 63 to ensure that medical radiologic technologists are operators of 
mammography equipment. In sec.32.17(b)(3), the language was clarified to 
indicate that the physicist must be licensed in "diagnostic radiological 
physics." In sec.32.17(c)(1), the word "supervising" was added before physician 
and "ongoing or at the frequency stated and are" was deleted. In 
sec.32.17(c)(1)(i), the word "motivation" was deleted. In sec.32.17(c)(1)(ii) 
the words "opportunities for" were deleted. In sec.32.17(c)(1)(vii), the entire 
section was deleted. In sec.32.17(c)(2), the words "no more than 31 days" were 
added after monthly for clarification. In sec.32.17(c)(iv), the words 
"mammographic" was added before the word "phantom." In sec.32.17(c)(vii), 
language was added to clarify the standard for analysis of fixer retention. In 
sec.32.17(c)(2)(viii), clarifying language was added to allow for the use of 
"devices used to block extraneous light." In sec.32.17(c)(2)(ix) and (xi), 
references were changed to reflect changes in the rule. In sec.32.17(c)(3), 
language was deleted requiring the medical physicist to evaluate continuing 
education requirements. In  sec.32.17(c)(3)(ii), the word "collimator" was 
deleted and the words "beam-limiting device" inserted. In sec.32.17(c)(3)(vi), 
the reference was changed to reflect changes in the rule. In sec.32.17(d)(1), 
the words "or projection" were added after the word "views." In sec.32.17(d)(2), 
clarifying language was used to more accurately reflect the intent of the rule. 
In  sec.32.17(d)(3), language was added to ensure followup for patients needing 
repeat exams. In sec.32.20(h), language on tests for mammography was deleted as 
this is now under a separate section. In sec.32.44, footnote, the reference was 
changed to reflect the change in the rule. In sec.32.44(a)(4), language in 
clause (ii) was deleted and new language added to clarify the parameters for 
collimation. In sec.32.44(a)(7), the words "kVp used in clinical conditions" was 
substituted for "clinically used kVps." In sec.32.44(a)(8), the regulation was 
deleted as it is not required by ACR and some machines are not able to meet 
these parameters. In sec.32.44(a), paragraphs (9)-(14) were renumbered to 
reflect the deletion of sec.32.44(a)(8). In sec.32.44(a)(9), clause (iii) was 
added to provide for exemptions to this regulation for Rhodium filters and 
anodes. In sec.32.44(b), correction was made from milligrey to milligray. The 
definition of "contact hour" was changed to include "and/or" participation in 
instructor-directed activities. The definition of "continuing education" was 
changed to include "or participation in" self-study programs. A definition of 
"formal training" was added. In definition of "special purpose x-ray system," 
the words "mammographic units" were deleted as these are now addressed in a 
separate section. The definition of"mAs" was changed to reflect that this is 
"mA." A definition of mobile services was added. The definition of mammographic 
screening was modified to indicate only the use of x-radiation is allowed and 
changed the word "persons" to "women." Definitions of "mammographic phantom," 
"mammography," "mammographic system," and "technical aspects of mammography" 
were added. In Appendix 32-C, the heading "Mammography Positioning" was modified 
to include actual positioning of patients or models. 
 The following comments were received concerning the proposed amendment to TRCR, 
Part 32. 
 COMMENT. One commenter indicates that the recent publication of the Texas 
Register, Volume 18, Number 84 includes an impact statement...states that 
facilities with current ACR accreditation will have no start-up costs. Scott and 
White, an ACR accredited facility, will be required to invest a large amount of 
resources in order to comply. The increase in personnel required to insure 
compliance with the letter of the regulations is an obvious cost. Though not 
considered a start-up cost, the potential cost impact associated with the 
increased risk to liability has been completely ignored. This liability risk 
will probably drive many suppliers out of the market. Those who remain will be 
forced to charge higher rates for the same examination quality. Those 
institutions already ACR accredited will also be hurt by the additional 
bureaucratic levels. Less emphasis should be placed on the 
inspection/notification requirements and those institutions already accredited 
by the ACR should be fully exempted, as stated in the bill. Quality cannot be 
regulated, though excessive regulations can result in reduced quality. 
 RESPONSE. The Agency acknowledges the commenter's remarks. However, House Bill 
63 mandates requirements for mammographic systems. The Agency made no change to 
the rule as a result of the comment. 
 COMMENT. One commenter indicates the cost of certification is an operating 
expense that cannot be avoided but the stringent rules proposed by the State 
will create an enormous hardship on mammography facilities as well as the Texas 
Department of Health. The commenter encourages passage of a rule acknowledging 
certification through the ACR as the only requirement by the Texas Department of 
Health. (See sec.sec.12.22, 32.17, 32.44, and 42.24). 
 RESPONSE. As a result of carrying out the requirements of House Bill 63, the 
state is obligated to certify all mammography systems in the state by July 1, 
1994, and inspect non-ACR certified units 60 days after the certification is 
issued and all units annually thereafter. Likewise the Legislature requires 
state agencies to recover 100% of their costs in certain regulatory programs. 
The Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter suggests that the first sentence should also include 
testing after repair or relocation of the system. (See sec.32.17(a)(3)). 
 RESPONSE. The Agency does require a licensed medical physicist report when 
units have been moved from one place to another or after a major repair. The 
Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter agrees with the provisions that under certain 
conditions, operations should cease until corrective actions have been 
performed. (See sec.32.17(a)(3)). 
 RESPONSE. The Agency acknowledges the comment and made no change to the rule as 
a result of it. 
 COMMENT. One commenter indicated the wording in the second sentence was 
redundant, i.e., if you don't perform mammograms there are not images to process 
and you should not make images until they can be processed. The commenter also 
indicated that the requirements basically address film/screen standards and none 
for xerography. The commenter offered suggestions for the sections to be 
included. (See sec.32.17(a)(3)). 
 RESPONSE. The Agency acknowledged the comment on the wording but made no change 
to the rue as a result of the comment. The Agency agrees with the commenter on 
the xerography requirements and has added language in sec.32.17(a) (7). 
 COMMENT. One commenter suggests that the text be changed in these sections to 
read that the measurements be performed "annually" instead of "at intervals not 
to exceed 12 months." The commenter indicates the word "annually" has been 
previously interpreted by the Agency to mean once each calendar year. The 
commenter also indicates that in TRCR, sec.11.5(d)(2) the text states that an 
inspection of mammography facilities is to be performed "at least once 
annually." The commenter indicates that because of heavy workloads, often a 
facility is not available when a physicist wants to perform studies and the 
regulations should be sufficiently flexible to prevent interference with the 
function of the related equipment. The commenter also cites the PM procedures 
required on other heavily worked diagnostic x-ray machines (in hospitals) are 
required "annually." (See sec.32.17(a)(3(ix)-(xvi)). 
 RESPONSE. The Agency acknowledges the commenter's concern about facilities with 
heavy workloads and makes every reasonable effort to accommodate unusual 
circumstances. The Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter asked how the calibration of the densitometer is to be 
handled? Who inspects this? A service company, manufacturer? (See sec.32. 
17(a)(3)(i)). 
 RESPONSE. The densitometer may be calibrated by the registrant using the 
calibration strip supplied by the manufacturer or it may be sent to the 
manufacturer or facility that does the calibration. The Agency made no change to 
the rule as a result of the comment. 
 COMMENT. Two commenters indicate the regulation for checking the developer 
temperature daily is excessive and not necessary. One of the commenters 
indicates that if the quality control indicates the speed, contrast and base 
plus fog are within compliance, than the developer temperature must be 
appropriate. Both commenters indicate the only time developer temperature needs 
to be checked is when any of the quality control parameters are out of 
compliance. (See sec.32.17(a)(3)(i)). 
 RESPONSE. The Agency acknowledges the comments. Development temperature is an 
integral part of quality processing and made no change to the rule as a result 
of the comment. 
 COMMENT. One commenter indicates the optical density limits used by each 
institution are usually based arbitrarily on the random status of the processor 
when monitoring is started. The commenter further states by placing such firm 
limits of O.15 you prevent the radiologist and physicist from discerning a 
measurement that is 0.14 OD below the "set baseline" from one that is 0.16 OD 
below. The commenter indicates that in order for firm limits to be effective 
they must be based on statistical inference based specifically on particular 
units...otherwise they are just arbitrary limits. The commenter suggests the 
radiologist and physicist need to retain authority on site whether a particular 
processing condition produces satisfactory images or not. (See 
sec.32.17(a)(3)(i)(a)). 
 RESPONSE. The limits of O.15 O.D. are those recommended by the ACR as a level 
where corrective action needs to be taken. The Agency made no change to the rule 
as a result of the comment. 
 COMMENT. One commenter indicates that specifying the size, number, and 
composition of the objects contained in the phantom would make it necessary to 
change the rule if the current state of the art in phantom construction and 
composition changes. The commenter suggests by just stating that the phantom be 
ACR or Agency approved would avoid this problem. The commenter further states 
that the brackets appear to be a typographical error. The other interpretation 
is that the information inside the brackets should have been printed in bold 
text indicating that the text was to be deleted in the final rule, in which case 
something else is missing from the text. The commenter suggests that the 
definition of phantom, referred to by an asterisk, should be located in Subpart 
D, Definitions, under "mammographic phantom." (See sec.32. 17(a)(3)(iv)). 
 RESPONSE. The Agency acknowledges the comment and feels it is important to be 
specific about the phantom. The implementation of MQSA may change this 
requirement and if so, it will be addressed at that time. The Agency made no 
change to the rule as a result of the comment. The Agency removed the brackets 
for clarification and acknowledges the comment about definitions but feels the 
phantom specifications are more appropriately located in sec.32.17. 
 COMMENT. One commenter suggests there should be a standard for this 
requirement, referenced to the appropriate regulatory paragraph and 
incorporating the standards recommended by the ACR. (See sec.32.17(a)(3)(ix)). 
 RESPONSE. For lack of a definitive federal standard or guidance, the Agency 
will accept the physicist's results on this section. The Agency made no change 
to the rule as a result of the comment. 
 COMMENT. One commenter indicates that specifying a maximum repeat rate may be 
counterproductive and could be harmful. The commenter indicates it is probably 
more likely to assure that films that should not have been read will be read 
than that film quality will improve. (See sec.32.17(a)(4)). 
 RESPONSE. The Agency feels it is important to establish a repeat rate and this 
is standard throughout the industry. The Agency made no change to the rule as a 
result of the comment. 
 COMMENT. One commenter indicates that there is no standard in the TRCR for this 
requirement and feels each facility could set their own standards. The commenter 
suggests the ACR recommendation be adopted. (See sec.32.17(a)(4)(ii)). 
 RESPONSE. The Agency has made changes to the language to also allow the use of 
devices to block extraneous light. Recommendations regarding the use of such 
devices will be addressed in a regulatory guide. 
 COMMENT. Two commenters agree that extraneous light should be masked from the 
viewer's eyes while reading; however, they indicate the rule is impractical 
because frequently not only is one viewing mammography but also sonography or 
other exams on the same viewbox. The commenters suggest a simple means to 
accomplish this objective is to use a handheld viewer, or tunnel, that 
eliminates extraneous light. (Literature describing such an alternative was 
submitted) (See sec.32.17(a)(4)(ii)). 
 RESPONSE. The Agency has made changes to the language to also allow the use of 
devices to block extraneous light. 
 COMMENT. One commenter suggests this regulation should be removed because it is 
a frivolous and unnecessary requirement. The commenter indicates if the darkroom 
fog test shows that the lighting in the darkroom is completely adequate, then 
the safelights used under those conditions must be adequate also and it would be 
more appropriate to require that the darkroom test be done under normal safe 
light conditions. The commenter disagrees with requiring safe lights recommended 
by the manufacturer and cautions that the manufacturer only recommends certain 
things, but there are equivalent usages to adequately meet the intent of the 
recommendations. The commenter states these are only recommendations and there 
are conditions of darkroom that would make other configurations and uses 
perfectly adequate while not meeting the letter of the manufacturer's 
recommendation. (See sec.32.17(a)(4)(iii)(b)). 
 RESPONSE. The Agency agrees and has removed this requirement. 
 COMMENT. Five commenters submitted comments and questions on sec.32.17(a)(5). 
The questions include: "Films forwarded to another medical institution shall be 
retained until the fifth anniversary of the films," and asks how can one 
institution be responsible for maintaining its films at another institution? 
What are the rules a patient must follow to request that films are forwarded to 
another institution and must the request be written and signed? Once films are 
forwarded to another institution, who is responsible for them, the sending or 
the receiving institution and for how long? Does the patient's request to 
transfer the films also transfer legal responsibility for maintenance of the 
medical record (in this case, the films)? Does a new five-year clock start? Two 
commenters indicate the regulation as written does not take into account the 
cost of film storage. Screening facilities must be kept to a minimum of space, 
equipment, and personnel if a reasonable cost is to be achieved. The alternative 
of releasing the films to the patient with a written explanation of the 
importance of retaining them as part of her permanent file should be included. 
It should also be made clear that films forwarded to another institution become 
the responsibility of that institution to either return or store until the fifth 
anniversary of the films. Several commenters agree with the requirement to keep 
films for five years; however, two commenters indicate the wording in the first 
sentence creates some legal problem. The commenters indicate that a requirement 
to "make available to a patient all original mammograms" sets a precedent which 
should be vigorously opposed. If the intent of "make available to the patient, 
this will have a significant effect upon the evidentiary value of the original 
films to either party. Under the present standard of practice in healthcare, 
copies of documents, laboratory results, EKGs, fetal monitoring strips, as well 
as radiology films, are furnished to the patients with a "reasonable charge." 
The originals are always maintained by the healthcare provider and we will 
vigorously oppose any change to that procedure. (See sec.32.17(a)(5)). 
 RESPONSE. It would be up to individual facilities to formulate procedures for 
film requests. The Agency acknowledges the comment on the alternative of 
releasing the films to a patient versus storage. The language in the law states 
"maintains and makes available to a patient..." A facility would need to 
investigate this alternative with their legal representative. The Agency also 
acknowledges the commenters legal concerns on the ability to maintain original 
medical records (films). House Bill 63 is specific on this issue. The Agency has 
changed the wording and used the language from sec.401.424 (4)(E) of House Bill 
63 with modification to clarify the intent of the law. 
 COMMENT. Fifteen commenters submitted comments on sec.32.17(a)(6) indicating 
this rule would eliminate batch processing and subsequently eliminate needed 
mammography services in the rural areas of the state. One commenter listed 
criticisms and advantages; 
 CRITICISMS: 
 (1) The main concern is that if some malfunction occurs several patients (up to 
25) may be exposed before the malfunction is detected. 
 (2) A concern that patients are exposed to a slightly increased dose to provide 
adequate film density to offset latent image fading that results from delayed 
processing. 
 ADVANTAGES: 
 (1) Mobile mammographic images receive the same high quality processing that 
in-house images receive. 
 (2) There is no change in the processing environment in terms of dust or 
moisture as there would be with a van based processor, darkroom, or x-ray 
system. 
 (3) There is no change in the processor environment in terms of dust or 
moisture as there would be with a van based processor, darkroom, or x-ray 
system. 
 (4) The chemicals used are not exposed to extremes in temperatures as are those 
in a mobile processing system and therefore should offer more stable chemistry. 
Mobile facilities that process int he van may also hold films and batch process 
when there is fluctuation in processor temperature. During cold weather, it may 
take several hours for the processor to achieve the correct temperature and 
morning films may be held until that time. Several commenters offered data from 
institutions in the United States and Europe who successfully utilize batch 
processing. 
 Several commenters offered suggestions on quality assurance procedures they 
follow when utilizing batch processing including labeling each film with 
technical factors in the event of repeats. Several commenters indicated the 
disadvantages of on-board processing. Many of the commenters offered time 
intervals in which to allow batch processing after the exam. These ranged from 
ten to 24 hours. (See sec.32.17(a)(6)). 
 RESPONSE. The Agency agrees and has changed the regulation to allow batch 
processing within a ten-hour interval with certain parameters. 
 COMMENT. One commenter indicates that the specific requirements of these 
subsections may be at variance with corresponding requirements of an FDA interim 
final rule on quality standards for the MQSA of 1992. The commenter further 
indicates the rule is to be issued imminently. (See sec.32.17(b)(ii) -(iv)). 
 RESPONSE. The interim rules for MQSA addressing this requirement have not yet 
been published. The Agency will make revisions to the regulations to comply with 
MQSA as necessary. The Agency made no change to the rule as a result of the 
comment. 
 COMMENT. Two commenters suggest the qualifications for radiologist should not 
be limited to board certification as this would eliminate some qualified 
individuals who have been practicing successfully for many years. One suggests 
including the language "or board eligible" and the other strongly suggests 
adopting physician qualification standards utilized by the ACR. (See sec.32. 
17(b)(1)). 
 RESPONSE. The Agency has changed the rule to allow acceptance of documented 
equivalent formal training and experience. 
 COMMENT. One commenter indicates that currently JCAHO hospitals may employ ARRT 
technologists without requiring certification under the MRT Act and questions if 
this section now requires all mammography technologists to now be certified by 
MRT even though employed in a JCAHO hospital? (See sec.32.17(b)(2)) . 
 RESPONSE. House Bill 63, sec.401.424(3) requires that mammography equipment 
must be operated by a medical radiologic technologist certified under Chapter 
1096, Acts of the 70th Legislature, Regular Session, 1987 (Article 4512m, 
Vernon's Texas Civil Statutes) who has successfully completed special training 
in mammography. JCAHO hospitals must employ technologists with this 
certification for mammography. The Agency added clarifying language to reflect 
the intent of the law. 
 COMMENT. One commenter suggests that "formal training" be defined, i.e., who is 
responsible, the supervisor or is a formal course necessary? (See sec.32. 
17)(b)(2)(i)). 
 RESPONSE. The Agency agrees and has included a definition of formal training. 
 COMMENT. Two commenters suggest adding continuing medical education (CME) 
requirements for licensed medical physicists. One commenter indicates that the 
Texas Board of Licensure for Professional Medical Physicists has declined to 
consider requirements for CME but indicates that he believes it is the intent of 
the Board, at a future date, to require this. The commenter also indicates that 
ACR has a requirement for 15 hours but it is not an on-going requirement for 
ACR. (See sec.32.17(b)(3)). 
 RESPONSE. The Agency acknowledges the comments. The interim rules for MQSA 
addressing this requirement have not yet been published. The Agency will make 
revisions to the regulations to comply with MQSA as necessary. The Agency made 
no change to the rule as a result of the comment. 
 COMMENT. One commenter indicates the quarterly review for Q.A. is somewhat 
redundant since the RSO is already instructed to routinely review operations. 
(See sec.32.17(c)(1)(ii)). 
 RESPONSE. The quarterly review follows the guidelines for physician 
responsibilities under the ACR mammography certification program. This is a 
separate requirement from an RSO review. The Agency made no change to the rule 
as a result of the comment. 
 COMMENT. One commenter indicates there should be a standard for this 
responsibility, referenced to the appropriate regulatory paragraph and 
incorporating the standards recommended by the ACR. (See sec.32.17(c)(2)(v)). 
 RESPONSE. ACR has an "equipment observation checklist." Denoting standards for 
a checklist would be cumbersome. Guidelines for an "equipment observation 
checklist" will be included in a regulatory guide. The Agency made no change to 
the rule as a result of the comment. 
 COMMENT. One commenter suggests that the standard for analysis of fixer 
retention in film should be moved out of this subsection to an appropriate 
subparagraph in sec.32.44(a) where equipment standards are defined. (See sec.32. 
17(c)(2)(vii)). 
 RESPONSE. Analysis of fixer retention is a quality assurance test and is 
appropriate in the quality assurance section. The Agency made no change to the 
rule as a result of the comment. 
 COMMENT. One commenter indicates it is not necessary to require a medical 
physicist to verify continuing education requirements which is an administrative 
detail. (See sec.32.17(c)(3)). 
 RESPONSE. The Agency agrees and has removed the requirement. 
 COMMENT. One commenter suggests an appropriate regulatory subparagraph be 
referenced which incorporates the standard recommended by the ACR. (See sec.32. 
17(c)(3)(i)). 
