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 22. EXAMINING BOARDS Part XXII. Texas State Board of Public Accountancy Chapter 501. Professional Conduct The Texas State Board of Public Accountancy adopts amendments to sec.sec.501. 2-501.4, and 501.40, concerning professional conduct. Section 501.2 and sec.501. 40 are adopted with changes to the proposed text as published in the March 17, 1995, issue of the Texas Register (20 TexReg 1851). Section 501.3 and sec.501.4 are adopted without changes and will not be republished. The changes for rule 501.2 are the inclusion of the word "routinely" before the word require in subparagraph (A)(iv) of the definition of the practice of public accountancy, and the replacement of the words "is conventionally understood to imply such assurance and/or such" with the word "implies" as part of the definition of Report. The changes to sec.501.40 are the replacing of the word "resumes" with the word "reserve" in the second paragraph of the preamble to rule 501.40; the changing of the word "holders" to the word "holder" in subsection (b); the replacement of the word "or" with the word "and" in subsection (a)(1) before the words "is required to register"; and the replacement of the words "other printed" with the word "written" in subsection (b) before the word "statement, " and after the words "advertisement or"; and the inclusion of the word "the" before the word "certificate" in the subsection (b). The insertion of the phrase "as such" following the word principal in subsection (b), and the deletion of the word "both" and the phrase "and the name of the certificate or registration holder" in the same subsection. The words "authorized by" are replaced with the phrase "qualified to register with" in subsection (b). The last line of subsection (b) includes the new sentence "If the advertisement is in audio format only, the foregoing notation shall be clearly declared at the conclusion of each such presentation." Under subsection (c)(2) the words "institution's" and "fiduciary capacity" have been deleted. The last line of subsection (c)(2) now includes the phrase "activities of the institution's trust department". The amendments allow for a clearer understanding of the definitions; divide the definition of practice of public accountancy into two categories, client practice and industry or government practice; and comply with the U. S. Supreme Court decision in Ibanez v. The Florida State Board of Public Accountancy. The amendments will function by establishing clearer definitions of terms used in other rules such as sec.501.40. Comments concerning sec.sec.501.2-501.4 and 501.40 were received at the Board. The following people expressed the comments listed. 1. Chenok, Philip B. President, AICPA, New York, New York. The American Institute of Certified Public Accountants (AICPA) stated in its comments to the Board that the Board should reconsider the adoption of the proposed rules. The AICPA stated that the proposed disclaimer will confuse and mislead the public and in order to assure compliance with the highest ethical and professional standards a CPA should practice in a firm that adheres to the same ethical and professional standards as the CPA. Its comments further stated that constitutional law does not mandate the Disclaimer. RESPONSE: The Board recognizes and appreciates the concerns identified in the AICPA's comments. The Board is also sensitive however to the individual CPA's right to commercial free speech and unobtrusive regulation. The profession has changed dramatically in the last 30 years. The Board believes that it has an obligation to address these changes by its regulations and to recognize that a large majority of CPAs in the State of Texas are no longer practicing public accounting in the traditional CPA firm. The Board has determined that the proposed rules recognize and accommodate the CPA who wishes to practice through a CPA firm as well as those who choose to provide accounting services to their employer or provide the services to the public as a person with specialized training but without providing auditing, compilation and reviews. The proposed regulation does not prohibit a CPA from telling the public that he or she is a CPA while practicing through a non-registered entity. The Board believes that such a practice is at best difficult to monitor and enforce as well as unfair to the CPA who has earned the recognition. What the proposed rule provides is three options from which to choose. The CPA may practice through a CPA firm. The CPA may also practice through a non-CPA firm that does not provide audits, compilations and review and use the Disclaimer language when he or she is identified in a written statement or audio advertisement as a CPA. The CPA may also choose to provide accounting services through a non-CPA firm not providing the attest function without being identified as a CPA. Subsumed in the Board's mission to protect the public is an obligation to allow consumers to make their own informed, educated choices. The Board believes that the proposed rule permits the CPA to choose a form of practice which recognizes the CPA's accomplishment and administers a regulatory program that creates a better informed public. Regardless of whether the CPA licensee provides services through a registered entity or not, the CPA licensee is required to comply with the Board's Rules of Professional Conduct. 2. Baker, W. Hank, Senior Vice President Secured Trust Corporation, Tyler, Texas. Mr. Baker said using the term "federally-insured depository institution" is inappropriate because the term refers to insuring time and demand deposits and does not relate to fiduciary activities because trust deposits are not covered by the FDIC. He points out that financial institutions may be chartered by the State of Texas, and that both state and federal charters may be issued solely for fiduciary activities. Mr. Baker suggests replacing the term with "an institution regulated by the Texas Department of Banking, the Office of the Comptroller of the Currency." RESPONSE: The Board considered these issues to some degree and, while further study may be appropriate, there was a conclusion that federal insurance would be used as the exemption trigger, not because of the insurance of deposits but because federal insurance triggers the full scope of federal regulation. Whether a bank is state chartered or federally chartered, to obtain federal insurance the bank must submit to the full scope of federal regulation and it was this extent of regulation that the Board felt comfortable using as the benchmark for exemption. The Board's initial review concluded that purely state regulated trust companies were subject to less onerous state regulatory schemes than is the case for the trust departments of traditional, federally-insured and regulated commercial banks. Furthermore, the state "change of control" regulations over pure trust companies, as compared to federally regulated banks with trust departments, possibly render such trust companies subject to manipulation and use as conduits by commercial enterprises seeking to obtain the benefit of the exemption. This "conduit" concern also arises from the fact that state regulated trust companies with limited assets exist which could be obtained by a commercial enterprise at comparatively low cost. The Board members also felt the exemption should be based on the fact that existing federal law allows tax return preparation and other related accounting services within the trust departments of federally regulated commercial banks, under a Constitutional preemption concept. This preemption argument would not apply to state regulated trust companies. If financial institutions can provide the Board with evidence of like regulation the Board would be receptive to revisiting this issue in the form of a future rulemaking. 3. Barr, Robert H., CPA. Mr. Barr objects to the Disclaimer because he believes: it tarnishes the image of the CPA designation; creates a misunderstanding for the public; creates a second class CPA status; there is no substantial difference between a CPA in commercial enterprise and a CPA in a CPA firm; the Disclaimer is a misrepresentation of fact; and, the Disclaimer would stop CPAs from doing work they are more qualified to perform. Mr. Barr says the matrix and the rules are not in agreement because the rule says the Disclaimer is required even when the CPA designation is not used, while the matrix implies a Disclaimer is required only when the CPA designation is used. He agrees with the proposed rules regarding attest and compilation. RESPONSE: The Disclaimer has been re-written to be informative and accurate for the consumer, and non-derogatory and positive for the CPAs whose employers will make the disclosure. Although the matrix is not a rule, language has been added to make it clear that the disclaimer is required when there is reference by a firm to any CPA's association with the firm offering accounting services. 4. Blair, Vickie L., CPA, Rockwall, Texas. Ms. Blair objects to the Disclaimer because it strengthens the position of the large CPA firms in areas other than attest and compilation, because she is as qualified as any other CPA, and because the Disclaimer is discriminatory. RESPONSE: See response in Number 3. 5. Broussard, Jana K., CPA, Hallsville, Texas. Ms. Broussard objects to the Disclaimer to the extent its disclosure is required in areas other than attest, compilation and report preparation because it implies her CPA designation is invalid. She suggests the possibility of a third category of CPA for the attest function alone or a restating of the disclaimer in a positive manner. RESPONSE: See response in Number 3. 6. Burgher, Jeffrey, CPA, Dallas, Texas. Mr. Burgher is a property appraiser. He is concerned that the definition of accounting may apply to him because of inconsistent answers. If the definition does apply to him then he objects to the Disclaimer. Mr. Burgher is appalled that the current and proposed definition of accounting is so broad. He states compilation services are not a concern and if attestation services are the concern then the board should be more specific. Mr. Burgher says this is a restraint of trade by CPA firms. RESPONSE: The reasons for the responses were explained to Mr. Burgher in a letter dated April 17. The definition and the Disclaimer would not apply to Mr. Burgher. The definition of accounting was created by the Texas Legislature and not this proposed rulemaking. 7. Cannefax, Terry, Assistant Vice President Accounting Policy and Procedure, USAA, San Antonio, Texas. Mr. Cannefax asks 5 questions requiring interpretation and application of the proposed rules including whether the proposed rules prohibit CPAs performing pro bono work for charities unless they have registered practice units. He wants the exemption to include employees of life insurance companies and investment management/broker dealers because they occasionally give financial advice to their employer's customers like bank trust departments. RESPONSE: CPAs performing pro bono work will not be held accountable by the Board for their pro bono work so long as they reasonably adhere to professional standards. CPAs who perform as investment managers/broker dealers and sell life insurance are not in the practice of public accountancy and may display their CPA designation without having to practice through a registered entity or use the Disclaimer language of rule 501.40(b). 8. Chovantez, Frank Mr. Chovantez wants the Board to retain the asterisk by the CPA's name and wants the Disclaimer to read "Not authorized" instead of "Not qualified" to register. RESPONSE: The Board does not believe that the Disclaimer language appended to the CPA's name and firm name would be an accurate statement. Only the firm is not registered by the Board of Public Accountancy. If a CPA licensed by the Board is required to insert a disclaimer stating "not qualified" alongside his name, the public could be misled into believing that the CPA is not fully accredited. The Board has chosen the term "qualified" in order to track the language of the section of the Public Accountancy Act that requires registration. The Board believes "qualified" is a more accurate representation of legislative intent. 9. Corbin, Ray W. Mr. Corbin is a shareholder in an independent trust company regulated by the Texas Department of Banking and wants the exemption expanded to exempt state or federally regulated corporate trustee services. RESPONSE: See response in Number 2. 10. Douglas, Melvyn L, attorney/CPA, Dallas, Texas. Mr. Douglas supports the exemption for attorneys. RESPONSE: The rules express long-standing Board policy regarding attorney/CPAs. 11. Texas Credit Union League (TCUL) and TCUL Services (TCULS) commented through their attorneys, Gail Watkins and Lisa Dreishmire, Haynes and Boone, Austin, Texas. The member credit unions own TCUL, TCUL owns TCULS, TCULS employs CPAs to perform accounting services for its member credit unions. TCULS believes the CPAs are employees of the member credit unions and in the industry category. TCULS wants additional rule language to allow it to perform specific review and examination functions, not opinion or attestations, as required by state or federal statutes or regulations on credit unions. RESPONSE: The Board agrees with the comment as presented that the CPAs with TCULS are in the industry or government practice of public accountancy. Paragraph B in the definition of public accountancy states that a CPA is in industry or government practice when preparing or reporting on financial statements of the CPA's employer or an entity "affiliated with" the employer. Paragraph D states that the CPA is "affiliated with" a licensee's employer when the employer possess the power to direct the management of the entity through ownership. TCULS must recognize, however, that when preparing financial statements for their owner/employer credit unions they must comply with sec.501.4(b) of the Board rules. That section prevents a licensee not in the client practice of public accountancy from claiming or implying independence from his or her employer. 12. TCUL and TCULS In a subsequent comment TCUL significantly changed the wording of the language it had earlier proposed for a rule to apply to its specific situation. RESPONSE: The response in Number 11 still applies. 13. Feher, Theodore M., CPA, National Conference of CPA Practitioners (NCCPAP), Lake Success, New York. Mr. Feher wants the board to require all CPAs to follow the same ethical standards. He does not want CPAs to be licensed unless they are employed by licensed CPA firms. He asked the Board to conduct additional public hearings on these rules. Mr. Feher wants the definition of public accountancy defined as anything a licensed CPA does; a CPA may be licensed only if employed by a CPA firm; anyone not licensed is not practicing public accountancy; anyone not licensed may not refer to themselves as a CPA. Mr. Feher dislikes the 5-minute limit on addressing the Board at public hearings on the rules, and the 8:30 a. m. public hearing starting time because they are disincentives to CPAs living outside Austin. RESPONSE: All CPAs are held to the same ethical standards. Depending on a CPA's work, different professional and industry standards may apply but the standards apply uniformly to every CPA engaged in that particular line of work. The Board held public hearings on these rules on January 19, 1994 and on April 18, 1995. No reason is given to support the request for further hearings. The Board is not required to conduct a third public hearing and believes that it has received enough evidence over the last two years it has studied this issue to make an informed decision. NCCPAP's definition may be too exclusive. There were no limits imposed on the length of written comments to be submitted to the Board, and all written comments on the proposed rules were photocopied and made available to all Board members. It is reasonable for an organization to impose time limits on speakers. Early starting times allow persons to return to work without losing the entire day. It is unlikely any time limit and starting time would satisfy everyone. 14. Feher, Theodore In a subsequent comment Mr. Feher states he was under the impression from the April 18, 1995 public hearing that the Board would not consider the rules until the June 29, 1995 Board meeting. He believes the Board's meeting dates are arbitrary, impulsive and inconsistent and that the Board is trying to "railroad" a decision. RESPONSE: At the April 18, 1995 public hearing there was some discussion that the next regularly scheduled Board meeting was on June 29, 1995. At the April 19, 1995 Board meeting the full Board decided to hold a Board meeting on May 1, 1995 to consider these and other rules. Notice of the Board meeting was personally mailed to each individual attending the April 18, 1995 public hearing and to each person who submitted written comments to the Board as well as being published in the Texas Register . With regard to the Board acting impulsively on these rules, the Board has been examining these revisions for approximately 2 1/2 years. On two occasions the Board has personally provided mail outs to over 50,000 people advising them of the Board's proposals, explaining them and soliciting their comments. Two public hearings have been conducted to receive and consider public comments and the Board has discussed the proposed rulemaking at most of the Board's public meetings for the past two years. The proposed rulemakings have been published in the Texas Register pursuant to state law and the Board has received more written comments on these rules than the Board has received in its recent history. It is not a fair nor accurate comment to accuse the Board of attempting to "railroad" its decisions. 15. Flanagan, Sam, CPA, Austin, Texas. Mr. Flanagan is 100% in support of the proposed rules. He favors a waiver of continuing professional education requirements and a reduction of license fees for commercial enterprise CPAs, and thinks specialty designations are needed. RESPONSE: The licensing fee is being reduced. As low as the fee will be, it would serve little purpose to distinguish between commercial enterprises and CPA firms. CPE, license fees and specialty designations are outside the scope of the proposed rules. CPAs are free to move among CPA firms, commercial enterprise, industry and government, and the Board may set a minimum continuing professional education requirement for all CPAs. 16. Freeman, L. DeLynn, Dallas, Texas. Mr. Freeman opposes the Disclaimer because it implies someone is less qualified. RESPONSE: See response in Number 3. 17. Guinn, G. Kyle, Southwest Guaranty Trust Company, Houston, Texas. Mr. Guinn endorses the language proposed by Dianne Hughes and states that independent trust companies are regulated similarly to bank trust departments. RESPONSE: See the response to Ms. Hughes at item 22. See response in Number 2. 18. Harris, Susan R. Ms. Harris wants the exemption extended to other entities which meet the same criteria. Registered Investment Advisors (RIAs) are highly regulated by the Securities and Exchange Commission and the State Securities Board. Both the SEC and the State Securities Board perform compliance audits of RIAs. She points out the similarity to bank trust departments and feels excluding other groups which satisfy the criteria is unfair, discriminatory and provides an unfair competitive advantage. She suggests a process whereby other entities could apply for exemption. Ms. Harris included approximately 1/4 inch of materials supporting her exemption request, which is useful. In a subsequent comment Ms. Harris said there are attorneys performing the same services as she offers and they may use the CPA designation without a Disclaimer. The Disclaimer is negative and she suggests an alternate, but lengthier language. The Disclaimer should only address the attest function. Either there should be no exemptions or the exemptions should be fair and available to anyone who satisfies the criteria. RESPONSE: There is no intent, desire or design to exclude any group or to favor one group over another. The Board has not satisfied itself that any industry that is regulated should be able to be exempted. The nature, scope and goals of regulation, and enforcement policies, vary for each regulated industry and, accordingly, the potential for abuse at the entity level varies as well. Some regulatory schemes, while stringent as to their primary purpose and goal, may offer no relief or safety with regard to accounting services rendered by individuals within those regulated businesses. After consideration of historical experience and legal analysis, the Board only felt confident with the two exemptions provided for in proposed Rule 501.40. The rules can be amended to recognize any exemptions the Board feels qualify for exemption. The board already has procedures whereby CPAs can apply for exemptions from other requirements, and this exemption can be included. 19. Hay, Fred, CPA, Austin, Texas. Mr. Hay requested clarification on the proposed rules' impact on his practice. RESPONSE: In a letter dated April 17, 1995 the staff informed Mr. Hays that the proposed rules did not affect his occasionally serving as a client's internal controller since he has a registered practice unit. 20. Hochberg, Scott, State Representative from District 132, Houston, Texas. Representative Hochberg suggested the insertion of "routinely" between "recommendations" and "require" in sec.501.2(A)(iv) to clarify that periodic recommendations or advice are not prohibited. RESPONSE: His recommendation has been included in the most recent draft. 