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 16. ECONOMIC REGULATION Part I. Railroad Commission of Texas Chapter 3. Oil and Gas Division Conservation Rules and Regulations 16 TAC sec.sec.3.101-3.105 The Railroad Commission of Texas adopts the repeal of sec. sec.3.101-3.105, concerning Natural Gas Policy Act (NGPA) state jurisdictional agency procedures and state certification for severance tax exemption for gas produced from high cost wells, without changes to the proposed text as published in the July 29, 1994, issue of the Texas Register (19 TexReg 5817). The applicable provisions of the NGPA expired on December 31, 1993. Therefore, sec. sec.3.101-3.104 are no longer viable. Section 3.105 is the state severance tax exemption rule which is keyed, in part, to certain provisions of the NGPA. The application time period for the state severance tax law, however, does not expire until September 1, 1996. Statewide Rule 105 has been revised to reflect that the NGPA provisions are no longer in effect. The revision of sec.3.105 is the subject of the new rule sec.3.101. No comments were received regarding adoption of the repeals. The repeals are adopted under Texas Natural Resources Code, sec.81.052, which authorizes the commission to adopt all necessary rules for governing and regulating persons and their operations under the jurisdiction of the commission. 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 authority. Issued in Austin, Texas, on January 11, 1995. TRD-9500428 Mary Ross McDonald Assistant Director, Legal Division, Gas Utilities/LP Gas Railroad Commission of Texas Effective date: January 11, 1995 Proposal publication date: July 29, 1994 For further information, please call: (512) 463-7008 TITLE 22. EXAMINING BOARDS Part XVII. Texas State Board of Plumbing Examiners Chapter 365. Licensing License Categories; Description; Scope of Work Permitted 22 TAC sec.365.14 The Texas State Board of Plumbing Examiners adopts an amendment to sec.365. 14, concerning approval criteria and other performance criteria for providers of continuing education, with changes to the proposed text as published in the October 21, 1994, issue of the Texas Register (19 TexReg 8343). The rule is justified because the public health, safety, and welfare will be enhanced by ensuring each person has access to clean water because of plumbing installed and maintained by well-trained and competent plumbers who have undergone quality continuing education programs. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 6243-101, which provide the Texas State Board of Plumbing Examiners with the authority to prescribe, amend, and enforce all rules necessary to carry out the Plumbing License Law. sec.365.14. Continuing Education Programs. (a) Any provider wishing to offer continuing education in plumbing must make application at least 60 days prior to the March board meeting each year. The 60- day deadline will become effective September 1, 1995. The board shall approve no more than four providers annually. All providers will submit to the board a list of instructors and instructors' credentials for board approval. The board will approve a course and textbook each year as well as a course outline and establish the required minimum hours. The providers shall meet the certification requirements of the Central Education Agency or be exempted from the Central Education Agency certification requirements under Chapter 32, sec.32.12(a)(5), Texas Education Code (Texas Proprietary School Act) or be approved by the United States Department of Labor-Bureau of Apprenticeship Training Schools and/or Programs. (b) Instructors must be licensees of the board, successfully complete the instructor certification workshop each year conducted by the board, and be employed by a provider approved by the board. (c) Instructors will be required to successfully complete a board approved program of 160 clock hours which meets the following generic criteria. The board will allow credit for approved courses. (1) 40 hours to provide the instructor with the basic educational techniques and instructional strategies necessary to plan and conduct effective training programs. (2) 40 hours to provide the instructor with the basic techniques and strategies necessary to analyze, select, develop, and organize instructional material for effective training programs. (3) 40 hours to provide the instructor with the basic principles, techniques, theories, and strategies to establish and maintain effective relationships with students, co-workers, and other personnel in the classroom, industry, and community. 13> (4) 40 hours to provide the instructor with the basic principles, techniques, theories, and strategies to communicate effectively with the use of instructional media. (5) To maintain his/her status as an approved instructor of continuing education, the instructor shall undergo one of the aforementioned training programs every 12 months such that the entire training (160 hours) is complete within four years. (d) Continuing education providers shall be reviewed annually by the board to ensure that classes have been provided equitably across the state of Texas. (e) The board shall review continuing education providers for quality in instruction. The board shall also respond to complaints regarding approved providers. (f) Each approved provider must notify the board 30 days before conducting classes; the notice shall contain the time(s) and place(s) where the classes will occur. (g) Each approved provider will perform self-monitoring and reporting as required by the board. 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 January 11, 1995. TRD-9500465 Gilbert Kissling Administrator Texas State Board of Plumbing Examiners Effective date: February 2, 1995 Proposal publication date: October 21, 1994 For further information, please call: (512) 458-2145 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 5. Property and Casualty Insurance Subchapter A. Automobile Insurance Miscellaneous Interpretations 28 TAC 5.206 The Texas Department of Insurance adopts new sec.5.206, which designates geographic areas as underserved for automobile liability insurance for purposes of determining credits to offset an insurer's quota of assignments through the Texas Automobile Insurance Plan Association, with nonsubstantive changes to subsections (g) and (h) of the proposed text as published in the November 15, 1994, issue of the Texas Register (19 TexReg 8934). A public hearing on the proposed section was held on December 16, 1994. The new section is necessary to designate certain ZIP Codes in Texas as underserved for the purpose of establishing Texas Automobile Insurance Plan Association (TAIPA) credits and incentives for the voluntary sale of automobile insurance in those geographic areas. The Commissioner is required by Insurance Code, Article 21.81 sec.3(e) to designate underserved areas for the purpose of providing credits against TAIPA assignments. Department staff has worked with insurers, agents and other interested parties over the past year on the issue of TAIPA credits generally and specifically on the issue of crafting a program of credits for underserved markets. The issues have been thoroughly discussed and the adopted rule, in conjunction with the recently approved TAIPA Plan of Operation and the Texas Private Passenger Automobile Statistical Plan, offers an equitable and efficient method of developing the incentive program targeting underserved geographic areas which was mandated by the Legislature in Article 21.81, sec.3(e). There are four pieces of the program to establish credits against TAIPA quota for voluntary writings in underserved areas: 1. The TAIPA Plan of Operation establishes the method of calculating basic quota and credit-adjusted quotas. For example, the Plan specifies the number of credits earned by an insurer for an average vehicle on policy in force for each Category of ZIP Code. An eligible average vehicle in a Category 4 ZIP code, as designated in this rule, earns four credits. The Plan also specifies which writings are eligible for the purpose of calculating basic quota and which writings earn credits. Vehicles written at rates at or below the TAIPA rate established by the Commissioner are eligible for both basic quota and credits. Vehicles written at rates above the TAIPA rate, as well as county mutual writings, are not eligible. The premise is that consumers do not benefit from a voluntary writing at rates above the TAIPA rate, so credits should not be earned for writing at non-standard rates. 2. The Texas Private Passenger Automobile Statistical Plan specifies the reporting of data necessary for the calculation of quotas and credits. The quota calculation procedures in the TAIPA Plan of Operation and the formula for identifying underserved areas in the proposed rule specifically reference data elements in the Statistical Plan. 3. The NAIC/Texas Special Call provided experience by ZIP Code from the top 40 insurer groups writing private passenger for calendar year 1992. These data serve as the initial basis for determining and designating underserved areas. 4. Adopted Rule 28 TAC sec.5.206 represents the Commissioner's actual designation of certain ZIP Codes as underserved by categories to match those categories in the TAIPA Plan of Operation. The Department adopts 28 TAC sec.5.206 under the authority and requirements of Insurance Code Article 21.81 Section 3(e) which directs the TAIPA to develop an incentive program to target underserved geographic areas, "which shall be determined and designed by the commissioner by rule. In determining which areas will be designated as underserved, the commissioner shall consider the availability of insurance, the number of uninsured drivers, the number of drivers insured through the association and any other relevant factors." The adopted rules implements this statutory requirement. Department staff initiated discussions on the credit program with the TAIPA Governing Committee in April of 1994 and continued those discussions with the TAIPA Quota Subcommittee. The Governing Committee and Quota Subcommittee are comprised of insurers, agents and public members. In addition, all meetings were open to the public and were attended by other interested parties, including other insurers and the Office of Public Insurance Counsel. In early August of 1994, Department staff sent a letter to Mike Gerik, chair of the Quota Subcommittee, outlining a proposal for the quota program including recommendations on the rule for designating underserved areas. In that letter, items 5 through 8 refer to the designation of underserved ZIP Codes by the Commissioner: "5. The Commissioner shall adopt the designation of all ZIP Codes as Category 0 through Category 4 by rule. The category number refers to the number of credits awarded an insurer for each eligible vehicle written in the ZIP Code. No credits are awarded for eligible vehicles written in a Category 0 ZIP Code while four credits are awarded for an eligible vehicle written in a Category 4 ZIP Code. All changes to ZIP Code designations shall be adopted by rule. 6. After initial determination of the ZIP Code designations, a ZIP Code's designation may not be decreased (to a lower credit) for three years. The Commissioner may decrease a ZIP Code's designation with a minimum of one-year notice. The end of the one-year notice period and the three-year designation period may coincide. The Commissioner may increase a ZIP Code's designation (to a higher credit) at any time by rule. 7. The Commissioner shall designate each ZIP Code in the state as one of five designations-Category 0 through Category 4. The Commissioner shall base his or her decisions on the following factors: availability, the number of uninsured drivers, the number of drivers insured through TAIPA and any other relevant factors. The primary formula for analyzing availability shall be the number of vehicles written voluntarily at rates at or below the rate for assigned risk automobile insurance set by the Commissioner as a percentage of some measure of total vehicles, total vehicles insured or total drivers per ZIP Code. The denominator in this percentage may be: the sum of all vehicles written by ZIP Code, measured as average vehicles on policies in force from the Quarterly Market Report, including all voluntary and involuntary writings. This measure has the benefit of relying solely on insurance data from the same source of data from which all quota calculations are made. The disadvantage is the potential absence of uninsured drivers from the calculation; the number of registered private passenger vehicles by ZIP Code, as reported by the Division of Vehicle Titles and Registration of the Texas Department of Transportation. This measure has the benefits of being relatively timely and potentially identifying some uninsured drivers. The disadvantages of this measure is that registration addresses may differ from insurance addresses and that uninsured vehicles may not be registered; the number of licensed drivers by ZIP Code, as reported by the Texas Department of Public Safety. This measure has the potential benefit of capturing uninsured drivers. However, since licenses are valid for four years, this measure has the disadvantage of potentially misreporting significant numbers of drivers; the number of driving age population by ZIP Code, as reported in the 1990 U. S. Census. This measure has the potential benefit of capturing uninsured drivers, but the disadvantage of being a static number. Over time, the Census data will become more and more inaccurate. The Commissioner shall publish as a rule for adoption the proposals for ZIP Code designations. Interested parties may also petition the Commissioner for changes in ZIP Code designations. The Commissioner shall make available the statistical and economic analysis supporting the proposal for ZIP Code designations. Where a ZIP Code's designation is not based solely upon a statistical formula, the Commissioner shall provide a rationale for departing from the formulaic result. (Note: Some interested parties have expressed a preference for the Commissioner to promulgate formulas for designating underserved ZIP Codes in a rule and then the underserved areas will be automatically identified. The problem with this approach is that a ZIP Code could move from one Category to another as a result of new writings by insurers seeking the credits. Thus, the automatic formula could violate the requirement that a ZIP Code's designation be lowered for three years after initial designation. In addition, while it is likely that underserved ZIP Codes in a region are contiguous, it may be that the Commissioner wants to create a contiguous block of designated underserved ZIP Codes to facilitate writings by insurers. Such an approach may also be inconsistent with the strictly formulaic approach to designating underserved areas.) 8. The Commissioner shall direct the designated statistical agent for Private Passenger and Commercial Automobile experience to make available any and all relevant data to the TAIPA Manager and/or any data processing organization designated by the TAIPA Governing Committee for the purposes of calculating quotas. The TAIPA Manager shall report quarterly to all subscribers on credits for underserved areas and quota calculation." Regarding the approach to developing a formula for determining underserved areas, the Quota Subcommittee endorsed the use of insurance data. All the factors listed in 21.81 Section 3 (e) were considered, including the number of uninsured drivers. After further discussion, the proposal was refined on August 31, 1994. On November 3, 1994, Department staff distributed to the TAIPA Governing Committee and other interested parties the proposed designation of underserved ZIP Codes with a discussion of that selection process. Staff also distributed a complete list of all ZIP Codes with the relevant data and calculation for each ZIP Code, including the list of non-standard, standard and preferred companies. These documents were included in the record at the December 16, 1994 hearing and are incorporated by reference. Finally, the proposal to designate certain ZIP Codes as underserved was crafted as a rule and published in the Texas Register for public comment. In response to comments, the Department has made two non-substantive revisions to the rule as published. In subsection (g), the word "principally" was removed. In subsection (h), the requirement that the Department publish a listing of the number of average vehicles on policies in force by company by Zip Code was changed to provide that the Department shall publish the listing upon request from any member of the public. The TAIPA Plan of Operation establishes the method of calculating basic quota and credit-adjusted quotas. The Plan specifies the number of credits earned by an insurer for an average vehicle on policies in force for each Category of ZIP Code. The Texas Automobile Insurance Plan Association Plan of Operation defines an average vehicle on policies in force. Subsection (a) of the adopted rule provides that all ZIP Codes listed in that subsection are designated as Class 4 Zip Codes and an insurer will earn four credits for each eligible average vehicle on policies in force in a Category 4 ZIP code. Subsection (b) of the adopted rule provides that all ZIP Codes listed in that subsection are designated as Class 3 Zip Codes and an insurer will earn three credits for each eligible average vehicle on policies in force in a Category 3 ZIP code. Subsection (c) of the adopted rule provides that all ZIP Codes listed in that subsection are designated as Class 2 Zip Codes and an insurer will earn two credits for each eligible average vehicle on policies in force in a Category 2 ZIP code. Subsection (d) of the adopted rule provides that all ZIP Codes listed in that subsection are designated as Class 