 RESPONSE. For lack of a definitive federal standard or guidance, the Agency 
will accept the physicist's results on this section. The Agency made no change 
to the rule as a result of the comment. 
 COMMENT. One commenter questioned the requirement that the physicist must 
retain test records for seven years, which is two years longer than the actual 
patient mammogram. (See sec.32.17(c)(3)). 
 RESPONSE. The facility must retain records of physicist tests and consultations 
for seven years. This is a provision of House Bill 63, sec.401. 424 and cannot 
be changed. The Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter indicates that if the physicist will check continuing 
education on personnel that someone needs to initially check the requirements of 
personnel...presumably this is done by the State when the application for 
certification is reviewed. The commenter questions what happens when a new staff 
member comes on board? (See sec.32.17(c)(3)). 
 RESPONSE. The requirement for the physicist to check continuing education has 
been eliminated. The requirements of personnel will be checked during the 
application for certification process. The rules indicate that any change 
(including personnel) must be submitted to the Agency for review and approval. 
The Agency made no change to the rule as a result of the comment. 
 COMMENT. Two commenters indicate that this regulation seems to be directed at 
individuals who wish to operate freestanding mass screening facilities. The 
commenters indicate that it should be recognized that the majority of screening 
mammograms are performed in hospitals and clinics that also examine symptomatic 
patients; and the numbers of screened patients may be relatively small. If all 
requirements for attaining a registration certificate are met by an institution, 
they should apply to mammography of all types. As presently written, this 
regulation implies a separate and distinct approval for screening mammography as 
opposed to the overall facility approval. (See sec.32. 17(d)). 
 RESPONSE. The rules require certification for all facilities with mammography 
units. The authorization for screening mammography (for asymptomatic women) is 
separate and has been in place for a number of years. The application contains a 
section specific to screening authorization. The Agency made no change to the 
rule as a result of the comment. 
 COMMENT. One commenter had questions about approval for screening 
authorization, i.e., is this a one-time approval? Just for new facilities? Every 
year? Every Inspection? (See sec.32.17(d)). 
 RESPONSE. Screening authorization is approved initially and thereafter on 
renewal of the certification. The Agency made no change to the rule as a result 
of the comment. 
 COMMENT. One commenter suggests that Texas may want to specifically mention 
Medicare here as the Medicare payment frequencies are going to be the 
controlling factor in many examinations. (See sec.32.17(d)(2)). 
 RESPONSE. This section is for screening of asymptomatic patients and has 
nothing to do with reimbursement. The Agency has no authority over Medicare 
payment frequencies and made no change to the rule as a result of the comment. 
 COMMENT. One commenter questions "or other criteria recognized by the Agency"; 
what is the recognition process and does it involve policy changes with public 
input? The commenter indicates this is an open-ended rule and could be construed 
as an attempt to avoid the Administrative Procedures Act. (See sec.32.17(d)(2)). 
 RESPONSE. The Agency agrees and has changed the wording to clarify the intent 
of the rule. 
 COMMENT. One commenter has two questions on this section: 1) Does this mean the 
same as the ACR Physicist's Manual where the left plus the right misalignment 
error must not exceed 2.0% SID. Similarly the anterior plus the chest wall 
misalignment must not exceed 2.0% SID. Or does this mean now that the sum of the 
misalignment of all four must not exceed 2.0% of the SID? 2) Some older (but 
within the last eight years) dedicated mammography systems have what the 
manufacturers term "field illuminators" not light-localizer and are not 
adjustable to 2.0% of the SID. How will these units be handled? 
 RESPONSE. All units must meet the collimation requirements for mammography of 
21 CFR irrespective of the terminology. The Agency has changed the wording to 
clarify the intent of the rule. 
 COMMENT. One commenter indicates this requirement is in conflict with 21 CFR 
sec.1020.30(h)(3) and sec.1020.31(a)(4) which allow the manufacturers to set the 
accuracy specifications for their equipment. (See sec.32.44(a)(6)). 
 RESPONSE. House Bill 63 requires the Agency to be at least as stringent as 
MQSA. This requirement follows ACR guidelines and is more restrictive than 
manufacturer's recommendations. The Agency made no change to the rule as a 
result of the comment. 
 COMMENT. Four commenters are concerned that two standards will exclude tubes 
with the new rhodium filter and anode which have been shown to reduce radiation 
exposure to the patient. There is also a concern that some existing tubes may 
not meet the requirement of sec.32.44(a)(8). (See sec.32.44(a)(8) and 
sec.32.44(a)(9)(1)). 
 RESPONSE. The Agency acknowledges the comments. ACR guidelines do not contain 
the requirement listed in sec.32.44(a)(8). Also, it is not the intent to exclude 
new technology. Therefore, the Agency has deleted the requirement in 
sec.32.44(a)(8) and has exempted rhodium filters and anodes from the 
requirements of sec.32.44(a)(9). When MQSA interim rules are published, the 
Agency will review their standards and revise our regulations as necessary. 
 COMMENT. One commenter suggests there appears to be a typographical error since 
"one centimeter" does not represent an area. (See sec.32.44(a)(12)). 
 RESPONSE. The Agency has inserted wording to clarify the statement. 
 COMMENT. One commenter indicates that specification of the resolution will 
require revising the regulations if there are changes in the phantom or test 
objects. The commenter suggests a general specification requiring the minimum 
specified by the accrediting body might be more convenient. (See sec.32.44(a) 
(13)). 
 RESPONSE. The Agency acknowledges the comment and feels it is important to be 
specific about the phantom. The implementation of MQSA may change this 
requirement which will be addressed at that time. The Agency made no change to 
the rule as a result of the comment. 
 COMMENT. One commenter indicates that the preferred spelling is "milligray" as 
opposed to "milligrey." (See sec.32.44(b)). 
 RESPONSE. The Agency agrees and has made the changes. 
 COMMENT. One commenter questions why the definition of "continuing education" 
is different from those of the MRT and ARRT? (See sec.32.100). 
 RESPONSE. The continuing education requirements of TRCR will be applicable to 
the MRT program. ARRT is a national organization. The Agency made no change to 
the rule as a result of the comment. 
 COMMENT. One commenter indicated "mAs means milliampere" should be written to 
say "mA means milliampere." (See sec.32.100). 
 RESPONSE. The Agency agrees and has made the change to more accurately reflect 
the intent of the rule. 
 COMMENT. Four commenters indicate that the definition of "mammography system" 
does not include the physicist and suggests it be added. (See sec.32. 100). 
 RESPONSE. The definition of "mammography system" is from House Bill 63, 
sec.401.421 and does not include medical physicist. The requirement for an 
annual evaluation by a physicist is in TRCR, sec.32.17(c)(3) and House Bill 63, 
sec.401.424 (4)(B). The Agency made no change to the rule as a result of the 
comment. 
 COMMENT. One commenter indicates the Agency has created an extremely broad 
definition of "mammography system" and this may exclude stereotactic units and 
some personnel operating them. The commenter suggests the definition needs to be 
revised to exclude special purpose units. (See sec.32.100). 
 RESPONSE. The definition of "mammography system" is from House Bill 63, 
sec.401.421. The Agency acknowledges the concern for unique mammography units 
and has listed an exemption section in sec.42.24(f) that may apply under certain 
circumstances. 
 COMMENT. Three commenters suggest including a seventh section for mammography 
physics in the definition "technical aspects of mammography." (See sec.32.100). 
 RESPONSE. The commenters did not clarify what the term "mammography physics" 
entails and the Agency feels the definition of "technical aspects of 
mammography" is adequately explained. The Agency made no change to the rule as a 
result of the comment. 
 COMMENT. One commenter indicates that "Physics and radiation protection unique 
to mammography" should be added to this list. (See Appendix 32-C). 
 RESPONSE. The Agency believes that adding the term will not clarify nor add to 
the items listed in the appendix. The Agency made no change to the rule as a 
result of the comment. 
 TRCR, Part 42 provides for registration, renewal, and exemption requirements 
for mammography systems and expands the criteria for mobile services. It changes 
the registration time requirements for accelerators, industrial radiography, and 
providers of equipment. 
 In sec.42.20(e), language was added to indicate that applications for 
certification of mammography systems must be made separately. In sec.42.20(g), 
the reference was changed to reflect the fee schedule for mammography. In 
sec.42.21(c), the words "in question" were deleted. In sec.42.23(d), the 
language was deleted and moved to a more appropriate section in Part 21. In 
sec.42.24, a section was added on application for certification of mammography 
systems. In sec.42.25, a section was added on application for registration for 
mobile services used in healing arts and veterinary medicine. In sec.42.26, 
language was added to require registration prior to use for industrial 
radiography. A subsection was also added for requirements for providers of 
equipment. In sec.42.32(a)(1), clarifying language was used in the section on 
notification of changes. In sec.42.32(a)(3), the word "that" was added in place 
of "which." In sec.42.33(c)(4), language was added to clarify the intent of the 
rule. In sec.42.34, language was added on renewal of certifications for 
mammography. In sec.42.40(g), language was added prohibiting reciprocity for 
mammography. In Appendix 42-B, clarifying language was added to "A"-"G" for 
easier readability. A subparagraph "H" was added to require quarterly audits by 
the RSO. 
 The following comments were received concerning the proposed amendment to TRCR, 
Part 42. 
 COMMENT. One commenter suggests that to be consistent with the stated scope and 
purpose of sec.42.1(a), the heading of Part 42 ought to be changed to 
"REGISTRATION OF RADIATION MACHINE USERS AND SERVICES." (See Part 42, Heading). 
 RESPONSE. The Texas Radiation Control Act gives the Agency the authority to 
register radiation machine use and services. It is the machine use and services 
that are registered, not the users. The Agency made no change to the rule as a 
result of the comment. 
 COMMENT. One commenter indicates that in the second paragraph, the reference to 
..."another recognized organization" is vague. (See sec.42.24(c)). 
 RESPONSE. This language is from House Bill 63, sec.401.425. The Agency made no 
change to the rule as a result of the comment. 
 COMMENT. Four commenters had statements about this section. Two commenters 
indicated that ACR accreditation will be accepted in lieu of a lengthy 
application but that this would eliminate the initial state inspection only. 
These two commenters indicate there must be a means to eliminate so many 
different inspections and that these inspections should be done by a qualified 
expert, such as an ABR Certified Diagnostic Medical Physicist. They further 
indicate that should a facility choose not to participate in ACR certification, 
then certification by the state should be mandatory. All four commenters were 
concerned about the time frames for certification and the fact that ACR 
certification may take months, so to become certified under the state with an 
ACR certified machine, the facility would have to remain idle. One commenter 
indicates the regulations forces all institutions to use the state's 
certification process regardless of ACR accreditation. (See sec.42.24(c)). 
 RESPONSE. House Bill 63 requires a certification and inspection process. There 
is no provision for a phase-in period, the bill requires certification prior to 
use of the system. Once MQSA is implemented, there will be one certification and 
one inspection. House Bill 63 is in effect until MQSA is effective October 1, 
1994. MQSA will provide for extensive training of mammography inspectors. The 
Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter indicates that the second paragraph makes the statement 
about..."less stringent than the standards of the ACR on forms prescribed by the 
agency." The commenter suggests that transcribing date from either ACR forms or 
the medical physics report is unnecessary and suggests that the Agency accept a 
copy of either of these reports. (See sec.42.24(c)). 
 RESPONSE. The application process will not necessitate reduplication of all the 
information submitted to ACR. The application form will have a section to 
indicate ACR accreditation with a provision to provide proof of ACR 
accreditation. The Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter indicates that this requires a registration for 
calibration of kV meters and other instruments utilized for TRCR, sec.32.20(h) 
tests and questions if one must be registered in order to provide the service 
for calibration of densitometers needed for the mammography program or will 
simply being licensed as a medical physicist be adequate? (See sec.42.27). 
 RESPONSE. Densitometers may be calibrated by the registrant using the 
calibration strip supplied by the manufacturer. There is no requirement that 
this calibration be performed by a licensed medical physicist or that an 
individual be registered to calibrate a densitometer. The Agency made no change 
to the rule as a result of the comment. 
 COMMENT. One commenter indicates that this requires quarterly, documented 
reviews by the RSO to ensure that the TRCR conditions of the certificate of 
registration and the operating, safety, and emergency procedures of the 
registrant are being observed by the personnel and sec.21.101(c) requires at 
least an annual review of the radiation protection program and implementation. 
The commenter indicates that these two requirements appear to be redundant and 
confusing and suggests modification of both sections to make this clearer. (See 
Appendix 42-B, G.). 
 RESPONSE. The requirement in sec.21.202(c) is an evaluation of the radiation 
protection program. The quarterly audit in Appendix 42-B is a review to ensure 
that personnel are complying with the rules, operating, safety, and emergency 
procedures, and the conditions of the certificate of registration. This is an 
internal audit to be performed by the RSO and is separate from that required in 
Part 21. The Agency made no change to the rule as a result of the comment. 
 COMMENT. One commenter questions if a quarterly review is necessary as only a 
few people handle the machines in his facility and they are observed on a week 
to week basis. The commenter suggests an annual review is more appropriate. (See 
Appendix 42-B,G.). 
 RESPONSE. The audit is required for all registrants. The Agency made no change 
to the rule as a result of the comment. 
 COMMENT. One commenter indicates that a quarterly review would place an 
unnecessary burden on resident RSOs, reducing the current level of 
effectiveness. The commenter questions that if the intent cannot be made more 
specifically applicable for the non-resident RSO, will guidance be provided to 
resident RSOs on acceptable methods for meeting this requirement or will 
exemptions be granted? The commenter also questions: "Is the documented review 
of these duties" a review of the duties of the RSO or the compliance of the 
personnel with the rules and procedures of the registrant? The commenter 
indicates the only mention of "duties" is in reference to the "Specific Duties 
of the RSO..." (See Appendix 42-B, G.). 
 RESPONSE. The quarterly audit is a review to ensure that personnel are 
complying with the rules, operating, safety, and emergency procedures, and the 
conditions of the certificate of registration. This is an internal audit to be 
performed by the RSO. The Agency changed the language to clarify the intent of 
the regulations. There will be no exemptions granted. 
 TRCR, Part 12 was amended to reflect increases in fee amounts for mammography 
system certification necessitated by the changes in TRCR, Parts 11, 32, and 42 
resulting from the passage of House Bill 63. Fee increases for all healing arts 
and veterinary medicine machines was deleted to allow the Agency time to further 
review training and formulate rules for training prior to implementing fees. The 
amendment also deletes fees for uranium recovery facilities as the authority to 
regulate those facilities has been transferred to the Texas Natural Resource 
Conservation Commission and rearranges and further defines categories in the 
industrial radiography fee section. 
 In sec.12.11(b), some of the reference numbers were deleted to better clarify 
the intent of the rule. In sec.12.21(a)(1), language was added to indicate the 
use "for production of radioactive materials." In sec.12.21(a)(46), uranium 
recovery fees were deleted and the rest of the items renumbered accordingly. 
"Section 12.22 Schedule of Fees for Uranium Recovery Facilities" was deleted. 
Section 12.22 now becomes "Schedule of Fees for Certification of Mammography 
Systems." Section 12.31(a)-(d) reflects a $10 decrease for each fee category. 
Fee categories in sec.12.31(e)-(g), (i), and (l) were rearranged to more 
accurately reflect the appropriate category of use. There were no changes in the 
fees. 
 The following comments were received concerning the proposed amendment to TRCR, 
Part 12. 
 COMMENT. Three commenters indicate that items sec.12.31(1)-(9) should be 
sec.12.31(a)-(i) and sec.12.31(11) should be  sec.12.31(k). (See 
sec.12.11(b)(3)). 
 RESPONSE. The Agency agrees and has made changes to the rule to clarify the 
references. 
 COMMENT. One commenter questions whether the changes in  sec.12.11(b)(3) would 
affect the fees charged for a Registration Certificate (not referring to 
mammography), which has previously been covered by the $4,000 ceiling. However, 
the changed wording poses the possibility that subsites would not be covered by 
this ceiling. (See sec.12.11(b)(3)). 
 RESPONSE. The Agency has clarified the wording to ensure that subsites are 
covered by the $4,000 ceiling. 
 COMMENT. One commenter indicates that the listing (46) for Uranium Recovery 
needs to be deleted. 
 RESPONSE. The Agency agrees and has removed the listing. 
 COMMENT. Seven commenters offered comments on this section. Several commenters 
indicate there are several entities with mammography accreditation requirements 
as well as those being developed by the FDA and Texas. One commenter indicated 
that at the time House Bill 63 was under consideration by the legislature, it 
was indicated that its primary purpose was to provide safe mammography for the 
women of Texas in the event that the Federal program was not activated or was 
less stringent in its requirements. The commenter indicates that since all have 
the same goal and are similar in essentials, it is hoped that equivalency can be 
negotiated between various agencies and the cost of having to satisfy multiple 
agency requirements goes beyond the various fees set by each entity. One 
commenter questions if the triplication of paperwork and fee schedules are 
necessary? Several commenters indicated that House Bill 63 would exempt ACR 
accredited facilities. One commenter questioned the increase in fees for ACR 
facilities in subsequent years? (See sec.12.22). 
 RESPONSE. As a result of carrying out the requirements of House Bill 63, the 
state is obligated to certify all mammography systems in the state by July 1, 
1994, and inspect them 60 days after the certification is issued for non-ACR 
certified units and annually thereafter for all units. The initial lower base 
fee for ACR-accredited units reflects not having the initial 60-day inspection 
and the annual fee thereafter includes the inspection. Implementation of MQSA 
will eliminate the need for multiple inspections and certifications and will 
require certification and an annual inspection. Because MQSA is to go into 
effect October 1, 1994, the state must conform to the requirements of House Bill 
63 until that time. Likewise, the Legislature requires state agencies to recover 
100% of their costs in certain regulatory programs. The Agency made no change to 
the rule as a result of the comment. 
 COMMENT. One commenter indicates flash radiography is listed in both (e) and 
(h). The commenter also states ion implantation is listed in Appendix 11-D as a 
"Minimal Threat" machine. The Semiconductor Industry uses ion implantation in 
the production of integrated circuits. There is no analytical process used. The 
commenter recommends it be moved back to the "Minimal Threat" category as there 
is no difference in fee. (See sec.12.31(e)-(g), and (h)). 
 RESPONSE. Flash radiography is listed in both sections because of the different 
use applications that apply, i.e. industrial radiography and analytical (bomb 
detection). The Agency changed the rule to list ion implantation devices in the 
"Minimal Threat" category. 
 COMMENT. One commenter indicates that sec.12.31(i) establishes fees for 
registration for calibration "of x-ray equipment and nonionizing devices," and 
that an addition has been noted to change the next line to read "Calibration of 
survey and measurement instruments." (See sec.12.31(i)). 
 RESPONSE. The Agency made this change to clarify the difference between the two 
categories of calibration. The Agency made no change to the rule as a result of 
the comment. 
 Representatives from Frank Malek and Associates in Montgomery, Richmond Imaging 
Associates in Houston, Texas State Soil and Water Conservation Board, Texas 
Natural Resource Conservation Commission, The Wichita Falls Clinic of Wichita 
Falls, Valley Baptist Medical Center of Harlingen, Center for Devices and 
Radiological Health of the Food and Drug Administration of Rockville, Maryland, 
Baylor College of Medicine of Houston, The University of Texas Medical School of 
Houston, Baylor-Komen Breast Center of Dallas, The University of Texas, M.D. 
Anderson Cancer Center of Houston, J. Preston Coleman, D.D.S., Inc. and 
Associates of San Antonio, Scott and White of Temple, Hendrick Medical Center of 
Abilene, The Women's Clinic of Wichita Falls, Texas Medical Association, Texas 
Radiological Society, Texas Instruments of Dallas, American Cancer Society of 
Austin, Wichita General Hospital of Wichita Falls, Hermann Hospital of Houston, 
Fairfield Memorial Hospital of Fairfield, General Electric Company of Milwaukee, 
Wisconsin, John F. Domatti, Inc., of Simonton, The University of Texas 
Southwestern Medical Center of Dallas, Zale Lipshy University Hospital at 
Southwestern Medical Center of Dallas, Clyde Danks, M.D. of Austin, Capital Area 
Society of Radiologic Technologists of Austin, and RFJ Associates, Inc. of 
Austin presented comments, questions, and suggestions for changes to the 
proposed amendment as discussed in the summary of comments. 
 The amendments are adopted under the Health and Safety Code, Chapter 401, which 
provides the Texas Board of Health with the authority to adopt rules and 
guidelines relating to the control of radiation; and sec.12.001, which 
authorizes the board to adopt rules for the performance of every duty imposed by 
law on the board, the Agency, and the commissioner of health. 
 