21. Holeman, Roger A. Mr. Holeman inquired whether private practice CPAs would have a different "stature" from public practice CPAs, and said the large public accounting firms were lobbying to deny private practice CPAs the same rights and privileges granted public practice CPAs. RESPONSE: Both CPAs in client practice and CPAs in Industry and Government practice are permitted to use their CPA designation. A CPA in the client practice of public accountancy who is not practicing through an entity registered with the Board must advise the public of that fact. This does not provide any distinction in stature between CPAs. It does result in informing the public when a CPA chooses not to practice through a registered CPA firm. 22. Hughes, Dianne, Executive Director, Trust Financial Services Division/Texas Bankers Association, Austin, Texas. Ms. Hughes feels the rules discriminate against independent trust companies and other financial institutions like credit unions, and exclude state chartered independent trust companies and federally chartered trust companies. She recommends against referencing specific regulatory agencies because of overlapping authority and possible future government downsizing. She recommends using "state or federally regulated financial institution that provides depository or corporate trustee services." RESPONSE: See responses in Numbers 2, 11, and 18. Excluding some groups from exemption for a reasonable period of time to allow the Board to study whether exemption is appropriate for any of the excluded groups does not rise to the level of discrimination As to Ms. Hughes' comment about not referencing a particular regulatory agency, the Board recognizes the extent and quality of oversight and regulation varies by regulatory body and prefers to avoid expressing a blanket approval of all regulatory bodies. 23. Joiner, J. David, CPA, Dallas, Texas. Mr. Joiner supports the Disclaimer and feels CPAs not involved in client practice should not identify themselves to the public as CPAs. RESPONSE: See response to Number 3. Limiting the CPA designation to only CPAs in client practice would be overly limiting. 24. Kanaly, E. Deane, Chairman Kanaly Trust Company, Houston, Texas. Ms. Kanaly seconds Dianne Hughes' comments regarding independent trust companies. RESPONSE: The response to Ms. Hughes is at item 22. 25. M. Travis Keath, CPA, Mary Beth Petruska, CPA, and Ray A. Sheeler, CPA, Business Valuation Services (BVS), Dallas, Texas. BVS objects to the Disclaimer because it believes it is blatantly anti competitive. The Disclaimer would impair the utility of the CPA designation at unregistered firms, implies some CPAs are less qualified, and places them at a distinct marketing disadvantage. BVS acknowledges the unauthorized provision of attestation and compilation services is undesirable, but suggests this be addressed via annual affidavits requiring disclosure of any attestation or compilation services performed. RESPONSE: See response to Number 3. Licensee affidavits which admit to having performed attest or compilations during the previous year fail to protect those members of the public who retained or relied upon the attestations or compilations during the year ended. Affidavits are neither prohibitions nor always reliable. 26. Kuhlwein, Michael R., CPA, Dallas, Texas. Mr. Kuhlwein objects to the Disclaimer, categorizing it as sheer discrimination and an attempt to circumvent Ibanez. He states the true reason for the proposed rules is to strengthen the position of the large CPA firms in service areas other than attest and compilation. RESPONSE: The proposed rules are an attempt to regulate fairly, and inform and educate the public: they are not an attempt to favor one group of CPAs over another. 27. Liles, Mitch, Garland, Texas. Mr. Liles' comments were general and did not address any particular rules. He feels whatever rules are adopted should not cause a CPA to have to surrender his certificate; the current dilemma could be resolved by not requiring practice unit registration; and, the Board's genuine attempt to be fair is resulting in over regulation and excessive definition. RESPONSE: The proposed rules are not designed to cause surrenders of certificates; they should result in more compliance with the Board's rules. Practice unit registration does not pose any problem addressed by the proposed rules. To the extent there is a "problem," the "problems" are caused by CPAs, not by inanimate legal entities. In order to place everyone on notice and to be fair, sometimes rules and definitions have to be lengthy. 28. Lucksinger, Michael, attorney/CPA, Burnet, Texas. Mr. Lucksinger supports the proposed rules, especially as they apply to attorneys. RESPONSE: The rules express long-standing Board policy regarding attorney/CPAs. 29. Luckenback, Byron, CPA, Green & McElreath The commenter stated that the asterisk footnoting the Disclaimer language should be by the written name of the CPA as well as the firm name. He was concerned that the public would be confused and not understand the distinction. He also recommended that the Disclaimer language contain "not authorized" as opposed to "not qualified to register with." RESPONSE: The Board does not believe that the Disclaimer language appended to the CPA's name and firm name would be an accurate statement. Only the firm is not registered by the Board of Public Accountancy. If a CPA licensed by the Board is required to insert a disclaimer stating "not qualified" alongside his name, the public could be misled into believing that the CPA is not fully accredited. The Board prefers to state "not qualified" rather than "not authorized" since qualified is the term used in sec.10 of the Public Accountancy Act that requires firm registration. The Board believes qualified more accurately reflects the legislative intent. 30. Lyons, E. Keith, CPA, Investigative Group Inc., Houston, Texas. Mr. Lyons is part owner of a private investigation firm. He feels he is in commercial practice and objects to the Disclaimer because it creates the false impression that he is not a "real" CPA. He thinks CPA firms are forcing other CPAs to use the Disclaimer to give potential clients the wrong impression, resulting in unfair competition. RESPONSE: See response to Number 3. One result of the proposed rules will be increased information and more accurate information being available to the consumer. Favoring one group of CPAs over another group is neither this Board's mandate nor its desire. A private investigator is not in the practice of public accountancy and thus not required to use the Disclaimer language. 31. McCullough, Thomas W., attorney, President American Association of Attorney-Certified Public Accountants, Houston, Texas. Mr. Mccullough supports the proposed rules, especially as applied to attorney/CPAs. He suggests the exemption be moved to the definitions section and modified to clarify it is the legal services which are excepted. Mr. McCullough discusses separation of powers since attorneys are under the judicial branch of government and this board is under the executive branch. RESPONSE: The proposed rules express the board's long-standing policy regarding attorney/CPAs. The suggested language is inappropriate because it is not the attorney's practice of law that is being exempted, it is the attorney/CPA's unregistered practice unit practice of public accountancy that is being exempted. The separation of powers doctrine is inapplicable. This Board has no jurisdiction over the practice of law. This Board does have jurisdiction over the practice of accountancy. Whenever anyone receives this Board's licensure they automatically become subject to this Board's jurisdiction as to the practice of public accountancy. 32. McElreath, Ross, CPA, Green & McElreath The concerns expressed in his written statement mirrored the concerns expressed in Number 29. RESPONSE: See response contained in Number 29. 33. McKenzie, Sarah, National Director-Firm Development, American Express Tax and Business Services (AMX), Minneapolis, Minnesota. Ms. McKenzie submitted lengthy comments on compiled financial statements and the Disclaimer. Compilations. Ms. McKenzie says equating compilations with audit and attest functions gives CPA firms a monopoly on compilations. She says only CPAs employed by CPA firms will be able to provide client services that include compilations. Compiled financial statements, and the reports thereon, are not expressions of opinion by CPAs and present no risk to third party users. The proposed rules would lock AMX out of tax and management services because they are integrally linked to compilations. CPAs are prohibited from offering the same services that non CPAs may lawfully provide. Ms. McKenzie cites the Opella case which permits unlicensed accountants to issue transmittal letters with compilations. The Board is attempting to prohibit CPAs employed by non CPA firms from issuing compilations and transmittal letters in the same form as unlicensed accountants are permitted to do. More qualified professionals are prohibited from doing what less qualified non CPAs may do. Ms. McKenzie disagrees with the conclusion that the rules will not adversely affect small businesses and will not impose costs on those businesses. She says the rules will drive competitors in tax and business services out of business entirely, will greatly reduce the revenues of others, and are anti-consumer, pro-monopoly. Disclaimer. The Disclaimer conveys materially false information to consumers. The individual CPAs and the unlicensed firms may provide tax and consulting services. The Disclaimer is grossly over broad and unnecessary. Ms. McKenzie cites a Supreme Court Justice's comment during oral argument of Ibanez to the effect that if a potential client were to seek attest services from a CPA employed by a non CPA firm the CPA would simply inform the potential client that the attest service was not available. The Disclaimer is so negatively worded that it creates a ban on using the credential. If CPAs choose to not use the CPA designation the consumer is not aware they have a right to file a complaint with the IRS. The Disclaimer must not be necessary because banks and law firms are exempted. It would be more effective to restate the Disclaimer positively. RESPONSE: Compilations. CPAs do not receive a monopoly on compilations by these proposed rules. Non CPA firms may prepare financial statements so long as no opinion is expressed and no report is included which violates sec.8 of the Act, and so long as they are not performed by CPAs. There is an exemption in SSARS for financial statements prepared in connection with tax return preparation. The commenter states that compilations do not present a risk to third party users. Third parties do rely on these compilations and if a bank, for example, sees a compilation signed by a CPA it will give it greater weight than one signed by a non CPA. The bank would expect the compilation performed by the CPA to be performed in accordance with CPA standards, i.e. SSARS. The public needs to be protected and is being protected when CPAs are required to perform in accordance with stricter standards than non CPAs. The CPA firm ownership requirement is one of these stricter standards, in that it assures that all of the owners of the firm are licensed and subject to the professional standards applicable to CPAs. Disclaimer. See response in Number 3. 34. Mintz, Steven. Professor Mintz says some individuals required to issue a Disclaimer may actually perform some services through unregistered entities. He suggested new and additional language for the Disclaimer. RESPONSE: The circumstances under which disclosure is required has been changed to require disclosure by the employer, not the employee. See response to Number 3. 35. Neely, Karen M., General Counsel, Independent Bankers Association of Texas, Austin, Texas. Ms. Neely says the trust department exemption only applies to fiduciary activities. She wants the exemption expanded to apply whenever the bank was acting within the scope of its legally permitted activities. RESPONSE: The exemption is limited to trust activities because that is the banking activity with the extensive federal regulatory oversight. The other banking activities do not receive the same level of regulatory oversight. 36. Newlin, Clarke R., Senior Vice President, Advent Trust Company, Houston, Texas. Mr. Newlin concurs with Ms. Hughes comments at item 22. He suggests the exemption for attorneys be expanded to include employees of an attorney because his company has some tax work performed by an affiliated law firm. RESPONSE: The suggested language is unnecessary. The exemption is based on the fact that attorney/CPAs are regulated by the State Supreme Court and by this Board. Employees of an attorney may not be licensed by the State Supreme Court, by this Board, or by any regulatory authority. Other banking activities do not receive the same level of regulatory oversight. Also see responses to Numbers 2 and 18. 37. Owen, Bob, President, TSCPA, Dallas, Texas. Mr. Owen is in favor of the proposed rules. He feels compilation services must be performed by registered entities. He wants the Board to aggressively enforce the Disclaimer requirement. RESPONSE: None required. 38. Robinson, John C., CPA, Garland, Texas. Mr. Robinson objects to the definition of accountancy including the sale of computer software. Mr. Robinson says the Board's rules are intended to protect users of audited financial statements by policing the competency of those who prepare the statements. RESPONSE: The sale of computer software is not regulated. It becomes regulated when a purchaser makes a decision to purchase computer software based upon the expert advice of a CPA. When the public relies upon the advise of a CPA in the sale of accounting software, the CPA is in the practice of public accounting. 39. Rucker, Guy W., CPA, Addison, Texas. Mr. Rucker says the giving of tax advice and management consulting are the practice of law, and the Board is infringing on the State Bar and the Supreme Court which regulate the practice of law. He also says the preparation of tax returns is regulated by the IRS, not by this Board. RESPONSE: The Board has a long-standing policy of exempting attorney/CPAs. The Board has concurrent and independent jurisdiction over CPAs who are attorneys, and over CPAs who are subject to IRS regulation. 40. Rye, Joe T. Mr Rye thinks it is a mistake to grant an exemption because others will want the exemption resulting in selective enforcement. He says the matrix and rules are inconsistent. He says the rules require the Disclaimer even if the designation is not used, while the matrix requires the Disclaimer only if the designation is used. He says a CPA owner of a corporation ineligible to register would have to surrender his certificate. RESPONSE: If the Board grants an exemption when certain requirements are satisfied, then it would be a mistake to not grant exemptions to anyone who satisfied the criteria. This is equal treatment, it is not selective enforcement. Selective enforcement occurs when only some suspected violators are regularly prosecuted and other similarly situated suspects are regularly not prosecuted. The rule has been revised to be in agreement with the matrix. 41. Scott, Dr. Edward R., Los Angeles, California. Dr. Scott stated that expanding the definition of the practice of accountancy places an unreasonable burden on many accountants. The proposed definition will deprive some CPAs of their certificate, will deprive some employers of the value of their employee/CPA's certificate, and will deprive some CPAs of potential jobs. He suggests having CPAs indicate the last year they were licensed; establishing a second category of certificate for MIGIs with minimum annual requirements, and allowing MIGI CPAs to honorably "retire" their certificate. RESPONSE: The Board is not expanding the definition of Public Accountancy. The definition was created by the Texas Legislature. 42. Texas Commerce Bank National Association (TCB) commented through its attorney, Carroll Shaddock, Houston, Texas. TCB wants the exemption to apply to all activities undertaken as an employee of a federally insured depository. If not, TCB says the exemption language is unclear and wants the exemption language clarified. RESPONSE: The Board does not believe that the other banking activities receive the same level of oversight as trust departments. In response to the issue raised concerning the clarity of the exemption, the Board has revised the language in sec.501.40(c)(2) to address his concern. 43. EDS commented through its attorney, Marc Shivers of Hughes & Luce, Austin, Texas. EDS says it is unclear when the Disclaimer must be used, suggests alternate Disclaimer language, believes the Disclaimer should not be used by the CPA's name, and suggests a shorter Disclaimer for the CPA's business card. In a subsequent comment EDS said the last clause in sec.501.40(a)(1) referencing sec.20 was confusing and unnecessary. RESPONSE: The Disclaimer has been rewritten. EDS' observation was correct. The "or" was changed to "and." The end of this clause should read: ". . .eligible for registration, and is required to register . . ." 44. Sterkx, Albert D., CPA, Katy, Texas. Mr. Sterkx complains about fee increases, the current confusing fee structure, and the continuing professional education requirement. He believes any CPA should be able to offer his services to the public. RESPONSE: By letter dated April 17, 1995 Mr. Sterkx was informed the fees are legislatively mandated, that the current fee structure is a conversion to birth month licensing, and about practice unit registration. The remainder of Mr. Sterkx' comments do not address the proposed rules. 45. Tenenbaum, Marvin A., Vice President & General Counsel, Peterson Consulting, Chicago, Illinois. Mr. Tenenbaum objects to the negativeness of the Disclaimer and suggests more neutral language be used. He objects to the exception for banks and lawyers as being arbitrary, unlawful and unwarranted. He says the statement that lawyers' practice of public accountancy is the practice of law is totally incorrect. He says the rules will allow a law firm to use non lawyer CPAs to perform public accounting and will allow the law firms' non lawyer CPAs to use the CPA designation. RESPONSE: The Disclaimer has been rewritten. When attorneys interpret the Internal Revenue Code, Tax Court opinions, and prepare inventories and financial statements for use in courts, they are engaged in the practice of law. CPAs who prepare tax returns and offer tax advice are not subject to charges of unauthorized practice of law due to long-standing policy agreements between the two professions. An attorney/CPA may use the CPA designation. The CPA designation may not be used by a non CPA attorney and may not be used by a non CPA employee of the attorney. A non CPA attorney may not engage in the practice of accountancy unless it is incidental to the practice of law. A CPA/attorney may not perform an audit or issue an audit report as part of his practice of law. 46. Vest, Herb, chairman, HD Vest Financial Services, Irving, Texas. Mr. Vest comments about the short time allowed in which to comment on the proposed rules and says this is due to the Board's hidden agenda. He says expressing an opinion on a set of financial statements is the only area exclusive to a CPA. Including other service areas is designed to regulate the competitive process and not to protect the public. RESPONSE: The Board has been considering these rules since 1993 and has written about them in two Board Reports and had two public hearings and two separate comment periods. The public participation is unprecedented and it is thus difficult to justify accusing the Board of hiding anything. The definition of accountancy is also in the Public Accountancy Act and it is not limited to attestations. 47. Vickers, F. Charles, CPA, Dallas, Texas. Mr. Vickers wants sec.501.2(B)(1) and (D) to include the situation where a wealthy family employs CPAs to perform accounting, tax and compilation services for the individual family members, for the trusts established for family members, and for companies owned by family members. Services are not performed for any persons not related "in some way" to this particular family. RESPONSE: Rather than grant an exception for a nebulous but small category, case-by-case examination is more appropriate. Mr. Vickers does not define either "family" or "in some way." These terms could be extended to include a large number of persons who are remotely related to each other. It is unclear whether the companies are fully owned only by some or all of the family members or whether there is non-family ownership. 48. Walker, David G., CPA, Vice President, Mercantile Partners, Fort Worth, Texas. Mr. Walker says if the rules mean a CPA in industry or government is prohibited from allowing internally generated financial statements from getting into the hands of third party users such as banks, then there is no reason to hire a CPA or for a CPA to use his designation. He also says CPAs in industry or government should be allowed to practice on the side without paying a $250 fee and being subject to quality review. RESPONSE: By letter dated April 17, 1995 staff informed Mr. Walker that CPAs may practice on the side, that the practice unit fee is $100, and under what circumstances quality review is required. The rules do not require a CPA to prevent his employer's dissemination of financial statements. 