1 Zip Codes and an insurer will earn one credit for each eligible average vehicle on policies in force in a Category 1 ZIP code. Subsection (e) of the adopted rule provides that all ZIP Codes not listed in subsections (a) through (d) are designated as Class 0 Zip Codes and an insurer will not earn credits for eligible average vehicle on policies in force in a Category 0 ZIP code. Subsection (f) of the adopted rule provides that a ZIP Code may not be decreased (to a lower numbered class) for three years. Subsection (g) of the adopted rule provides guidance for the future designation of zip codes. Subsection (h) of the adopted rule provides that, upon request, the Department will provide a listing of average vehicles on policies in force by company by ZIP Code. Written comments against various portions of the section were received from State Farm Insurance Companies, the National Association of Independent Insurers, and USAA. A representative of TAIPA testified orally at the hearing in favor of the adoption. COMMENT: A commenter argued that the rule does not properly implement the statutory mandate of Article 21.81 Section 3(e) because the statute directs the Commissioner to consider the availability of insurance, the number of uninsured drivers, the number of drivers insured through the association, and any other relevant factor. The commenter contends that nothing in the proposed regulation considers the availability of insurance or the number of uninsured drivers. The commenter further comments that the formula for determining an underserved market is not disclosed in the rule nor made a part of the regulation and questions what other factors the Commissioner is entitled to use under the proposed regulation and how much weight should be given the formula if other factors are used. DEPARTMENT RESPONSE: The Department disagrees. As described above, the proposed designation considers all the factors specified in Article 21.81 3(e), including the number of uninsured drivers. The rule does contain a formula and does contain direction about the weight given to that formula. The formula directly measures the availability of insurance and includes the number of drivers insured through the plan. Since Article 21.81 3(e) specifically requires the consideration of certain factors, there is no reason to repeat those factors in this rule. The absence of such mention in the rule does not excuse the Commissioner from considering these factors. The Department anticipates that as various data sources become available to help identify underserved areas, these other data shall be considered by the Commissioner. The Department discussed the issue of including a specific formula in the regulation, but found that such an action would be inappropriate for the reasons initially mentioned in staff's letter to Mike Gerik. Total reliance on a formula would eliminate the discretion necessary and required by statute for the Commissioner to consider other factors. Further, total reliance on a formula may result in a conflict between the results of the formula and the requirement that a designation not be lowered for three years. This three-year requirement is an essential part of the credit program and should not be violated. COMMENT: A commenter argued that there is no definition of "non-standard" and that AIP rates are competitive with voluntary market rates and, therefore, county mutual writings are erroneously considered in determining underserved areas. DEPARTMENT'S RESPONSE: In conjunction with the TAIPA Plan of Operation, the definition of non-standard for the purpose of calculating credits for underserved areas and for future designations of underserved areas is business written at rates above the TAIPA rate approved by the Commissioner. Staff's November 3, 1994 memo included the list of those companies identified as non- standard for the calculations. The non-standard companies include county mutuals and those rate-regulated companies with approval for rates above the top of the flex band. For future calculations, non-standard is defined through the definition of average eligible vehicles in the Texas Automobile Insurance Plan Association Plan of Operation. The share of TAIP plus non-standard to total exposures is an excellent measure of insurance availability. When someone goes to buy insurance, that person would naturally seek the greatest choice of coverage at the lowest price. No one would voluntarily choose higher-priced county mutuals or the TAIP if they could obtain coverage in the standard or preferred market. The TAIP and county mutuals are understood to be the markets for high-risk drivers. Since we have no reason to expect that high-risk drivers are concentrated in any particular ZIP Code, those ZIP Codes with greater share of TAIP plus non-standard clearly represent areas with less availability in standard and preferred carriers. Thus, the formula explicitly considers availability of insurance and, in conjunction with the TAIPA plan of operation and the Statistical Plan, includes a definition of non- standard. The Department disagrees that TAIPA is competitive with standard market carriers. TAIPA offers only minimum limits liability, does not offer physical damage coverage and assigns consumers to insurers at random. In comparison, a consumer going to a standard or preferred insurer has a choice of liability limits, physical damage coverage and insurer. COMMENT: A commenter claims that TDI should not publish quarterly a listing of the number of average vehicles on policies in force by company by ZIP Code in this state because they feel the data is proprietary and would give its competitors a competitive advantage. At the hearing, however, the commenter testified that the reports described in subsection (h) were not the kind of information that the commenter's company considered to be a trade secret. He did express concern about the regular release of company-specific data asking why the reports need be made public on a regular basis if not requested. DEPARTMENT'S RESPONSE: The Department disagrees that an individual insurer's premium by Zip Code or number of average vehicles on policies in force by Zip Code data would be a trade secret and such data should not be made publicly available. First, the Department disagrees that these data represent a trade secret and would provide competitors with competitive advantage. More current information on a company's marketing and pricing strategy are readily available in the marketplace such that public availability of these data would not reveal any trade secrets or business strategy. Long before these data are available- five months after the end of the reporting quarter-competitors will be aware of other insurers marketing and pricing strategies. Second, even if certain information were a trade secret, a strong public policy purpose justifies the public availability of that information. In the case of the ZIP Code level exposure data, there are at least two compelling public policy reasons to publish these data. First, public availability of these data allow insurers and other interested parties to verify the data and the quota calculation. This is particularly important in light of past credit calculation schemes which resulted in huge shifts of quota from one insurer to another and tremendous fluctuation in these credits from year to year. Second, these data are essential to monitor the availability of automobile insurance and the effectiveness of credit programs and other efforts to increase availability, such as the commitments made by insurers as part of the Houston Redlining Compact. These data are essential for the public to hold both regulators and insurers accountable. Further, in agreeing to the release of their company specific ZIP Code data from the NAIC Call, State Farm acknowledged the important public policy issue being addressed with the public release of company-specific ZIP Code data. In response to this comment, however, the Department has changed the wording of subsection (h) to exclude the word "quarterly" and to include the words "Upon request" at the beginning of the sentence. In that way, the Department will only be required to publish the report if requested by any member of the public. COMMENT: A commenter argued that there is an inconsistency between the requirement that a ZIP Code's designation not be lowered for three years and the ability of the Commissioner to raise a designation at any time. DEPARTMENT'S RESPONSE: The Department disagrees and believes there is no inconsistency. First, the commenter is incorrect that the actual requirement is four years. The rule states three years with one year notice. The one-year notice can be the third year of designation. The three-year requirement is an integral part of the overall credit program. In order to provide insurers with the proper incentive, the insurer must know that the incentive will be available for a certain period of time. Without the three-year requirement, if insurers wrote the business in underserved areas, that area would immediately become well-served and lose the designation. Instead of a long-term solution, we would either see a roller coaster of activity and non-activity or simply a lack of interest by insurers because of the uncertainty involved. On the other hand, if an area remains underserved with a relatively low designation, it makes sense for the Commissioner to increase that designation to create the necessary incentive to encourage voluntary writings in the underserved area. The ability to increase a designation by rule at any time does not conflict with the intent or the effect of the three-year rule for lowering a designation. COMMENT: A commenter suggests that proposed regulation be re-examined by the Commissioner to be appointed in place of Commissioner Hunter and not be adopted at the public hearing scheduled for December 16, 1994. DEPARTMENT'S RESPONSE: The Department disagrees. The existence of an incentive for insurers to start new writings in underserved areas will not exist until this rule is adopted. Writings in January 1995 will be included in the quota calculations incorporating credits for underserved areas. Delay in adopting these rules will mean delay in an important incentive for insurers to voluntarily write insurance in underserved areas. A TAIPA representative offered testimony at the hearing about the importance of immediate adoption of the rule. COMMENT: Commenters argued that the rule will have a negative impact upon the Texas insurance market and the Department lacks statutory authority to adopt this regulation. DEPARTMENT'S RESPONSE: The Department disagrees. Article 21.81 not only allows but requires the Commissioner to promulgate and adopt a rule designating underserved areas. The representative for TAIPA agreed at the hearing that the Department not only has the authority to promulgate this rule, it has a duty to promulgate the rule. In addition, a program of incentives is an integral part of an overall program to address market failures which cause a lack of insurance availability in parts of the state. Adoption of the rule will have a positive impact on the Texas automobile insurance market. It will provide the needed incentives for companies to write in areas that are currently underserved. Availability problems represent failures of the market. The market mechanism is not operating effectively to provide insureds with insurance products at affordable prices. The incentives provided in these rules will change the market calculation for insurers that will encourage them to provide insurance in those areas of the state that are currently underserved and thereby improve the market. COMMENT: A commenter argued that certain ZIP Codes proposed for designation as underserved contain a small number of exposures. The commenter contended that ZIP Codes with small numbers of exposures should not be designated as underserved and that TDI should perform statistical tests to determine the credibility of the data in each ZIP Code. DEPARTMENT'S RESPONSE: The Department disagrees. The measure of insurance availability is the share of TAIP plus non-standard to total exposures. If the ZIP Code has a high percentage but few exposures, it is an underserved ZIP Code, albeit with few exposures. If the concern is that the formula produces a list with too many ZIP Codes, the Department disagrees and notes that a ZIP Code with few exposures can only produce few credits. Finally, the Department believes that an arbitrary cap on designating ZIP Codes because of the number of vehicles has no logical or statistical support. Credibility is a statistical technique used in ratemaking and has no relevance in this issue because the designation of underserved ZIP Codes is not ratemaking. COMMENT: A commenter raised several complaints about the credit program contained in the TAIPA Plan of Operation previously approved by the Commissioner. DEPARTMENT'S RESPONSE: The credit program is not at issue in this rule proceeding. The TAIPA Governing Committee discussed the credits for underserved areas and made their decision in the Plan of Operation. Commissioner Hunter adopted that Plan which finalized the structure of the credit program. The subject of this proposed rule is not the structure of the credit program, but the designation of ZIP Codes as underserved. COMMENT: A commenter argued that the methodology for determining underserved areas is incorrect and a more appropriate measure of availability would be simply the share of TAIP exposures to total exposures. The commenter claims that the legislature was interested in depopulating the TAIPA and not in depopulating non-standard companies. DEPARTMENT'S RESPONSE: The Department disagrees. Article 21.81 3(e) states, "Among other provisions, the plan of operation must contain certain incentive programs to encourage members to write insurance on a voluntary basis and to minimize the use of the association as a means to obtain insurance." (emphasis added). This sets out two purposes: (1) to encourage members to write insurance on a voluntary basis and (2) to minimize the use of the association. Regarding the first purpose, the clear intent is to provide an incentive for association members to write consumers who they are not otherwise willing to insure. County mutual insurers are not members of TAIPA. Therefore, the legislature intended that members of TAIPA-rate-regulated insurers predominantly writing standard and preferred business-write consumers who are currently insured through TAIPA or county mutuals. Those drivers insured through TAIPA and county mutuals have been rejected by the members of TAIPA. Therefore, it is appropriate to include the number of county mutual exposures in the calculation. The second purpose of the incentive program, to depopulate the association, is not affected by the use of county mutual exposures in the calculation. There would be no benefit to consumers if TAIPA were depopulated only by forcing these insureds into higher-priced county mutuals. The only logical and meaningful intent of an incentive for writing in underserved areas is to encourage standard and preferred writers to voluntarily write business that would otherwise end up in TAIPA, non-standard carriers or simply uninsured. The new section is adopted pursuant to Insurance Code, Articles 1.03A and 21.81 sec. 3(e). Article 1.03A authorizes the Commissioner to adopt rules and regulations for the conduct and execution of the duties and functions of the department as authorized by statute. Article 21.81 requires that the Commissioner designate underserved geographic areas by rule. The following Article of the Insurance Code are affected by this rule: Article 21.81. sec.5.206. Designation of Underserved ZIP Codes. (a) FIGURE 1: 28 TAC sec.5.206(a) (b) FIGURE 2: 28 TAC sec.5.206(b) (c) FIGURE 3: 28 TAC sec.5.206(c) (d) FIGURE 4: 28 TAC sec.5.206(d) (e) Class 0. Any ZIP Code not listed in subsections (a) through (d) of this section are designated as a Class 0 ZIP Code. (f) Changes to designations. After initial designation of a ZIP Code, the designation may not be decreased (to a lower numbered class) for three years. Any such decrease in designation shall not be effective until one year after the changed designation is adopted as an amendment to this rule. An increase in the designation of a ZIP Code (to a higher numbered class) may occur at any time by amending this rule. (g) In designating ZIP Codes as Class 0, 1, 2, 3 or 4, the Commissioner shall use the share of average vehicles on policies in force in assigned risk and non- standard markets as a percentage of total average vehicles on polices in force by ZIP Code. (h) Upon request, the Department shall publish a listing of the number of average vehicles on policies in force by company by ZIP Code in this state. This information will enable the Texas Automobile Insurance Plan Association, insurers and the public to make the necessary credit calculations and allow all interested parties to monitor which ZIP Codes may be underserved in the future. 