 
  sec.289.111. General Provisions. 
 
  (a)  The Texas Department of Health adopts by reference Part 11, "General 
Provisions" of the Department's document titled Texas Regulations for Control of 
Radiation, as amended in March, 1994. 
   
  (b)  (No change.) 
 
     
  sec.289.113. Standards for Protection Against Radiation. 
 
  (a)  The Texas Department of Health adopts by reference Part 21, "Standards 
for Protection Against Radiation" of the department's document titled Texas 
Regulations for Control of Radiation, as amended in March, 1994. 
   
  (b)  (No change.) 
 
     
  sec.289.116. Use of Radiation Machines in the Healing Arts and Veterinary 
Medicine. 
 
  (a)  The Texas Department of Health adopts by reference Part 32, "Use of 
Radiation Machines in the Healing Arts and Veterinary Medicine" of the 
Department's document titled Texas Regulations for Control of Radiation, as 
amended in March, 1994. 
   
  (b)  (No change.) 
 
     
  sec.289.122. Registration of Radiation Machine Use and Services. 
 
  (a) The Texas Department of Health adopts by reference Part 42, "Registration 
of Radiation Machine Use and Services" of the Department's document titled Texas 
Regulations for Control of Radiation as amended in March, 1994. 
   
  (b)  (No change.) 
 
     
  sec.289.126. Fees for Certificates of Registration, Radioactive Material(s), 
Emergency Planning and Implementation, and Other Regulatory Services. 
 
  (a) The Texas Department of Health adopts by reference Part 12, "Fees for 
Certificates of Registration, Radioactive Material(s), Emergency Planning and 
Implementation, and Other Regulatory Services" of the Department's document 
titled Texas Regulations for Control of Radiation, as amended in March, 1994. 
   
  (b) (No change.) 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 11, 1994. 
 TRD-9436085 
  Susan K. Steeg 
 General Counsel, Office of General Counsel 
 Texas Department of Health 
    Effective date: March 4, 1994 
 Proposal publication date: November 9, 1993 
 For further information, please call: (512) 834-6688 
         
                 Part VIII. Interagency Council on Early Childhood Intervention 
  Chapter 621. Early Childhood Intervention Program 
  
  Early Childhood Intervention Service Delivery 
 
  25 TAC sec.621.23, sec.621.25 
 
  The Interagency Council on Early Childhood Intervention (Council) adopts 
amendments to sec.621.23 and sec.621.25. Section 621.23 is adopted with changes 
to the proposed text as published in the September 21, 1993, issue of the Texas 
Register (18 TexReg 6423). Section 621.25 is adopted without changes and will 
not be republished. 
 The amendments clarify policies requiring collecting reimbursements for 
services and participation in the State Medicaid Program. The language was 
modified to reflect the public comment. 
 Upon further review, the Council noted that sec.621.23(5)(L)(i) and sec.621. 
23(5)(L)(iii) appear to be contradictory. The language in sec.621.23(5)(L)(i) 
was amended to clarify that parents must give permission before a third party is 
billed. 
 No other comments were received and no other changes were made. 
 The amendments are adopted under the Human Resource Code  sec.73.003, which 
provides the Interagency Council on Early Childhood Intervention with the 
authority to establish rules regarding services provided for children with 
developmental delays. 
 The amendments will effect the Health and Safety Code, Chapter 73. 
 
 
  sec.621.23. Service Delivery Requirements. Programs that receive Early 
Childhood Intervention (ECI) funds must have written policies and procedures 
which are implemented and evaluated in each of the following areas. 
 
  (1)-(4) (No change.) 
   
  (5) Individualized family service plan (IFSP). An IFSP must be developed for 
each eligible child and the child's family. 
 
  (A)-(K) (No change.) 
   
  (L) Reimbursement for service. 
 
  (i) All programs will be required to establish third-party billing systems, 
determine client eligibility for all third-party reimbursement sources, and 
complete and submit reimbursement requests to corresponding third-party sources, 
in accordance with clause (iii) of this subparagraph. Third parties include, but 
are not limited to Health Maintenance Organizations (HMO's), private insurance, 
Medicaid programs (Early Periodic Screening Diagnosis and Treatment Program 
(EPSDT) and Targeted Case Management) and the Chronically Ill and Disabled 
Children's Program. 
   
  (ii)  All ECI required services must be provided at no cost to families, 
including but not limited to, child find, evaluation and assessment, service 
coordination, and administration and coordination related to the development, 
review, and evaluation of IFSP's. The determination of the duration, scope and 
nature of the services provided will not be based on parental consent to the use 
of funding resources for which the may be eligible. 
   
  (iii)  No child may be denied services because of the family's inability to 
pay, or unwillingness to consent to third party-billing. Informed parental 
consent is required prior to billing private insurers. Billing third-party 
insurers must be at no cost to families. All programs will be required to 
discuss with families the implications of billing private insurance. 
   
  (iv) Programs will be required to encourage the family to apply for all 
applicable funding resources for which they are potentially eligible including, 
but not limited to, Medicaid and the Chronically Ill and Disabled Children's 
Program. No child may be denied services because of the family's refusal to 
apply for Medicaid or other funding resources for which they may be eligible. 
   
  (v) All programs will be required to apply for Chapter 1 funds. 
 
         
  sec.621.25. Application Requirements. 
 
  (a)-(c) (No change.) 
   
  (d) Applicant share or maintenance of effort. 
 
  (1)-(6) (No change.) 
   
  (7) All private non-profit ECI programs participating in the Medicaid Targeted 
Case Management Program must reimburse the state ECI program for the state share 
of medicaid reimbursement received. 
   
  (8)  The program provider shall notify the Council promptly whenever the 
amount of the contract is expected to exceed the projected expenditures by more 
than $5000 or 5.0% of the contract whichever is smaller. The Council may request 
that the contract be reduced by this amount which exceeds the need. 
     