49. Wilshire, Rick, President, National Association of Enrolled Agents, Gaithersburg, Maryland. Mr. Wilshire objects that Enrolled Agents (EA) are not exempted because they are regulated by the IRS. He says EAs prepare financial statements for their practice before the IRS and the proposed rules restrict this ability. In a subsequent comment Mr. Wilshire took exception to a Board member's comment at the April 18, 1995 public hearing and offered citations to federal statutes and regulations regarding regulation of EAs by the Internal Revenue Service. RESPONSE: Enrolled Agent CPAs who are licensed by the State of Texas agree to abide by the terms of their licensure. They can not agree to licensure and its terms and simultaneously argue that the terms they have agreed to do not apply to them because of federal preemption. When the public sees the CPA designation, they expect and should expect that the CPA is complying with the requisites of being a CPA. 50. Wilson, Pat, CPA, Alamo Investment Management, San Antonio, Texas. Mr. Wilson is an institutional money manager who manages investment portfolios. It seems he believes he may not be able to use the CPA designation under the proposed rules. He suggests he be allowed to use the CPA designation as long as he tells the public he does not practice accountancy. RESPONSE: Mr. Wilson is in the industry or government practice of public accountancy. Based upon the information provided he does not provide financial advisory services and may therefore use the CPA designation without the Disclaimer language. General Provisions 22 TAC sec.501.2 The amendment is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which provide the Texas State Board of Public Accountancy with the authority to make such rules as may be necessary or advisable to carry in effect the purposes of the law. sec.501.2. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Practice of public accountancy-The practice of public accountancy includes the client practice of public accountancy and the industry or government practice of public accountancy. (A) Client Practice. Client practice of public accountancy is the offer to perform or the performance by a certificate or registration holder for a client or a potential client (other than the certificate or registration holder's employer or an entity affiliated with the employer) of a service involving the use of accounting, attesting, or auditing skills. The phrase "service involving the use of accounting, attesting, or auditing skills" includes: (i) the issuance of reports on, or the preparation of, financial statements- including historical or prospective financial statements or any element thereof; (ii) the furnishing of management or financial advisory or consulting services; (iii) the preparation of tax returns or the furnishing of advice or consultation on tax matters; and/or (iv) the advice or recommendations in connection with the sale or offer for sale of products (including the design and implementation of computer software), when the advice or recommendations routinely require or imply the possession of accounting or auditing skills or expert knowledge in auditing or accounting. (B) Industry or government practice. Industry or government practice of public accountancy is: (i) the preparation of, or reporting on, financial statements (including historical or prospective financial statements or any element thereof) by an individual licensed under the Act, of the individual's employer or an entity affiliated with the employer, when the financial statement or report is to be used by an investor, a third party, or a financial institution; (ii) the preparation of a tax return of the individual's employer or an entity affiliated with the employer, if the tax return is filed with a taxing authority; or (iii) the supervision of those activities described in clauses (i) and (ii) of this subparagraph. (C) A certificate or registration holder not engaged or employed to any extent in either the client practice of public accountancy or the industry or government practice of public accountancy is not engaged in the practice of public accountancy. Furthermore, the preparation of reports by an individual licensed under the Act exclusively for internal use by the management and/or board of directors of the individual's employer or an entity affiliated with the employer is not the practice of public accountancy. (D) For purposes of the foregoing provisions of this section defining the practice of public accountancy, an entity shall be deemed "affiliated with" a licensee's employer only if, and so long as, the employer (directly or indirectly through another entity affiliated with the employer) possesses the power to direct the management of the entity through ownership of a majority of the voting securities or other applicable voting equity interests of the entity. (E) The requirements for the registration of the client practice of public accountancy are found in sec.501.40 of this title (relating to Registration Requirements). The provisions of sec.501.40 do not apply to certificate or registration holders employed exclusively in the industry or government practice of public accountancy and do not apply to certificate or registration holders not engaged in the practice of public accountancy. 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 May 10, 1995. TRD-9505726 William Treacy Executive Director Texas State Board of Public Accountancy Effective date: May 31, 1995 Proposal publication date: March 17, 1995 For further information, please call: (512) 505-5566 22 TAC sec.501.3 The amendment is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which provide the Texas State Board of Public Accountancy with the authority to make such rules as may be necessary or advisable to carry in effect the purposes of the law. 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 May 10, 1995. TRD-9505727 William Treacy Executive Director Texas State Board of Public Accountancy Effective date: May 31, 1995 Proposal publication date: March 17, 1995 For further information, please call: (512) 505-5566 22 TAC sec.501.4 The amendment is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which provide the Texas State Board of Public Accountancy with the authority to make such rules as may be necessary or advisable to carry in effect the purposes of the law. 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 May 10, 1995. TRD-9505728 William Treacy Executive Director Texas State Board of Public Accountancy Effective date: May 31, 1995 Proposal publication date: March 17, 1995 For further information, please call: (512) 505-5566 Licensing/Registration Requirements 22 TAC sec.501.40 The amendment is adopted under Texas Civil Statutes, Article 41a-1, sec.6, which provide the Texas State Board of Public Accountancy with the authority to make such rules as may be necessary or advisable to carry in effect the purposes of the law. sec.501.40. Registration Requirements. (a) A certificate or registration holder engaged in the client practice of public accountancy as defined in sec.501.2 of this title (relating to Definitions) must practice through an entity meeting the ownership requirements of the Public Accountancy Act and registered with the board pursuant to the Public Accountancy Act, sec.10, if: (1) the certificate or registration holder engages in the client practice of public accountancy as a sole proprietorship or as an employee, partner, shareholder, member or independent contractor of a firm or person that is eligible for registration, and is required to register, under the Act, sec.sec.10, 17, 19 and/or 20; or (2) the services offered or performed include the performance of attest or compilation services, or issuance of reports on financial statements-including historical or prospective financial statements or any element thereof. (b) A certificate or registration holder engaged in the client practice of public accountancy as defined in sec.501.2 of this title (relating to Definitions) who is not required to practice through an entity registered with the board pursuant to subsection (a) of this section must, in each advertisement or written statement by the certificate or registration holder and/or by his or her employer or principal, in which reference is made to the certificate or registration holder or his or her association with the employer or principal as such, whether or not the specific certificate or registration holder is named, include an asterisk by the name of the employer or principal, which asterisk shall refer to a notation included within conspicuous proximity and with reasonable prominence that says "Not qualified to register with the Texas State Board of Public Accountancy to practice public accountancy in Texas." The notation must be printed in type not less bold than that contained in the body of the advertisement or written statement. If the advertisement is in audio format only, the foregoing notation shall be clearly declared at the conclusion of each such presentation. (c) Notwithstanding the foregoing, the requirements of this section do not apply with regard to a certificate or registration holder performing services: (1) as a licensed attorney at law of this state while in the practice of law; or (2) as an employee, officer, or director of a federally-insured depository institution, when lawfully acting within the scope of the legally permitted activities of the institution's trust 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 May 10, 1995. TRD-9505729 William Treacy Executive Director Texas State Board of Public Accountancy Effective date: May 31, 1995 Proposal publication date: March 17, 1995 For further information, please call: (512) 505-5566 TITLE 25. HEALTH SERVICES Part II. Texas Department of Mental Health and Mental Retardation Chapter 401. System Administration Subchapter B. Interagency Agreements 25 TAC sec.401.54 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts an amendment to sec.401.54, concerning Interagency Agreements, with changes to the proposed text as published in the February 21, 1995, issue of the Texas Register (20 TexReg 1258). The amended section adopts by reference rules of the Texas Education Agency (TEA) contained in 19 TAC sec.89.246 (relating to Memorandum of Understanding on Transition Planning for Students Receiving Special Education Services). The adopted text of the TEA rules was published in the April 18, 1995, issue of the Texas Register (20 TexReg 2823). The TEA rule constitutes a memorandum of understanding (MOU) between TDMHMR, TEA, the Texas Employment Commission, the Texas Department of Human Services, the Texas Department of Protective and Regulatory Services, the Texas Rehabilitation Commission (TRC), and the Texas Commission for the Blind required by the Texas Education Code, sec.21.510. The MOU establishes the respective responsibilities of each agency for the provision of services necessary to prepare students enrolled in special education programs for a successful transition to life outside the public school system. The MOU also incorporates new federal requirements and clarifies the goals of, and responsibilities for, the transition planning process. The TEA rule/MOU originally was adopted in July 1992. The current rule/MOU reflects months of negotiation between the named agencies. As stated in 19 TAC sec.89.246(g), the MOU becomes effective when it has been adopted by each of the named agencies. Revisions to the proposed text of the TEA rule/MOU are discussed in the adoption preamble of the TEA rule published in the April 18, 1995, issue of the Texas Register (20 TexReg 2823). In a technical revision to the title of sec.401.54, the word "in" has been dropped. The word inadvertently was not marked for deletion in the proposed text. No public hearing was held concerning the proposal. Written comments were received from Gulf Bend Center, Victoria; Heart of Texas Mental Health and Mental Retardation Center, Waco; Life Management Center for MH/MR Services, El Paso; Texas United Regional Networks (TURN), Conroe, Texas. One commenter questioned whether the department would provide community MHMR centers with the necessary staff to attend meetings of admission, review, and dismissal (ARD) committees and complete necessary paper work. The department responds that participation by community MHMR centers in the transition planning process for individuals currently being served by the community center is not a new requirement. The department notes that reference to the ARD process is included in the MOU for clarification of how it differs from the transition planning process and how the school district responsibility for transition planning is carried out in the individual education plan developed later at an ARD meeting. The revised MOU places increased emphasis on the community center representative meeting with the school district to develop and implement a plan for what the community center involvement in the transition process will be. A commenter expressed agreement with the purpose of the MOU but stated that as a community MHMR center, the commenter had experienced very little cooperation from the school districts in the area served by the MHMRA. The commenter commended TRC for the funds and training opportunities provided by the agency. The department appreciates the commenters' support of the MOU's purpose and has shared the comments concerning lack of cooperation on the part of school districts with TEA. The comments concerning TRC have been shared with that agency. A commenter stated that the MOU places too great a burden for the individual transition planning process on the student and/or parent since they are required to call the meeting and determine which agencies are to attend. The commenter suggested that the student and/or parent can't possibly know what services they need unless someone informs them; therefore, they would not know which agencies to invite. The department responds that the MOU specifies that the school district-not the student and/or parents-is required to initiate transition planning, invite the appropriate participants, and provide 30-day advance of the meeting, and refers the commenter to sec.89.246(c)(6) and (d)(2)(A) of the TEA rule. The department notes that the student and/or parents "may invite other interested individuals to the meeting," as may other participants. In addition, the department refers to sec.89.246(d)(3) which states that the student and/or parents "are responsible for planning for and attending" the meetings and "should be prepared to discuss their ideas and visions for the student's adulthood." The school district is required to provide information about transition planning annually to the student and family beginning by age 14 until the first individual transition plan is developed as described in sec.89.246(d)(7)(B)(v). The same commenter stated that the individual transition plan should allow for a smooth transition from school to adult services and that there should be some system which permits community MHMR centers to inform the students and their families of MHMR services such as supported living, residential living, and case management well before exiting the school system. The commenter noted that schools frequently contact community centers in the spring just before the students are to graduate and want something done. The department agrees with the commenter's characterization of what the individual transition plan should accomplish and believes that the local collaborative planning and sharing of written information detailed in the MOU promotes that vision. One commenter requested that the parent of a child who is currently in the targeted service arena or has recently experienced the transition period of their education be included in the roster listed on page 1251 of the proposed TEA rule as it was published in the February 21, 1995 issue of the Texas Register. The department responds that the "roster" described by the commenter is a listing of the state agencies which are required by statute to mutually develop and adopt the MOU as a rule. Therefore, it would be inappropriate to comply with the commenter's request. The department further notes that the transition planning process discussed in the MOU stresses coordination between families, their local school districts, and local service providers, and refers the commenter to sec.89.246(d)(3)(A) of the TEA rule which codifies the MOU. In addition, the department notes that representatives from The Arc of Texas and the Transition Task Force were involved in rewriting the MOU and represented the consumer voice. A commenter requested clarification concerning the phrase "other steps" used in sec.89.246(c)(9) of the TEA rule. The department responds that the MOU requires the school district to "take other steps" to obtain participation by a agency which has not sent a representative to transition planning meeting as invited. What form those steps takes is left up to the individual school district, although they could be part of the plan developed in the collaborative planning meetings discussed in sec.89.246(d) of the TEA rule. A commenter suggested that the "availability of personnel" language contained in sec.89.246(d)(2)(D) of the TEA rule be included in subsection (d) (6)(B). The department notes that the rule language reflects provisions currently in place with the existing MOU and also the department's commitment to coordinate with other agencies on behalf of the students we serve. A commenter stated that training must be in line with the collaborative models of the Child and Adolescent Services System Program (CASSP). The department responds that (e)(2)(C) details the responsibilities of each signatory agency for training, and that the commenter's suggestion will be shared with each of those agencies. The amendment is adopted under the Texas Health and Safety Code, sec.532.015, which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority, and with Texas Education Code, sec.21.510, which requires the MOU to be adopted by rule. sec.401.54. Memorandum of Understanding (MOU) on Transition Planning for Students Receiving Special Education Services. (a) Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts by reference rules of the Texas Education Agency (TEA) contained in 19 TAC sec.89.246 (relating to Memorandum of Understanding on Transition Planning for Students Receiving Special Education Services). (b) The MOU is required by the Texas Education Code, sec.21.510. Agencies involved in the development, adoption, and implementation of the MOU include TDMHMR, TEA, Texas Employment Commission, Texas Department of Human Services, Texas Department of Protective and Regulatory Services, Texas Rehabilitation Commission, and the Commission for the Blind. (c) Copies of the MOU are filed in the Office of Policy Development, TDMHMR, 4405 North Lamar Boulevard, Austin, Texas 78756, and may be reviewed during regular business hours. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 12, 1995. TRD-9505831 Ann Utley Chair Texas Department of Mental Health and Mental Retardation Effective date: June 2, 1995 Proposal publication date: February 21, 1995 For further information, please call: (512) 206-4516 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 21. Texas Department of Insurance Subchapter J. Prohibited Trade Practices 28 TAC sec.sec.21.1002, 21.1004, 21.1005 The Texas Department of Insurance adopts amendments to sec.sec.21.1002, 21. 