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 authority. Issued in Austin, Texas, on January 13, 1995. TRD-9500627 D. J. Powers General Counsel and Chief Clerk Texas Department of Insurance Effective date: February 3, 1995 Proposal publication date: November 15, 1994 For further information, please call: (512) 463-6327 Subchapter P. Commercial Property Insurance 28 TAC sec.5.12000 The Texas Department of Insurance adopts new sec.5.12000, concerning the conduct of commercial property inspection and rating functions by private entities and the Department's regulatory oversight of these functions, without changes to the proposed text as published in the September 16, 1994, issue of the Texas Register (19 TexReg 7229). The new section provides necessary and appropriate procedures and standards for those private entities that will provide on and after September 1, 1994, commercial property inspection and rating services to the commercial property insurance industry in Texas. These new procedures and standards are needed to assure that the consumers of Texas are adequately and fairly served by these private entities. The newly adopted procedures and standards address the regulatory requirements for the private entities performing commercial property inspections and rating functions; the duties and responsibilities of the Commissioner of Insurance and the Texas Department of Insurance relating to the oversight of these entities in their conduct of the commercial property inspection and rating functions; and the complaint handling procedures relating to these inspection and rating functions. Subsection (a) outlines the purpose and scope of the new section. Subsection (b) defines terms used in the new section. Subsection (c) specifies inspection, reporting, computer access, personnel training, and consumer information requirements for the private entities in their conduct of the commercial property inspections and rating functions. Subsection (d) provides that these private entities are advisory organizations and subject to regulation under Article 5.73 of the Insurance Code and specifies regulatory sanctions for certain violations. Subsection (e) defines the duties and responsibilities of the Department and the Commissioner over the commercial property inspections and rating functions as conducted by private entities. These duties and responsibilities include oversight of the commercial property inspections and rating; review of commercial property rating schedules and/or public fire protection grading or classification schedules used by a private entity to establish base fire rates and/or public fire protection gradings or classifications of communities in Texas prior to the filing of those rating schedules by individual insurers pursuant to the Insurance Code, Article 5.13-2; providing of advice and assistance in the development of commercial property rating schedules, standards of construction, standards of fire protection (public or private), or any other standard relating to the establishment of a base fire rate or a public fire protection grading or classification; continued Departmental inspection and rating of certain residential risks; and dissemination of public information through publications and educational programs. Subsection (f) specifies procedures for handling complaints relating to the commercial property inspections and rating functions performed by private entities. No comments were received regarding adoption of the new section. The new section is adopted pursuant to the Insurance Code, Articles 5.25, 5. 13-2, 5.73, 5.98, 1.02, and 1.03A and the Government Code, sec.sec.2001.004 et seq. It is the Department's interpretation that the language in Article 5.25(b) (Acts 1991, 72nd Legislature, Chapter 242, sec.2.23, effective September 1, 1991) which addresses the Department's conduct of commercial property inspections and prescription of rating schedules does not create a requirement for the Department to perform these functions, and therefore the Department may authorize third-parties to perform these functions. Article 5.13-2 provides for a file and use rate system for insurers writing commercial property insurance in Texas and requires each such insurer to file with the Commissioner all rates, supplementary rating information, and reasonable and pertinent supporting information for risks written in this state. Article 5. 13-2 authorizes the Commissioner to disapprove a rate if the Commissioner determines that the rate filing made under this article does not meet the standards established under the rate standards section of Article 5.13-2. These rate standards include the requirement that rates may not be excessive, inadequate, or unfairly discriminatory. Section 1 of Article 5.73 provides a functional definition of an advisory organization, i.e., that every insurer transacting business in the state may, but is not required to, subscribe to an advisory organization and is permitted to submit to and receive from any advisory organization statistical plans, historical data, prospective loss costs, supplementary rating information, policy forms and endorsements, research and performance of inspections except final rates or recommendations regarding profit or expense provisions, other than loss adjustment expenses. Sections 2 and 3(a) and (b) of Article 5.73 specify certain prohibited activities for insurers and advisory organizations. Section 3(c) of Article 5. 73 provides that if, after a hearing, the Commissioner of Insurance finds that the furnishing of specified services by an advisory organization involves any act or practice which is unfair or unreasonable or otherwise inconsistent with the provisions of Subchapter F, Chapter 5 of the Insurance Code (governing Joint Underwriting and Reinsurance; Advisory Organizations) or with the applicable laws of this state, the Commissioner may issue an order specifying in what respects such act or practice is unfair or unreasonable or otherwise inconsistent with the provisions of law and requiring the discontinuance of such act or practice, and in addition to any other remedies available at law, impose any sanction authorized under Article 1.10 of the Insurance Code. Section 4(b) of Article 5.73 provides that an advisory organization is subject to examination under Article 5.74 of the Insurance Code. Article 5.98 authorizes the Commissioner of Insurance to adopt reasonable rules that are appropriate to accomplish the purposes of Chapter 5 of the Insurance Code (Rating and Policy Forms). Articles 5.73 and 5.98 by their terms delegate the foregoing authority to the State Board of Insurance. However, under Article 1. 02 of the Insurance Code, as amended by the 73rd Texas Legislature in House Bill 1461 (Acts 1993, 73rd Legislature, Chapter 685, sec.1.01, effective September 1, 1993), a reference in the Insurance Code or another insurance law to the State Board of Insurance means the Commissioner of Insurance or the Texas Department of Insurance, as consistent with the respective powers and duties of the Commissioner and the Department under Article 1.02. Section 1. 23(c) of House Bill 1461 provides that on September 1, 1993, the Board shall relinquish authority over all areas of activity of the Texas Department of Insurance except the promulgation and approval of rates and policy forms and endorsements and hearings, proceedings, and rules related to these activities; such authority shall be exercised by the Board until no later than September 1, 1994. Section 1.23(d) of House Bill 1461 provides that on and after the date a Commissioner of Insurance is appointed under subsection (a) of sec.1.23 the Commissioner shall cooperate with the Board to assume the authority granted to the Board under subsection (c) of sec.1.23 and shall adopt rules as necessary to govern those activities. Section 1.23(d) further provides that as soon as possible after the appointment of the Commissioner under sec.1.23(a) but not later than September 1, 1994, the Commissioner shall assume the authority granted to the Board under sec.1.23(c). Pursuant to Board Order No. 60574, November 29, 1993, the State Board of Insurance transferred the authority granted to the Board under sec.1.23(c) of House Bill 1461 to the Commissioner of Insurance, effective December 16, 1993. Article 1.03A, as enacted by the 73rd Texas Legislature in House Bill 1461 (Acts 1993, 73rd Legislature, Chapter 685, sec.1.03, effective September 1, 1993), provides that the Commissioner of Insurance may adopt rules and regulations, which must be for general and uniform application, for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code, sec.sec.2001.004 et seq (Administrative Procedure Act), authorize and require each state agency to adopt rules of practice setting forth the nature and requirement of available procedures and to prescribe the procedures for adoption of rules by a state 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 authority. Issued in Austin, Texas, on January 13, 1995. TRD-9500623 D. J. Powers General Counsel and Chief Clerk Texas Department of Insurance Effective date: February 3, 1995 Proposal publication date: September 16, 1994 For further information, please call: (512) 463-6327 Chapter 7. Corporate and Financial Regulation Subchapter A. Examination and Corporate Custodian and Tax 28 TAC sec.7.64 The Texas Department of Insurance adopts the repeal of sec.7.64, 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 1985, without changes to the proposed text as published in the December 2, 1994, issue of the Texas Register (19 TexReg 9457) The repeal of the section is necessary to eliminate unnecessary provisions and to enable the Texas Department of Insurance simultaneously to adopt new sec.7.64, which replaces the repealed section with new provisions concerning the filing requirements for annual and quarterly statements and other reporting forms for calendar years 1994 and 1995. 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 1985. No comments were received regarding adoption of the repeal. The repeal 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, 21.39, 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 21.39 requires insurers to establish adequate reserves and provides for the adoption of each current formula for establishing reserves applicable to each line of insurance. 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 following are the articles of the Insurance Code that are affected by this section: 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, 21.39, 21.43, 21.54, 22.06, 23.02, 23.26. 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 authority. Issued in Austin, Texas, on January 13, 1995. TRD-9500626 D. J. Powers General Counsel and Chief Clerk Texas Department of Insurance Effective date: February 3, 1995 Proposal publication date: December 2, 1994 For further information, please call: (512) 463-6327 The Texas Department of Insurance adopts new sec.7.64, with changes to the proposed text as published in the December 2, 1994, issue of the Texas Register (19 TexReg 9457). 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 1995, the financial condition and business operations and activities conducted during the 1994 and 1995 calendar years. The adoption of new sec.7.64 is simultaneous with the repeal of existing sec.7.64, concerning the 1985 annual statement filings. The adoption includes a change to subsections (c)(1)(G) and (d)(1)(I) to conform the due date stated in the rule to the due date stated in the Credit Insurance Experience Exhibit form which is adopted by reference in this new section. The due date in the subsections is changed from May 1, 1995 to April 1, 1995. Subsections (c)(2)(B) , (d)(2)(B) and (e)(2)(A) are changed to conform the due date in the Accident and Health Policy Experience Exhibit form which is adopted by reference in this new section. The due date is changed in the subsections from June 30, 1995 to May 1, 1995. Subsection (c)(1)(I) and (J) are changed to conform the due date stated in the rule to the due date stated in the Life, Health and Annuity Guaranty Association Model Act Assessment Base Reconciliation Exhibit and the Adjustments to the Life, Health and Annuity Guaranty Association Model Act Assessment Base Reconciliation Exhibit forms which are adopted by reference in the new section. The due date in the rule is changed from June 30, 1995 to April 1, 1995. 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 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. No comments were received regarding adoption of the new section. The new 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, 21.39, 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 21.39 requires insurers to establish adequate reserves and provides for the adoption of each current formula for establishing reserves applicable to each line of insurance. 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 proposed 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. The following are the articles of the Insurance Code that are affected by this section: 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, 21.39, 21.43, 21.54, 22.06, 23.02, and 23.26. sec.7.64. Requirements for filing the 1994 Annual and 1995 Quarterly Statements, Other Reporting Forms, and Diskettes. (a) Scope. This section provides insurers and other regulated entities with the filing requirements for the 1994 annual statement, 1995 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 1994 annual and 1995 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 Monitoring Activity, 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 1994 calendar year and the first three quarters of the 1995 calendar year. The forms, reports and diskettes identified in paragraphs (1)(A)-(L); (2)(A)-(C); and (3)(A) of this subsection shall be completed in accordance with the current NAIC Annual Statement Instructions, Life, Accident and Health, except as provided by paragraph (4) of this subsection. The diskettes identified in paragraph (3)(B) and (C) shall be completed in accordance with the current NAIC Annual Statement Diskette Filing Specifications-Life/Health, except as provided by paragraph (4) of this subsection. (1) Reports to be filed with the department and the NAIC include the following: (A) Annual Statement (association edition, Form 1 or Form 11 with a blue colored cover), 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, 1995 (stipulated premium insurance companies, April 1, 1995); (B) Annual Statement of the Separate Accounts (association edition, Form 1-S with a green colored cover) (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, 1995 (stipulated premium insurance companies, April 1, 1995); (C) Trusted Surplus Statement (association edition, Life, Accident and Health Supplement) (required of the U.S. branch of an alien insurer), 9 inch x 14 inch size to be filed on or before March 1, May 15, August 15, and November 15, 1995; (D) Management's Discussion and Analysis (a narrative document setting forth information which enables regulators to enhance their understanding of the insurer's financial position, results of operations, changes in capital and surplus accounts and cash flow), to be filed on or before April 1, 1995 (stipulated premium insurance companies, May 1, 1995); (E) 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, 1995 (stipulated premium insurance companies, April 1, 1995), in addition to the Long-Term Care Experience Reporting Form included in the annual statement required by subparagraph (A) of this paragraph; (F) 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, 1995 (stipulated premium insurance companies, April 1, 1995); (G) Credit Insurance Experience Exhibit (association edition) (required of companies writing credit business), 9 inch x 14 inch size, to be filed on or before April 1, 1995; (H) 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, 1995 (stipulated premium insurance companies, May 1, 1995); (I) Life, Health and Annuity Guaranty Association Model Act Assessment Base Reconciliation Exhibit (association edition), 9 inch x 14 inch size, to be filed on or before April 1, 1995; (J) Adjustments to the Life, Health & Annuity Guaranty Association Model Act Assessment Base Reconciliation Exhibit (association edition), 9 inch x 14 inch size, to be filed on or before April 1, 1995; (K) 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, 1995. However, a Texas stipulated premium insurance 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; (L) Certificate of Compliance with All Required Reporting Requirements of the Securities Valuation Office of the NAIC (required of all companies to certify that the requirements of the Securities Valuation Office (SVO) have been met in a timely fashion), to be attached to each annual and quarterly statement required by paragraphs (1)(A) and (K) of this subsection; and (M) Actuarial Opinion (the statement of a qualified actuary, setting forth his or her opinion relating to policy reserves and other actuarial items; required of all companies), to be attached to the annual statement required by paragraph (1)(A) of this subsection. (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, 1995; (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 May 1, 1995; (C) Supplemental Compensation Exhibit (association edition) 9 inch x 14 inch size, to be filed on or before March 1, 1995; (D) Annual Statement (Texas edition, green) (required of companies writing prepaid legal business in 1994), 8 1/2 inch x 14 inch size, to be filed on or before March 1, 1995; (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 1994), to be filed on or before March 1, 1995; (F) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1995 (stipulated premium insurance companies, April 1, 1995); (G) Analysis of Surplus, for life, accident and health insurers, to be filed on or before March 1, 1995 (stipulated premium insurance companies, April 1, 1995); (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, 1995 (stipulated premium companies, April 1, 1995 and, for those stipulated premium companies subject to quarterly reporting in accordance with paragraph (1)(K) of this subsection, May 15, August 15, and November 15, 1995); (I) Supplemental Investment Income Exhibit (shows percent of net investment income by type of investment, as an attachment to page ten of the annual statement as required by paragraph (1)(A) of this subsection), to be filed on or before March 1, 1995 (stipulated premium companies, April 1, 1995); and (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, 1995 (stipulated premium insurance companies, April 1, 1995); (B) machine-readable diskettes containing computerized annual statement data (required of companies