  (e) -(f) (No change.) 
 
  This council hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 14, 1994. 
 TRD-9436148 
  Tammy Tiner, Ph.D. 
 Chairperson 
 Interagency Council on Early Childhood Intervention 
    Effective date: March 7, 1994 
 Proposal publication date: September 21, 1993 
 For further information, please call: (512) 502-4900 
         
                   
  TITLE 28. INSURANCE 
 Part I. Texas Department of Insurance 
  Chapter 7. Corporate and Financial Rgulation 
  
  Subchapter A. Examination and Corporate and Tax 
 
  28 TAC sec.7.63 
 
  The Texas Department of Insurance adopts the repeal of  sec. 7.63, concerning 
the annual statement blanks, instructions, and other forms used by insurers and 
certain other entities regulated by the Texas Department of Insurance to report 
their financial condition and business operations and activities for calendar 
year 1984, without changes to the proposed text published in December 3, 1993, 
issue of the Texas Register  (18 TexReg 8856). 
 The repeal of this section is necessary to eliminate unnecessary provisions and 
to enable the Texas Department of Insurance simultaneously to adopt new 
sec.7.63, which replaces the repealed section with other provisions concerning 
the filing requirements for annual and quarterly statements and other reporting 
forms for calendar year 1993. Notification of the new section which replaces 
this repealed section appears elsewhere in this issue of the Texas Register. 
 The repeal of this section will eliminate unnecessary and outdated provisions 
pertaining to reports of financial condition and business operations and 
activities for calendar year 1984. 
 No comments were received regarding adoption of the repeal. 
 The repeal is adopted under the Insurance Code, Articles 1.11, 1.10, 3.07, 
6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 11.19, 14.15, 14. 
39, 15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 20.02, 20A.10, 20A. 
22, 21.43, 21.54, 22.06, 23.02, 23.26, 1.03A; and Texas Government Code, 
sec.sec.2001.004-2001.038. Article 1.11 authorizes the commissioner to change 
the form of the statement blanks and other reporting forms as shall seem best 
adapted to elicit a true exhibit of the financial condition and the methods of 
transacting the business of insurers and/or other regulated entities and 
requires certain insurers and/or other regulated entities to make filings with 
the National Association of Insurance Commissioners. Article 1.10(9) requires 
the department to furnish the statement blanks and other reporting forms 
necessary for companies to comply with the filing requirements. Articles 3.07, 
6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 11.19, 14.15, 14. 
39, 15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 20.02, 20A.10, 20A. 
22, 21.54, 22.06, 23.02, and 23.26 require the filing of financial reports and 
other information by insurers and other regulated entities, and specify 
particular rulemaking authority of the commissioner relating to those insurers 
and other regulated entities. Article 21.43 provides the conditions under which 
foreign insurers are permitted to do business in this state and requires foreign 
insurers to comply with the provisions of the Insurance Code. Article 1.03A 
authorizes the commissioner to adopt rules and regulations for the conduct and 
execution of the duties and functions of the department only as authorized by 
statute for general and uniform application. Texas Government Code, 
sec.sec.2001.004-2001.038 authorize and require each state agency to adopt rules 
of practice setting forth the nature and requirement of available procedures, 
and prescribe the procedures for adoption of rules by a state administrative 
agency. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 11, 1994. 
 TRD-9436153 
  Linda K. von Quintus-Dorn 
 Chief Clerk 
 Texas Department of Insurance 
    Effective date: March 7, 1994 
 Proposal publication date: December 3, 1993 
 For further information, please call: (512) 463-6327 
         
     
  The Texas Department of Insurance (department) adopts new sec.7. 63, with 
changes to the proposed text as published in the December 3, 1993, issue of the 
Texas Register  (18 TexReg 8857). 
 The new section concerns annual and quarterly statement blanks, other reporting 
forms, diskettes and instructions to be used by insurers and certain other 
entities regulated by the Texas Department of Insurance when reporting their 
financial condition and business operations and activities, and the requirement 
to file such completed statement blanks and other reporting forms, including 
diskettes. These statement blanks, other reporting forms and diskettes are 
required for reporting in 1994 the financial condition and business operations 
and activities of insurers and certain other regulated entities conducted during 
the 1993 and 1994 calendar years. The adoption of new sec.7.63 is simultaneous 
with the repeal of existing sec.7.63, concerning the 1984 annual statement 
filings. Notice of the repeal appears elsewhere in this issue of the Texas 
Register. The adoption includes a change to subsection (e) by adding language to 
provide for an exemption from Asset Valuation Reserve (AVR) or Interest 
Maintenance Reserve (IMR) requirements for fraternal benefit societies which is 
consistent with the exemption from AVR/IMR for life, accident and health 
insurers authorized in subsection (c). Changes were made to subsections (c)-(g) 
to clarify that the requirement that reports be completed in accordance with the 
current NAIC Annual Statement Instructions includes Management's Discussion and 
Analysis be filed by April 1, 1994, with the NAIC and the department. Changes 
were made to delete paragraphs (2)(A) of subsections (c)-(f) and paragraph (2) 
of subsection (g) of the proposed sections that required Management's Discussion 
and Analysis be filed with the department on or before March 1, 1994. Subsequent 
paragraphs of subsections (c)-(g) were renumbered as appropriate. A change was 
made to subsection (d) to provide an exemption for domestic insurers writing 
workers' compensation business only in Texas from establishing the full Schedule 
P penalty reserve. A change was made to paragraph (2)(H) of subsection (f) to 
adopt by reference Special Instructions to Title Insurers for completing the 
Policy Count Exhibit. 
 The new section defines terms relevant to the statement blanks and reporting 
forms; provides the dates by which certain reports are to be filed; adopts by 
reference the annual and quarterly statement blanks, other reporting forms, and 
instructions for reporting the financial condition and business operations and 
activities; and requires insurance companies and certain other regulated 
entities to file such annual and quarterly statements and other reporting forms 
with the department and/or the National Association of Insurance Commissioners 
as directed. The department has filed with the Office of the Secretary of State, 
Texas Register Division, copies of the annual and quarterly statement blanks, 
other reporting forms, and manuals adopted by reference. Other copies are 
available for inspection in the office of the Financial Analysis Unit of the 
Texas Department of Insurance, William P. Hobby State Office Building, 333 
Guadalupe, Building 3, Third Floor, Austin, Texas. 
 Comment: Seven commenters pointed out that subsection (c), regarding filing 
requirements for life, accident and health insurers, provides an exemption for 
certain domestic insurers from the establishment an Asset Valuation Reserve 
(AVR) or Interest Maintenance Reserve (IMR) but subsection (e) regarding filing 
requirements for fraternal benefit societies does not provide for a similar 
exemption. The commenters stated that allowing the exemption from AVR/IMR 
requirements for fraternal benefit societies will be consistent with historical 
practice, and will allow a more even handed treatment of the two types of 
insuring organizations. 
 Response: The department concurs with the commenters and has added language to 
subsection (e) to exempt certain domestic fraternal benefit societies from the 
establishment of the AVR/IMR requirement. 
 Comment: Two commenters recommended that the filing date requirement for 
Management's Discussion and Analysis follow the April 1 filing date standard set 
by the NAIC. 
 Response: The department concurs with this recommendation and has changed 
subsections (c)-(g) to clarify that Management's Discussion and Analysis be 
filed by April 1, 1994, with the NAIC and the department. Changes were made to 
paragraph (2)(A) of subsections (c)-(f) and paragraph (2) of subsection (g) to 
delete the requirement that Management's Discussion and Analysis be filed with 
the department on or before March 1, 1994. 
 Comment: One commenter suggested that the requirement for title insurance 
companies to file a Policy Count Exhibit showing the number of insurance 
policies written and certificates issued and in force December 31, 1993 as set 
forth in paragraph (H) of subsection (f) be eliminated. The commenter pointed 
out that paragraph (H) as proposed has no relevance in terms of calculating any 
of a title insurer's liabilities and it would be impossible to complete. 
 Response: The department does not concur with the suggestion to eliminate the 
use of the Policy Count Exhibit but concurs that unique reporting issues exist 
for title insurers and has adopted by reference Special Instructions to Title 
Insurers. 
 Comment: One commenter stated that the Schedule P excess statutory reserve is 
based on loss experience from years prior to Texas workers' compensation 
insurance reform and would force workers' compensation insurers licensed to do 
business only in the State of Texas to post excess reserves that would be 
actuarially unsound, unreasonably large, inconsistent with current Texas 
Department of Insurance rating policy, and unfair when compared to insurers that 
do business in other states. The commenter recommended that subsection (d) as 
proposed be amended to include the following language: 
 A Texas domestic company not licensed to do business in any other state is not 
required to post the NAIC Schedule P excess statutory reserve if a majority of 
such company's premium income is derived from workers' compensation insurance 
business. 
 Response: Although the suggested language provided by the commenter was not 
utilized, the department has amended proposed subsection (d) to provide an 
exemption for certain insurers from establishing the entire Schedule P excess 
statutory reserve over statement reserves. 
 No comments were received against the proposed rule in its entirety; although, 
certain individuals and/or entities objected to a portion or portions. 
 Against-Texas Builders Insurance Company; Chicago Title Insurance Company; 
Moslah Benefit Fund; Slavonic Benevolent Order of the State of Texas; Catholic 
Family Fraternal of Texas; Catholic Union of Texas-The KJT; Grand Lodge of the 
Order of the Sons of Hermann in the State of Texas; Agee and Associates; Temple 
Benefit Fund; Aid Association for Lutherans. 
 The section is adopted under the Insurance Code, Articles 1.11, 1.10, 3.07, 
3.20-1, 3.27-2, 6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 
11.19, 14.15, 14.39, 15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 
20.02, 20A.10, 20A.22, 21.43, 21.54, 22.06, 23.02, 23.26, 1.03A; and Texas 
Government Code, sec.sec.2001.004-2001.038. The Insurance Code, Article 1.11 
authorizes the commissioner to make changes in the forms of the annual 
statements required of insurance companies of any kind, as shall seem best 
adapted to elicit a true exhibit of their condition and methods of transacting 
business, and requires certain insurers to make filings with the National 
Association of Insurance Commissioners. Article 1.10(9) requires the department 
to furnish the statement blanks and other reporting forms necessary for 
companies to comply with the filing requirements. Articles 3.07, 3.20-1, 3. 27-
2, 6.11, 6.12, 8.07, 8.08, 8.21, 8.24, 9.22, 9.47, 10.30, 11.06, 11.19, 14. 15, 
14.39, 15.15, 15.16, 16.18, 16.24, 17.22, 17.25, 18.12, 19.08, 20.02, 20A. 10, 
20A.22, 21.54, 22.06, 23.02, and 23.26 require the filing of financial reports 
and other information by insurers and other regulated entities, and specify 
particular rule making authority of the commissioner relating to those insurers 
and other regulated entities. Article 21.43 provides the conditions under which 
foreign insurers are permitted to do business in this state and requires foreign 
insurers to comply with the provisions of the Insurance Code. Article 1.03A 
authorizes the commissioner to adopt rules for the conduct and execution of the 
duties and functions of the department only as authorized by statute for general 
and uniform application. Texas Government Code, sec.sec.2001. 004-2001.038 
authorize and require each state agency to adopt rules of practice setting forth 
the nature and requirement of available procedures, and prescribe the procedures 
for adoption of rules by a state administrative agency. The adopted section 
affects the filing of the annual statement, other reporting forms, and diskettes 
to elicit the financial condition of insurers under the Insurance Code, Article 
1.11. 
 
 
  sec.7.63. Requirements for Filing the 1993 Annual and 1994 Quarterly 
Statements, Other Reporting Forms and Diskettes. 
 
  (a) Scope. This section provides insurers and other regulated entities with 
the filing requirements for the 1993 annual statement, 1994 quarterly 
statements, other reporting forms, and diskettes necessary to report information 
concerning the financial condition and business operations and activities of 
insurers. This section applies to all insurers and other regulated entities 
authorized to do the business of insurance in this state and includes, but is 
not limited to, life insurers; accident insurers; life and accident insurers; 
life and health insurers; accident and health insurers; life, accident and 
health insurers; mutual life insurers; stipulated premium insurers; group 
hospital service corporations; fire insurers; fire and marine insurers; general 
casualty insurers; fire and casualty insurers; mutual insurers other than life; 
county mutual insurers; Lloyd's plans; reciprocal and inter-insurance exchanges; 
domestic risk retention groups; domestic joint underwriting associations; title 
insurers; fraternal benefit societies; local mutual aid associations; statewide 
mutual assessment companies; mutual burial associations; exempt associations; 
farm mutual insurers; health maintenance organizations; and nonprofit legal 
services corporations. The commissioner of insurance adopts by reference the 
1993 annual and 1994 quarterly statement blanks, instruction manuals, and other 
reporting forms specified in this section. The annual and quarterly statement 
blanks and other reporting forms are available from the Texas Department of 
Insurance, Financial Analysis, Mail Code 303-1A, P.O. Box 149099, Austin, Texas 
78714-9099. Insurers and other regulated entities shall properly report to the 
Texas Department of Insurance and the National Association of Insurance 
Commissioners (NAIC), using the appropriate annual and quarterly statement 
blanks, other reporting forms and machine-readable diskettes and following the 
applicable instructions as outlined in subsections (c)-(l) of this section. 
   
  (b) Definitions. The following words and terms, when used in this section, 
shall have the following meanings, unless the context clearly indicates 
otherwise: 
 
  (1) Association edition-blanks and forms promulgated by the National 
Association of Insurance Commissioners. 
   
  (2) Commissioner-the commissioner of insurance appointed under the Insurance 
Code, Article 1.09. 
   
  (3) Department-the Texas Department of Insurance. 
   
  (4) Insurer-a person or business entity legally organized in and authorized by 
its domiciliary jurisdiction to do the business of insurance. 
   
  (5) NAIC-the National Association of Insurance Commissioners. 
   
  (6) Texas edition-blanks and forms promulgated by the commissioner of 
insurance. 
     
  (c) Filing requirements for life, accident and health insurers. Each life, 
life and accident, life and health, accident and health, mutual life, or life, 
accident and health insurance company, stipulated premium insurance company, and 
group hospital services corporation shall complete and file the following 
blanks, forms, and diskettes for the 1993 calendar year and the first three 
quarters of the 1994 calendar year. Except as otherwise provided by this 
section, the forms, reports and diskettes identified in paragraphs (1) (A)-
(1)(G); (2)(A)-(2)(C); and (3)(A)-(3)(D) of this subsection shall be completed 
in accordance with the current NAIC Accounting Practices and Procedures Manual 
for Life, Accident and Health Insurance Companies, and the current NAIC Annual 
Statement Instructions, Life, Accident and Health, including Management's 
Discussion and Analysis to be filed by April 1, 1994, with the NAIC and the 
department. The diskettes identified in paragraphs (3)(C) and (D) shall be 
completed in accordance with the current NAIC Annual Statement Diskette Filing 
Specifications-Life/Health. Since Texas domestic companies have historically not 
been required to establish a Mandatory Securities Valuation Reserve (MSVR), they 
are not required at the present time to establish an Asset Valuation Reserve 
(AVR) or Interest Maintenance Reserve (IMR) unless the company is licensed in a 
state that requires an AVR or IMR, in which case the reserve must be calculated 
in accordance with the instructions established by the NAIC. Goodwill shall not 
be allowed as an admitted asset of an insurer or an insurer's insurance 
subsidiaries on any filing with the department or the NAIC by Texas domestic 
insurers or on any filing with the department by insurers domiciled outside the 
State of Texas. In the event of a conflict between the Insurance Code, any 
currently existing department rule, form or instruction, or any specific 
requirement of this subsection and the NAIC manuals listed in this subsection, 
then and in that event, the Insurance Code, the department's promulgated rule, 
form or instruction, or the specific requirement of this subsection shall take 
precedence and in all respects control. It is the express intent of this 
subsection that it shall not repeal or otherwise modify or amend any department 
rule or the Insurance Code. 
 