1004, and 21.1005, concerning the change in implementation date in the use of unfair underwriting guidelines for private passenger automobile and residential property insurance, discrimination in the sale of insurance, and the use of underwriting guidelines by private passenger automobile insurers based on the purchase of types or amounts of coverage in excess of the minimum automobile liability coverage by law, without changes to the proposed text as published in the March 17, 1995, issue of the Texas Register (20 TexReg 1873). A public hearing on the amendments was requested, and conducted May 10, 1995 before the Commissioner of Insurance. The amendments are necessary to change the implementation date of the sections from June 1, 1995 to September 1, 1995, to allow the commissioner sufficient time to review the impact of these sections on consumers and industry. The amendments will also provide the department time to make any changes to the sections which may be necessary based on any changes in statutory provisions addressing the same subject matter made during this legislative session. The adoption of amendments to sec.sec.21.1002, 21.1004, and 21.1005 will change the effective date of these sections to September 1, 1995. general comments against proposal Several commenters oppose any delay in implementation of the sections. Numerous groups have worked hard for adoption of these sections. Sufficient evidence has been presented to support the sections and it is time to implement the sections to protect consumers without further delay. The issue of redlining and unfair discrimination has been studied for a long time. People with disabilities are arbitrarily denied insurance or placed in companies with higher rates. Many people with disabilities are no more expensive to insure than their able-bodied counterparts. It is unfair and inappropriate to discriminate against persons unless there are sound actuarial principles employed and real actuarial data exist that clearly demonstrate a causal link to the risk of loss for the insurer. Some commenters do not believe that pending legislation and the sections adopted in January are interchangeable. They do not believe that a legislative enactment, in any form, obviates the need for strong regulatory action, including rules, in the area of discrimination. These commenters believe there is no conflict between provisions of CSHB 668 and the rules, and further that there is a clear and convincing need for two of the sections to be implemented on June 1. Commenters also agree that the commissioner must follow the directive set forth by the legislature, but believe there is clear statutory authority to address the redlining issues. Concern is expressed by a commenter that any delay will result in a public perception that the government is not responding to its needs. A commenter believes that CSHB 1367 inadequately addresses the issue of redlining. department response The department believes that a short delay is reasonable. It is important for the commissioner to have the opportunity to review and consider the sections. This opportunity for the commissioner has become increasingly more important because of the interest the legislature has shown in this area. Likewise, the delay appropriately provides the legislature an opportunity to consider the subject matter of the sections and to exercise its judgment with respect to possible legislative enactment. The commissioner believes that the legislature should be provided decision-making discretion to the fullest extent possible. The 20 discrimination-related bills filed this session indicate the legislature's desire to address the issues raised by these sections. In deference to the legislature as the policy-making body of the state, the department is persuaded it is necessary to have a brief delay in the implementation of these sections. The department agrees with the commenters that vigorous enforcement action should be taken to enforce statutes and rules prohibiting discrimination. The department disagrees that a rule can permit the department to take action contrary to what the legislation authorizes. consumer Harm A few commenters claim the sections will benefit Texas and implementation should not be delayed. The contention is made that the department has already determined that use of the prohibited/unfair underwriting guidelines cause substantial harm to consumers. Delay of implementation will deny substantial benefits to consumers and result in substantial harm. Language from the order which initially adopted these sections in January is presented as support for no delay in implementation. A commenter claims that no concern is shown for the interests of low income and minority persons who are being placed in substandard insurers or risk being denied insurance by insurers who engage in unfair practices. Commenters contend the department is protecting the interests of the insurance industry and not the interest of consumers who are treated unfairly. Commenters claim the department is not protecting consumers from unfair discrimination and compounding the effects of redlining. department response The department disagrees. The department does not believe that a short delay in implementation of the sections will cause substantial harm to consumers. The legislature is considering bills that will directly impact on these sections. The department is supporting legislation specifically designed to make insurance more affordable and available to consumers in underserved areas. The department believes some of the pending bills provide a more comprehensive approach to availability and affordability of insurance in the state. It is important and appropriate for the department to briefly delay the implementation of these sections to allow the legislature to act. Sufficient Time to review, Costs to Consumers Any delay in implementation of the sections is opposed. The commenters' position is that the sections adopted in January address the fundamental unfairness of denying insurance or charging excessive rates due to insurance underwriting factors which have nothing to do with actual risk of loss. They claim Texas consumers will be harmed by further delay in implementation of the sections and incorporate by reference the record of the hearings on these sections. Two commenters complain that the department did not calculate the cost of delay of the sections to Texas consumers. Some commenters believe that the consumer bears the cost of unfair practices, so that whatever costs are incurred as a result of June 1 implementation would not be unnecessary or wasted. A few commenters state that nowhere in the proposal is there an attempt to challenge the evidence showing the problem of unfair insurance discrimination and its effect on Texas consumers. Some commenters recognized that sec.21.1002 and sec.21.1004 are highly controversial and probably need more work before they are implemented. Department Response It is evident to the department from bills filed thus far that there could be substantial changes to the statutes affecting availability and affordability of insurance to consumers. The legislature is deliberating on statutes that will directly impact these sections and it is important and appropriate for the department to briefly delay implementation of these sections to provide the legislature an opportunity to act. It seemed premature to the department to implement rules which are arguably litigious and highly controversial when waiting a brief period for implementing the sections would afford more clear legislative guidance to the department. increase in taipa rates Some commenters contend that the delay of the sections' implementation will harm consumers because of the substantial increase in TAIPA rates which take effect June 1, 1995. Recently, large rate increases have been approved for TAIPA which provides mandatory automobile liability insurance to hundreds of thousands of Texans, many with clean accident and ticket records. They claim that the good drivers currently in TAIPA would be protected by the sections being implemented June 1, 1995. They also claim that delay of the sections will pose significant hardship to those good drivers who are not able to find coverage in the standard market. A few commenters suggest that the proposal will compound the effects of redlining for those individuals who are forced to purchase auto insurance through TAIPA. It is suggested that permitting the sections to be implemented on June 1, 1995, prevents the good drivers in TAIPA from having to pay the higher rates in TAIPA. A commenter suggests that the Commissioner's decision to raise UMBI rates by 306% mandates immediate protection for those consumers who are being penalized for living in a low income neighborhood where there are higher percentages of uninsured drivers. This commenter believes that TAIPA drivers should not have to pay more than the voluntary market drivers for uninsured motorist coverage because it is not a person's fault if the driver who hits you is uninsured. Department Response The department disagrees. The department believes the rates set for TAIPA are fair because they are based on the statutory requirement that premiums be sufficient to pay claims to maturity. The TAIPA hearing record supports the increase in the UMBI rates and does not support setting TAIPA uninsured motorist coverage at the same level as the voluntary market. The comments on TAIPA rates are not pertinent to the change in implementation date of the sections. The department is aware that some people may be placed improperly in TAIPA and is currently taking several steps to address this problem. The delay in implementation is necessary and appropriate to allow the legislature to act and to avoid potentially greater harm to consumers and industry if these arguably litigious and highly controversial sections were implemented, especially in light of pending legislation. The department is committed to improving insurance availability to Texas consumers and is actively working with the legislature to improve insurance availability and affordability. The department is committed to implementing and enforcing rules that address these issues after the legislature has had an opportunity to issue its policy on the topic. Justification inadequate A few commenters contend the justification for delaying the sections is inadequate. They believe that the issue of unfair discrimination has been studied at length and no further review or study of the issue is necessary. It is felt that the department has had "months" to study the rules since adoption and no further time is necessary for analysis. They contend the proposal ignores the system of regulation in place in Texas and that the Texas Legislature has provided the department specific rulemaking authority to adopt regulations which define and prohibit unfair practices in particular. The commenters assert the department is not proposing to delay implementation of other rules because the legislature is in session and may act on other statutes which might affect these rules, interpretations or actions. They claim the department is being inconsistent and the rationale for delay is based on speculation of legislative action and results. A few commenters believe that implementation should not be delayed because the department has the power and responsibility to enforce, through its rule-making authority, existing law. These commenters further state that it is not the department's role to predict potential legislation, its possibility of enactment and its potential effect. One commenter complains that the department doesn't identify the specific bills to allow the public to comment on the potential impact of the bills. The commenters claim the rationale is inadequate to allow insurers to continue to engage in unfair practices that result in consumer harm. department response The department disagrees. It is ensuring that it is acting within the statutory framework in a manner designed to ensure harmony with any legislative mandates on the requirements on availability and affordability of insurance or other related statutory provisions. The possible enactment of legislation which seriously affects a portion of the legal basis for a rule necessitates a short- term delay in the implementation of that rule. The department agrees with the commenters who recognize the highly controversial nature of sec.21.1002 and sec.21.1004 and that the commissioner should have the opportunity to review these sections especially in light of pending legislation. Use of the word "Effective" Two commenters claim a substantive change has been made which is not reflected in the published notice. They contend that the change of the word "after" to "effective" raises questions about the department's intent to adopt the changes to the sections and provides the department the opportunity to pull down the sections without a discussion of the substance of the sections. They state that the department should provide notice of any proposed repeal of the sections, provide the public an opportunity to comment and hold a public hearing if requested. department response The department disagrees that changing the word "after" to "effective" is a substantive change. The change of the word "after" to "effective" was to give opportunity to make any other necessary changes, via proper rulemaking procedures, before the sections became effective, not to withdraw the sections without opportunity for review and comment by anyone. Also, the word "effective" is standard language used by the Legislative Council in the drafting of bills. Lack of consumer input A commenter complains that consumers were not given a meaningful opportunity to comment or a fair hearing before the amendments were proposed. The commenter claims the commissioner had input from insurers before proposing the sections but did not solicit input from consumers or representatives of consumers. The commenter argues that the right to file comments does not make up for the lack of opportunity to provide input prior to publication. This commenter claims it appears the commissioner has already made up his mind to adopt the amendments and only industry had any input. Department response The department disagrees. Input on the proposed sections was not solicited from either industry or consumers prior to publication of the proposal. The purpose of the 30-day comment period is to obtain comments on the proposed sections, and the department has certainly received such comments. It was obvious that these same issues were being considered by the legislature and it seemed prudent to the department to delay implementation and give the legislature, as well as the commissioner, adequate time to properly address the subject matter of these sections. Section 21.1005-Two commenters claim there is no need to delay implementation of this section. They claim no legislation is pending which address the underwriting guidelines prohibited by this section. They also claim it would be of substantial benefit to consumers even if in effect for only three months. The position is taken that sec.21.1005 does not fit into the same category as the other two sections proposed for delay of implementation. They contend there are no legislative conflicts of realistic consequence, nor does the section have the level of controversy of the other sections. A commenter believes the section is a fair common sense approach to an unfair auto insurance guideline which requires excess limits of liability or full coverage for an individual to be insured by a premium or standard company. He estimates that 35%-40% of insureds in TAIPA have 'no points' and are there because they want or can only afford minimum limits liability coverage. He feels it is unfair to those drivers who only want minimum coverage to have to remain in TAIPA with the June 1, 1995 increase in rates because this section is not in place to prohibit this type of underwriting guideline. This commenter also testified that this underwriting guideline is used by 38% of the companies that write in Texas. department response The department agrees in part but believes that an implementation date of September 1, 1995 is reasonable. Nearly two-thirds of the insurers in Texas write this type of insurance through standard or preferred risk companies, including numerous major insurers. The commissioner is concerned about the use of this underwriting guideline and is working with a major insurer and other insurers to eliminate this underwriting guideline prior to implementation of this section. Based on this action of the commissioner, a much larger voluntary market should be available to those persons improperly in TAIPA due to this underwriting guideline. comments in support of the proposal Numerous comments were received in support of the proposal. The commenters agreed with the department that an extension of the effective date would allow the legislature to continue its efforts to develop a comprehensive, incentive- based plan to address the insurance availability and affordability issues. Several commenters believe that CSHB 1367, sponsored by Representative Harold Dutton, is a more comprehensive, creative, market-based approach to availability and affordability issues in the state than the approach taken in sec.sec.21.1002, 21.1004, and 21.1005. A commenter believes this bill provides a more balanced and beneficial solution to the issue. One commenter stated that the department can only adopt rules which are sustained by statutory authority and that when that statutory authority may be changed it is imprudent to take action on those rules. One commenter explained that the sections require significant and time consuming actions on the part of the insurer to come into compliance with a June 1, 1995 implementation date and the proposed extension has been used in formulating the short term business plans of the company. Several commenters indicate that an insurer's renewal process can take as much as 60 days and no less than 30 days in advance of the effective date of renewal and literal compliance with the sections after the date of the hearing on the sections would not be possible for renewal policies effective June 1, 1995. Commenters concur with the department's explanation of the proposal that anticipation of possible action by the legislature necessitates the extension and would eliminate unnecessary costs to the department, to insurers and ultimately to consumers. A commenter believes that it is logical and prudent to delay implementation and several bills would provide a better approach to the availability and affordability issues than the sections adopted in January. This commenter believes the sections would result in severe market disruption. Commenters believe the proposed extension of effective date is a valid and reasonable response to the legislative consideration of these issues. Comments were made that the additional time is necessary to examine the many problems with the sections, both substantively and procedural. A comment was made that many concepts were included in the sections which were not discussed in the hearing on the sections. The comment was made that there were fundamental changes made to the sections at the time they were adopted in January. department response The department agrees with the commenters that it is impractical to implement the sections on June 1, 1995 with several bills currently pending in the legislature that affect affordability and availability of insurance. The department also agrees that the commissioner should have additional time to review the possible substantive and procedural problems with the sections, particularly in light of the pending legislation. Comments were received against the proposal from: Consumers Union, Texas Alliance for the Mentally Ill, The Disability Policy Consortium, Advocacy, Inc. , Association for Advancement of Mexican Americans, Mexican American Legal Defense and Educational Fund (MALDEF), Office of Public Insurance Counsel, Texas Citizen Action and Texas Senior Citizens Association. Comments were received in favor of the proposal from: Government Employees Insurance Company (GEICO), GEICO General Insurance Company, GEICO Indemnity Insurance Company, National Association of Independent Insurers (NAII), Republic Insurance group of companies, Allstate Insurance Company, American Insurance Association, Metropolitan Property and Casualty Insurance Company, Texas Farm Bureau Mutual Insurance Company, Texas Farm Bureau Underwriters, United Services Automobile Association (USAA), Association of Fire and Casualty Companies in Texas (AFACT), Alliance of American Insurers, State Farm Insurance Company, Farmers Insurance Group of Companies, Liberty Mutual Insurance Company and Preferred Risk Group. The amendments are adopted under the Insurance Code, Articles 21.20, 21.21, 5.98, and 1.03A. Article 21.21, sec.13, authorizes the department to promulgate rules and regulations to accomplish the purposes of the Insurance Code, Articles 21.20 and 21.21. Article 5.98 authorizes the department to adopt reasonable rules that are appropriate to accomplish the purposes of the Insurance Code, Chapter 5. Article 1.03A authorizes the commissioner of insurance to promulgate and adopt rules and regulations for the conduct and execution of the duties and functions of the department. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 11, 1995. TRD-9505752 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: September 1, 1995 Proposal publication date: March 17, 1995 For further information, please call: (512) 463-6327 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 335. Industrial Solid Waste and Hazardous Waste (Editor's Note: Due to TNRCC's technical problems, the following adopted rules were omitted from the May 16, 1995 issue of the Texas Register. The rules were submitted to the Texas Register on May 9, 1995. The effective date is May 30, 1995.) The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts amendments to sec.sec.335.1, 335.6, 335.501, 335.503, 335.505, 335.507- 335. 510, 335.514-335.515, and new 335.521, concerning industrial solid waste and municipal hazardous waste management in general; standards applicable to generators of hazardous and industrial solid waste classification. Sections 335.1, 335.501, 335.503, 335.505, 335.508, 335.515 and 335.521 are adopted with changes to the proposed text as published in the November 18, 1994, issue of the Texas Register (19 TexReg 9155 and 19 TexReg 9186). Sections 335. 