filing annual statement Form 1), to be filed on or before March 1, 1995 (stipulated premium insurance companies, April 1, 1995); and (C) 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, 1995. However, a Texas stipulated premium insurance 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. (4) The following provisions shall apply to the filings required in paragraphs (1)-(3) of this subsection. (A) Since Texas domestic companies have historically not been required to establish Asset Valuation Reserve (AVR) or Interest Maintenance Reserve (IMR), 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. (B) In the event of a conflict between the Insurance Code, any currently existing departmental 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. (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 1993 calendar year, and domestic joint underwriting associations shall complete and file the following blanks, forms, and diskettes for the 1994 calendar year and the first three quarters of the 1995 calendar year. The forms, reports, and diskettes identified in paragraphs (1)(A)-(K); (2)(A)-(C); and (3)(A)-(C) of this subsection shall be completed in accordance with the current NAIC Annual Statement Instructions, Property and Casualty, except as provided by paragraph (4) of this section. The diskettes identified in paragraph (3)(B) and (C) of this subsection shall be completed in accordance with the current NAIC Annual Statement Diskette Filing Specifications-Property/Casualty, except as provided by paragraph (4) of this subsection. (1) Reports to be filed with the department and the NAIC: (A) Annual Statement (association edition, Form 2 with a yellow colored cover), 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, 1995; (B) Trusted Surplus Statement (association edition, Property and Casualty Supplement) (required of the U.S. branch of an alien insurer), 9 inch x 14 inch size to be filed on or before March 1, May 15, August 15, and November 15, 1995; (C) Management's Discussion and Analysis (a narrative document setting forth information which enables regulators to enhance their understanding of the insurer's financial position, results of operations, changes in capital and surplus accounts and cash flow), to be filed on or before April 1, 1995; (D) 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, 1995, in addition to the Long-Term Care Experience Reporting Form required by paragraph (1)(E) of this subsection; (E) 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 May 1, 1995; (F) 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, 1995; (G) 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, 1995; (H) 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, 1995; and (I) 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 April 1, 1995; (J) 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, 1995; and (K) Actuarial Opinion (the statement of a qualified actuary, setting forth his or her opinion relating to policy reserves and other actuarial items; required of all companies), to be attached to the annual statement required by paragraph (1)(A) of this subsection. (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, 1995; (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 May 1, 1995; (C) Supplemental Compensation Exhibit (association edition) 9 inch x 14 inch size, to be filed on or before March 1, 1995; (D) Annual Statement (Texas edition, green) (required of companies writing prepaid legal business), 8 1/2 inch x 14 inch size, to be filed on or before March 1, 1995; (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 1994), to be filed on or before March 1, 1995; (F) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1995; (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, 1995; (H) Supplement for County Mutuals (required of Texas domestic county mutual companies, as an attachment to page sixteen of the annual statement as required by paragraph (1)(A) of this subsection), to be filed on or before March 1, 1995; (I) Supplement A for County Mutuals (required of Texas domestic county mutual companies, as an attachment to page eight of the annual statement as required by paragraph (1)(A) of this subsection), to be filed on or before March 1, 1995; (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, 1995; and (K) Supplemental Investment Income Exhibit (shows percent of net investment income by type of investment, as an attachment to page six of the annual statement as required by paragraph (1)(A) of this subsection), to be filed on or before March 1, 1995; and (L) Form ALT/P/WC, Application for Alternative Excess Statutory Over Statement Reserves for Workers' Compensation (required of deductible plan workers' compensation writers if applying for an alternative basis of calculating the excess statutory over statement reserves for workers' compensation business), to be filed on or before January 31, 1995. (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, 1995; (B) machine-readable diskettes containing computerized annual statement data, to be filed on or before March 1, 1995; and (C) machine-readable diskettes containing computerized quarterly statement data, to be filed on or before May 15, August 15, and November 15, 1995. (4) The following provisions shall apply to all filings required by paragraphs (1)-(3) of this subsection. (A) 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. (B) The commissioner shall have the authority to determine the appropriateness of, and may disapprove, anticipated salvage and subrogation. (C) 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 may be exempt from establishing the entire excess of statutory reserves over statement reserves, also known as the Schedule P penalty 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 1992, 1993, and 1994 and whose loss experience prior to 1992 would require the establishment of a Schedule P penalty reserve using a loss ratio greater than 65% may calculate the reserve based on a loss ratio of 65%. The exemption herein described shall only be for the 1994 annual and 1995 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. (D) Insurers meeting certain eligibility criteria and not claiming the exemption provided in paragraph (4)(C) of this subsection may apply for approval of an alternative basis of calculating the Excess of Statutory Over Statement Reserve, also known as the Schedule P penalty reserve, for workers' compensation business. The application for an alternative basis for calculating this reserve applies only to workers' compensation business written pursuant to deductible plans authorized by Texas Insurance Code, Article 5.55C. (i) Eligibility is generally available to insurers that are domiciled or commercially domiciled in Texas and that demonstrate that their standard premium, prior to application of deductible credits, written pursuant to deductible plans was at least 80% of total standard premium for all workers' compensation business for each of the years for which an alternative calculation is requested. (ii) To apply for an alternative basis of calculating the penalty reserve, an eligible insurer must complete Form ALT/P/WC, Application for Alternative Excess of Statutory Over Statement Reserve for Worker's Compensation. Forms may be obtained from the Financial Monitoring Activity of the Department of Insurance, MC 303-1A, P.O. Box 149099, Austin, Texas 78714-9099, (512) 322-5002. Completed applications must be filed with the department on or before January 31, 1995. (iii) The Texas Department of Insurance may grant an exception or alternative to requiring the full Schedule P penalty reserve for workers' compensation business, if, in the department's opinion, such treatment is warranted based on the insurer's application. Insurers that do not obtain the prior written approval of the department for an alternative basis of calculating the Schedule P penalty reserve as provided in the subparagraph shall calculate the penalty reserve in accordance with the current NAIC Annual Statement Instruction, Property and Casualty. (E) In the event of a conflict between the Insurance Code, any currently existing departmental 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. (e) Requirements for fraternal benefit societies. Each fraternal benefit society shall complete and file the following blanks, forms, and diskettes for the 1994 calendar year and the first three quarters of the 1995 calendar year. The forms, reports, and diskettes identified in paragraphs (1) (A)-(H); (2)(A)- (C); and (3)(A) and (B) of this subsection shall be completed in accordance with the current NAIC Annual Statement Instructions, Fraternal, except as provided by paragraph (4) of this subsection. 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, except as provided by paragraph (4) of this subsection. (1) Reports to be filed with the department and the NAIC: (A) Annual Statement (association edition, Form 4 with a brown colored cover), 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, 1995; (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, 1995; (C) Trusted Surplus Statement (association edition, Fraternal Supplement) (required of the U.S. branch of an alien insurer), 9 inch x 14 inch size to be filed on or before March 1, May 15, August 15, and November 15, 1995; (D) Management's Discussion and Analysis (a narrative document setting forth information which enables regulators to enhance their understanding of the insurer's financial position, results of operations, changes in capital and surplus accounts and cash flow), to be filed on or before April 1, 1995; (E) 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, 1995, in addition to the Long-Term Care Experience Reporting Form included in the annual statement required in paragraph (1)(A) of this subsection; and (F) 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, 1995. (G) Certificate of Compliance with All Required Reporting Requirements of the Securities Valuation Office of the NAIC (required of all companies to certify that the requirements of the Securities Valuation Office (SVO) have been met in a timely fashion, to be attached to each annual statement required by subparagraph (1)(A); and (H) Actuarial Opinion (the statement of a qualified actuary, setting forth his or her opinion relating to policy reserves and other actuarial items; to be filed by all companies), to be attached to the annual statement required by paragraph (1)(A) of this subsection. (2) Reports to be filed only with the department: (A) 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 May 1, 1995; (B) Supplemental Compensation Exhibit (association edition) 9 inch x 14 inch size, to be filed on or before March 1, 1995; (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, 1995; (D) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1995; (E) Analysis of Surplus, for fraternal benefit societies, to be filed on or before March 1, 1995; and (F) Fraternal Benefit Societies-Supplement to Valuation Report, to be filed on or before June 30, 1995. (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, 1995; (H) Supplemental Investment Income Exhibit (shows percent of net investment income by type of investment, as an attachment to page nine of the annual statement as required by paragraph (1)(A) of this subsection), to be filed on or before March 1, 1995; and (I) Certificate of Compliance with All Required Reporting Requirements of the Securities Valuation Office of the NAIC (required of all companies to certify that the requirements of the Securities Valuation Office (SVO) have been met in a timely fashion), to be attached to each quarterly statement required by paragraph (2)(C) of this subsection. (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, 1995; and (B) machine-readable diskettes containing computerized annual statement data, to be filed on or before March 1, 1995. (4) The following provisions shall apply to the filings required in paragraphs (1)-(3) of this subsection. (A) Since Texas domestic companies have historically not been required to establish Asset Valuation Reserve (AVR) or Interest Maintenance Reserve (IMR), 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. (B) In the event of a conflict between the Insurance Code, any currently existing departmental 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. (f) Requirements for title insurers. Each title insurance company shall complete and file the following blanks and forms for the 1994 calendar year and the first three quarters of the 1995 calendar year. The reports and forms identified in paragraphs (1)(A) and (B); (2)(A) and (B); and (3) of this subsection shall be completed in accordance with the current NAIC Annual Statement Instructions, Title, except as otherwise provided by this section. In the event of a conflict between the Insurance Code, any currently existing departmental 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: (A) Annual Statement (association edition, Form 9 with a salmon colored cover), 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, 1995. (B) Management's Discussion and Analysis (a narrative document setting forth information which enables regulators to enhance their understanding of the insurer's financial position, results of operations, changes in capital and surplus accounts and cash flow), to be filed on or before April 1, 1995; (2) Reports to be filed only with the department: (A) Supplemental Compensation Exhibit (association edition), 9 inch x 14 inch size, to be filed on or before March 1, 1995; (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, 1995; (C) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1995; and (D) Analysis of Surplus, for title insurers, to be filed on or before March 1, 1995. (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, 1995; (F) Supplemental Investment Income Exhibit (shows percent of net investment income by type of investment, as an attachment to page five of the annual statement as required in paragraph (1)(A) of this subsection), to be filed on or before March 1, 1995; and (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, 1995. (g) Requirements for health maintenance organizations. Each health maintenance organization shall complete and file the following blanks and forms for the 1994 calendar year and the first three quarters of the 1995 calendar year with the department only. The forms or reports identified in paragraphs (1)-(5) of this subsection shall be completed in accordance with the current NAIC Annual Statements Instructions, Health Maintenance Organizations, except as otherwise provided by this section. In the event of a conflict between the Insurance Code, any currently existing departmental 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, 1995; (2) Management's Discussion and Analysis, (a narrative document setting forth information which enables regulators to enhance their understanding of the insurer's financial position, results of operations, changes in capital and surplus accounts and cash flow), to be filed on or before April 1, 1995; (3) Actuarial Opinion (the statement of a qualified actuary, setting forth his or her opinion relating to policy reserves and other actuarial items; to be filed by all health maintenance organizations), to be attached to the annual statement required by paragraph (1)(A) of this subsection; (4) Supplemental Compensation Exhibit (association edition), 9 inch x 14 inch size, to be filed on or before March 1, 1995; (5) 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, 1995; (6) HMO Supplement, 8 1/2 inch x 14 inch size, to be filed on or before March 1, 1995; (7) Texas Overhead Assessment Form (required of Texas domestic companies only), to be filed on or before March 1, 1995; and (8) Exhibit Z, 8 1/2 inch x 14 inch size, to be filed on or before May 15, August 15, and November 15, 1995; (9) 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, 1995. (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 1994 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, 1995; (2) Texas Overhead Assessment Form, to be filed on or before March 1, 1995; (3) Actuarial Opinion (the statement of a qualified actuary, setting forth his or her opinion relating to policy reserves and other actuarial items) , to be attached to the annual statement required by paragraph (1) of this subsection, unless otherwise exempted. (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 1994 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, 1995, 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, 1995; (3) Release of Contribution Form, to be filed on or before April 1, 1995; (4) 3 1/2% Chamberlain Reserve Table (Reserve Valuation), to be filed on or before April 1, 1995; (5) Reserve Summary (1956 Chamberlain Table 3 1/2%), to be filed on or before April 1, 1995; (6) Inventory of Insurance in Force by Age of Issue or Reserving Year, to be filed on or before April 1, 1995; and (7) Summary of Inventory of Insurance In Force by Age and Calculation of Net Premiums, to be filed on or before April 1, 1995. (j) Requirements for nonprofit legal service corporations. Each nonprofit legal service corporation shall file the following completed blanks and forms for the 1994 calendar year only 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, 1995; and (2) Texas Overhead Assessment Form, to be filed on or before March 1, 1995. (k) Requirements for Mexican casualty companies. Each Mexican casualty company doing business as authorized by a Certificate of Authority issued under Texas Insurance Code, Article 8.24, shall complete and file the following blanks and forms for the 1994 calendar year with the department only. All submissions shall be printed or typed in English and all monetary values shall be clearly designated in United States dollars. The form identified in paragraph (1) of this subsection shall be completed in accordance