  (1) Reports to be filed with the department and the NAIC include the 
following: 
 
  (A) Annual Statement (association edition, Form 1, Form 1A, or Form 11), 
either the 12-inch x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch 
size, to be filed on or before March 1, 1994 (stipulated premium insurance 
companies, April 1, 1994); 
   
  (B) Annual Statement of the Separate Accounts (association edition, Form 1-S) 
(required of companies maintaining separate accounts), either the 12-inch x 19-
inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or 
before March 1, 1994 (stipulated premium insurance companies, April 1, 1994); 
   
  (C) Long-Term Care Insurance Exhibit (association edition) (required of 
companies writing long-term care business), either the 12-inch x 19-inch size, 
11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before March 
1, 1994 (stipulated premium insurance companies, April 1, 1994), in addition to 
the Long-Term Care Experience Reporting Form included in the annual statement 
required by paragraph (1)(A) of this subsection; 
   
  (D) Schedule DS (association edition) (required of companies that have 
included equity in the undistributed income of consolidated subsidiaries in its 
net gain/(loss) from operations), either the 12-inch x 19-inch size, 11-inch x 
17-inch size, or 9-inch x 14-inch size, to be filed on or before March 1, 1994 
(stipulated premium insurance companies, April 1, 1994); 
   
  (E) Interest Sensitive Life Insurance Products Report (association edition) 
(required of companies writing interest sensitive products), either the 12-inch 
x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on 
or before April 1, 1994 (stipulated premium insurance companies, April 1, 1994); 
   
  (F)  Life, Health and Annuity Guaranty Association Model Act Assessment Base 
Reconciliation Exhibit (association edition), 8 1/2-inch x 14-inch size, to be 
filed on or before June 30, 1994; and 
   
  (G) Life and Accident and Health Quarterly Statement (association edition) 
(required of companies filing Form 1) , either the 12-inch x 19-inch size, 11-
inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before May 15, 
August 15, and November 15, 1994. However, a Texas stipulated premium company, 
unless specifically requested to do so by the department, is not required to 
file quarterly statements with the department or the NAIC if it meets all three 
of the following conditions: 
 
  (i) it is authorized to write only life insurance on its Certificate of 
Authority; 
   
  (ii) it collected premiums in the prior calendar year of less than $1 million; 
and 
   
  (iii)  it had a profit from operations in the prior two calendar years. 
       
  (2) Reports to be filed only with the department: 
 
  (A)  Schedule SIS, Stockholder Information Supplement (association edition) 
(required of domestic stock companies which have 100 or more stockholders), 
either the 12-inch x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch 
size, to be filed on or before March 1, 1994 (stipulated premium insurance 
companies, April 1, 1994); 
   
  (B) Schedule DM (association edition) (shows statement value and fair market 
value of all bonds and preferred stock owned), either the 12-inch x 19-inch 
size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before 
March 1, 1994 (stipulated premium insurance companies, April 1, 1994); 
   
  (C) Accident and Health Policy Experience Exhibit, (association edition) 
(required of companies writing accident and/or health business), either the 12-
inch x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be 
filed on or before June 30, 1994; 
   
  (D) Annual Statement (Texas edition, green) (required of companies writing 
prepaid legal business in 1993), 2 inch /2 inch x 14-inch size, to be filed on 
or before March 1, 1994 (stipulated premium insurance companies, April 1, 1994); 
   
  (E) Affidavit in Lieu of Annual Statement (Texas edition, green) (required of 
companies authorized to write prepaid legal business that did not write such 
business in 1993), to be filed on or before March 1, 1994; 
   
  (F) Texas Overhead Assessment Form (required of Texas domestic companies 
only), to be filed on or before March 1, 1994 (stipulated premium insurance 
companies, April 1, 1994); 
   
  (G) Analysis of Surplus, for life, accident and health insurers, to be filed 
on or before March 1, 1994 (stipulated premium insurance companies, April 1, 
1994); 
   
  (H) TX Disclosure Form (reports whether the annual or quarterly statement 
filing with the department differs from the annual or quarterly statement filing 
with the NAIC or the insurer's state of domicile and reports any individual 
treatment of assets, liabilities, operations, or capital and surplus accounts 
granted by an insurer's state of domicile or any other state insurance 
regulatory department), to be filed on or before March 1, May 15, August 15, and 
November 15, 1994 (stipulated premium companies, April 1, 1994 and, for those 
stipulated premium companies subject to quarterly reporting in accordance with 
paragraph (1)(G) of this subsection, May 15, August 15, and November 15, 1994); 
   
  (I) Supplemental Investment Income Exhibit (shows percent of net investment 
income by type of investment, as an attachment to page 10 of the annual 
statement as required by paragraph (1)(A) of this subsection), to be filed on or 
before March 1, 1994 (stipulated premium companies, April 1, 1994); and 
   
  (J) Policy Count Exhibit (shows number of insurance policies written or 
certificates issued by the insurer and in force on December 31, 1993), to be 
filed on or before March 1, 1994 (stipulated premium companies, April 1, 1994). 
     
  (3) Reports and diskettes to be filed only with the NAIC: 
 
  (A) Officers and Directors Information (association edition) (required of 
companies upon their initial filing with the NAIC and to report any changes in 
previously filed information) , to be filed on or before March 1, 1994 
(stipulated premium insurance companies, April 1, 1994); 
   
  (B) Credit Insurance Experience Exhibit (association edition) (required of 
companies writing credit business), 9-inch x 14-inch size, to be filed on or 
before May 1, 1994; 
   
  (C)  Machine-readable diskettes containing computerized annual statement data, 
(required of companies filing annual statement Form 1), to be filed on or before 
March 1, 1994 (stipulated premium insurance companies, April 1, 1994); and 
   
  (D) Machine-readable diskettes containing computerized quarterly statement 
data, (required of companies filing annual statement Form 1), to be filed on or 
before May 15, August 15, and November 15, 1994. However, a Texas stipulated 
premium company, unless specifically requested to do so by the department, is 
not required to file diskettes with the NAIC if it meets all three of the 
following conditions: 
 
  (i)  it is authorized to write only life insurance on its Certificate of 
Authority; 
   
  (ii) it collected premiums in the prior calendar year of less than $1 million; 
and 
   
  (iii) it had a profit from operations in the prior two calendar years. 
         
  (d) Requirements for property and casualty insurers. Each fire, fire and 
marine, general casualty, fire and casualty, county mutual insurance company, 
mutual insurance company other than life, Lloyd's plan, reciprocal or inter-
insurance exchange, domestic risk retention group, life insurance company that 
is licensed to write workers' compensation, any farm mutual insurance company 
that filed on a Form 2 for the 1992 calendar year, and domestic joint 
underwriting association shall complete and file the following blanks, forms, 
and diskettes for the 1993 calendar year and the first three quarters of the 
1994 calendar year. Except as otherwise provided by this section, the forms, 
reports, and diskettes identified in paragraphs (1)(A)-(1) (G); (2)(A)-(2)(C); 
and (3)(A)-(3)(D) of this subsection shall be completed in accordance with the 
current NAIC Accounting Practices and Procedures Manual for Fire and Casualty 
Insurance Companies, and the current NAIC Annual Statement Instructions, 
Property and Casualty including Management's Discussion and Analysis to be filed 
by April 1, 1994, with the NAIC and the department. No loss reserve discounts, 
other than as respects fixed and determinable payments such as those emanating 
from workers' compensation tabular indemnity reserves and long-term disability 
claims for which specific segregated investments have been established, shall be 
allowed; provided, however, any company that claimed loss reserve discounts, 
other than as respects fixed and determinable payments such as those emanating 
from workers' compensation tabular indemnity reserves and long-term disability 
claims, as of December 31, 1991, shall be allowed to claim such reserve 
discounts at the applicable percentage. The applicable percentage for claiming 
such loss reserve discounts shall be 100% for 1992, 75% for 1993, 50% for 1994, 
25% for 1995, 0% for 1996, and subsequent years. In no event shall the dollar 
amount of discounts, other than as respects fixed and determinable payments such 
as those emanating from workers' compensation tabular indemnity reserves and 
long-term disability claims, claimed as of December 31, 1991, and subject to the 
applicable percentage, be increased as of December 31, 1992 and thereafter. The 
commissioner shall have the authority to determine the appropriateness of, and 
may disapprove, discounts taken as respects fixed and determinable payments such 
as those emanating from workers' compensation tabular indemnity reserves and 
long-term disability claims. The commissioner shall also have the authority to 
determine the appropriateness of and may disapprove anticipated salvage and 
subrogation. Goodwill shall not be allowed as an admitted asset of an insurer or 
an insurer's insurance subsidiary on any filing with the department or the NAIC 
by Texas domestic insurers or on any filing with the department by insurers 
domiciled outside the State of Texas. Because SB1, acts of the 71st Texas 
Legislature, effective January 1, 1991, may have had a dramatic effect on the 
pricing and loss ratios for workers' compensation business written in the State 
of Texas, some insurers should be exempt from establishing the entire excess of 
statutory reserves over statement reserves, the "Schedule P" reserve, as would 
otherwise be required by the NAIC Annual Statement Instructions, Property and 
Casualty. Specifically, Texas domestic insurers that wrote workers' compensation 
in Texas, but no state other than Texas, in years 1991, 1992, and 1993 and whose 
loss experience prior to 1991 would require the establishment of a "Schedule P" 
reserve using a loss ratio greater than 65% may calculate the reserve based on a 
loss ratio of 65%. The exemption herein contemplated shall only be for the 1993 
annual and 1994 interim financial statements. Reserving in this manner is 
intended to be consistent with the regulatory desire to attain competitive rates 
for workers' compensation written in Texas. The diskettes identified in 
paragraphs (3)(C) and (3)(D) of this subsection shall be completed in accordance 
with the current NAIC Annual Statement Diskette Filing Specifications-
Property/Casualty. In the event of a conflict between the Insurance Code, any 
currently existing department rule, form or instruction, or any specific 
requirement of this section and the NAIC manuals listed in this subsection, then 
and in that event, the Insurance Code, the department's promulgated rule, form 
or instruction, or the specific requirement of this section shall take 
precedence and in all respects control. It is the express intent of this 
subsection that it shall not repeal or otherwise modify or amend any department 
rule or the Insurance Code. 
 
  (1) Reports to be filed with the department and the NAIC: 
 
  (A)  Annual Statement (association edition, Form 2), either the 12-inch x 19-
inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or 
before March 1, 1994; 
   
  (B) Long-Term Care Insurance Exhibit (association edition) (required of 
companies writing long-term care business), either the 12-inch x 19-inch size, 
11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before March 
1, 1994, in addition to the Long-Term Care Reporting Form required by paragraph 
(1)(C) of this subsection; 
   
  (C)  Long-Term Care Experience Reporting Form (association edition) (required 
of companies writing long-term care business), either the 12-inch x 19-inch 
size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before 
March 1, 1994; 
   
  (D) Financial Guaranty Insurance Exhibit (association edition) (required of 
companies writing financial guaranty business), either the 12-inch x 19-inch 
size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before 
March 1, 1994; 
   
  (E)  Supplement "A" to Schedule T, Exhibit of Medical Malpractice Premiums 
Written (association edition) (required of companies writing medical malpractice 
business), either the 12-inch x 19-inch size, 11-inch x 17-inch size, or 9-inch 
x 14-inch size, to be filed on or before March 1, 1994; 
   
  (F) Insurance Expense Exhibit (association edition), either the 12-inch x 19-
inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed in 
duplicate on or before April 1, 1994; and 
   
  (G) Fire and Casualty Quarterly Statement (association edition), either the 
12-inch x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be 
filed on or before May 15, August 15, and November 15, 1994. 
     
  (2) Reports to be filed only with the department: 
 
  (A) Schedule SIS, Stockholder Information Supplement (association edition) 
(required of domestic stock companies which have 100 or more stockholders), 
either the 12-inch x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch 
size, to be filed on or before March 1, 1994; 
   
  (B) Schedule DM (association edition) (shows statement value and fair market 
value of all bonds and preferred stock owned), either the 12-inch x 19-inch 
size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before 
March 1, 1994; 
   
  (C) Accident and Health Policy Experience Exhibit (association edition) 
(required of companies writing accident and/or health business), either the 12-
inch x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be 
filed on or before June 30, 1994; 
   
  (D) Annual Statement (Texas edition, green) (required of companies writing 
prepaid legal business),2 inch /2 inch x 14-inch size, to be filed on or before 
March 1, 1994; 
   
  (E) Affidavit in Lieu of Annual Statement (Texas edition, green) (required of 
companies authorized to write prepaid legal business that did not write such 
business in 1993), to be filed on or before March 1, 1994; 
   
  (F) Texas Overhead Assessment Form (required of Texas domestic companies 
only), to be filed on or before March 1, 1994; 
   
  (G) Analysis of Surplus, for property and casualty insurers (required of all 
licensed companies, except Texas domestic county mutual companies), to be filed 
on or before March 1, 1994; 
   
  (H) Supplement for County Mutuals (required of Texas domestic county mutual 
companies, as an attachment to page 16 of the annual statement as required by 
paragraph (1)(A) of this subsection), to be filed on or before March 1, 1994; 
   
  (I) Supplement A for County Mutuals (required of Texas domestic county mutual 
companies, as an attachment to page 8 of the annual statement as required by 
paragraph (1)(A) of this subsection), to be filed before March 1, 1994; 
   
  (J) TX Disclosure Form (reports whether the annual or quarterly statement 
filing with the department differs from the annual or quarterly statement filing 
with the NAIC or the insurer's state of domicile and reports any individual 
treatment of assets, liabilities, operations, or capital and surplus accounts 
granted by an insurer's state of domicile or any other state insurance 
regulatory department) , to be filed on or before March 1, May 15, August 15, 
and November 15, 1994; 
   
  (K) Supplemental Investment Income Exhibit (shows percent of net investment 
income by type of investment, as an attachment to page 6 of the annual statement 
as required by paragraph (1)(A) of this subsection), to be filed on or before 
March 1, 1994; and 
   
  (L) Policy Count Exhibit (shows number of insurance policies written or 
certificates issued and in force on December 31, 1993), to be filed on or before 
March 1, 1994. 
     
  (3)  Reports and diskettes to be filed only with the NAIC: 
 
  (A) Officers and Directors Information (association edition) (required of 
companies upon their initial filing with the NAIC and to report any changes in 
previously filed information), to be filed on or before March 1, 1994; 
   
  (B) Credit Insurance Experience Exhibit (association edition) (required of 
companies writing credit accident and/or health business), 9-inch x 14-inch 
size, to be filed on or before May 1, 1994; 
   
  (C) Machine-readable diskettes containing computerized annual statement data, 
to be filed on or before March 1, 1994; and 
   
  (D) Machine-readable diskettes containing computerized quarterly statement 
data, to be filed on or before May 15, August 15, and November 15, 1994. 
       