6, 335.507, 335.509-335.510, and 335.514 are adopted without changes and will not be republished. These rules use information gathered from the advisory group meetings and proposed amendments to the self-classification system. The commission received discussion on the amended sections of this rule from Marine Spill Response Corporation; LCRA; Fugro Environmental, Incorporated; Texas Utilities Services; Texas Electric Cooperatives, Incorporated; Exxon Chemicals; Dupont; Ameripol Synpol Corporation; Laidlaw Waste Systems; Amoco Corporation; The Light Company; and Central and South West Services, Incorporated. The following is a discussion of the concerns received on the November 18, 1994 proposal. In regards to the rules in general, one commenter's request that the commission clarify the assumptions that are the foundation for these rules, the commission provides information here in this preamble. The commission staff worked with a Task Force 21 subgroup with members representing the regulated community, general public, and landfills to identify areas that needed clarification or amendment. The commission utilized information gathered during these meetings as well as information submitted in response to it's "Call for Comments" and the proposed rules, both published in the Texas Register, to evaluate and propose changes to the rules. Concerning sec.335.1 (Definitions), several commenters stated that the exclusion for polymerized materials found in the definition of a Petroleum Substance was not broad enough. One commenter stated that it did not exclude their particular form of plastic. Another commenter asked if the list of polymerized materials was an exhaustive one. Many commenters seemed to be confused by the meaning of the definition of petroleum substance. Based upon the questions and confusion surrounding the Petroleum Substance definition, the commission felt the proposed rule needed clarification. The definition for motor fuels was moved into the definition of Petroleum Substance. The steps taken to further clarify the definition in the rule and additional information regarding the definition of a Petroleum Substance may be found in this preamble's discussion of Total Petroleum Hydrocarbons (TPH) which is discussed later. The commission feels it might be misleading to individuals to attempt to discuss the definition of Petroleum Substance separately from TPH because they are so closely related. In regards to sec.335.6 concerning notification requirements, one commenter acknowledged the advantages of using the State of Texas Environmental Electronic Reporting System (STEERS) for electronic reporting, but noted that it had delays and limitations (i.e. the required submissions of written notifications for certain changes to a company's Notice of Registration (NOR)). One commenter believed that the commission's response time to notifications submitted is slow. The commission acknowledges the commenters recommendation of the STEERS system, which has allowed many generators to perform NOR updates in the form of adding waste streams, adding waste management units, and converting old six-digit waste codes to the new eight-digit waste codes. Many companies have also taken advantage of STEERS to report their annual, shipment, and receipt summaries. Within this calendar year, the commission plans to eliminate barriers that currently prohibit generators from changing information on their NOR such as the identity of a contact person, or mailing address by STEERS. When this occurs the STEERS user will have the means to update their NOR without the need for paper or forms. The commission acknowledges that the amount of time from the submittal of a non-STEERS waste stream notification and receipt of an updated NOR is lengthy. The delay is due in part to the July 1, 1994 notification submittal deadline for all Texas generators (over 25,000 companies) for all industrial and hazardous wastes they generate. The commission believes that the delay is temporary and has been working diligently to minimize this inconvenience. Generators can help the commission address this problem by using the forms designed for updating a NOR and, when possible, using the STEERS system. When a generator uses the STEERS system to update a NOR, the update generally occurs within 30 days. As more generators begin to use STEERS that time is projected to decrease. In regards to sec.335.10(b)(18), manifest requirements, one commenter suggested changing the subsection to allow a generator to provide a descriptive clause in Section 11 and the waste code in Block I of the Texas manifest, which would allow additional descriptions to be added to block J. According to the commenter, this change would facilitate a clearer understanding of what type of material is being transported and would eliminate the use of the continuation sheet as noted in the current regulations. The commission does not concur with allowing generators to use a descriptive clause for all waste shipped with a manifest in section 11 of the form. The information recorded in section 11 is federally mandated for hazardous wastes. The state regulation may be no less stringent than the federal regulations. In accordance with the federal regulations, generators should record the United States Department of Transportation (DOT) description including proper shipping name, hazard class, and ID number for hazardous wastes. For nonhazardous waste, sec.335.10(b) identifies information which shall be on the manifest. Although the section only requires generators to include the waste classification code description for nonhazardous waste, the commission requests that generators follow the instructions for completing a manifest that appear on the reverse of the manifest form. The manifest instructions request that the Texas Waste Code description, found in Appendix 3 (form code description), be entered in Item (block) 11 for waste shipped with the manifest. Please note that generators may enter in item J additional descriptions that apply to the waste streams entered in Section 11 which are being shipped with the manifest. In regards to the commenter's request that generators be allowed to place the waste code in block I of the manifest form, the commission concurs with the commenter. Section 335.10(b) requests that generators include on the manifest the waste classification code. The instructions for generators on the manifest form request generators to enter the TNRCC state waste code in item (block) I for each waste the generator ships. The last digit of the Texas eight- digit waste code is the waste classification code. Therefore, by completing the manifest in accordance with the manifest instructions, the generator would be in compliance with the regulations and would be allowed to include the waste code in item I. The commission appreciates the commenter's noting this concern. The commission understands that this subsection needs to be amended to be consistent with the self-classification regulations and the needs of the commission; however, this subsection was not part of this rule proposal, consequently the commission cannot amend it at this time. The commission will consider amending this subsection if these rules are amended in the future. In regards to the recycling of scrap metals and lead acid batteries, one commenter requested that the generator only have to include the storage methods and nature of the recycling activity on the NOR, not the classification or Texas waste Code. The commenter stated that the classification of items destined for recycling was burdensome and would only create economic disincentive for generators. The commission does not concur with the commenter regarding the notification of recyclable material. The commission understands the requirement of classification and notification for these waste streams may seem cumbersome; however, the classification dictates the management of the waste stream. Also, the waste code helps to identify and characterize the waste that a facility generates and manages. To help ensure that facilities are managing their recyclable materials properly, the commission will retain the requirement of classification and notification for recyclable materials. The commission would also like to note that generators are given some relief from the regulations for waste which is recycled. The commission would like to note that recycled materials are exempted from various tracking, reporting, and billing requirements through sec.335.24, Subchapter H, and Subchapter J. In light of these reduced requirements, the commission believes that notification and classification of these wastes is not overly burdensome and is necessary to ensure proper identification and management for recycled wastes both by the generator and the recycler. In regards to the Subchapter R changes, one commenter stated that the commission had not accurately assessed the impact of the changes, in that generators will be paying for more analytical tests and greater disposal costs at no additional benefit to human health and the environment. The commission does not concur with this commenter. Minimal additional analytical tests are required by the rule amendments. The new parameter of total cyanides replaces the Toxicity Characteristic Leaching Procedure (TCLP) cyanide analysis. The rule eliminates analytical testing requirements for certain polymerized materials, solidified asphaltic materials, food grade oils and fats when addressing the TPH criteria. In addition, the cost of analytical testing may be limited by the generator applying process knowledge when evaluating a waste. If the additional constituents of concern are not present in the process generating a waste, the generator need not test for them. The generator would need only to keep documentation supporting the conclusion. Finally, the commission would like to state that when generators determine the classification of a waste, they have also determined a level of risk associated with that waste. Analytical cost to identify harmful waste and the additional cost to dispose of harmful waste are generally far less than the cost and hazard to human health and the environment in the event of the improper disposal. In regards to the preamble of 19 TexReg November 18, 1994, one commenter requested the commission address the management of oil/water mixtures generated during the response to large scale oil spills and provide guidance for the management of waste associated with the clean-up of these spills. Depending upon the nature and size of the oil spill, the regulatory agency overseeing clean-up could be the Railroad commission of Texas or the Texas General Land Office or the TNRCC. Based upon additional comments by the commenter, it appears the commenter's major concern involves crude oil spills. The management of crude oil spill wastes would be regulated by the TNRCC only when the generator of such waste intends to ship the wastes to a facility regulated by the commission. Prior to shipment or acceptance by a TNRCC- regulated facility, the generator should first classify and code the wastes in accordance with these rules. Additional authorization from the Industrial and Hazardous Waste Division's Special Waste Team for disposal in a municipally permitted TNRCC regulated facility may be required if this type of waste is intended for disposal in such a facility. For technical assistance the generator may contact the Emergency Response Section of the commission for situations that are considered an emergency. In non-emergency situations, a generator may seek technical assistance from the Industrial and Hazardous Waste's Waste Evaluation Section of the commission. Depending on the situation, sequence numbers for these spill wastes would be assigned by one of the above referenced section. In a non-emergency situation, the generator would utilize the one-time shipment process. The one-time shipment process involves the generator submitting a form TNRCC-0757 completed with the form code and classification code for the waste generated. Once the completed form is submitted to the commission, the generator would receive a sequence number from the commission. This would complete the waste code. Please note, the commission staff continues to provide training regarding the classification and coding of wastes at the agency sponsored seminars and in guidance documents available through the commission's Publications Office. In regards to the one-time shipment program, one commenter requested that the commission reply to faxed one-time shipment requests for temporary wastes codes, registration numbers and the U.S. Environmental Protection Agency (EPA) Identification numbers by telephone. According to the commenter, this would avoid problems caused by the storage of wastes in non-secure areas, which may lead to the endangerment of human health through vandalism or mismanagement. The commission would like to note that on the reverse of the one-time shipment form, the commission has identified situations in which a request would be expedited. One such situation is the potential for endangerment to human health or the environment. Due the high volume of faxed requests (approximately 630 per month), the commission does not concur with commenters suggestion that the commission telephone generators who fax requests to the one-time shipment program. When the commission determines that a request should be expedited, the form, with the commission's assigned numbers, is faxed back to the generator. The commission would like to note further that generators have classified a waste before a form is submitted to the commission. Based on the classification, the generator should manage the waste accordingly so as to protect human health and the environment. In regards to the Texas waste classification regulations, one commenter stated that they were significantly stricter than those of the EPA and neighboring states and hence negatively affected a company's ability and cost to do business in Texas. The commission was asked to remember its commitment not to be stricter than EPA. The commission would like to note that EPA only regulates hazardous waste. Consequently it has no compatible program for the regulation of nonhazardous, industrial waste. Therefore, the regulation of nonhazardous, industrial waste lies solely under state regulation. Since the TNRCC regulates waste from over 25,000 generators, the commission believes that the classification rules provide the safeguards needed to help protect human health and the environment from harmful waste from this large group of generators. In regards to sec.335.78, concerning Conditionally Exempt Small Quantity Generators (CESQG), one commenter requested that the commission consider creating a category of CESQGs for industrial generators. As this topic does not concern the classification of waste, the commission feels it inappropriate to comment in detail on this suggestion other than to state that it has adopted rules in the April 11, 1995 issue of the Texas Register that would allow for certain exemptions for conditionally exempt small quantity generators of industrial wastes. In regards to sec.335.501, wording was changed to clarify that generators of waste regulated by Chapter 334, Subchapter K regulations may also be subject to these rules if they generate other, non-Chapter 334, Subchapter K wastes. The original text could have been interpreted to indicate that if a generator generated any waste subject to Chapter 334, Subchapter K, then that generator did not need to comply with these rules for any waste he generated, regardless of if it were or were not regulated by Chapter 334, Subchapter K. That was not the intent of the rule amendment. In regards to sec.335.501, purpose, scope, and applicability, one commenter suggested that the conversion to the new Waste Classification System be extended one year. The commenter cited the addition of 14 new constituents to the appendix (Appendix 1 Table 1) as the reason for the request. The commenter also felt the delay would not interfere with the commission's ability to make its Biennial Report to EPA since the data has already been submitted. Other commenters suggested that the commission reconsider the addition of the constituents at this time because of the additional cost in time and money it would require and that the regulated community would be immediately out of compliance. The commission concurs with the requestor that the delay of the rules would not interfere with the Biennial Report to EPA. The Biennial Report reports only hazardous waste generated. The waste classification criteria concerning the 14 new constituents applies only to nonhazardous industrial waste. The implementation schedule of sec.335.501 has been added to allow additional time for generators to evaluate already classified waste streams for the new constituents included in Figure 1: 30 TAC sec.335.521(a)(1) regarding Table 1, Appendix 1. The delay should give the regulated community the time it needs to phase in the new requirements, limit cost and time constraints, and allow generators to remain in compliance with the regulations. In regards to sec.335.503 (Waste Classification and Waste Coding Required) the commission has added language to the final rule concerning the use of "CESQ" in the Texas waste code. This language recommends that facilities which receive and consolidate like waste from Municipal Conditionally Exempt Small Quantity Generators use "CESQ" in the first four positions of the waste code for any manifesting and/or reporting associated with that waste. This was felt appropriate since it has come to the commission's attention that at least one such facility was mistakenly identified as the generator of the exempt waste rather than the collector/shipper of that waste. The code "CESQ" should help identify the waste as originating from one or more Municipal Conditionally Exempt Small Quantity Generator sources. Because of this addition, re-numbering of sec.335.503 has also occurred. Concerning sec.335.503(b)(7), Waste Classification and Coding Required, several commenters indicated that the preamble to the proposed rules contained contradictory language concerning the classification of combined wastes. For example, the preamble states that "...similar types of wastes from similar types of processes...could be classified as one waste stream..." and then that "...combining multiple waste streams is inappropriate...generators are required to classify each waste stream at the point of generation....the commission must be notified of all waste streams generated by the facility at the point of generation prior to and following any mixing..." One commenter presumed that the reasonable combination of like wastes was acceptable. The commenters requested that the commission clarify these statements. The commission hopes to provide clarification in regards to the commenters' suggestion of conflicting language concerning the classification of combined wastes/waste streams. In providing this clarification, the commission feels that it first must clarify what it means by "waste" and "waste stream." This is so because the two terms are often treated as interchangeable when they often times are not. Second, the commission hopes to provide a glimpse into its rationale for determining what is a "waste stream." Thirdly, it hopes to provide examples of the commission's view on several waste stream combining activities. In this discussion, "waste" refers to any one particular, unique item from any one particular, unique activity. For illustration purposes, uncontaminated asbestos ceiling tile from building "A" is one "waste" while uncontaminated asbestos ceiling tile from building "B" is another waste. In this discussion "waste stream" refers to wastes which are generated by similar types of processes, have similar compositions, and are the same classification. In carrying the previous paragraph's illustration forward, the combined asbestos ceiling tiles from buildings "A" and "B," as long as they are of the same classification, are one "waste stream." When a waste is generated, it has a certain history and specific characteristics about it such that it is already a particular "kind" of waste before any analysis or evaluation is performed in its regards. For example, it may be a nonindustrial or an industrial waste. It may be a hazardous waste or a Class 3 waste. The point is that the history and characteristics are already there when the waste is produced. In identifying new waste streams, the question that needs to be answered is "Does the history and characteristics match up with another waste or not?" If they match up and you combine the two, you start with and end up with the same "waste stream." Nothing has been altered by combining the two. If they do not match up, and you combine them, you started out with two waste streams and ended up with another unique third waste stream. In other words, similar types of waste from similar types of processes are considered one waste stream. Different types of waste from different types of processes; different types of wastes from similar types of processes; and similar types of waste from different types of processes are not considered to be one waste stream. This is important for several reasons. If you mix a hazardous waste with a nonhazardous waste, you may have just diluted that hazardous waste such that it no longer exhibits the characteristics of a hazardous waste. By federal law, most dilution of hazardous waste is prohibited. If you mix a hazardous waste with a nonhazardous waste, you may have just made the entire mixture hazardous. Most individuals, companies, and regulatory agencies do not want an increase in the quantity of hazardous waste generated. The commission assesses a fee for the generation of hazardous waste and industrial Class 1 waste. This fee aids the commission in overseeing the management of hazardous and industrial waste in Texas while at the same times promotes waste minimization. This fee is waived for recycling activities to promote recycling. It is not waived for "dilution" activities which might move wastes within classification categories but not reduce the total amount of waste produced. The identification of "waste streams" at a facility helps the commission better understand and follow the facility's waste activities which in turn helps the commission determine if the waste is being handled properly for the protection of human health. As an example of waste stream identification, compressor oils that are generated from the maintenance of units in different areas a facility might be considered one waste stream. Although the processes occur in different areas of the facility, they are similar and they generate a similar type of waste. If the generator determines that all the used compressor oil has the same classification, the generator can identify all used compressor oil generated in this manner in different areas of the facility as one waste stream. The