with the current NAIC Annual Statement Instructions, Property and Casualty, except as provided by this section. An actuarial opinion is not required. In the event of a conflict between the Insurance Code, any currently existing departmental 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. The blanks or forms are as follows: (1) Annual Statement (association edition, Form 2 with a yellow colored cover), 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, 1995; (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, 1995; (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, 1995; and (4) A copy of the current license to operate in the Republic of Mexico, to be filed on or before March 1, 1995. (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 authority. Issued in Austin, Texas, on January 13, 1995. TRD-9500625 D. J. Powers General Counsel and Chief Clerk Texas Department of Insurance Effective date: February 3, 1995 Proposal publication date: December 2, 1994 For further information, please call: (512) 463-6327 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 321. Control of Certain Activities by Rule The Texas Natural Resource Conservation Commission (TNRCC) adopts the repeal of sec.sec.321.133-321.138, amendments to sec.sec.321.131-321.132 and new sec.sec.321.133-321.138. The amendments to sec.321.131 and sec.321.132 and new sec.sec.321.133-321.136, and 321-138 are adopted with changes to the proposed text as published in the August 19, 1994, issue of the Texas Register (19 TexReg 6508). New sec.321.137 is adopted without changes and will not be republished. These sections will allow wastewater contaminated by petroleum substances other than those presently allowed by this subchapter to be discharged. Public comment was solicited and received until September 19, 1994. A public hearing on these rules was held in Austin on November 29, 1994. Several groups and authorities submitted comments on the revision of this subchapter. The following are the names of the groups, businesses and/or industries that submitted comments: Amoco Oil Company, Chevron U.S.A. Products Company, Colonial Pipeline Company, Exxon Company U.S.A., Gas Produces Association, Marine Spill Response Corporation, Mobil Exploration and Producing U.S. Inc., Texas Automobile Dealers Association, Texas Mid-Continental Oil and Gas Association, Texas Oil Marketers Association, Railroad Commission of Texas, and Texas General Land Office. All suggested changes to the proposed rules have been considered, and have been incorporated into the rules where appropriate. Comments were received regarding the lengthy section titles of sec.321.33 and sec.321.34. The commission agrees with this comment and has shortened the section titles for more clarity. Several comments were received requesting the TNRCC to define or redefine various terms. Also, staff identified several terms that should be defined. In response to these comments the TNRCC has proposed several changes in sec.321. 131 to define the terms, Contaminated Water, Designated Representative, Executive Director, Facility, Release, Treatment, and Vessel. Additionally, the definition of Tank Test was modified to include vessel. A comment regarding pipeline definitions was considered but was not included as it was not necessary to further clarify those activities to which this subchapter applies. Several comments were received regarding the definition of Operator and Owner. The comments generally focused on the fact that these terms are limited to aboveground storage tanks or underground storage tank systems while the proposed revisions of the subchapter would extend the authority to discharge water contaminated by petroleum substance released from vessels other than an aboveground storage tank or underground storage tank systems. The TNRCC agrees that changes are appropriate and these definitions in sec.321.131 were revised. Several comments were received concerning the appearance that the TNRCC was extending its jurisdiction to areas where existing state and/or federal law provided for discharge under the authority of other entities, i.e. Texas Railroad Commission and Texas General Land Office. The TNRCC has revised sec.321.132(a) to expressly state that the rule is applicable only to those activities within the statutory jurisdiction of the TNRCC to regulate. One comment was received concerning the applicability requirement to a facility's drainage from a facility for which a Spill Prevention Control and Counter-measure (SPCC) Plan had been prepared and implemented. It is not the intent of the TNRCC to regulate these discharges pursuant to this subchapter, therefore, sec.321.132(b)(3) has been revised to specifically exclude these discharges. Several comments were received suggesting that registration of de-minimis discharges should not be required provided the water was treated to discharge levels compliant with discharge limitations prior to disposal. The TNRCC agrees with the recommended change and has provided an exclusion from registration in sec.321.132(b)(2). One commenter suggested that the section titles of sec.321.133 and sec.321. 134 be shortened and more concise for easy reading. The commission agrees with this comment and has changed the titles accordingly. One commenter suggested removal of the requirement to discharge to a splash pad since some discharges were piped to an underground discharge point. This subchapter does not regulate the reinjection of petroleum substance contaminated water; however, sec. sec.321.133(c)(1)(A) and 321.134(c)(1)(A) has been reworded to state that any surface discharge must be to a splash pad. One commenter recommended that the requirement to submit a registration 60 days prior to the discharge of waters resulting from a diesel release was unnecessary since all discharges were heretofore authorized by the submission of the registration. The TNRCC concurs with this comment and has revised sec.321.134(a) and sec.321.134(a)(3) accordingly. Additionally, sec.321.134(a) was revised to exclude the registration requirement of filing 60 days in advance of any emergency discharge as defined in 30 TAC sec.305.23(a). One commenter recommended that the requirement to submit a United States Geologic Survey Topographic Map, sec.321.134(a)(2), be removed to allow locating a site by other methods. The requirement remains unchanged because the USGS topographic map is necessary for staff to identify the discharge point and waters where a negative impact could occur in order to establish appropriate discharge limits. Also, TNRCC is proposing to regulate the discharge of water contaminated by petroleum substances not previously regulated by this subchapter. One commenter believed there is an inconsistency with the Polynuclear Aromatic Hydrocarbons (PAH) requirements published in sec.321.134 and the table published following the printed text of that rule (August 19, 1994, Texas Register ). The TNRCC has determined that the requirement is appropriately stated. One commenter suggested that the applicability requirement for registration not apply to contaminated waters recycled in the process or those routed to a permitted TNRCC facility. The TNRCC believes no additional clarification is required since this rule applies only to those seeking a surface discharge where other alternatives for disposal have been considered and/or may not be available for various reasons. One commenter expressed a concern that the TNRCC may not have correctly determined the cost analysis accompanying this rule. However, this rule provides a more reasonable and less expensive alternative to seeking an individual permit to discharge or to have the water transported elsewhere for treatment and disposal. Thus, the TNRCC believes its fiscal statement published on August 19, 1994 to be accurate. At the public hearing on November 29, 1994, Exxon Company U.S.A. representatives expressed their concern that it was not clear whether the monitoring and reporting requirements of sec.321.133 and sec.321.134 of this subchapter would apply to a discharge conducted pursuant to the sec.321.132(b) (2) (exclusion for the land application of 500 gallons or less per quarter of petroleum substance contaminated water). The Texas Oil Marketers Association supported their comments. The TNRCC did not intend for any discharge resulting from the exclusion to be subject to the monitoring and reporting requirements that would be required if registration were required. Accordingly, proposed sec.321.132(b)(2) has been reworded to clarify requirements. Subchapter H. Discharge to Surface Waters from Treatment of Petroleum Substance Contaminated Waters 30 TAC sec.sec.321.131-321.138 The amendments and new sections are adopted under the authority of the Texas Water Code, sec.sec.5.103, 5.105 and 5.120, which provides the TNRCC with the authority to promulgate rules as necessary to carry out its powers and duties under the Water Code and other laws of the state and to establish and approve all general policies of the TNRCC. There are no other codes, statutes or acts that will be effected by this adoption. sec.321.131. Definitions. The following words and terms, when used in this subchapter (relating to the Discharge to Surface Waters from Treatment of Petroleum Substance Contaminated Water), shall have the following meanings, unless the context clearly indicates otherwise. Aboveground storage tank (or AST)-A nonvehicular device (including any associated piping) that is made of nonearthen materials; located on or above the surface of the ground, or on or above the surface of the floor of a structure below ground, such as a mineworking, basement, or vault; and designed to contain an accumulation of petroleum substances. Free product-Floating gasoline, diesel fuel, fuel oil, kerosene, jet fuel or other petroleum substance. Gasoline-leaded or unleaded gasoline, all grades of aviation gasoline and all grades of gasohol. Motor fuel-A petroleum substance which is typically used for the operation of internal combustion engines (including stationary engines and engines used in transportation vehicles and marine vessels), and which is one of the following types of fuels: leaded or unleaded gasoline, aviation gasoline, Number 1 diesel fuel, Number 2 diesel fuel, and any grades of gasohol. Operator-Any person in control of or having responsibility for the daily operation of an aboveground or underground storage tank system, facility, pipeline or vessel. Owner-Any person who currently holds legal possession or ownership of a total or partial interest in an aboveground storage tank (AST) or underground storage tank system (UST) or any person, individual, partnership, corporation, association, governmental unit, or public or private organization of any charter owning, operating or responsible for operating, or chartering by demise a vessel and or pipeline, owning, operating or responsible for operating a facility or operating a facility by lease, contract, or other form of agreement. For the purpose of the subchapter, where the actual ownership of an AST or UST system is either uncertain, unknown, or in dispute, the fee simple owner of the surface estate where the AST or UST is located shall be considered the AST or the UST system owner, unless the owner of the surface estate can demonstrate by appropriate documentation (deed reservation, invoice, bill of sale, etc.) or by other legally-acceptable means that the AST or the UST system is owned by others. "Other" does not include a person who holds an interest in an AST or UST system solely for financial security purposes unless, through foreclosure or other related actions, the holder of such security interest has taken legal possession of the AST or UST system. Additionally, this definition does not include a person who owns only the land underlying a facility or a person who owns a security interest in a facility, pipeline or vessel if the person does not participate in the operation of the facility, pipeline or vessel, does not own a controlling interest in the owner or operator of the facility, pipeline or vessel and is not controlled by or under common ownership with the owner or operator of the facility, pipeline or vessel. Petroleum Substance Contaminated Water Report-A form provided the responsible party or their agent by the executive director in response to the filing of a registration form to enable compliance with the reporting requirements of this subchapter. Petroleum substance -A crude oil or any refined or unrefined fraction or derivative of crude oil which is liquid at standard conditions of temperature and pressure, and is limited to one or a combination of the substances or mixtures in the following list (except for any substance regulated as a hazardous waste under sec.335.1 of this title (relating to Definitions)). (A) Basic petroleum substances-Crude oils, crude oil fractions, petroleum feedstocks, and petroleum fractions. (B) Motor fuels-(see definition for "motor fuel" in this section.) (C) Aviation gasolines-Grade 80, Grade 100, and Grade 100-LL. (D) Aviation jet fuels-Jet A, Jet A-1, Jet B, JP-4, JP-5, and JP-8. (E) Distillate fuel oils-Number 1-D, Number 1, Number 2-D, and Number 2. (F) Residual fuel oils-Number 4-D, Number 4-light, Number 4, Number 5-light, Number 5-heavy, and Number 6. (G) Gas-turbine fuel oils-Grade O-GT, Grade 1-GT, Grade 2-GT, Grade 3-GT, and Grade 4-GT. (H) Illuminating oils-Kerosene, mineral seal oil, long-time burning oils, 300 oil, and mineral colza oil. (I) Solvents-Stoddard solvent, petroleum spirits, mineral spirits, petroleum ether, varnish makers' and painters' naphthas, petroleum extender oils, and commercial hexane. (J) Lubricants-Automotive and industrial lubricants. (K) Building materials-Liquid asphalt and dust-laying oils. (L) Insulating and waterproofing materials-Transformer oils and cable oils. (M) Used oils-(See definition for "used oil" in this section.) (N) Any other petroleum-based material having physical and chemical properties similar to the above materials and receiving approval by the executive director for designation as a petroleum substance. (O) Examples of materials which are not petroleum substances include: aldehydes and ketones (e.g. acetone, methyl ethyl ketone); halogenated solvents (e.g. carbon tetrachloride, trichloroethylene), alcohols (e.g. methanol), phenols, nitrogen-containing compounds and transformer oils containing polychlorinated biphenyl compounds. Responsible Party -The operator or the owner as defined in this subsection or any person having responsibility for or exercising control over activities covered by this subchapter. Registration Form -An application form provided by the executive director, that must be completed and submitted by the responsible party or their agent, for the purpose of discharging petroleum substance contaminated water pursuant to the authorization provided by this subchapter. Any person signing as an agent must have the express authority of the responsible party to sign the registration form and/or petroleum substance contaminated water report form. The signature of the responsible party or their agent on the registration form and/or petroleum substance contaminated water report form must be an original, preferably in blue ink. TNRCC-Texas Natural Resource Conservation Commission. Underground storage tank-Any one or combination of underground tanks and any connecting underground pipes used to contain an accumulation of regulated substances, the volume of which, including the volume of the connecting underground pipes, is ten percent or more beneath the surface of the ground. Underground storage tank system-An underground storage tank, all associated piping and ancillary equipment, spill and overfill prevention equipment, release detection equipment, corrosion protection system, secondary containment equipment (as applicable), and all other related systems and equipment. Used oil-Any oil or similar petroleum substance that has been refined from crude oil, used for its designed or intended purposes, and contaminated as a result of such use by physical or chemical impurities; and including spent motor vehicle and aircraft lubricating oils (e.g. car and truck engine oil, transmission fluid, and brake fluid), spent industrial oils (e.g., compressor, turbine, bearing, hydraulic, metalworking, gear, electrical, and refrigerator oils), and spent industrial process oils. Water in the state-Groundwater, percolating or otherwise, lakes, bays, ponds, impounded waters, springs, rivers, streams, creeks, wetlands, estuaries, marshes, inlets, canals, the Gulf of Mexico inside the territorial limits of the state, and all other bodies of surface water, natural or artificial, inland or coastal, fresh or salt, navigable or nonnavigable, and including the beds and banks of all water courses and bodies of surface water, that are wholly or partially inside or bordering the state or inside the jurisdiction of the state. sec.321.132. Applicability. (a) The purpose of this subchapter is to regulate by rule the surface discharge of water contaminated by a release of a petroleum substance into or adjacent to water in the state, within the statutory jurisdiction of the TNRCC to regulate and not otherwise prohibited elsewhere in the rules of the TNRCC, and: (1) subject to the conditions of sec.321.133 of this title (relating to Discharge of Water Contaminated by Gasoline, Jet Fuel or Kerosene); or (2) subject to the conditions of sec.321.134 of this title (relating to Discharge of Water Contaminated by Other Petroleum Substances). (b) TNRCC registration in accordance with sec.321.133 or sec.321.134 of this title is not required if one of the following conditions exists: (1) free product is removed and the remaining contaminated water is routed to an existing TNRCC permitted wastewater treatment system capable of treating the wastes; (2) petroleum substance contaminated water is land applied on-site with no runoff if: (A) the volume to be land applied is 500 gallons or less during any quarter. However, the General and Specific conditions of sec.321.133 or sec.321. 