  (e) Requirements for fraternal benefit societies. Each fraternal benefit 
society shall complete and file the following blanks, forms, and diskettes for 
the 1993 calendar year and the first three quarters of the 1994 calendar year. 
Except as otherwise provided by this section, the forms, reports, and diskettes 
identified in paragraphs (1)(A)-(1)(D); (2)(A)-(2)(C); and (3)(A) and (3)(B) of 
this subsection shall be completed in accordance with the current NAIC 
Accounting Practices and Procedures Manual for Life, Accident and Health 
Insurance Companies, and the current NAIC Annual Statement Instructions, 
Fraternal including Management's Discussion and Analysis to be filed by April 1, 
1994, with the NAIC and the department. The diskettes identified in paragraph 
(3)(B) of this subsection shall be completed in accordance with the current NAIC 
Annual Statement Diskette Filing Specifications-Fraternal. Since Texas fraternal 
benefit societies have historically not been required to establish a Mandatory 
Securities Valuation Reserve (MSVR), they are not required at the present time 
to establish an Asset Valuation Reserve (AVR) or Interest Maintenance Reserve 
(IMR) unless the company is licensed in a state that requires an AVR or IMR, in 
which case the reserve must be calculated in accordance with the instructions 
established by the NAIC. Goodwill shall not be allowed as an admitted asset of 
an insurer or an insurer's insurance subsidiaries on any filing with the 
department or the NAIC by Texas domestic insurers or on any filing with the 
department by insurers domiciled outside the State of Texas. In the event of a 
conflict between the Insurance Code, any currently existing department rule, 
form or instruction, or any specific requirement of this subsection and the NAIC 
manuals listed in this subsection, then and in that event, the Insurance Code or 
the department's promulgated rule, form or instruction, or the specific 
requirement of this subsection shall take precedence and in all respects 
control. It is the express intent of this subsection that it shall not repeal or 
otherwise modify or amend any department rule or the Insurance Code. 
 
  (1) Reports to be filed with the department and the NAIC: 
 
  (A) Annual Statement (association edition, Form 4), either the 12-inch x 19-
inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or 
before March 1, 1994; 
   
  (B) Annual Statement of the Separate Accounts (association edition, Form 1-S) 
(required of companies maintaining separate accounts) either the 12-inch x 19-
inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or 
before March 1, 1994; 
   
  (C) Long-Term Care Insurance Exhibit (association edition) (required of 
companies writing long-term care business), either the 12-inch x 19-inch size, 
11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before March 
1, 1994, in addition to the Long-Term Care Experience Reporting Form included in 
the annual statement required in paragraph (1)(A) of this subsection; and 
   
  (D) Interest Sensitive Life Insurance Products Report (association edition) 
(required of companies writing interest sensitive products), either the 12-inch 
x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on 
or before April 1, 1994. 
     
  (2) Reports to be filed only with the department: 
 
  (A) Schedule DM (association edition) (shows statement value and fair market 
value of all bonds and preferred stock owned), either the 12-inch x 19-inch 
size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before 
March 1, 1994; 
   
  (B) Accident and Health Policy Experience Exhibit, (association edition) 
(required of companies writing accident and/or health business), either the 12-
inch x 19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be 
filed on or before June 30, 1994; 
   
  (C)  Fraternal Quarterly Statement (association edition), either the 12-inch x 
19-inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on 
or before May 15, August 15, and November 15, 1994; 
   
  (D) Texas Overhead Assessment Form (required of Texas domestic companies 
only), to be filed on or before March 1, 1994; 
   
  (E) Analysis of Surplus, for fraternal benefit societies, to be filed on or 
before March 1, 1994; and 
   
  (F) Fraternal Benefit Societies-Supplement to Valuation Report, to be filed on 
or before June 30, 1994. 
   
  (G) TX Disclosure Form (reports whether the annual or quarterly statement 
filing with the department differs from the annual or quarterly statement filing 
with the NAIC or the insurer's state of domicile and reports any individual 
treatment of assets, liabilities, operations, or capital and surplus accounts 
granted by an insurer's state of domicile or any other state insurance 
regulatory department), to be filed on or before March 1, May 15, August 15, and 
November 15, 1994; 
   
  (H) Supplemental Investment Income Exhibit (shows percent of net investment 
income by type of investment, as an attachment to page 9 of the annual statement 
as required by paragraph (1) (A) of this subsection), to be filed on or before 
March 1, 1994; and 
   
  (I)  Policy Count Exhibit (shows number of insurance policies written and 
certificates issued and in force on December 31, 1993), to be filed on or before 
March 1, 1994. 
     
  (3) Reports and diskettes to be filed only with the NAIC: 
 
  (A) Officers and Directors Information (association edition) (required of 
companies upon their initial filing with the NAIC and to report any changes in 
previously filed information), to be filed on or before March 1, 1994; and 
   
  (B) Machine-readable diskettes containing computerized annual statement data, 
to be filed on or before March 1, 1994. 
       
  (f) Requirements for title insurers. Each title insurance company shall 
complete and file the following blanks and forms for the 1993 calendar year and 
the first three quarters of the 1994 calendar year. Except as otherwise provided 
by this section, the reports and forms identified in paragraphs (1); (2)(A) and 
(B); and (3) of this subsection shall be completed in accordance with the Title 
Insurance Accounting Principles Supplement section of the current NAIC 
Accounting Practices and Procedures Manual for Fire and Casualty Insurance 
Companies, and the current NAIC Annual Statement Instructions, Title, including 
Management's Discussion and Analysis to be filed by April 1, 1994 with the NAIC 
and the department. Goodwill shall not be allowed as an admitted asset of an 
insurer or an insurer's insurance subsidiary on any filing with the department 
and the NAIC by Texas domestic insurers or on any filing with the department by 
insurers domiciled outside the State of Texas. In the event of a conflict 
between the Insurance Code, any currently existing department rule, form or 
instruction, or any specific requirement of this subsection and the NAIC manuals 
listed in this subsection, then and in that event, the Insurance Code, the 
department's promulgated rule, form or instruction, or the specific requirement 
of this subsection shall take precedence and in all respects control. It is the 
express intent of this subsection that it shall not repeal or otherwise modify 
or amend any department rule or the Insurance Code. 
 
  (1) Reports to be filed with the department and the NAIC: Annual Statement 
(association edition, Form 9), either the 12-inch x 19-inch size, 11-inch x 17-
inch size, or 9-inch x 14-inch size, to be filed on or before March 1, 1994. 
   
  (2) Reports to be filed only with the department: 
 
  (A) Schedule DM (association edition) (shows statement value and fair market 
value of all bonds and preferred stock owned), either the 12-inch x 19-inch 
size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or before 
each March 1, 1994; 
   
  (B) Title Quarterly Statement (association edition), either the 12-inch x 19-
inch size, 11-inch x 17-inch size, or 9-inch x 14-inch size, to be filed on or 
before May 15, August 15, and November 15, 1994; 
   
  (C) Texas Overhead Assessment Form (required of Texas domestic companies 
only), to be filed on or before March 1, 1994; and 
   
  (D) Analysis of Surplus, for title insurers, to be filed on or before March 1, 
1994. 
   
  (E) TX Disclosure Form (reports whether the annual or quarterly statement 
filing with the department differs from the annual or quarterly statement filing 
with the NAIC or the insurer's state of domicile and reports any individual 
treatment of assets, liabilities, operations, or capital and surplus accounts 
granted by an insurer's state of domicile or any other state insurance 
regulatory department), to be filed on or before March 1, May 15, August 15, and 
November 15, 1994; 
   
  (F) Supplemental Investment Income Exhibit (shows percent of net investment 
income by type of investment, as an attachment to page 5 of the annual statement 
as required in paragraph (1) (A) of this subsection), to be filed on or before 
March 1, 1994; and 
   
  (G)  Policy Count Exhibit and Special Instructions to Title Insurers (shows 
number of insurance policies written during the preceding five (5) calendars 
years), to be filed on or before March 1, 1994. 
     
  (3) Reports to be filed only with the NAIC: Officers and Directors Information 
(association edition) (required of companies upon their initial filing with the 
NAIC and to report any changes in previously filed information), to be filed on 
or before March 1, 1994. 
     
  (g) Requirements for health maintenance organizations. Each health maintenance 
organization shall complete and file the following blanks and forms for the 1993 
calendar year and the first three quarters of the 1994 calendar year with the 
department only. Except as otherwise provided by this section, the forms or 
reports identified in paragraphs (1) and (2) of this subsection shall be 
completed in accordance with the current NAIC Accounting Practices and 
Procedures Manual for Health Maintenance Organizations, and the current NAIC 
Annual Statements Instructions, Health Maintenance Organizations, including 
Management's Discussion and Analysis to be filed by April 1, 1994 with the NAIC 
and the department. Goodwill shall not be allowed as an admitted asset of an 
insurer or an insurer's insurance subsidiaries on any filing with the department 
and the NAIC by Texas domestic insurers and any filing with the department by 
insurers domiciled outside the State of Texas. In the event of a conflict 
between the Insurance Code, any currently existing department rule, form or 
instruction, or any specific requirement of this subsection and the NAIC manuals 
listed in this subsection, then and in that event, the Insurance Code, the 
department's promulgated rule, form or instruction, or the specific requirement 
of this subsection shall take precedence and in all respects control. It is the 
express intent of this subsection that it shall not repeal or otherwise modify 
or amend any department rule or the Insurance Code. 
 
  (1) Annual Statement (association edition, HMO), 8 1/2-inch x 14-inch size, to 
be filed on or before March 1, 1994; 
   
  (2) HMO Quarterly Statement (association edition), 8 1/2-inch x 14-inch size, 
to be filed on or before May 15, August 15 and November 15, 1994; 
   
  (3) HMO Supplement, 8 1/2-inch x 14-inch size, to be filed on or before March 
1, 1994; 
   
  (4)  Texas Overhead Assessment Form (required of Texas domestic companies 
only), to be filed on or before March 1, 1994; and 
   
  (5) Exhibit Z, 8 1/2-inch x 14-inch size, to be filed on or before May 15, 
August 15, and November 15, 1994; 
   
  (6) TX Disclosure Form (reports whether the annual or quarterly statement 
filing with the department differs from the annual or quarterly statement filing 
with the insurer's state of domicile and reports any individual treatment of 
assets, liabilities, operations, or capital and surplus accounts granted by an 
insurer's state of domicile or any other state insurance regulatory department), 
to be filed on or before March 1, May 15, August 15, and November 15, 1994; 
   
  (7) Policy Count Exhibit (shows number of insurance policies written and 
certificates issued and in force as of December 31, 1993), to be filed on or 
before March 1, 1994. 
     
  (h)  Requirements for farm mutual insurers not subject to the provisions of 
subsection (d) of this section. Each farm mutual insurance company shall file 
the following completed blanks and forms for the 1993 calendar year with the 
department only: 
 
  (1) Annual Statement (Texas edition, tan), 8 1/2-inch x 14-inch size, to be 
filed on or before March 1, 1994; 
   
  (2) Texas Overhead Assessment Form, to be filed on or before March 1, 1994; 
and 
   
  (3)  Policy Count Exhibit (shows number of insurance policies written and 
certificates issued and in force December 31, 1993), to be filed on or before 
March 1, 1994. 
     
  (i) Requirements for mutual assessment companies, mutual aid and mutual burial 
associations, and exempt companies. Each statewide mutual assessment company, 
local mutual aid association, local mutual burial association, and exempt 
company shall file the following completed blanks and forms for the 1993 
calendar year with the department only: 
 
  (1) Annual Statement (Texas edition, orange), 8 1/2-inch x 14-inch size, to be 
filed on or before April 1, 1994, provided, however, exempt companies are not 
required to complete lines 22, 23, 24, 25, and 26 on page 3, the special 
instructions at the bottom of page 3, and pages 4, 5, 6, 7, and 19. All other 
pages are required; 
   
  (2) Texas Overhead Assessment Form, to be filed on or before April 1, 1994; 
   
  (3) Release of Contribution Form, to be filed on or before April 1, 1994; 
   
  (4) 3-1/2% Chamberlain Reserve Table (Reserve Valuation), to be filed on or 
before April 1, 1994; 
   
  (5) Reserve Summary (1956 Chamberlain Table 3-1/2%), to be filed on or before 
April 1, 1994; 
   
  (6)  Inventory of Insurance in Force by Age of Issue or Reserving Year, to be 
filed on or before April 1, 1994; 
   
  (7) Summary of Inventory of Insurance In Force by Age and Calculation of Net 
Premiums, to be filed on or before April 1, 1994; and 
   
  (8) Policy Count Exhibit (shows number of insurance policies written and 
certificates issued and in force December 31, 1993), to be filed on or before 
April 1, 1994. 
     
  (j) Requirements for nonprofit legal service corporations. Each nonprofit 
legal service corporation shall file the following completed blanks and forms 
for the 1993 calendar year with the department only; 
 
  (1)  Annual Statement (Texas edition, green), 8 1/2-inch x 14-inch size, to be 
filed on or before March 1, 1994; and 
   
  (2) Texas Overhead Assessment Form, to be filed on or before March 1, 1994; 
and 
   
  (3) Policy Count Exhibit (shows number of insurance policies written and 
certificates issued and in force December 31, 1993), to be filed on or before 
March 1, 1994. 
     
  (k) Requirements for Mexican casualty companies. Each Mexican casualty company 
shall complete and file the following blanks and forms for the 1993 calendar 
year with the department only. The form identified in paragraph (1) of this 
subsection shall be completed in accordance with the current NAIC Accounting 
Practices and Procedures Manual for Fire and Casualty Insurance Companies, and 
the current NAIC Annual Statement Instructions, Property and Casualty, except as 
provided by this section. An actuarial opinion is not required. All submissions 
shall be printed or typed in English and all monetary values shall be clearly 
designated in U. S. dollars. In the event of a conflict between the Insurance 
Code, any currently existing department rule, form or instruction, or any 
specific requirement of this subsection and the NAIC manuals listed in this 
subsection, then and in that event, the Insurance Code, the department's 
promulgated rule, form or instruction, or the specific requirement of this 
subsection shall take precedence and in all respects control. It is the express 
intent of this subsection that it shall not repeal or otherwise modify or amend 
any department rule or the Insurance Code. 
 
  (1) Annual Statement (association edition, Form 2), 12-inch x 19-inch size, 
provided, however, only pages 1-4, 14, 18, and 97 are required to be completed, 
to be filed on or before March 1, 1994; 
   
  (2) A copy of the balance sheet and the statement of profit and loss from the 
Mexican financial statement (printed or typed in English), to be filed on or 
before March 1, 1994; 
   
  (3) A copy of the official documents issued by the COMISION NACIONAL DE 
SEGUROS Y FIANZAS approving the current year's annual statement, to be filed on 
or before June 30, 1994; 
   
  (4) A copy of the current license to operate in the Republic of Mexico, to be 
filed on or before March 1, 1994; and 
   
  (5) Policy Count Exhibit (shows number of insurance policies written and 
certificates issued and in force December 31, 1993), to be filed on or before 
March 1, 1994. 
     