facility, going though the same process described previously may determine that all its vehicle crankcase oil is one waste stream. However, the vehicle crankcase oil and the used compressor oil are not the same waste stream. Although both wastes are used oil, the two have been generated by different types of processes. If the generator chooses to combine these two wastes, the streams must be classified and coded prior to and following mixing. The generator must also provide notification to the commission for these three waste streams. The commission cannot fully concur with the commenters' general statement that reasonable combinations of like wastes is acceptable in all situations. In general, for the purpose of management, the commission agrees that generators may combine like wastes. However the commission would like to note that, for safety reasons, generators should always be aware of adverse reaction that may occur when they mix wastes. Just because two wastes have the same form code and/or classification does not mean that the commission has determined that they are safe to mix. In regards to point of generation, one commenter stated that the proposed rules and associated preamble suggested more regulation associated with the term "point of generation" than was discussed by the advisory committee. The commenter requested the commission provide further clarification as to the intent and possible consequences of the changes proposed to the term "point of generation." In reviewing the proposed rule and associated preamble, commission staff could not determine where the commenters concern originated. Commission staff attempted several times to contact the commenter for clarification, but was unsuccessful. The commission does not believe that the proposed rules, associated preamble, and/or final rules impose additional requirements to the regulations associated with the "point of generation." Two commenters requested clarification on the preamble language concerning the Treatment, Storage, and Disposal Facility (TSDF) management issues and how this affects non-commercial facilities accumulating wastes prior to shipping. The accumulation or storage of wastes on-site by industrial or municipal facilities must be within the accumulation and storage requirements allowed for generators in the regulations. If a facility is authorized through permit or other means, additional storage time is allowed. The "TSDF" sequence number does not impact or change the accumulation, storage, or receipt rules found elsewhere in this Chapter. Concerning the use of the "TSDF" sequence code, one commenter requested clarification of the use of "TSDF" and manifesting. The commenter's concern revolved around the use of "TSDF" by a single company which has multiple generating facilities. According to the commenter, the multiple generating facilities ship and manifest their nonhazardous waste to a centrally located facility which terminates the manifest and consolidates similar nonhazardous waste into bulk containers. The centrally located facility then generates a new manifest for the bulked waste, using "TSDF" as the waste code sequence number, and ships the bulked waste to its "final destination." The commenter is concerned that the commission wants each of the manifests from the multiple generating facilities to accompany the consolidated waste to the "final destination." The commenter feels this would create a significant and costly administrative burden on the company. According to the commenter, if one company is the "sole generator" of a type of nonhazardous waste, then the consolidated manifest which uses the sequence number "TSDF" should suffice and the manifests from the multiple generating facilities need not accompany the consolidated shipment from the centrally located facility. The commission concurs with the commenter that it is not necessary for copies of manifest to accompany the described consolidated waste to the "final destination." If one owner has three facilities which are within 50 miles of each other, the owner may ship nonhazardous waste from two of the facilities (Companies A and B) to the Third (Company C) with or without a manifest. (A manifest is not required. See sec.335.10(g)). If a manifest is used, Companies A and B would identify Company C as the receiving facility on the manifest and use it's own unique sequence numbers (not "TSDF") for shipping purposes. Company C would note receipt of that waste on a receipt summary form. (See sec.335.15) When it came time to ship the three like wastes to a final destination, the like waste from Companies A and B would be reassigned the sequence number "TSDF" on the outgoing manifest. Company C would need to put its own unique waste code for its own waste on the outgoing manifest for tracking purposes. (In other words, Company C cannot use the sequence number "TSDF" for any waste it generates.) The "final destination" receiving facility (Facility D) would then report the receipt of waste, from Company C, with the sequence number "TSDF" and Company C's unique waste code. On the generators' annual reports, Company A would report how much waste it generated and that it shipped that waste to Company C, Company B would report how much waste it generated and that it shipped that waste to Company C, and Company C would report how much waste it generated (not including the waste received from Companies A and B) and that it shipped that waste to Facility D. In its receiver's reports, Facility D would report the receipt, from Company C, of the "TSDF" waste and Company C's waste. If Companies A and B are farther than 50 miles from Company C or the waste is hazardous waste and Company C stores the waste, Company C would be subject to an Industrial and Hazardous Waste permit and Companies A and B would be required to manifest their waste to Company C. (See sec.335.10 and sec.335.2) The manifesting requirements would stay the same as described previously. (The commission would like to note that it hopes to investigate the possibility of permitting by rule certain captive facilities (such as Company C) for storage purposes.) If Companies A and B are within 50 miles of Company C, and they choose not to manifest their nonhazardous waste to Company C, Company C would be recognized as the generator of the nonhazardous waste. Company A and B would not report the generation of this waste on their Annual Summary. Company C would report the total amount of waste from Companies A, B and C as being generated by Company C. Company C would manifest the waste to Company D using the unique sequence number Company C had assigned to the waste. The sequence number "TSDF" would not be used. If Company C is acting as a "Transfer Facility", Companies A and B would identify Facility D as the receiving facility. No waste would be reassigned the sequence number "TSDF." On its Annual Summary, Company A would report how much waste it generated and that it was shipped to Facility D, Company B would report how much waste it generated and that it was shipped to Facility D, and Company C would report how much waste it generated and that it was shipped to Facility D. Facility D, on its receiver report would note how much waste it received from each company on an individual basis. One commenter requested clarification regarding the preamble language found in the November 18, 1994, issue of the Texas Register (19 TexReg 9156). The commenter states that it is unclear whether the preamble language implies that certain types of facilities (e.g., service centers associated with the electric utility industry) would be required to obtain permits to receive and accumulate various wastes (e.g., spill contaminated soils and debris). The commission believes that this concern has been addressed by the preceding discussion concerning the use of the sequence code "TSDF." In regards to sec.335.505(4), relating to amenable cyanides, one commenter requested that the commission allow additional time to evaluate wastes for this criteria. The commenter also requested information regarding the basis for this new requirement. To allow generators time to re-evaluate their waste already classified under the eight-digit system, the commission has amended sec.335.501, relating to the conversion to the new waste notification and classification system, such that wastes which have already been classified and coded under the eight-digit system do not require re-evaluation and re-notification until January 1, 1996. The cyanide parameter has been removed from Table 1 of Appendix 1 because the acidic nature of the TCLP does not provide a suitable environment to quantify cyanides. However, due to the toxic nature of cyanides, the commission felt it appropriate to consider cyanides in the Class 1 classification criteria, therefore the proposed rule suggested an amenable cyanide limit of 20 mg/l in the text of the rules. In this adoption, the term "amenable cyanides" has been replaced by the term "total recoverable cyanides" since the test for "amenable cyanides" is based upon the cyanides' reaction with chloride and "total recoverable cyanides" is based on the total amount of cyanide available to form hydrogen cyanide, a very toxic gas. The commission feels the "total recoverable cyanides" test is more reflective of the waste's potential to do harm. Also, the proposed rules suggested a limit of 20 mg/l. Because mg/l is a measure of liquid waste and not solids, mg/l has been changed in these rules to parts per million (ppm) which is a measure of not only liquid waste but also solid and semi-solid waste. Concerning sec.335.507, regarding Class 3 criteria, several commenters felt that the TDS level was too restrictive for the Class 3 classification. One commenter felt that by raising the TDS limit from 500 mg/l to 10,000 mg/l, a waste could still be considered essentially insoluble because the waste would be still be insoluble at 99% insoluble as compared to 99.95%. Another commenter suggested that the level for TDS be raised to 2,000 mg/l or 3,000 mg/l. Because of the numerous comments it received on the industrial Class 3 classification criteria, the commission feels additional evaluation of this criteria is warranted before any changes are considered. Therefore, the commission will maintain the Class 3 criteria as found in the original rule. Concerning sec.335.507, regarding Class 3 criteria, one commenter believed that the preamble was contradictory to the definition of a solid waste. The commenter stated that the definition of a solid waste includes solids, liquids, and gases. The commenter believed that the preamble statement that liquids cannot be a Class 3 waste conflicts with that definition. The commission would like to note that Class 3 wastes, by definition, are wastes which are insoluble. A liquid is considered to be a solute and ready to solubilize other material. A liquid, although a solid waste, is not considered insoluble under the definition of a Class 3. Solid wastes can be divided into hazardous waste, Class 1 wastes, Class 2 wastes, and Class 3 wastes. Solid wastes can also be divided into solids, liquids, semi-solids, and gases. The rules do not say that Class 3 waste can be divided into solids, liquids, semi- solids and gases. In regards to sec.335.508 (specific industrial wastes), one commenter felt that a specific category of Class 2 or Class 3 classifications should be established for uncontaminated construction debris. Another commenter felt that generators should not have to sample construction debris that has no known contaminants, and that the material should automatically be considered a Class 2 waste or Class 3 waste. The commission does not wish to give blanket approval for all construction debris to be considered Class 2 or Class 3 waste. The commission feels that the debris should be classified based upon the characteristics of that debris. It is not unheard of for construction debris to be hazardous waste. Some construction debris can also exhibit the characteristics of Class 1 waste. Therefore, the commission feels that construction debris waste should be evaluated and classified based upon its own individual merit. However, this does not necessarily mean that the generator needs to run a bombardment of analytical tests. The commission agrees wholeheartedly with the commenter that generators should not be made to run unnecessary tests. If construction debris is uncontaminated, the generator can use that fact as process knowledge in classifying the waste. If sufficient knowledge exists about the construction debris (i.e., no contamination or constituents which would cause the construction debris to be hazardous, Class 1 or Class 2) the waste could and should be classified as a Class 3 waste without a single analytical test being run. In other words, the rules, as written already, allow generators to classify their waste (including construction debris) as Class 2 or Class 3 waste without analytical data, provided they know enough about their waste. The commission would also like to note that it is currently in the very early stages of reviewing the possibility of identifying certain industrial waste as "unique" because they are fairly removed from "industrial" processes and could be more closely grouped with "municipal" activities. During this review, the commission hopes to determine the best way to identify and regulate these types of "unique" wastes. Construction debris could be a candidate for evaluation as a "unique" waste. In regards to sec.335.508(2), several commenters felt that containers with a capacity of five gallons or less, which have previously held a hazardous waste, hazardous substance, or a Class 1 waste, should be considered a Class 2 waste if the containers are empty and rendered unusable, without the provision that they be triple-rinsed or hydroblasted. The commenters indicate that rendering these containers unusable would prevent the scavenging of these from municipal landfills for reuse in a capacity which is largely difficult to regulate by the commission. The waste generated by the triple-rinsing/hydroblasting of five gallon containers is a concern for several commenters who state that it is in conflict with the commissions' waste minimization policy, and that it creates additional costs and inefficiencies for the generator. One commenter stated that limiting the Class 2 empty container exemption to containers less than five gallons in capacity puts an unnecessary economic burden on the regulated community. After listening to the various comments and concerns, the commission has adopted a final rule which allows empty containers that have a capacity of five gallons or less to be considered Class 2 wastes without triple rinsing or rendering unusable. It is the commission's understanding that these size containers are not likely to be used for the storage of drinking materials. In addition sec.335.508(3), concerning plant trash, has been amended to reflect that nonhazardous empty containers of five gallons or less may be considered for the "plant trash" designation. In regards to sec.335.508(2)(A) (specific industrial waste), one commenter stated that the word "disposed" was improperly used and should be replace by the words "disposed of" in the phrase "...would be classified as a Hazardous or Class I waste if disposed, and is empty..." The commission concurs with this comment and the wording of the rule has been changed accordingly. Additionally, the commission has amended this subsection by retaining the term "completely" that was removed in the proposed rule. The commission feels that the extent of the removal of residues needs to be specified. The commission also replaced the word "any" with the word "the" to lessen any confusion about how much of the residues should be removed. The commission felt the terms "completely removed" and "capable of removing any waste" might appear contradictory if the term "any" was interpreted to mean "a portion of" rather than "all." A commenter requested clarification on the empty container classification process under the non-container classification criteria. To that end, the commission would like to note that it is the generator's choice when classifying empty containers as to which criteria is used for classification purposes. Classification of empty containers under the non-container classification system would probably require generators to address many more issues at a greater expense. For example, after a hazardous waste determination of the containers in question has been made, the generator would need to address each nonhazardous criteria (i.e., Class 1 corrosives, Class 1 ignitable, Class 1 toxics, Class 1 corrosives, Class 1 RACM, Class 2 medical wastes, Class 1 polychlorinated biphenyl (PCB) waste, Class 1 TPH waste, and Class 1 new chemical substance waste). Because of the unique properties of empty containers, the commission has attempted to develop an empty container category that is protective of human health and the environment without being overly restrictive on generators. In regards to sec.335.508(2)(A)(iv), concerning requirements for containers going for recycling, several commenters requested that containers which were empty (per sec.335.41(f)(2)) not be required to be triple-rinsed or hydroblasted and rendered unusable if they were going for recycling. It was stated by another commenter that the emphasis for the empty container classifications should be placed on only removing as much residue as is needed for proper management by the recycler, since this would put an additional burden on the generator to manage additional waste streams resulting from that rinsing process. Based on this the commenter felt that the receiver could specify what degree of residue removal would be required and this would not deter the adoption of the recycling route of management by the generators. During the advisory committee's review of the self-classification rules, staff received information concerning the recycling process of dismantling or scrapping containers. It is apparent that these containers ultimately would be rendered unusable; thus, puncturing or rendering unusable prior to the recycling process would be redundant. The commission concurred with the committee's assessment and the empty container category was amended to allow for this waste management practice. In order to clarify this requirement, clarifying language has been added to sec.335.508(2)(A)(iv). The commission believes that the requirement for triple-rinsing or hydroblasting these containers is necessary to prevent the release of harmful residues to humans or the environment during storage and/or transportation. If the harmful residues were not removed and the containers were considered Class 2, there would be a substantial increase in the possibility that these residues would cause harm. This arises from the increased likelihood that the containers would be handled with less precautions than a Class 1 waste during storage and transportation as well as the fact that these containers (along with their residues) could more easily end up being used in an inappropriate manner (ie. bar-b-que pits, sleeping quarters, and drinking water containers) since their movement is not tracked by manifesting. As an example, if a 55 gallon container were only required to be empty per sec.335.41(f)(2)(A) before it was classified as a Class 2 waste, as much as 1. 65 gallons (or 6.24 liters) could remain in the container. This would amount to a considerable amount of waste, if it was from a large quantity of containers, which could then migrate into the environment. It would also be a large amount of waste for one individual to come into contact with in a mismanagement situation. Therefore, the commission does not concur that the stipulation that residues be removed be stricken from the rule. Another commenter suggested that the TNRCC allow containers of less than five gallons in capacity fall under the same guidelines as those greater than or equal to five gallons since this would preserve landfill space and promote recycling. Although the commission agrees that recycling should be promoted, it does not feel that the waste classification rules are the right avenue. The commission feels that its classification rules should concentrate on the potential hazard associated with a waste rather than with recycling. One commenter expressed concern that a more stringent container classification should not be based on the fact that the containers being classified came from an industrial rather than an institutional, commercial, or municipal source. The commission would like to note that some of the sources mentioned by the commenter may be considered industrial sources and thus subject to these classification rules (including those for containers). For those sources which are non-industrial, the commission does not have a waste classification scheme as implied by the commenter. In regards to the exemption for containers which are to be reclaimed, sec.335.508(2)(A)(iv), one commenter requested clarification. The commenter also noted that in a previous preamble the TNRCC stated that "...containers of all sizes which are directly re-used or re-conditioned (reclaimed for reuse for its intended purpose) are not solid wastes..." and is requesting clarification of this statement. "Reconditioned" or "reused" in this context refer to materials which are returned for use for their intended purpose (i.e., shipment of products). For example, drums which are returned to the manufacturer to be reconditioned and refilled or just refilled would not be considered wastes. However, drums sent to be shredded for use as a feedstock replacement in a process to make metal ingots would be considered recycling. The commission further clarifies this section by amending the wording to read "recycling" rather than "reclamation." The commission would like to reiterate that containers destined for reconditioning and returned for reuse as containers are not considered solid waste and therefore are not subject to the classification requirements of these rules. In regard to form codes for plant trash, sec.335.508(3), one commenter was against having multiple codes (i.e., 999 and 902) since the waste generally ends up in the same landfill anyway. The form codes 999 (plant trash) and 902 (supplemental plant production refuse) represent two types of wastes. Nine hundred and ninety-nine (plant trash) represents the more common type of wastes which are typically considered Class 2. For example, 999 would include such things as paper, cardboard, wooden packaging materials, food wastes, glass, stainless steel, steel, iron scrap, plastics, styrofoam, rope, twine, equipment belts, wiring, uncontaminated cloth, metal bindings, and uncontaminated floor sweepings. 