134 of this title, excluding notification of the TNRCC region office, monitoring/reporting requirements and any other condition not appropriate to the land application of petroleum substance contaminated water, shall apply to any discharge. The responsible party must be able to demonstrate that any discharge pursuant to this exclusion was compliant with discharge limits based on laboratory analysis or the petroleum substance contaminated water is treated by a properly operated and maintained system to produce a compliant effluent; and (B) the discharge does not violate local ordinances; (3) the discharge is drainage from a facility where preparation and implementation of a Spill Prevention Control and Counter-measure Plan is required pursuant to 40 Code of Federal Regulations, Part 112; (4) the discharge is performed in accordance with sec.321.135 of this title (relating to Telephone Utilities); or (5) exempted by the executive director on a case-by-case basis. (c) For discharges located in or within ten miles upstream of the Edwards Aquifer recharge zone as defined in Chapter 313 of this title (relating to Edwards Aquifer), the executive director may require a responsible party to obtain a permit or other authorization from the TNRCC for such a discharge, in accordance with sec.321.138 of this title (relating to Reservation). (d) An application for an emergency order, temporary order, or permit as provided by Chapter 305 of this title (relating to Consolidated Permits) must be submitted and the order or permit issued by the TNRCC either before water contaminated by any substance not regulated by this subchapter can be discharged or as an alternative to compliance with the requirements of this subchapter. (e) Regardless of whether registration is required, no person may discharge water in excess of the limitations specified in this subchapter. Any discharge that does not comply with the applicable provision of this subchapter is subject to enforcement proceedings. (f) A surface discharge may occur during groundwater pump tests, groundwater remediation, tank tests, on-site soil remediation activities, cleanup activities following the release of one or more petroleum substances occurring during transport, removal of water from a tank previously containing a petroleum substance and/or other activities including the removal of petroleum substance contaminated water from groundwater wells, excavations and utility vaults, etc. sec.321.133. Discharge of Water Contaminated by Gasoline, Jet Fuel or Kerosene. (a) Registration. Except as provided in sec.321.132 of this title (relating to Applicability) and sec.321.135 of this title (relating to Telephone Utilities), a registration form must be submitted to the Watershed Management Division, TNRCC Austin office prior to discharge. Submittal of the registration form is acknowledgment that the responsible party or their agent has determined that the requirements of this subchapter are applicable to the proposed discharge, and that all requirements for discharge will be satisfied. Submittal of a registration form is sufficient notice to initiate discharge in accordance with this subchapter to include compliance with subsections (b) and (c) of this section. (b) General Requirements for Discharge. Except as provided in sec.321. 135 of this title (relating to Telephone Utilities), the following general requirements apply. (1) The responsible party shall notify the appropriate TNRCC regional office at least 24 hours prior to initiating the discharge. (2) There shall be no discharge of free product. (3) Disposal of solid wastes shall be in accordance with Chapter 361 of the Texas Health and Safety Code. (4) The discharge shall not cause any nuisance conditions to land owners along the discharge route. (5) The responsible party shall take all steps necessary to prevent any adverse effect to human health or safety, or to the environment. Immediately upon the notification from the supervisor of the TNRCC regional office that the discharge is presenting a hazard to the uses of the receiving water, the responsible party shall terminate such discharges. The discharge shall cease immediately whenever problems associated with the discharge may endanger human health or safety, or the environment, and the problems shall be reported to the Watershed Management Division, TNRCC Austin office and appropriate regional office as soon as possible but no later that 24 hours following their discovery. A written report shall be submitted to the TNRCC Austin and regional offices within five working days of the discovery of a problem. The report shall contain a description of the location; the exact date and time the problem was first identified; the potential danger to human health or safety, or the environment; the immediate steps that were taken to correct the problem; steps planned and/or taken to mitigate any adverse effects; and plans to prevent the recurrence of similar problems with further discharge events. (6) Concentrations of taste and odor producing substances shall not interfere with the production of potable water by reasonable water treatment methods, impart unpalatable flavor to food fish including shellfish, result in offensive odors arising from the waters, or otherwise interfere with the reasonable use of the water in the state. (c) Specific Requirements for Discharge. Except as provided in sec.321.135 of this title (relating to Telephone Utilities), the following specific requirements apply. (1) Point of discharge. (A) All surface discharges shall be to a splash pad to aerate the treated water. (B) The rate of discharge shall be controlled to prevent flooding and erosion. (2) Effluent limitations and monitoring requirements. (A) The following maximum effluent limitations and minimum monitoring requirements apply to the discharge of petroleum substance contaminated water: Figure 1: 30 TAC sec.321.133(c)(2)(A) 13> (B) If the responsible party or their agent determines through sample collection and analysis that the wastewater is not contaminated with lead or lead compounds then such information shall be noted on the registration form and continued analysis for lead or lead compounds is not required. (C) The pH of the discharge shall not be less than 6.0 nor greater than 9.0 standard units and shall be measured once per week by grab sample. The petroleum substance contaminated water report form does not require that pH be reported, however, records must be maintained to demonstrate compliance with this requirement. (D) There shall be no discharge of floating solids or visible foam in other than trace amounts, and no discharge of visible oil. (E) All samples shall be collected after any final treatment unit that may be used. All sample collection shall be conducted in accordance with the requirements of sec.319.11 of this title (relating to Sampling and Laboratory Test Methods). (F) Sample containers, holding times, preservation methods and the physical, chemical and microbiological analyses of effluent shall meet the requirements specified in regulations published in 40 Code of Federal Regulations Part 136 pursuant to the Federal Water Pollution Control Act, sec.304(g), and be conducted according to this federal regulation or the latest edition of "Standard Methods for the Examination of Water and Wastewater." (3) Reporting Requirements. All analytical results shall be reported to the Watershed Management Division, TNRCC Austin office using the "Petroleum Substance Contaminated Water Report" form provided by the executive director. Results of sampling activities shall be submitted to the TNRCC no later than the 20th day of the month following the discharge unless the discharge occurs one day per quarter based on the frequency of discharge noted on the registration form and reports for these discharges are due no later than the 20th day in the months of April, July, October, and January. Any report form reflecting that a discharge limit was exceeded must be accompanied by a report prepared in accordance with subsection (b)(5) of this section. sec.321.134. Discharge of Water Contaminated by Other Petroleum Substances. (a) Registration. Except as provided in sec.321.132 of this title (relating to Applicability) and sec.321.135 of this title (relating to Telephone Utilities), a registration form must be submitted to the Watershed Management Division, TNRCC Austin office. The registration form shall be submitted a minimum of 60 days prior to the expected date of discharge (except for: (1) an emergency as defined in sec.305.23(a) of this title (relating to Emergency Orders) where the registration form may be submitted at any time but a discharge can not occur until approved by the executive director or designated representative as provided by this section; or (2) water contaminated by a diesel release may be discharged upon the submission of the registration form less the following items but subject to the discharge limits and the monitoring/ reporting requirements of this section) and shall include: (A) analytical test results for Total Petroleum Hydrocarbons, Total Lead, Benzene, Total BTEX, Polynuclear Aromatic Hydrocarbons and pH; (B) an original USGS Topographic map; and (C) a written description of the discharge route. Submittal of the registration form (excluding diesel fuel contaminated water) does not constitute an authorization to discharge. The TNRCC will review requests for registration on a case-by-case basis and the agency may request additional information, including additional sampling and analytical data. Submittal of a registration form is acknowledgement that the responsible party or their agent has determined that the requirements of this subchapter are applicable to the proposed discharge, and that all criteria for discharge will be satisfied. If the registration is approved, the executive director or designated representative shall notify the responsible party or their agent in writing and this notification shall constitute an authorization to discharge wastewater. Requirements in addition to those listed in subsection (c)(2)(A) of this section may be specified on a case-by-case basis. (b) General Requirements for Discharge. Except as provided in sec.321.135 of this title (relating to Telephone Utilities), the following general requirements apply. (1) The responsible party or their agent upon receipt of approval to discharge and prior to the discharge shall notify the appropriate TNRCC regional office at least 24 hours prior to initiating the discharge. (2) There shall be no discharge of free product. (3) Disposal of solid wastes shall be in accordance with the Texas Health and Safety Code, Chapter 361. (4) The discharge shall not cause any nuisance conditions to land owners along the discharge route. (5) The responsible party or their agent shall take all steps necessary to prevent any adverse effect to human health or safety, or to the environment. Immediately upon the notification from the supervisor of the TNRCC regional office that the discharge is presenting a hazard to the uses of the receiving water, the responsible party or their agent shall terminate such discharges. The discharge shall cease immediately whenever problems associated with the discharge may endanger human health or safety, or the environment, and the problems shall be reported to the Watershed Management Division, TNRCC Austin office and the appropriate regional office as soon as possible but no later that 24 hours following their discovery. A written report shall be submitted to the TNRCC Austin and regional office within five working days of the discovery of a problem. The report shall contain a description of the location; the exact date and time the problem was first identified; the potential danger to human health or safety, or the environment; the immediate steps that were taken to correct the problem; steps planned and/or taken to mitigate any adverse effects; and plans to prevent the recurrence of similar problems with further discharge events. (6) Concentrations of taste and odor producing substances shall not interfere with the production of potable water by reasonable water treatment methods, impart unpalatable flavor to food fish including shellfish, result in offensive odors arising from the waters, or otherwise interfere with the reasonable use of the water in the state. (c) Specific Requirements for Discharge. Except as provided in sec.321.135 of this title (relating to Telephone Utilities), the following specific requirements apply. (1) Point of discharge. (A) All surface discharges shall be to a splash pad to aerate the treated water. (B) The rate of discharge shall be controlled to prevent flooding and erosion. (2) Effluent limitations and monitoring requirements. (A) The following maximum effluent limitations and minimum monitoring requirements apply to the discharge of water: Figure 2: 30 TAC sec.321.134(c)(2)(A) (B) If the responsible party or their agent determines through sample collection and analysis that the wastewater is not contaminated with lead or lead compounds then such information shall be noted on the registration form and continued analysis for lead or lead compounds is not required. (C) The pH of the discharge shall not be less than 6.0 nor greater than 9.0 standard units and shall be measured once per week by grab sample. The petroleum substance contaminated water report form does not require that pH be reported, however, records must be maintained to demonstrate compliance with this requirement. (D) There shall be no discharge of floating solids or visible foam in other than trace amounts, and no discharge of visible oil. (E) Discharge of wastewater shall cease within 24 hours of the time that the responsible party or their agent learns that any one of the polynuclear aromatic hydrocarbons has been detected at a concentration of 0.01 mg/l or greater. A written report shall be provided to the TNRCC Austin and regional office within five working days. Discharge may not be resumed under the provisions of this subchapter without written authorization from the executive director. The executive director may require the responsible party to obtain a permit from the TNRCC for such a discharge. (F) All samples shall be collected after any final treatment unit that may be used. All sample collection shall be conducted in accordance with the requirements of sec.319.11 of this title (pertaining to Sampling and Laboratory Test Methods) . (G) Sample containers, holding times, preservation methods and the physical, chemical and microbiological analyses of effluent shall meet the requirements specified in regulations published in 40 Code of Federal Regulations Part 136 pursuant to the Federal Water Pollution Control Act, sec.304(g), and be conducted according to this federal regulation or the latest edition of "Standard Methods for the Examination of Water and Wastewater." (3) Reporting Requirements. All analytical results shall be reported to the Watershed Management Division, TNRCC Austin office using the "Petroleum Substance Contaminated Water Report" form provided by the executive director. Results of sampling activities shall be submitted to the TNRCC no later than the 20th day of the month following the discharge unless the discharge occurs one day per quarter based on the frequency of discharge noted on the registration form and reports for these discharges are due no later than the 20th day in the months of April, July, October, and January. Any report form reflecting that a discharge limit was exceeded must be accompanied by a report prepared in accordance with subsection (b)(5) of this section. sec.321.135. Telephone Utilities. (a) Registration Not Required. Telephone utilities are exempt from registration pursuant to sec.321. 133 and sec.321.134 of this title (relating to Water Contamination) for the discharge of water contaminated by Gasoline, Jet Fuel, Kerosene or Diesel. The following general requirements apply to discharges from utility vaults. (1) There shall be no discharge of free product. Free product shall be collected, reused, or disposed of in accordance with state law. (2) If the responsible party or their agent detects the presence of any hydrocarbon vapors as indicated by standard explosimeter test, the responsible party or their agent shall air purge the vault before discharging its contents. Following this initial air purging, the responsible party or their agent shall again perform a standard explosimeter test. If this second test reveals the presence of hydrocarbon vapors, the responsible party or their agent shall take a water sample and have a laboratory analysis made to determine whether the Benzene concentration is equal to or greater than 0.05 mg/l or the Total BTEX concentration is equal to or greater than 0.50 mg/l. If the analysis confirms an exceedance of the Benzene or BTEX concentration in the water, the entire contents of the utility vault may not be discharged under this subsection but must be disposed of in some other legal manner. (3) Disposal of solid wastes shall be in accordance with the Texas Health and Safety Code, Chapter 361. (4) The discharge shall not cause any nuisance conditions to land owners along the discharge route. (5) The responsible party or their agent shall take all steps necessary to prevent any adverse effect to human health or safety, or to the environment. Immediately upon the notification from the supervisor of the TNRCC regional office that the discharge is presenting a hazard to the uses of the receiving water, the responsible party or their agent shall terminate such discharges. The discharge shall cease immediately whenever problems associated with the discharge may endanger human health or safety, or the environment, and the problems shall be reported to the Watershed Management Division, TNRCC Austin office and appropriate regional office as soon as possible but no later that 24 hours following their discovery. A written report shall be submitted to the TNRCC Austin and regional office within five working days of the discovery of a problem. The report shall contain a description of the location; the exact date and time the problem was first identified; the potential danger to human health or safety, or to the environment; the immediate steps that were taken to correct the problem; steps planned and/or taken to mitigate any adverse effects; and plans to prevent the recurrence of similar problems with further discharge events. (6) Concentration of taste and odor producing substances shall not interfere with the production of potable water by reasonable water treatment methods, impart unpalatable flavor to food fish including shellfish, result in offensive odors arising from the waters, or otherwise interfere with the reasonable use of the water in the state. (b) Registration Required. If concentrations of Benzene is 0.05 mg/l or greater and/or Total BTEX is equal to or greater than 0.50 mg/l, the telephone utility may elect to submit a registration in accordance with sec.321. 