  (l) Other financial reports. Nothing in this section prohibits the department 
from requiring any insurer or other regulated entity from filing other financial 
reports with the department. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 14, 1994. 
 TRD-9436152 
  Linda K. von Quintus-Dorn 
 Chief Clerk 
 Texas Department of Insurance 
    Effective date: March 7, 1994 
 Proposal publication date: December 3, 1993 
 For further information, please call: (512) 463-6327 
         
                   
  
 Part III. Texas Certified Self-Insurer Guaranty Association 
  Chapter 181. By-laws 
  
  28 TAC sec.181.1 
 
  The Texas Certified Self-Insurer Guaranty Association adopts new sec.181.1, 
with changes to the proposed text as published in the September 28, 1993, issue 
of the Texas Register (18 TexReg 6622). 
 This rule is required by the Texas Labor Code, sec.407.123 which authorizes the 
board of directors to adopt rules necessary to operate the association. 
 This rule describes the membership of the Association, the duties of the 
members, and the relationship of the members of the Association to the Board of 
Directors of the Association. The Texas Workers' Compensation Act, Texas Labor 
Code, sec.407.122 establishes that four of the six Board of Director positions 
are not chosen by the Association membership but are appointed pursuant to the 
statute. In addition, this rule will provide direction to the members of the 
Association regarding collection of fees and assessments which the statute 
mandates as well as any maintenance fees which the Association members pay. The 
Association is composed of private entities certified as self-insurers. The 
Association has chosen to follow the Administrative Procedure Act procedures in 
proposing and adopting rules governing the internal operations of the 
Association and describing the effects of the Association activities on the 
public. 
 Changes to the text of this rule are found in: (a) where the parenthetical word 
"(members)" was inserted to simplify references to certified self-insurers in 
the rest of the rule; in (b)(1) the last sentence was changed so it starts with 
the word "each" to avoid the potential belief that only one of the two 
association members serving on the board of directors has to be an employee of a 
member of the association; in (b)(2) the word "concurring" was inserted to make 
it clear that four directors are required to concur before a motion can be 
adopted or rejected; in (b)(2) the last two sentences were deleted and new text 
added to make it clear that a motion to approve an applicant for self-insurance 
which does not receive four concurring votes will not be treated as approval of 
the application by the Board; in (b)(3) a new sentence was added to establish 
who will preside at a meeting if the chair is not available, the new sentence 
provides that the vice-chair will preside in the absence of the chair; in (b) a 
new paragraph (7) was added to require a director not to vote on any matter 
which creates an ethical conflict; in (b) a new paragraph (8) was added to 
establish that directors are reimbursed for expenses related to serving as a 
director but not otherwise compensated; in (c) the word "director" was 
substituted for "board members"; in (c)(3) the word "director" was substituted 
for "member of the board," a phrase was added to describe the action to be taken 
if the presidency becomes vacant, and to define when a vacancy occurs; in (d) 
the phrase "against each member" was added to make it clear that the assessment 
will be individual, a phrase was added to make it clear that payments will 
include payments made pursuant to the Texas Workers' Compensation Act, and a 
sentence was added making it clear that the fund will retain any earned income; 
in (d)(1) text was deleted that duplicated the definition found in (d); in 
(d)(2) the word "initial" was deleted because the process applies to more than 
the initial funds, the word "previous" was deleted because it was less specific 
than necessary, and a phrase was added to clarify that the five year period 
extends backwards for five years from the date of assessment; in (d)(3) a phrase 
was added to make it clear that the fund has to be reimbursed before making the 
determination that there are excess funds and returning those excess funds to 
the members; in (d)(4) changes were made to make it clear that the association 
may sue to collect assessments; in (e) changes were made to use commonly applied 
terms to describe how interest will be calculated, to describe the association's 
authority to sue for unpaid assessments and to empower the association to 
recommend revocation of the certificate of self-insurance for continued failure 
to pay assessments; in (f)(2) text was added to make it clear that the 
administrative fee will be assessed against the members, to delete most of the 
text of the subsection, to add text specifying when the fee can be assessed and 
to detail the uses the fee can be put to, including paying the salaries of 
staff; in (h), (1), and (2) text was added to broaden the indemnification and 
insurance provisions to cover anyone performing services for the association and 
to make it clear that the indemnification and insurance is in addition to any 
other right of the person; in (i) text was added to make it clear that rules are 
adopted contingent upon ratification of the members and what happens if the 
members fail to ratify, in (i)(1) text was deleted which limited the rule 
ratification to the first meeting after adoption; in (i)(2) text was added to 
make it clear that any form of delivery which results in a return receipt will 
be acceptable, to make it clear that the deemer clause only applies in the 
absence of a return receipt, and increasing the time for the deemer clause from 
three to five days, deleting (i)(3) because it is duplicative of text in the 
body of (i); in (k) text was added to make it clear that the association records 
are open to members and that the books and records of the association will be 
subject to an annual audit by an independent auditor; and in (l) text was moved 
around to make the application of the Open Meetings Act a flexible provision 
subject to change based on the outcome of a request for an Attorney General 
opinion. 
 Comments were received from Thiokol Corporation, Weyerhauser, Dayton Hudson 
Corporation, Jacobs Engineering Group Inc., Watkins Motor Lines, Inc., and 
interested individuals supporting changes to sec.181.1. Summaries of those 
comments and the board's responses follow: 
 Quorum should be a majority of the association. 
 The board agrees. The bylaws currently identify a majority of those present in 
person or by proxy as a quorum. 
 The rule should require the member to be present to vote at the annual meeting 
and not allow voting by proxy. 
 The board disagrees. While members are encouraged to expend funds and time to 
attend the annual meeting, they will be able to keep abreast of current events 
without attending an annual meeting and should not be prohibited from exercising 
their right to help control their association just because they do not attend 
the meeting. 
 Rules should be ratified by a majority of a quorum. 
 The board disagrees. A quorum only occurs at meetings of the association. To 
require ratification by a quorum would only allow ratification at a meeting of 
the association and would eliminate the option of allowing a vote by mail 
process which the board believes will result in a lower overall cost and more 
participation by the members. The reference in subsection (i)(1) to ratification 
"at its first meeting after adoption by the board." will be changed to delete 
the reference to "at its first meeting." 
 There should be a limit to the number of terms or of consecutive terms that a 
member of the association can serve on the board of directors. 
 The board disagrees. Appointment to a position on the board of directors is 
subject to election. The democratic process provides an adequate means for the 
membership to control the board appointments. If an elected board member fails 
to satisfactorily represent the position of the membership, the membership can 
elect a different member. 
 There should be a maximum on the amount that can be levied on any one company 
to establish or replenish the trust fund. 
 The board disagrees. The Act specifies how assessments are to be levied against 
association members. The Act does not establish a maximum on the amount that can 
be assessed against a member. Instead, the amount assessed against a member is 
made in proportion to the ratio of the member's income benefits paid to the 
total amount of income benefits paid by all unimpaired members and the amount to 
be raised through the assessment. The board cannot establish an absolute maximum 
without contravening the Act. Since the amount assessed against each member is 
based on that member's income benefit payments, it will reflect the 
effectiveness of the company's safety and return to work programs, both of which 
the Act encourages. 
 The rule should require the association to purchase liability insurance for 
directors and employees. 
 The board disagrees. The rule requires the association to indemnify directors 
or employees for expenses and payment of losses which result from holding the 
position. The insurance is optional and covers those circumstances for which the 
association would not directly indemnify. 
 The books and records of the association should be audited by an independent 
auditor. 
 The board agrees. The Act sets up a board of directors which includes four 
directors who are involved in the regulation of insurance and workers' 
compensation and are not members of the association. All business of the 
association is conducted by this board of directors. The presence of non-member 
directors helps to assure that there is independent review of all actions and 
expenditures of the association. This independent review reduces the need for 
the scrutiny and expense of a full-time auditor. However, requiring an annual 
independent audit will assure that the financial records of the association meet 
all appropriate record keeping requirements. A new sentence will be added to 
subsection (k) to specify that the financial records of the association shall be 
audited annually by an independent auditor. 
 Subsection (b)(1) should say "any director" instead of "a director" since the 
phrase "a director" could be taken to mean that only one of the directors 
representing association members has to be a current employee of a member. 
 The board agrees that this could be confusing and will change subsection (b) 
(1) to read: "Each director representing members of the association must be a 
current employee of a member of the association." 
 Subsection (b)(2) does not make it clear that failing to take action on a 
motion is not a "response" to the commission. 
 The board agrees. Commission sec.114.7 sets out a presumption of approval if 
the board does not respond to the director of the Division of Self-Insurance 
Regulation request for input on an application for self-insurance. When the 
board reaches an impasse on the motion to approve an application, the board 
should notify the director of the Division of Self-Insurance Regulation that the 
board has reached a deadlock and that should be treated as a disapproval of the 
application. The last two sentences of subsection (b)(2) will be deleted and the 
following added: A motion to recommend an application for certification that 
fails to receive the concurring vote of four board members constitutes 
disapproval of the application. Within 40 days of receiving an application for 
self-insurance, the Board shall advise the Director of the Division of Self-
Insurance Regulation of the status of the application. This constitutes a 
response for purposes of Commission sec.114.7 of this title (relating to 
Certification Process) and shall not be deemed approval of the application by 
the Board. 
 The rule should be consistent in referring to the members elected by the 
Association as either "Directors" or "Board members." 
 The board agrees. For consistency, the rule will refer to "director" rather 
than "members of the board." Specifically, subsection (c); (1); and (3) will be 
changed to reflect "director" wherever "members of the board" is used. 
 The rule should be changed to address what will happen if the vacancy, 
described in subsection (c)(3), is the president of the association. 
 The board agrees. Subsection (c)(3) will be changed from "...the president 
shall appoint a committee..." to read "...the president, or in the event of a 
vacancy in the office of the president, the vice-president, shall appoint..." 
 In subsection (d)(2), the term "previous" should be clarified so the public 
will know what period is actually covered. 
 The board agrees and notes that the word "initial," as used in sec.181.1(d) (2) 
should be deleted. By deleting the word "previous" and inserting the phrase 
"immediately preceding the date of assessment" after "five years," the meaning 
becomes clear. 
 The rule should make it clear that the trust fund is repaid before any money is 
returned to the members who paid an assessment for an impaired employer. 
 The board agrees. Subsection (d)(3) will be changed to read "When all 
liabilities of an impaired self-insurer have been paid, and the trust fund has 
been reimbursed, any excess funds shall be..." 
 In subsection (d)(4) the term "collect" needs to be clear. Does this imply a 
right to sue or are there other methods of collection? 
 The board agrees. An additional sentence shall be added which states "The board 
may use any appropriate means for collection of the assessment up to and 
including filing suit against the impaired member." 
 In subsection (i)(2) there are provisions for deeming whether notice was given. 
Since certified mail has a return receipt, the date of notice should be the date 
received. 
 The board agrees in part. The comment does point out a limitation with the 
current text, since the current text does not provide for the fairly common use 
of private delivery services. A return receipt can be requested with certified 
mail and with private delivery services, and subsection (i)(2) will be changed 
by deleting "certified mail" and adding "the United States Postal Service or 
private delivery service, return receipt requested" after "delivered by" in the 
first sentence. The association still needs to establish a presumption date in 
the event that the delivery is refused. To make it clear that the first proof 
will be a return receipt and the second level will be the presumption, the text: 
"In the absence of a return receipt" will be inserted at the beginning of the 
third sentence. 
 Subsection (i)(2) should be changed to allow five days and also to specify 
first class mail. 
 The board agrees with the additional time but disagrees with use of first class 
mail. The word "three" will be replaced with "five." In response to other public 
comment, the method of mail delivery has been adjusted to allow delivery by 
private delivery services so the reference to first class mail would be 
inconsistent. 
 Subsection (a) should include a parenthetical reference to "members" to make it 
clear that using the word members in the text of the rule refers to certified 
self-insurers. 
 The board agrees. Adding the word "members" after the word "self-insurer" and 
before the phrase "that hold a certificate" makes it clear that members will 
only be certified self-insurers. 
 Subsection (b)(5) should allow the board to pay salaries based on market 
conditions and not require the salaries to be "commensurate with the salaries 
paid by state agencies." 
 The board disagrees. Setting salaries based on comparable state salaries 
provides an effective means of assuring that the board does not create 
unreasonably high or low salary levels. 
 Subsection (c)(3) insert "self-insurer" between the words "three" and 
"members." 
 The board disagrees. Changes made to subsection (a) in response to public 
comments has already made it very clear that only certified self-insurers can be 
members. 
 Subsection (d) should make it clear that assessments will be made "against each 
member," that the payments will be based on payments "by each member," and 
should include a sentence making it clear that the trust fund will retain all 
income earned by the trust fund. 
 The board agrees in part. The phrase "against each member" will be added to the 
first line after the word "assessments." A new sentence will be added to the end 
of the paragraph stating: "All earned income of the trust fund is retained by 
the trust fund." However, the definition of "payments" has to incorporate the 
concept of payments by the entire group and payments by a carrier on behalf of 
the member, and it would not be clear if we added the suggested phrase "by each 
member." In reviewing this comment, it was noted that "payment" was defined in 
the body of section (d) and again in subsection (d)(1) so the definition in 
subsection (d)(1) was deleted. 
 There should be a provision that allows a minimum assessment to deal with the 
employer who had really good years and paid no income benefits. 
 The board disagrees. The Act establishes the method for setting the assessment 
and the Act does not provide for a minimum. Whether addressing the assessment to 
initially fund the trust fund or the assessment to pay for impaired certified 
self-insurers, the incentive should always be to improve the safety of the work-
place. Avoiding assessments by maintaining exceptional safety programs appears 
to be a very good incentive. 
 Subsection (h) should include association officers as well as others appointed 
to provide various services. It should also broaden the indemnification to cover 
any loss resulting from serving the association. And, subsection (h)(2) should 
be changed to make it clear in plain English that the indemnification provided 
by this section should be in addition to any other rights. 
 The board agrees. Throughout this subsection, where reference is made to the 
director, the following phrase will be inserted: "director, officer, appointee, 
committee member, person serving in any appointed or elected capacity, or 
employee." Where this subsection refers to "and the payment of damages," it will 
be changed to "or other loss." Finally, the phrase "cumulative of" in (h)(2) 
will be changed to "in addition to." 
 Subsection (e) should be changed to provide for a monthly interest rate and to 
establish that the interest will be paid on the unpaid balance. 
 The board agrees. The last sentence of subsection (e) will be deleted beginning 
with "18%" and the deleted text will be replaced with the phrase "1. 5% per 
month on any unpaid balance." 
 Subsection (f)(2) should be changed to make it clear that the assessment would 
be against members and to limit the opportunity to assess only to that point at 
which the fund income is not sufficient to pay for salaries and the 
administration of the fund and association. 
 The board agrees. The words "against members" will be inserted after "Fee" in 
the first line. Everything that follows will be deleted and replaced with the 
following statement: "only when trust fund income is insufficient to pay for the 
costs of administering the trust fund, operations of the association, 
administering the claims of impaired self-insurers, and salaries of association 
staff." 
 Subsection (g) should make the association a co-beneficiary of each self-
insurer's security deposit and require audits of the workers' compensation 
files/records of the self-insurer with recommendations to the commission up to 
and including recommendations for decertification. 
 The board disagrees. The Act, sec.407.062 specifically requires the security 
deposit to name the director of the commission's self-insurance regulation 
division as payee and does not appear to allow a co-payee. The Act also 
provides, in sec.407.081 and sec.407.082, that the certified self-insurer is 
required to report the information regarding their workers' compensation 
files/records to the commission. The proposed change to the rule would duplicate 
the regulatory role established by the Act for the division of self-insurance 
regulation; duplication is not cost-effective nor appropriate. 
 Subsection (i) should refer to ratification by the members of the association. 
 The board disagrees. Subsection (i)(1) makes it clear that the ratification 
requires a majority vote of the members, although subsection (i)(1) will be 
changed to remove the phrase "at its first meeting" so that ratification could 
occur by mail-in vote or at a meeting other than the first meeting after the 
board adopts the rules. 
 Subsection (k) should be changed to provide minutes only of business meetings 
and it should specify that there will be a record of the member's votes on 
ballot issues. It should also make it clear that any member at any time has the 
right to audit or review the books and records of the association. 
 The board disagrees with all but the last recommendation. While the association 
agrees that the records of the association should be open to review of any 
member and will add a sentence to subsection (k) stating: "All records of the 
association will be open to review by any member of the association at a time 
and place convenient to the member and the association staff," the other 
recommendations place too many limitations on the record keeping requirements of 
the board. As written, this section sets pretty broad record-keeping 
requirements and the board believes the requirement should be broader rather 
than more specific and limited. 
 Subsection (c)(2) should provide that each member will have voting power 
proportional to the benefits they pay. 
 The board disagrees. Not only would the system necessary to determine the 
voting power, prior to any vote, be administratively cumbersome and a burden to 
the association, it would also have the effect of allowing the employer with 
less effective safety and return to work programs to have more voting power than 
the employer with effective safety and return to work programs. 
 In subsection (d) it should require assessment to be based on incurred rather 
than paid benefits. 
 The board disagrees. The Act, sec.407.126 requires that the assessment be 
"based on the total amount of income benefits payments" and the rule has to 
comply with the statutory authority. 
 The term "income benefits," as used in subsection (d), should be defined. 
 The board disagrees. The Act clearly defines income benefits in sec.401. 
011(25). Furthermore, this rule will be changed to include a new subsection (i) 
(4) stating: "All rules of the association incorporate the Texas Workers' 
Compensation Act as written, and as it may from time to time be amended. To the 
extent that this rule conflicts with the Act, the Act shall govern." 
 The quorum requirement in subsection (b)(2) should be modified to require that 
at least one of the four board members has to be a member of the association. 
 The board disagrees. There are no proxy votes for board members, and the board 
must take action on applications for a certificate of self-insurance within a 
specific time or the commission, pursuant to commission sec.114.7, will presume 
the board approves the application. Furthermore, there may be times when neither 
association representative to the board will be able to attend the meetings of 
the board. 
 The rule should make it clear that the association has input on the issue of 
who becomes a certified self-insurer. 
 The board disagrees. The Act and commission rules establish that the 
association has in-put into the process for approving applications to self-
insure through the vote by the board of directors of the association and this 
rule does not need to restate that mechanism. 
 This rule needs to establish a process so that the employers who obtain the 
first certificates to self-insure do not contribute more to the fund than the 
employers certified later. 
 The board disagrees. The fund is established by the Act,  sec.407.126, which 
requires that the fund reach a minimum of one million dollars within five years. 
The Act also requires that the fund be generated from a fee assessed against 
each member. Since the board cannot predict, with any reasonable accuracy, the 
number of employers that will seek and obtain certificates of self-insurance, 
the board, to comply with the Act, has to calculate the fee based on the number 
of members in the association at the time of assessment. The association cannot 
wait before making the first assessment because the fund is an integral part of 
the program which was included in the Act to assure that employees injured on 
the job, whose employer becomes impaired, would have a certain source for 
payment of benefits. 
 The rule should make it clear either that the meetings of the association are 
subject to the Texas Open Meetings Act or that they are not. 
 The board disagrees. At this time, the board has chosen to comply with the Open 
Meetings Act. However, it is not clear if the Open Meetings Act applies to the 
board and/or association. Currently, there is a similar issue pending before the 
Texas Attorney General regarding other guaranty associations in Texas and the 
rule needs to be flexible enough to incorporate that ruling when it is issued. 
For this reason, the board has revised subsection (l) to make the application of 
the Open Meetings Act subject to determination that it is applicable. 
 The new rule is adopted as provided for in the Texas Labor Code, sec.407.123, 
which authorizes the Board of Directors to adopt rules necessary to operate the 
Association. 
 The only code affected by this rule is the Texas Labor Code, sec.sec.407. 121-
407.133. 
 