902 (supplemental plant production refuse) can include ANY Class 2 waste from production, manufacturing, or laboratory operations. For example, 902 could include such things as Class 2 sludges, Class 2 off-specification chemicals, and Class 2 contaminated absorbents. Another difference between the two codes is that the quantity of wastes identified as 999 (plant trash) can be unlimited while the total quantity of waste identified as 902 (supplemental plant production refuse) is limited to 20% of the waste identified as 999 (plant trash). The reasons the two codes were established were: the commission felt it unnecessary to identify on a Notice of Registration every common, Class 2 waste as an individual waste stream; therefore, form code 999 was established (plant trash); and sometimes generators produce small quantities of Class 2 production, manufacturing and/or laboratory wastes which, because of the small quantity and classification, do not seem to warrant individual waste stream identification on the Notice of Registration. However, because the commission did not want to lose its ability to review and audit Class 2 classifications, it did not want all Class 2 wastes being identified as supplemental plant production refuse (902). For that same reason, and the fact that wastes from production, manufacturing and laboratory operations can be classified as something other than Class 2, the commission feels it appropriate to retain the two codes at this time. In regard to form codes for plant trash, sec.335.508(3), one commenter requested that the commission put the emphasis on "people-related" trash rather than industrial trash. The commission does not wish at this time to identify "people-related" wastes as a separate form code. The commission feels that a majority of "people- related" wastes are covered by the form code 999 (plant trash), as this code includes such waste as paper, food wastes, cafeteria waste, glass, aluminum foil, aluminum cans, plastics, styrofoam, empty containers with a holding capacity of five gallons or less, uncontaminated floor sweepings, food packaging, and personal cosmetics generated by facility personnel. In regard to form codes for plant trash, sec.335.508(3), it was requested that the commission allow a small percentage of Class 1 waste to be included in the plant trash, to allow small quantity generators to avoid the Class 1 requirements for notification, classification, and disposal. The commission does not agree with the commenter's request to allow for small amounts of Class 1 waste to be included with plant trash. Class 1 wastes are wastes which may pose a potential or present risk to human health and the environment. The commission believes that allowing for such waste to be managed and disposed of alongside Class 2 wastes is not consistent with the regulations and is not protective of human health and the environment. Because of the confusion the commission has seen in regards to form codes for plant trash, sec.335.508(3), it feels that the inclusion of the main parts of the plant trash definitions would be useful to generators when choosing form codes found in Appendix III; therefore, the commission has amended the rules to include a summary of those definitions. Concerning sec.335.1 (definitions), several commenters stated that the exclusion for polymerized materials found in the definition of Petroleum Substance was too broad. Another commenter expressed concern that the Petroleum Substance definition did not exclude their particular form of plastic. Another commenter asked if the list of polymerized materials was an exhaustive one. To clarify the Petroleum Substance definition to meet its intended purpose, the commission is amending it to exclude the general category of polymerized materials, and rewording it for clarification purposes. Also, for ease of reading, the commission has moved the definition of "motor fuel" into the Petroleum Substance definition rather than referencing it in the Petroleum Substance definition. Examples of common polymerized materials have been added in hopes of assisting generators in the application of the definition. The solvent subcategory of petroleum substance has been moved to its own subparagraph (B) under the petroleum substance definition; therefore, the subsection regarding what is not considered a Petroleum Substance has been moved to subsection C. The commission does not wish to regulate materials that use minimal amounts of solvent during a process that renders the solvent no longer a risk to human health and the environment. The phrase regarding standard conditions has been moved to subsection A of the definition and standard conditions are defined. In regard to the TPH test, sec.335.508(6), one commenter stated that TPH should not be a parameter for evaluation since it is not a compound, and does not have a defined risk. In addition to this, several comments were received concerning the validity of using the TPH test, since it does not distinguish between those organic compounds which are harmless to human health and the environment and those known to pose a threat. The commission concurs with the commenters' statements that the TPH test does not identify specific compounds and does not distinguish between harmful and non-harmful compounds. This test was originally established as a screening mechanism to identify petroleum hydrocarbon contamination in various media and to establish a method to quantify that contamination. This screening mechanism was established to help generators avoid cost associated with a thorough organic analytical analysis for harmful constituents for wastes contaminated with or containing small amounts of petroleum materials. If the waste passed the screen, additional testing would not be needed. If the waste failed the screen, the commission would be willing to review information from the generator addressing the possible presence and quantity of toxic, carcinogenic and other harmful substances. This review would take place through the variance procedure. In time, the commission hoped to obtain sufficient information through the variance procedure and its Call for Comments on TPH to the regulated community (published in the Texas Register) that the criteria for specific waste streams bearing petroleum constituents could be narrowed. Unfortunately, the Call for Comments resulted in no responses on this issue. Therefore, based upon the limited information it has, the commission has only been able to provide relief from the variance procedure to a limited number of wastes. These are found in the Petroleum Substance Definition and include such things as hardened asphalt, plastics, cosmetics, synthetic rubber, and roofing shingles. Therefore, the commission does not feel it appropriate to remove the TPH criteria at this time. In regard to sec.335.508(6), several commenters stated that the TPH requirement of 1,500 ppm was too excessive and overly restrictive for stable waste (i.e., asphalt, shingles, spent roofing materials, rubber, plastic bags, food grade lubricating oils and tires) and wastes that exhibit elevated petroleum hydrocarbons due to the raw material properties of the substances. One commenter also felt that the commission should adopt the use of volatile and semi-volatile analysis for organics related to TPH. The commenter believes that if these were not present above Appendix 1, Table 1 levels, then the waste should not be considered a Class 1, and should not have to go through a variance procedure. The commission agrees with the comments concerning "stable" waste and has included in the definition of "Petroleum Substances" an exclusion for these types of waste. In regards to comparing the levels on the Table 1, Appendix 1 (Class 1 Toxics) to determine the classification of wastes, the commission would like to point out that the Class 1 Toxics table is not based on petroleum contaminated wastes. The commission needs more definitive information to generate a comprehensive list of harmful constituents that may be found in petroleum wastes in order to evaluate their potential for harm. In its Call for Comments that it placed in the Texas Register, the commission asked for assistance in this matter. It received none. Therefore, the commission must evaluate this need on an individual basis (i.e., the variance procedure) until sufficient information is gathered to allow it to address these needs more globally. As stated previously, the commission has amended the definition of a petroleum substance to exclude specific wastes which do not pose a threat when TPH concentrations exceed 1,500 ppm. This amendment should relieve generators of some of the economic burden associated with the management of these wastes and remain protective of human health and the environment. The commission does not concur with the commenter regarding requirements for industrial generators. Nonhazardous waste generated at an industrial site is capable of coming into contact with industrial contaminants that would not be found in the same waste that is generated by a nonindustrial facility. For that reason, generators need to demonstrate that these wastes do not contain such contamination in levels that are considered potentially harmful. In regard to sec.335.508(6), one commenter suggested the commission follow the Notification Advisory Committee's suggestion and assign specific classifications to wastes which contain petroleum hydrocarbons and which are regulated under another program. The commenter goes on to comment that just because this type of waste comes from an industrial source versus a commercial or residential source should not be the basis for subjecting the waste to more stringent testing and handling requirements. The commission does not concur with assigning specific classifications for wastes regulated by other programs. In fact, the commission has stated in the classification rules that the rules do not apply to wastes resulting from the cleanup of leaking underground storage tanks which are also regulated under the Petroleum Storage Tank Program. The commission would also like to note that some of the sources mentioned by the commenter may be considered industrial sources and thus may be subject to these classification rules (including those for petroleum hydrocarbons). For those sources which are non-industrial, the commission does not have a waste classification scheme as implied by the commenter. Consequently, the commission does not have classification regulations in place that apply to petroleum hydrocarbon waste coming from a non-industrial source; thus, the comment seems to imply that petroleum hydrocarbon waste should not be subject to classification. The commission does not agree with this suggestion due to the fact that this type of waste can be quite harmful. One commenter also expressed concern that it is economically significant and burdensome to the generator to handle petroleum contaminated wastes as Class 1 waste due to elevated TPH levels. The commission feels that the addition of the petroleum substance definition will eliminate cost for disposal of wastes not contaminated with a petroleum substance. Wastes that are contaminated with a petroleum substance and have a TPH concentration at a level equal to or greater than 1,500 ppm may pose a substantial risk to human health because they could contain substantial amounts of chemicals that are toxic or carcinogenic. Therefore, even though the cost for handling some waste as a Class 1 as opposed to a Class 2 may be greater, the commission feels this appropriate for the protection of human health. In regard to sec.335.508(6), one commenter suggested that the commission re- establish an advisory committee to consider and evaluate prior comments received by the advisory committee concerning TPH. The commission appreciates the comment as it continues to investigate the TPH issue. The commission hopes to develop additional documentation for future review through the variance process. In regard to sec.335.508(6), one commenter stated that the word "concentration" seems to have been omitted from the subsection and that it should be inserted between the words "hydrocarbon" and "less." The commission appreciates the commenter's noting the need for clarification and is clarifying this subsection of the rule in this publication. In regard to sec.335.508(6), several commenters stated that the TPH criteria is not realistic of potential risk. The commenters felt that the self classification rules should take into account the new federal standards for landfills. In regard to the federal landfill requirements, the Subtitle D landfill regulations "grandfathered" some landfills; therefore, all landfills are not consistent with the new more stringent technology requirements. Therefore, the commission can not fully agree with the commenters. Concerning sec.335.508(6), one commenter suggested that the commission exclude soils with greater than 1,500 TPH from being a Class 1 waste designation if the generators demonstrates that the soils do not contain identified hydrocarbons when using EPA methods 8260 and 8270. The commission has requested information regarding these and other TPH containing wastes, and to date has received little information. The commission has only been able to obtain information through the variance procedure. At this time the commission will determine on a case-by-case basis the acceptance of specific test methods during the variance procedure. The commission will utilize the variance procedure to review this approach to the TPH criteria. The commission requests that generators continue to utilize the variance procedure to increase the amount of information that the commission has on these types of wastes. Concerning sec.335.508(6), regarding the reuse of petroleum contaminated soils, one commenter questioned whether the use of petroleum contaminated soils was a new generator self-determination and whether there were specific variance procedures or case-by-case evaluations to go through. The commission would like to clarify that reuse or recycling of industrial wastes is not a new generator self-determination. Subchapter A addresses the reuse of industrial waste. The recycling rules were not part of these rules and as such are not addressed. One commenter stated that the cost of disposal for contaminated soils increased from $8.00 to $35 per cubic yard without any evidence that 1,500 ppm cut-off provides any significant protection to human health or the environment. The commission feels that the addition of the petroleum substance definition will eliminate any increased cost for disposal of soils not contaminated with a petroleum substance. The commission will retain the 1,500 ppm level for materials contaminated with or that are petroleum substances. Soils that are contaminated with a petroleum substance and have a TPH concentration at a level equal to or greater than 1,500 ppm may pose a substantial risk to human health because they could contain substantial amounts of chemicals that are toxic or carcinogenic. If generators feel that their particular waste does not pose this risk, they can request that the commission provide them a variance from the Class 1 classification. Concerning sec.335.508(6), one commenter felt that there is confusion in the regulated community in regards to TPH contaminated soils as being industrial or municipal (nonindustrial) when being sent to a municipal landfill. The commenter goes on to state, "that all recovered oil or oil/water mixtures spilled from a pipeline, vessel, or facility (excluding exploration and production facilities) as well as any associated oily solid waste (Tyvek, sorbents, etc.) are industrial waste and subject to the commission's Industrial Solid Waste Management rules." These types of wastes are defined as being industrial or municipal by the Texas Solid Waste Disposal Act. The Memorandum of Understanding between The Railroad Commission of Texas (RRC), the Texas Water Commission (now the TNRCC), and The Texas Department of Health (now the TNRCC) which took effect January 1, 1982 further establishes the agency which has jurisdiction over a particular waste. The commission notes that these issues are not addressed by these rules but would like to note that the management of contaminated soils and RRC wastes in municipal landfills is addressed through the Special Waste regulations of Chapter 330. In regards to sec.335.508(6), one commenter stated that EPA does not have limits for TPH, and as such, the TNRCC should not be more stringent than EPA. As noted earlier in this preamble, EPA only regulates hazardous waste from industrial sources. Consequently, it has no compatibly program for the regulation of nonhazardous industrial waste. Therefore, the regulation of nonhazardous industrial waste lies solely under state regulation. Since the TNRCC regulates waste from over 25,000 generators, the commission believes that the classification rules provide the safeguards needed to help protect human health and the environment from harmful waste from this large group of generators. The commission also believes that the inclusion of TPH as a distinguishing criteria among classes of nonhazardous wastes is a necessary measure to ensure proper management of such wastes. Regarding sec.335.508(6), one commenter suggested that the TPH limit be raised to 140,000 (20 times the Table 1 level set for xylene). The commission does not concur with this comment since wastes that are contaminated with a petroleum substance and have a TPH concentration at a level equal to or greater than 1,500 ppm may pose an unacceptable risk to human health due to the potential presence of substantial amounts of chemicals that are toxic or carcinogenic. The commission cannot concur with the commenter's suggestion to base the TPH classification criteria on a single constituent. Concerning sec.335.508(9), regarding out of state generated wastes, several commenters suggested that the commission provide an exemption allowing intrastate companies shipping wastes to captive facilities to declare a material a Class 2 waste or a Class 3 waste without prior approval. At this time the commission can not fully concur with the commenters' suggestion. The commission's regulations are established to protect Texas and Texans. The "prior approval" provision of the classification rules was originally included because it is difficult to pursue enforcement actions on out-of-state generators. The classification criteria and notification requirements for waste transported into or through Texas provides the safeguards needed to help ensure proper management of waste once it enters Texas. The rules for waste classification regarding out-of-state generated wastes help protect the citizens of Texas from possible mismanagement of out-of-state waste that is managed within Texas. However, the commission would like to state that it is aware of and sympathetic to companies' desire to reduce the time and procedures now associated with transporting Class 2 and Class 3 industrial waste into Texas. Therefore, it intends to pursue the means to reduce time and procedures associated with this activity and still protect human health. Several commenters stated that it would be against the commission's waste minimization policy to require stabilized hazardous waste to be classified as Class 1 and would be costly for transportation and disposal while taking up Hazardous and Class 1 landfill space. The commission does not concur with the statement that this contradicts the waste minimization policy since that goal is to eliminate the creation of waste, not to downgrade the waste to a less stringent classification. The commission agrees that the waste classification would increase the disposal and transportation costs and is withdrawing this proposal at this time. Another commenter suggested that since stabilized waste was already covered as a special waste in 30 TAC Chapter 325, it would be prevented from disposal in Subtitle D exempt landfills. The commission would like to note that the definition of Special Waste is found in 30 TAC Chapter 330. The commission does not concur with the commenter's assessment since stabilized wastes are not part of the current definition of Special Waste but as a Class 1 waste would then be a Special Waste. Stabilized waste with class 2 waste classification may or may not be considered Special Waste. The commenter also stated that this regulation will not keep non-notifiers from stabilizing and co-disposing the waste with putrescible wastes into Subtitle D exempt landfills. The