133 or sec.321.134 of this title to discharge water contaminated by Gasoline, Jet Fuel, Kerosene or Diesel. sec.321.136. Restrictions. (a) This subchapter does not convey property rights of any sort and does not grant any exclusive privilege. (b) The responsible party or their agent may not cause a discharge to a domestic sewage treatment plant and/or a separate storm sewer system without first obtaining the approval of the owner of the sewage treatment plant and/or separate storm sewer system. Air emissions for any activity regulated by this subchapter must be in accordance with TNRCC air regulations. sec.321.138. Reservation. The executive director may on a case-by-case basis, where conditions warrant, prohibit the discharge of petroleum substance contaminated water under this subchapter and require that the owner obtain an individual permit or seek other authorization to discharge from the TNRCC, or dispose of the water in some other legal manner. Additionally, the executive director may cancel, revoke or suspend authorization to discharge under this subchapter where the owner has discharged water in significant noncompliance of discharge limits, has had a history of noncompliance of discharge limits or has a history of failing to submit the petroleum substance contaminated water report within the time requirement specified in this subchapter. 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 January 17, 1995. TRD-9500727 Kevin McCalla Acting Director, Legal Division Texas Natural Resource Conservation Commission Effective date: February 8, 1995 Proposal publication date: August 19, 1994 For further information, please call: (512) 239-4640 30 TAC sec.sec.321.133-321.138 The repeals are adopted under the authority of the Texas Water Code, sec.sec.5.103, 5.105 and 5.120, which provides the Texas Natural Resource Conservation Commission (TNRCC) with the authority to promulgate rules as necessary to carry out its powers and duties under the Texas Water Code and other laws of the state and to establish and approve all general policies of the TNRCC. 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 January 17, 1995. TRD-9500726 Kevin McCalla Acting Director, Legal Division Texas Natural Resource Conservation Commission Effective date: February 8, 1995 Proposal publication date: August 19, 1994 For further information, please call: (512) 239-4640 Chapter 330. Municipal Solid Waste The Texas Natural Resource Conservation Commission (TNRCC) adopts amendments to sec.330.4 and sec.330.65, concerning municipal solid waste management and design requirements for Type V facilities that are exempt from permit requirements. Section 330.4 is adopted with changes to the proposed text as published in the October 14, 1994, issue of the Texas Register (19 TexReg 8096). Section 330.65 is adopted without changes and will not be republished. The amendments clarify the existing policy that drying grit-trap waste at a car wash does not require a permit or registration, and encourage the development of certain transfer stations and the recovery of reusable material from solid waste received at those transfer stations, thereby reducing transportation costs and the volumes of waste being landfilled. The changes are consistent with Senate Bill 963, 73rd Legislature (1993), which amended the Texas Solid Waste Disposal Act, sec.361.111, Texas Health and Safety Code. The bill exempts from TNRCC permitting requirements certain municipal solid waste management facilities involved in the transfer of municipal solid waste. In order to qualify for permit exemption, the facility must comply with certain design and operational requirements, and must recover some materials from the incoming waste. The amendment to sec.330.4(f) adds new language that clarifies which material recovery facilities must apply for a permit or registration. New sec.330.4(p) clarifies that drying grit trap waste at a car wash does not require a permit or registration. New sec.330.4(q) provides that a permit is not required for a municipal solid waste management facility that is used in the transfer of municipal solid waste and recovers recyclable materials, if certain criteria are met. In lieu of permitting, these facilities must be registered pursuant to requirements of sec.330.65, concerning Registration for Solid Waste Management Facilities. The amendment to sec.330.65(f), concerning Additional Design Criteria, delineates additional design standards for transfer stations that recover some material from incoming waste. The TNRCC offered an opportunity for public comment on the proposed amendments to the rules. A public hearing was held on November 4, 1994, in Austin, Texas, that ten people attended, and the following organizations and associations offered comments: Southwest Car Wash Association (SWCWA); Blackwell, Lackey, and Associates; American WasteWater Limited; and Center for Maximum Potential Building Systems. Written comments on the proposed rules were received for a period of 30 days from October 14, 1994, to November 14, 1994. Written comments on the proposed rules were received from the following entities during the comment period: Texas Municipal League, Southwest Car Wash Association, Genie Car Washes of Texas, Genie Self-Service Car Wash of Waco, City of Plano, Maintenance Service, Inc., Allwaste Recovery Systems, NSWMA Sunbelt Region, Browning-Ferris Industries, TNRCC staff, Center for Maximum Potential Building Systems, Laidlaw Waste Systems, Inc., Lower Colorado River Authority, American WasteWater Limited, Cold Springs Processing, and Mesa Processors. The TNRCC received four comments requesting clarification of sec.330.4(p) with respect to the authorization for drying grit trap waste at a car wash facility for waste brought to the facility from other facilities having the same owner. Three of these commenters suggested language to be added to the rule, using as a guideline language found in sec.361.090(a)(2) of the Texas Health and Safety Code, that sets a 50-mile limit on industrial waste facilities processing their own waste. The TNRCC believed that the suggested clarification will be useful and clarifying language has been added to sec.330. 4(p). Also with respect to sec.330.4(p) one commenter requested clarification regarding the effect of these rules on more stringent local government rules, especially where a local government permitting system is already in place. TNRCC does not wish to interfere with a local government regulation that is more stringent regarding this issue, and clarification to the language in sec.330.4(p) has been added to reflect this position. A group of four commenters recommended that the on-site grit trap waste drying process as discussed in sec.330.4(p) be controlled through additional operational and design rules. The TNRCC will consider a future rulemaking action to add requirements concerning the on-site operation and design of grit trap waste drying facilities at a car wash. In the interim, the TNRCC has a document entitled "Recommended Management Practices for Disposal of Grit Trap Waste" that provides guidance for on-site grit trap waste drying. With respect to sec.330.4(p), a group of four commenters expressed concern that this rulemaking will result in ineffective waste management practices allowing pollutants to enter the waters of the state. TNRCC does not agree with this stated concern because no operational rules are being deleted or changed that relate to surface water or groundwater contamination. In regard to sec.330.4(p), a group of four commenters suggested that TNRCC by rule require a registration of on-site grit trap waste drying facilities at a car wash. The TNRCC will not act on this suggestion without a clear legislative mandate, because at the present time we believe there is no health and safety concern regarding these facilities. With respect to sec.330.4(p), one commenter suggested that the state consider reviewing additional test results of grit trap waste before deregulating the waste. TNRCC is not deregulating grit trap waste. The current testing requirements for disposal are not changed in this rulemaking. With respect to sec.330.4(p), two commenters expressed concern regarding safety hazards associated with removal of grit trap waste from grit traps. This rulemaking does not address any new waste removal techniques. With respect to sec.330.4(q)(1), one commenter suggested that the 10% recovery standard might not be met, which would result in a lowering of safeguards for protecting public health, safety, and the environment. TNRCC is concerned with its legislative mandate to protect the public health, safety, and the environment. We have examined other types of transfer stations that have been operating with registrations in lieu of permits since 1991. TNRCC finds no substantial public health, safety, or environmental problems at those operating facilities. Additionally, the 10% performance standard is set by legislation in sec.361.111 of the Texas health and Safety Code, and consequently, TNRCC is unable to set another standard. TNRCC received one comment that sec.330.4(q) will promote the collection of unconfined municipal solid waste, allowing contamination and making the marketing of recycled materials less economically viable and therefore contravening the state's legislatively stated intent of recycling 40% of the generated municipal solid waste. TNRCC believes that the transfer stations that recover some useable material from unsegregated waste can work in conjunction with source separation and other recycling initiatives to achieve the state's goal of a 40% reduction in waste reaching landfills. TNRCC received one comment that sec.330.4(q) may be in conflict with the Texas Health and Safety Code, sec.361.061 and sec.361.086, which requires permits for each solid waste facility. We disagree because sec.330.4(q) is based on another statute, the Texas Health and Safety Code, sec.361.111. With respect to sec.330.4(f), one comment was received suggesting that material recovery facilities accepting segregated streams of recyclable materials should be considered by separate rule because by definition they do not handle solid waste. The TNRCC does not believe this is necessary because sec.330.4(f) clearly provides that the listed facilities are exempt from obtaining a permit. One commenter requested clarification regarding the tier system of authorizing material recovery facilities as established by existing rules compared to the provisions of sec.330.4(q). TNRCC responds that existing sec.330. 4(f) allows material recovery facilities that collect and process nonputrescible recyclable materials (clean MRFs) to be exempt from permit or registration requirements. Under new rule sec.330.4(q) owners and operators of material recovery facilities that accept unsegregated waste (dirty MRFs) and meet permit exemptions established in sec.330.4(q) must register their facilities in accordance with new sec.330.65(f). Owners and operators of material recovery facilities that accept unsegregated waste and do not meet exemptions established in sec.330.4(q) must obtain a permit prior to operation in accordance with sec.330.51. One commenter asked for clarification with respect to sec.330.4(q)(1) regarding whether or not recycling or reuse of the incoming waste stream included using the nonsegregated waste as compost. The commenter further pointed out a possible inconsistency with Senate Bill 1051 that would allow mixed municipal solid waste composting only where a source-separated recycling program exists and would require a permit for composting mixed solid waste. TNRCC believes that the 10% performance standard established in sec.330.4(q)(1) should be set to exclude composting with respect to the permit exemption of sec.330.4(q)(1) in order to be in harmony with the intent of Senate Bill 1051, and consequently, modifying language has been added to sec.330.4(q)(1). In regard to sec.330.4(q)(2), two commenters expressed concern that the proposed limitation of 50 miles between a material recovery facility and a landfill to receive a permit exemption is burdensome for material recovery facilities in rural areas, West Texas areas, and the Panhandle area. The 50-mile standard for permit exemption for material recovery facilities is set by legislation in the Texas Health and Safety Code, sec.361.111(a)(4). With respect to sec.330.65(f)(2)(c), one commenter requested clarification regarding the language that refers to 30 TAC Chapter 116, concerning Control of Air Pollution by Permits for New Construction or Modifications. TNRCC intends to clarify in a future rulemaking that transfer stations will be eligible for a permit standard exemption with respect to air quality. With respect to sec.330.65(f), two commenters expressed their agreement with new language that will be supportive of recycling efforts. Subchapter A. General Information 30 TAC sec.330.4 The amendments are adopted under the authority of the Texas Water Code, sec.5.103, which provides the Texas Natural Resource Conservation Commission with the authority to adopt any rules necessary to carry out the powers and duties under the provisions of the Texas Water Code, and the Texas Solid Waste Disposal Act (the Act), Texas Health and Safety Code, sec.361.024 and sec.361. 061, which provide the Texas Natural Resource Conservation Commission with the authority to regulate the operation, management and control of solid waste under its jurisdiction. sec.330.4. Permit Required. (a)-(e) (No change.) (f) A permit or registration under this chapter is not required for a facility or site that is used as: a citizens' collection station; as a collection and processing point for nonputrescible recyclable wastes or for composting of leaves, grass clippings, or wood chips; a collection point for parking-lot or street sweepings or wastes collected and received in sealed plastic bags from such activities as periodic citywide cleanup campaigns and cleanup of rights-of- way or roadside parks; or for the disposal of soil, dirt, rock, sand, or other natural or man-made inert solid materials used to fill land if the object of the fill is to make the land suitable for the construction of surface improvements. A permit or registration is not required for a baling operation at a recycling or materials recovery facility that handles only nonputrescible recyclable waste. Facilities that process recyclable wastes that contain more than incidental amounts of putrescible waste must apply for a permit or registration as applicable under subsections (a), (d) or (q) of this section. (g)-(o) (No change.) (p) A permit or registration is not required for the drying of grit trap waste at a car wash facility as long as these wastes are disposed of in compliance with applicable federal, state, and local regulations. Grit trap waste from car wash facilities may be transported for drying purposes to another car wash facility if the facilities have the same owner and if the facilities are located within 50 miles of each other. This subsection is not intended to pre-empt or supercede local government regulation of grit trap waste-drying facilities. Drying facilities must comply with Chapter 116 of this title (relating to Control of Air Pollution by Permits for New Construction or Modification) if applicable. (q) In addition to permit exemptions established in subsection (d) of this section, a permit is not required for any new municipal solid waste Type V transfer station that includes a material recovery operation that meets all of the requirements established by this subsection. Owners and operators of Type V transfer facilities meeting the requirements of this subsection are allowed to register their operations in lieu of permitting them. Owners and operators of transfer stations that meet the permit exemption requirements and wish to exercise the exemption option must register their operation in accordance with sec.330.65 of this title (relating to Registration for Solid Waste Management Facilities), meet the additional design criteria of sec.330. 