 
  sec.181.1. By-Laws of the Texas Certified Self-Insurer Guaranty Association. 
 
  (a) The membership of the Texas Certified Self-Insurer Guaranty Association 
(the Association) shall consist of all certified self-insurers (members) that 
hold a certificate of authority to self-insure issued by the Texas Workers' 
Compensation Commission (the Commission). Only certified self-insurers may be 
members of the Association. 
 
  (1)  Membership shall begin on the date the certificate of authority to self-
insure takes effect and each member shall designate a representative to receive 
notices from the Association. 
   
  (2) The members of the Association shall meet annually at a place and time 
designated by the Board of Directors in November of each year. At the Annual 
Meeting, the members shall elect Directors and Officers and conduct any other 
necessary and proper business. 
   
  (3) The Association shall have a President and Vice-President and may have 
other Officers as necessary to conduct the business of the Association. 
   
  (4) Special meetings of the Association may be called by the President of the 
Association on 30 days' notice to the members of the Association. 
   
  (5) A majority of the members present either in person or by proxy at any 
meeting of the Association shall constitute a quorum. 
     
  (b) The business of the Association shall be managed by the Board of Directors 
(the Board). 
 
  (1) The Board shall consist of two members of the Association, one member of 
the Commission representing wage earners, one member of the Commission 
representing employers, the Executive Director of the Commission, and the Public 
Insurance Counsel. The Director of the Commission's Division of Self-Insurance 
Regulation shall serve as a non-voting member. The members of the Board shall 
hereinafter be referred to as Directors. Each Director representing members of 
the Association must be a current employee of a member of the Association. 
   
  (2) A quorum of the Board is four voting members. No business may be conducted 
by the Board unless a quorum of its members is present at the meeting. An action 
by the Board requires the concurring vote of four members. A motion to recommend 
an application for certification that fails to receive the concurring vote of 
four board members constitutes disapproval of the application. Within 40 days of 
receiving an application for self-insurance, the Board shall advise the Director 
of the Division of Self-Insurance Regulation of the status of the application. 
This constitutes a response for purposes of Commission sec.114.7 (relating to 
Certification Process) and shall not be deemed approval of the application by 
the Board. 
   
  (3) The Board shall elect a chair and vice-chair annually. The chair and vice-
chair must be voting members of the Board of Directors. The Board may also elect 
other officers. The Chair shall preside at all meetings of the Board. In the 
absence of the chair, the vice-chair shall preside at the meeting. 
   
  (4) The Board shall meet at least once during each calendar quarter. 
Additional meetings may be held as necessary to conduct the business of the 
Association. Meetings shall be held at the call of the Chair or upon written 
request to the Chair by any four members of the Board. 
   
  (5) The Board shall have the authority to hire an Executive Director to 
conduct the day-to-day operations of the Association. The Board may also 
authorize the hiring of additional staff as necessary. The Executive Director 
serves at the pleasure of the Board. The employment or removal of an Executive 
Director requires the affirmative vote of at least four members of the Board. 
The salaries of the Executive Director and Staff shall be set by the Board and 
be commensurate with the salaries paid by state agencies. 
   
  (6) The Board shall have the authority to contract with others for any 
services necessary for the operation of the Association, including 
administration of the Trust Fund and administration of claims of impaired self-
insurers. 
   
  (7) A director shall abstain from voting on any matter in which he or she has, 
directly or indirectly, a personal, private or business interest. As used in 
this rule, personal, private or business interest includes being an officer, 
director, or affiliate of a person or entity subject to an action by the board, 
or directly or indirectly having a material financial interest in a matter 
before the board. 
   
  (8) The directors shall serve without compensation. But, the directors shall 
be reimbursed for any reasonable expenses incurred in carrying out the duties of 
the board. 
     
  (c) At the Annual Meeting, the members of the Association shall elect 
directors to represent the Association and shall elect officers of the 
Association. The terms for the elected directors will begin on January 1 of each 
year with the first terms beginning on January 1, 1994. At the first election of 
directors, one director shall be elected from the members of the Association to 
serve for a term of one year and one director shall be elected to serve for a 
term of two years. Thereafter, the Association shall annually elect one director 
for a term of two years. Directors may serve consecutive terms on the Board. 
 
  (1) Prior to the Annual Meeting, the President shall appoint from the 
membership of the Association a Nominations Committee of at least three members, 
which shall be responsible for nominating Officers and Directors to be elected 
by the Association. Nominations may also be made by members of the Association 
at the Annual Meeting. Any nominee must be a current employee of a member of the 
Association. The self-insurer directors shall appoint the first nominating 
committee. 
   
  (2) Each member of the Association may cast one vote for each Director or 
officer to be elected by the Association. 
   
  (3) If a vacancy occurs in any office elected by the Association, including a 
director representing the members of the Association (by death, resignation, or 
otherwise), the President, or in the event of a vacancy in the office of the 
president, the vice president, shall appoint a committee of at least three 
members which shall select a successor to fill the vacancy for the unexpired 
term. A vacancy occurs when a term expires, a director resigns, dies, is 
adjudicated mentally incompetent, or is convicted of a felony. If a director is 
convicted of a felony, and cannot be removed by statute, the director is 
prohibited from voting on any matter before the board. 
     
  (d) The Board shall levy assessments against each member necessary to create 
and maintain the Texas Certified Self-Insurer Guaranty Trust Fund (the Trust 
Fund). Assessments shall be levied in amounts that will provide at least $1 
million, but not more than $2 million, by January 1, 1998. For purposes of 
assessments, "payments" means all income benefits paid in the preceding reported 
calendar year pursuant to obligations as a certified self-insurer, or in the 
case of a first year member of the Association, made by the member's carrier on 
behalf of the member, pursuant to the Texas Workers' Compensation Act. All 
earned income of the trust fund is retained by the trust fund. 
 
  (1) The amount assessed against each individual member shall be based on the 
ratio of the payments made by the member to the total payments made by or on 
behalf of all certified self-insurers. 
   
  (2) If the security deposit of an impaired certified self-insurer (or former 
self-insurer) is not adequate to cover its self-insured liabilities for workers' 
compensation benefits, the funds required to pay the additional benefits shall 
be paid from the Trust Fund and reimbursed to the Trust Fund through assessment. 
The Board shall assess those currently unimpaired self-insurers and former self-
insurers that were members of the Association for any time during the five years 
immediately preceding the date of assessment (the "members subject to 
assessment"), in accordance with this section. The Board shall provide for the 
calculation of the estimated total amount necessary to pay all benefits and to 
reimburse the Trust Fund (the "estimated total assessment"). The estimated total 
assessment shall be assessed by the Board. The amount assessed against each of 
the members subject to assessment shall be based on the ratio of payments by a 
member to total payments. 
   
  (3) When all liabilities of an impaired certified self-insurer (or former 
self-insurer) have been paid, and the trust fund has been reimbursed, excess 
funds shall be returned to the members or former members of the Association on 
the same prorata basis on which they were assessed. 
   
  (4) The Board of Directors shall have the authority to collect from the 
impaired certified self-insurer (or former self-insurer) any amount that has 
been assessed against other self-insurers to pay the liabilities of the impaired 
certified self-insurer (or former self-insurer). The board may use any 
appropriate means for collection of the assessment up to and including filing 
suit against the impaired member or former member. Continued failure to pay the 
assessment may result in a recommendation to the commission that the member's 
certificate of self-insurance be revoked. 
     
  (e) The Association shall mail notice of any assessment to the designated 
representative of each member or former member of the Association. Each member 
or former member shall pay all assessments not later than 30 days after it is 
notified of the assessment. Late payments shall accrue interest at the rate of 
1.5% per month on any unpaid balance. The board may use any appropriate means 
for collection of the assessment up to and including filing suit against the 
member or former member and continued failure to pay the assessment may result 
in a recommendation to the commission that the member's certificate of self-
insurance be revoked. 
   
  (f) The Board of Directors shall approve a budget for the operating expenses 
for the succeeding year not later than December 31 of each year. 
 
  (1) Income earned from the investment of the Trust Fund shall be used for 
expenses of administration of the Trust Fund in accordance with sec.113.111(a), 
Texas Property Code. 
   
  (2)  The Board may assess an Administrative Fee against members only when 
trust fund income is insufficient to pay the costs of administering the trust 
fund, operations of the association, and administering the claims of impaired 
members or former members. 
     
  (g) If the Commission declares that a certified self-insurer (or former self-
insurer) is impaired and determines that the payment of benefits and claims 
administration shall be made through the association, the Board shall provide 
for the administration and payment of claims on behalf of the impaired certified 
self-insurer (or former self-insurer) in accordance with the Texas Workers' 
Compensation Act. The Board shall provide for the creation of a separate account 
for the administration of each impaired certified self-insurer (or former self-
insurer) and for the payment from the Trust Fund to the separate account if the 
Director of Self-Insurance advises the Board that additional funds are needed to 
supplement the security deposit. 
   
  (h) The Association shall indemnify, or pay in advance, any present or former 
Director, officer, appointee, committee member, person serving in any appointed 
or elected capacity, or employee for expenses, or other loss in connection with 
any proceeding in which such a person is made a party because of the position 
they hold for the association to the full extent of the law. 
 
  (1) The Association may purchase insurance for any present or former Director, 
officer, appointee, committee member, person serving in any appointed or elected 
capacity, or employee of the Association against any liability arising out of 
the position they hold for the association, whether or not the Association would 
have the power to indemnify him or her against liability. 
   
  (2)  The protection and indemnification provided in this Article shall be in 
addition to any other right to which a Director, officer, appointee, committee 
member, person serving in any appointed or elected capacity, or employee may be 
entitled. 
     
  (i) The Board shall adopt and amend rules, including these by-laws, in 
accordance with the Administrative Procedure Act, Government Code, Chapter 2001. 
After proposing, publishing, and receiving comments on rules, the Board shall 
meet and vote on a final version. Adoption of rules must be made contingent on 
approval by the Commission and ratification by the association. The rules so 
adopted shall be sent to the Commission. Upon approval by the Commission, and 
ratification by the Association, the rules shall be filed with the Texas 
Register and shall become effective in accord with the provisions of the 
Administrative Procedures Act. Failure to obtain ratification by the members 
will result in the board reconsidering the rule and voting on a revised version. 
 
  (1) Rules shall be ratified by a majority vote of the members of the 
Association after adoption by the Board. The President may choose to conduct the 
ratification vote by mail-in ballot. Notice of rule-making actions by the Board 
must be given in the manner provided by this rule. 
   
  (2) Any notice required or allowed by this rule shall be in writing and 
delivered by the United States Postal Service or private delivery service, 
return receipt requested. In the case of notice to a member of the Association, 
notice shall be made to the designated representative of the member. In the 
absence of a return receipt, notice shall be deemed to be given five days after 
deposit with the United States Postal Service or private delivery service, 
postage prepaid. Failure of a member to actually receive a notice shall not 
invalidate any action that may have been taken by the Association or the Board. 
     
  (j) The fiscal year of the Association shall be January 1 through December 31 
of each year. 
   
  (k)  The Board shall keep books and records of accounts, minutes of meetings 
of Directors, and a record of members. All records of the association will be 
open to review by any member at a time and place convenient to the member and 
association staff. The financial records of the association shall be audited 
annually by an independent auditor. 
   
  (l) All meetings of the Association and the Board of Directors shall be 
conducted in accordance with the most current edition of Roberts Rules of Order, 
except when in conflict with the Texas Workers' Compensation Act, these Rules, 
and any other applicable statute including the Texas Open Meetings Act. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on February 11, 1994. 
 TRD-9436092 
  Judy Roach 
 Executive Director 
 Texas Certified Self-Insurer Guaranty Association 
    Effective date: March 4, 1994 
 Proposal publication date: September 28, 1993 
 For further information, please call: (512) 322-2514