65(f) and operate the facility in accordance with Subchapter G of this chapter (relating to Operational Standards for Solid Waste Processing and Experimental Sites). (1) Materials recovery. The transfer facility must recover 10% or more by weight or weight equivalent of the total incoming waste stream for reuse or recycling. The applicant must demonstrate in the registration application the method that will be used to assure the 10% requirement is achieved. For purposes of this subsection, transfer stations that receive nonsegregated waste and recover material for reuse or recycling are not allowed to use composting as a method of meeting the reuse or recycling permit exemption standard, and a composting process may not be used as an on-site reuse or recycling process. (2) Distance to a landfill. The transfer facility must demonstrate in the registration application that it will transfer the remaining nonrecyclable waste to a landfill not more than 50 miles from the facility. (3) Exempt facilities. Transfer facilities exempted from a permit under this subsection shall register with the executive director in accordance with sec.330.65 and meet the additional design criteria of sec.330.65(f). (4) Revocation. Failure to operate such registered facilities in accordance with the requirements established in Subchapter G of this chapter (relating to Operational Standards for Solid Waste Processing and Experimental Sites) may be grounds for revocation of the registration. (5) Executive director's notice of nuisance. If registered transfer facilities are operated in a manner which causes or results in a nuisance, as defined in sec.330.2 of this title (relating to Definitions), and the executive director gives written notice that a nuisance exists, the registered facility shall cease operations and the facility's registration shall be suspended until such time as the facility owner or operator receives written notice of the executive director's determination that the nuisance no longer exists. (6) Receipt of registration. As a condition of receipt of a registration by a transfer facility under this subsection, the owner and operator of that facility agrees that if the facility operates in a manner which causes or results in a nuisance as defined in sec.330.2, and the executive director sends written notice pursuant to paragraph (5) of this subsection, the facility will immediately cease operations until the executive director notifies the facility of its determination that a nuisance no longer exists at the facility and that the facility may be reopened for operation. (7) Request for commission decision. If a registered transfer facility is notified that nuisance conditions exist due to the operations of the facility, and that its registration is therefore suspended, the owner or operator of the registered facility may request that the question of whether or not a nuisance exists be decided by the Commission. This request must be in writing and filed within 20 calendar days of receipt of the executive director's written notice of suspension of the registration. 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 January 12, 1995. TRD-9500527 Kevin McCalla Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: February 2, 1995 Proposal publication date: October 14, 1994 For further information, please call: (512) 239-6087 Subchapter E. Permit Procedures 30 TAC sec.330.65 The amendment is adopted under the authority of the Texas Water Code, sec.5.103, which provides the Texas Natural Resource Conservation Commission with the authority to adopt any rules necessary to carry out the powers and duties under the provisions of the Texas Water Code, and the Texas Solid Waste Disposal Act (the Act), Health and Safety Code, sec.361.024 and sec.361.061, which provide the Texas Natural Resource conservation commission with the authority to regulate the operation, management and control of solid waste under its jurisdiction. 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 January 12, 1995. TRD-9500526 Kevin McCalla Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: February 2, 1995 Proposal publication date: October 14, 1994 For further information, please call: (512) 239-6087 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part I. General Land Office Chapter 13. Land Resources 31 TAC sec.13.20 The General Land Office (GLO) adopts new sec.13.20, concerning fees for easements for rights-of-way over public lands granted pursuant to the Texas Natural Resource Code, Chapter 51, without changes to the proposed text as published in the November 8, 1994, issue of the Texas Register (19 TexReg 8843). The new section will enhance the administrative flexibility of the commissioner of the GLO (commissioner) to determine the terms of agreements regarding interests in public land resources. The statutory mandate and policy of the GLO is to sell and lease certain public land resources for the benefit of the Permanent School Fund. The new section will give the commissioner authority to reduce or waive any fee established by the GLO, or to accept non-cash consideration, or both, for certain interests in land resources, including leases and rights-of-way over public lands, if such a reduction or waiver would be in the public interest as determined by the commissioner. In most instances when a reduction or waiver is approved by the commissioner, or when non-cash consideration is accepted, the GLO anticipates that the effect of such action by the commissioner will be to facilitate the closure of transactions in which the public receives other consideration or value substantially equal to the amount of any reduced or waived fee or the amount of cash that would otherwise have been received. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Natural Resources Code, sec.51. 014, which provides that the commissioner may adopt rules necessary to carry out the provisions of the chapter concerning land, timber, and surface resources. 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 January 11, 1995. TRD-9500617 Garry Mauro Commissioner General Land Office Effective date: February 3, 1995 Proposal publication date: November 8, 1994 For further information, please call: (512) 305-9129 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 96. Certification of Long Term Care Facilities 40 TAC sec.96.7 The Texas Department of Human Services (DHS) adopts an amendment to sec.96. 7, concerning appeals, in its Certification of Long Term Care Facilities rule chapter. The amendment is adopted with changes to the proposed text as published in the November 25, 1994, issue of the Texas Register (19 TexReg 9340). The justification for the proposal is to add to the rule the circumstances under which DHS will or will not provide an informal reconsideration. The amendment will function by enabling providers and consumers to have a clearer understanding of the informal reconsideration process. No comments were received regarding the proposal; however, DHS is adopting subsection (a)(4)(B) with a change to correct the cross reference cited in clause (i). The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs; and under Texas Civil Statutes, Article 4413 (502), sec.16, which provide the Health and Human Services Commission with the authority to administer federal medical assistance funds. sec.96.7. Appeals. (a) Informal reconsideration (IR). Prior to the effective date of any termination of certification, the Texas Department of Human Services (DHS) gives the facility an opportunity for an IR. (1) Elements of the informal reconsideration are as follows. (A) DHS gives the facility written notice of the proposed termination of certification and the findings upon which the action is based. (B) The facility will have the opportunity to refute DHS's findings in writing. If the facility does not respond during the specified period, the action will be taken. If there is no response by the facility, DHS is not required to take any other action on the appeals process prior to the proposed action. (C) If the facility does respond as required in subparagraph (B) of this paragraph, DHS will give the facility a written affirmation or reversal of the proposed action. (2) DHS will provide IRs for an immediate termination of certification as follows: (A) The facility must submit a written request for an IR and provide all supporting documentation within five calendar days after receipt of DHS's written notice of the proposed termination of certification. Long Term Care- Regulatory staff will provide a written response to the facility within seven calendar days after receipt of the request. (B) If, as a result of a credible allegation visit, the immediate termination is changed to a 90-day termination, an IR will be offered based on the findings of this visit. This second IR will follow the procedures in paragraph (4) of this subsection. (3) DHS will not provide an IR for an immediate termination of certification if, as a result of a credible allegation visit, DHS's proposal to immediately terminate the facility's certification is not changed. (4) DHS will provide IRs for a 90-day termination of certification as follows: (A) The facility must submit a written request for an IR and provide all supporting documentation within seven calendar days after receipt of DHS's written notice of the proposed termination of certification. Long Term Care- Regulatory staff will provide a written response to the facility within ten calendar days after receipt of the request. (B) After the 45-day visit, DHS will provide the following IRs for a 90-day termination of certification: (i) If DHS proposes to continue the 90-day termination based on new deficiencies, an IR will be offered on the new deficiencies only, following the procedure in paragraph (2)(A) of this subsection. (ii) If DHS proposes to continue the 90-day termination based only on uncorrected deficiencies, an IR will not be offered. (iii) If DHS proposes to change the 90-day termination to an immediate termination, an IR will be offered on the new deficiencies only, following the procedure in paragraph (2) of this subsection. (5) DHS will not provide an IR for a 90-day termination of certification if, as a result of a credible allegation visit, DHS's proposal to terminate the facility's certification in 90 days is not changed. (b) Formal hearing for all facilities. 13> (1) The facility will have the opportunity for a formal hearing after the effective date of the termination of certification, denial of certification, or other adverse certification recommendation. (2) A facility desiring a formal hearing must make a request to DHS, in writing, within 15 calendar days after the facility receives DHS's official notice of the action. Upon receipt of the request, DHS's Office of General Counsel will institute formal hearing procedures. Failure of the facility to request a formal hearing within 15 calendar days constitutes a waiver of the right to a hearing. (3) The formal hearing will be conducted in accordance with DHS's formal hearing procedures in Chapter 79 of this title (relating to Legal Services). 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 January 12, 1995. TRD-9500496 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: March 1, 1995 Proposal publication date: November 25, 1994 For further information, please call: (512) 450-3765 Part II. Texas Rehabilitation Commission Chapter 101. General Rules 40 TAC sec.101.14 The Texas Rehabilitation Commission (TRC) adopts the repeal of sec.101.14, concerning Petition for Adoption of Rules, without changes to the proposed text as published in the December 16, 1994, issue of the Texas Register (19 TexReg 9976). The justification for the repeal is that sec.101.14 will be moved and renumbered sec.101.22, so that it will remain at the end of the section. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Human Resources Code, sec.111.018, which provides the Texas Rehabilitation Commission with the authority to make regulations governing personnel standards, the protection of records and confidential information, the manner and form of filing applications, eligibility, investigation, and determination for rehabilitation and other services, procedures for hearings, and other regulations subject to this section as necessary to carry out the purpose of this chapter. The repeal implements Title 10, Chapter 2001, Texas Government Code, (Vernon's), sec.2001.021. 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 January 17, 1995. TRD-9500680 Charles W. Schiesser General Counsel for the Office of the General Counsel Texas Rehabilitation Commission Effective date: February 7, 1995 Proposal publication date: December 16, 1994 For further information, please call: (512) 483-4051 40 TAC sec.sec.101.14-101.22 The Texas Rehabilitation Commission (TRC) adopts new sec. sec.101.14-101.22, concerning General Rules, without changes to the proposed text as published in the December 16, 1994, issue of the Texas Register (19 TexReg 9977). The justification for the new rules are that the public will have greater information concerning the Board of the Commission. No comments were received regarding adoption of the new rules. The new rules are adopted under Texas Human Resources Code, sec.111.018, which provides the Texas Rehabilitation Commission with the authority to make regulations governing personnel standards, the protection of records and confidential information, the manner and form of filing applications, eligibility, investigation, and determination for rehabilitation and other services, procedures for hearings, and other regulations subject to this section as necessary to carry out the purpose of this chapter. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 17, 1995. TRD-9500681 Charles W. Schiesser General Counsel for Office of the General Counsel Texas Rehabilitation Commission Effective date: February 7, 1995 Proposal publication date: December 16, 1994 For further information, please call: (512) 483-4051 Part V. Veterans Land Board Chapter 175. General Rules 40 TAC sec.175.24 The Veterans Land Board adopts new sec.175.24, with changes to the proposed text as published in the October 28, 1994, issue of the Texas Register (19 TexReg 8603). As proposed and adopted, the new rule will authorize veterans to apply for a loan in an amount not to exceed $40,000. One change involves the title of the new rule. As proposed, the new rule was entitled Enhanced Loan Eligibility; as adopted, the new rule is entitled Enhanced Loan Amount. In addition, a minor change was made in the language of the rule for the sake of clarity. As adopted, this new rule will increase the maximum loan amount in the Veterans Land Program to $40,000. No comments were received regarding adoption of the new rule. The new rule is adopted under the provisions of the Texas Natural Resources Code, sec.161.061 and sec.161.063, which provide the Veterans Land Board with the authority to adopt rules that it considers necessary or advisable to ensure the proper administration of the Veterans Land Program. sec.175.24. Enhanced Loan Amount. An eligible veteran who has not previously participated in the Veterans Land Program may apply for either an Enhanced Land Loan, or the standard Land Loan. Enhanced Land Loans shall be in an amount not to exceed $40,000, and shall bear an interest rate set by the Veterans Land Board. Funding for such loans shall come from the proceeds of the sale of taxable bonds. 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 January 12, 1995. TRD-9500618 Garry Mauro Chairman, Veterans Land Board of the State of Texas Veterans Land Board Effective date: February 3, 1995 Proposal publication date: October 28, 1994 For further information, please call: (512) 305-9129 Chapter 177. Veterans Housing Assistance Program 40 TAC sec.177.5 The Veterans Land Board adopts an amendment to sec.177.5, without changes to the proposed text as published in the October 28, 1994, issue of the Texas Register (19 TexReg 8603). The amendment provides for an expansion of the definition of a veteran in the Veterans Housing Assistance Program. As adopted, this rule will expand the class of veteran who are eligible to participate in the housing assistance program to include members of the Texas National Guard, Reservists who have completed at least 20 years of service, and the unmarried surviving spouse of a veteran killed in the line of duty or missing in action. No comments were received regarding adoption of the amendment. This amendment is adopted under the provisions of the Texas Natural Resources Code, sec.162.003(b), which provides that the Veterans Land Board shall adopt rules governing the administration and the fund and program. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 12, 1995. TRD-9500619 Garry Mauro Chairman, Veterans Land Board of the State of Texas Veterans Land Board Effective date: February 3, 1995 Proposal publication date: October 28, 1994 For further information, please call: (512) 305-9129 TITLE 43. TRANSPORTATION Part II. Texas Turnpike Authority Chapter 55. Rules and Procedures for Environmental Reviews of Turnpike Projects 43 TAC sec.sec.55.1-55.9 The Texas Turnpike Authority adopts new sec.sec.55.1-55.9, implementing House Bill 749, concerning Rules and Procedures for Environmental Reviews of Turnpike Projects, without changes to the proposed text as published in the October 25, 1994, issue of the Texas Register (19 TexReg 8531). The Rules and Procedures are to be used in evaluating environmental impacts and potential environmental impacts on Turnpike projects. The Rules and Procedures are promulgated to comply with Texas Civil Statutes, Title 116 (Act effective September 1, 1991, 72nd Legislature, Regular Session, Chapter 766, 1991; Texas General Laws, 2718 (the Turnpike Act) ), and in particular the Turnpike Act, sec.16(b). No comments were received regarding adoption of the rules. The rules are adopted pursuant to Texas Civil Statutes, Article 6674v, sec.16b; and the Texas Administrative Code, Title 43, Part II, Chapter 55. The adopted rules affect the Texas Civil Statutes, Article 6674v, sec.16b, which provide the Texas Turnpike Authority the authority to promulgate rules. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 4, 1995. TRD-9500667 James W. Griffin Executive Director Texas Turnpike Authority Effective date: January 27, 1995 Proposal publication date: October 17, 1994 For further information, please call: (512) 522-6200