commission agrees with the commenter on the fact that it is difficult to determine if everyone is in compliance with the regulations when you are not with the regulated entities 100% of the time or have not yet been identified as an entity to be regulated. Also regarding sec.335.508(10), several commenters suggested that the commission was ignoring data showing stabilized waste will not leach and that all stabilized wastes should be subject to the complete Subchapter R criteria without sec.335.508(10). The commission concurs with these comments, as the Toxicity Characteristic Leaching Procedure (TCLP) is designed to determine the mobility of both organic and inorganic analytes present in liquid, solid, and multi-phasic wastes in an acidic environment such as a landfill. TCLP analytical results will determine the waste classification, whether class 1 or class 2, of stabilized hazardous waste. The Commission acknowledges that additional information would be beneficial and welcomes input on the subject of stabilized hazardous waste, when disposed in a municipal landfill. In regards to sec.335.514, concerning variances from classification, the following comments were received: the publication of variances is not necessary since waste management information is public information, the publication of variances should not include company name and location, and the commission should maintain a historically detailed record of variances granted so as not to lose process knowledge through loss of institutional memory by movement of staff. The commission stated previously in the preamble to the proposed regulations that it is investigating ways to publish variances granted. The commission is considering the possibility of publishing variances granted via the commission's bulletin board system (BBS) and the Texas Register. The commission is considering this action as an effort to inform the public of classification variances. Company names and addresses would aid in the identification of the generator requesting the variance. This procedure may also be useful to those who are considering applying for a variance for one of their own wastes. The commission concurs with the commenter regarding the maintenance of historically detailed records of variances granted. The commission is committed to continued improvements and maintenance of information gathered and generated during the variance process. In response to the request of one commenter that the commission clarify the process involved in reviewing a variance request, the commission refers to 30 TAC sec.335.514. In this section the requirements and procedures for variance requests are set out for the regulated community. When a request is submitted to the commission it is first assigned to a chemist for evaluation and review. The chemist is looking for information regarding the nature of the waste, its composition, the generation process, and the justification for a variance. A review of any historical records which may be applicable to the current request is also part of the evaluation process. If additional information is required from the generator, it is requested at this time. The variance is sent to the division director for final decision. After this decision has been made, a letter is sent to the generator of the waste. Regarding sec.335.515 and sec.335.521, there was a typographical error in the November 18, 1994 publication in which the tables in the appendixes were misnumbered. This numbering has been corrected. In regards to Figure 1: 30 TAC sec.335.521(a)(1), Table 1, Appendix 1, the following comments were submitted in regards to the Maximum Concentration levels for new constituents: request that constituents added to the table be done so with very detailed records; request for the toxicological information for all of the additional compounds be added to the table; and request for the formulas used to derive the Maximum Concentration levels found in the table. The commission provides the information maintained for the additional new constituents requested herein this preamble. The equation used to determine the maximum concentration for toxic chemicals is: C [sub]w = [RFD x W] / [I x A] x 100 C [sub]w = Action level in water RFD = Reference Dose (mg/kg/day) W = Body weight (70 kg for an adult) A = Absorption factor (1) I = Intake assumption (2 liters/day) The equation for determining the maximum concentration for carcinogenic chemicals is: C [sub]w = {[R x W x LT] / [CSF x I x A x ED]} x 10,000 C [sub]w = Action level in water W = Body weight (70 kg-adult) A = Absorption factor (1) I = Intake Assumption (2 liter/day) R = Assumed Risk Level (Class A or B = 1.0 e [sup]-06) (Class C = 1.0 e[sup]-05) LT = Assumed lifetime (70 years) CSF = Oral carcinogenic slope factor ED = Exposure duration (70 years) The toxicological information for the new constituents for Figure 1: 30 TAC sec.335.521(a)(1) is: Acenaphthene-RFD = 6.00 x 10 [sup]-2 Anthracene-RFD = 3.00 x 10 [sup]-1 Chlor-m-cresol, p-RFD = 2.00 x 10 [sup]0 2,4 dimethylphenol-RFD = 2.00 x 10 [sup]-2 2,6 dimethylphenol-RFD = 6.00 x 10 [sup]-3 Dinoseb-RFD = 1.00 x 10[sup]-3 2-ethoxyethanol-RFD = 4.00 x 10 [sup]-1 Ethylene glycol-RFD = 2.00 x 10 [sup]0 Fluoranthene-RFD = 4.00 x 10 [sup]-2 Fluorene-RFD = 4.00 x 10[sup]-2 2-methoxyethanol-RFD = 4.00 x 10 [sup]-3 Mirex-RFD = 2.00 x 10[sup]-4 Pyrene (Class C)-CSF = 5.91 x 10 [sup]-1 The following paragraph provides additional background information regarding the addition of these constituents. Several commenters requested information regarding the reason for the addition of the new constituents in Figure 1: 30 TAC sec.335.521(a)(1), Table 1, Appendix 1. Since the adoption of these rules in 1992, the commission has become aware of additional constituents that may pose risk to human health. After review of these constituents by the commission's toxicologists, additions were made to the list. These RFD and CSF can be found in the Integrated Risk Information System (IRIS) database. IRIS is EPA's data system which contains summaries of health risk and EPA regulatory information on specific chemicals. Several commenters have asked for one year to comply with the new constituents. As addressed previously in this preamble, the commission will delay implementation for these constituents for waste generated, classified and coded prior to the effective date of these rules. One commenter suggested that the commission reconsider two compounds on Figure 1: 30 TAC sec.335.521(a)(1), Table 1, Appendix 1 because of the inability to quantify these constituents. The two compounds were epichlorohydrin (EPI) and thiosemicarbazide. EPI may hydrolyze in water (i.e., the TCLP extract) and therefore it may not be detected as EPI. The analytical method stated in the preamble of 19 TexReg (November 18, 1994) Texas Register (Method 632) for thiosemicarbazide does not list it as a constituent analyzed in the method. Methods 632 and 632.1 test for similar compounds with similar structures. The analysis for this thiourea compound does not at this time have an approved method by the EPA. Accordingly, the commission is at this time removing thiosemicarbazide and EPI from the Figure 1: 30 TAC sec.335.521(a)(1), regarding Table 1, Appendix 1. One commenter request that Figure 1: 30 TAC sec.335.521(a)(1), Table 1, Appendix 1 be replaced with Table 1 in 40 CFR sec.261.24. The commission does not agree with this since this table is only for the determination of the hazardous characteristic of toxicity and does not represent a complete list of chemicals that pose a risk to human health and the environment. The commission feels that Figure 1: 30 TAC sec.335.521(a)(1) is not exhaustive but is better representative of risk for nonhazardous waste than using only the 40 compounds found in the federal regulations. In regards to Figure 1: 30 TAC sec.335.521(a)(1), several commenters stated that the addition of 2-Methylphenol, 3-Methylphenol and 4-Methylphenol is a duplication of constituents on the table and that the levels conflict with the cresols already on the table. The commission concurs with the commenter that the constituents are a duplication of the cresols found on the table and in conflict with levels published. Therefore, the commission is removing these constituents in this publication. In regards to Figure 1: 30 TAC sec.335.521(a)(1), a commenter also stated that the commission should reconsider adding constituents to the table at this time. One commenter felt that the evaluation of the new constituents for generators of existing classified waste stream was both burdensome and expensive. The commission acknowledges that the review may be burdensome for some generators. The commission does not concur with reconsideration of adding constituents at this time; however, generators will be allowed additional time to comply with the new requirements of this table. The commission recommends generators utilize process knowledge whenever possible to eliminate potential constituents and minimize the cost of evaluation. In regards to Figure 2: 30 TAC sec.335.521(a)(2), Table 2, Appendix 1, one commenter requested additional time to comply with the additional examples of ignitable solids. The commission would like to point out that the examples are intended to serve only as examples. The revised rule does not change this. It only provides additional "examples" for consideration. The commission does not believe that the expanded list adds to the generator's responsibility and does not concur with the request for additional time to comply. The table, as previously published and as presently published, is not an all inclusive list. It is a list of materials which are examples of ignitable solids. The table is published to provide generators a list of examples of materials that are considered to be ignitable, combustible, and water-reactive solids and was expanded to provide generators with the most recent information from the DOT. The commission would like to again note that generators may utilize process knowledge to review all waste streams. Subchapter A. Industrial Solid Waste and Municipal Hazardous Waste in General 30 TAC sec.335.1, sec.335.6 The amendments are adopted pursuant to the Texas Water Code, sec.5.103, which authorizes the Texas Natural Resource Conservation Commission (TNRCC) to promulgate rules necessary to carry out the powers and duties under the provisions of the Texas Water Code, and other laws of this state; and pursuant to the Texas Health and Safety Code, sec.361.017 and sec.361.024, which further authorizes the TNRCC to promulgate rules necessary to manage industrial solid and municipal hazardous wastes. sec.335.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly requires otherwise. Petroleum substance -A crude oil or any refined or unrefined fraction or derivative of crude oil which is a liquid at standard conditions of temperature and pressure. (A) Except as provided in subparagraph (C) of this section for the purposes of this chapter, a "petroleum substance" shall be limited to a substance in or a combination or mixture of substances within the following list (except for any listed substance regulated as a hazardous waste under the federal Solid Waste Disposal Act, Subtitle C (42 United States Code sec.sec.6921, et seq)) and which is liquid at standard conditions of temperature (20o Centigrade) and pressure (1 atmosphere): (i) basic petroleum substances -i.e., crude oils, crude oil fractions, petroleum feedstocks, and petroleum fractions; (ii) motor fuels-a petroleum substance which is typically used for the operation of internal combustion engines and/or motors (which includes but is not limited to stationary engines and engines used in transportation vehicles and marine vessels); (iii) aviation gasolines-i.e., Grade 80, Grade 100, and Grade 100-LL; (iv) aviation jet fuels -i.e., Jet A, Jet A-1, Jet B, JP-4, JP-5, and JP-8; (v) distillate fuel oils -i.e., Number 1-D, Number 1, Number 2-D, and Number 2; (vi) residual fuel oils -i.e., Number 4-D, Number 4 light, Number 4, Number 5-light, Number 5-heavy, and Number 6; (vii) gas-turbine fuel oils -i.e., Grade O-GT, Grade 1GT, Grade 2-GT, Grade 3- GT, and Grade 4-GT; (viii) illuminating oils-i.e., kerosene, mineral seal oil, long-time burning oils, 300 oil, and mineral colza oil; (ix) lubricants-i.e., automotive and industrial lubricants; (x) building materials-i.e., liquid asphalt and dust-laying oils; (xi) insulating and waterproofing materials-i.e., transformer oils and cable oils; (xii) used oils-(See definition for "used oil" in this section); and (B) For the purposes of this chapter, a "petroleum substance" shall include solvents or a combination or mixture of solvents (except for any listed substance regulated as a hazardous waste under the federal Solid Waste Disposal Act, Subtitle C (42 United States Code sec.sec.6921, et seq)) and which is liquid at standard conditions of temperature (20o Centigrade) and pressure (1 atmosphere)-i.e., Stoddard solvent, petroleum spirits, mineral spirits, petroleum ether, varnish makers' and painters' naphthas, petroleum extender oils, and commercial hexane. (C) The following materials are not considered petroleum substances: (i) polymerized materials, i.e., plastics, synthetic rubber, polystyrene, high and low density polyethylene; (ii) animal, microbial, and vegetable fats; (iii) food grade oils; (iv) hardened asphalt and solid asphaltic materials-i.e., roofing shingles, roofing felt, hot mix (and cold mix); and (v) cosmetics. 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 May 8, 1995. TRD-9505732 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: May 30, 1995 Proposal publication date: November 18, 1994 For further information, please call: (512) 239-6087 Subchapter R. Waste Classification 30 TAC sec.sec.335.501, 335.503, 335.505, 335.507-335.510, 335. 514, 335.515, 335.521 The amendments and new section are adopted under the Texas Water Code, sec.5.103 and sec.26.011, which authorizes the Texas Natural Resource Conservation Commission (TNRCC) to promulgate rules necessary to carry out its power and duty to protect water quality in the state; and under Texas Health and Safety Code, sec.361.017 and sec.361.024, which authorizes the TNRCC to promulgate rules necessary to manage industrial solid and municipal hazardous wastes. sec.335.501. Purpose, Scope, and Applicability. Persons who generate industrial solid waste or municipal hazardous waste shall comply with the provisions of this subchapter. Wastes that are regulated under Chapter 334, Subchapter K, of this title (relating to Storage, Treatment and Reuse Procedures for Petroleum-Substance Contaminated Soil) are not subject to the provisions of this subchapter. Persons who generate wastes in Texas shall classify their own waste according to the standards set forth in this subchapter and may do so without any prior approval or communication with the commission other than notification of waste generation activities pursuant to sec.335.6 of this title (relating to Notification Requirements) and submittal of required documentation pursuant to sec.335.513 of this title (relating to Documentation Required). A generator of industrial solid waste or special waste as defined by sec.330.2 of this title (relating to Definitions) shall refer to Chapter 330 of this title (relating to Municipal Solid Waste) for regulations regarding the disposal of such waste prior to shipment to a municipal landfill. This subchapter will: (1)-(2) (No change.) (3) after June 7, 1995, apply to all classifications involving new waste streams and existing unclassified waste streams; and (4) on January 1, 1996, require the completion of all existing waste stream notifications in accordance with the classification requirements of this subchapter. sec.335.503. Waste Classification and Waste Coding Required. (a) (No change.) (b) As required under the schedule provided in sec.335.501 of this title (relating to Conversion to New Waste Notification and Classification System), all industrial solid waste and municipal hazardous waste generated, stored, processed, transported, or disposed of in the state shall be coded with an eight-digit waste code number which shall include a four-digit waste sequence number, a three-digit form code, and a one-character classification (either H, 1, 2, or 3). Form codes are provided in sec.335.521(c) of this title (relating to Appendix 3). Procedures for assigning waste code numbers and sequence numbers are outlined as follows and are available from the commission at the address listed in sec.335.521(b) of this title (relating to Appendix 2). (1)-(6) (No change.) (7) A facility which receives and consolidates like waste from Municipal Conditionally Exempt Small Quantity Generators should use "CESQ" in the first four positions of the waste code for any manifesting and/or reporting associated with that waste. (8) A facility which receives a waste and consolidates that waste with other like waste, other than its own, (thus not changing the form code of the waste stream or its composition, hazardous, or Texas waste class), or stores a waste without treating, processing (as defined in sec.335.1 of this title (relating to Definitions)), or changing the form or composition of that waste may ship that waste to a storage, treatment, or disposal facility using the sequence code "TSDF" in the first four positions of the waste code. This does not pertain to wastes which are treated or altered or combined with unlike wastes. This "TSDF" designation is only to be used by facilities that store and/or accumulate a quantity of wastes from more than one site for subsequent shipment to a treatment or disposal facility. Manifest documents must note a final destination designated to receive a consolidated waste. The designated "final destination" receiving facility noted on the manifest must be a permitted facility in order to terminate the manifest, unless the waste is nonhazardous and does not require manifesting in accordance with sec.335.10(g) of this title (relating to Shipping and Reporting Procedures Applicable to Generators of Hazardous Waste or class 1 Waste and Primary Exporters of Hazardous Waste) and is going to a facility described in sec.335.10(g) of this title (relating to Shipping and Reporting Procedures Applicable to Generators of Hazardous Waste or class 1 Waste and Primary Exporters of Hazardous Waste). A consolidated waste shipped to a non- permitted facility prior to being shipped to the final destination must proceed with the original manifests (noted with any appropriate changes) to the facility designated on the manifest for final handling. sec.335.505. Class 1 Waste Determination. A non-hazardous industrial solid waste is a Class 1 waste if: (1) it contains specific constituents which equal or exceed the levels listed in sec.335.521(a) (1) of this title (relating to Appendix 1, Table 1) as determined by the methods outlined in this section. A nonhazardous waste is a Class 1 waste if, using the test methods described in 40 CFR Part 261 Appendix II, or equivalent methods approved by the executive director under the procedures set forth in sec.335.509 of this title (relating to Waste Analysis), the extract from a representative sample of the waste contains any of the contaminants listed in sec.335.521(a)(1) at a concentration equal to or greater than the Maximum Concentration given in that table. Information on representative samples is set forth in sec.335.509 of this title (relating to Waste Analysis). Where matrix interferences of the waste cause the Practical Quantitation Limit (PQL) of the specific analysis to be greater than the Maximum Concentration listed in sec.335.521(a)(1), then the achievable PQL becomes the Maximum Concentration, provided that the generator maintains documentation which would satisfactorily demonstrate to the executive director that lower levels of quantitation of a sample are not possible. A satisfactory demonstration includes the results from the analysis of the waste for that specific analyte by a laboratory utilizing an appropriate method described in "Test Methods for the Evaluation of Solid Waste, Physical/Chemical Methods" (EPA SW-846), "Methods for Chemical Analysis of Water and Wastes" (EPA-600/4-79/020), "Standard Methods for the Examination of Water and Wastewater", "American Society for Testing and Materials (ASTM) Standard Methods", any EPA-approved method , or an equivalent method approved by the executive director under procedures set forth in sec.335.509 of this title (relating to Waste Analysis); (2) it is Class 1 ignitable. A nonhazardous waste is Class 1 ignitable if a representative sample of the waste has any of the following properties: (A) (No change.) (B) it is a physical solid or semi-solid under which conditions normally incident to storage, transportation, and disposal is capable of causing fires through friction, or retained heat from manufacturing or processing, or which can be ignited readily, and when ignited burns both vigorously and persistently such that it creates a serious hazard. Included in this class are spontaneously combustible and water-reactive materials, including but not necessarily limited to the substances listed in sec.335.521(a)(2) of this title (relating to Appendix 1, Table 2) and found in 49 CFR Part 173 Subchapter E. Generators should demonstrate that a waste with significant concentrations of these constituents is not Class 1 ignitable; (3) (No change.) (4) it contains amenable cyanides equal to or greater than 20 mg/l; (5) there is an absence of analytical data and/or documented process knowledge (as described in sec.335.511 of this title (relating to Use of Process Knowledge)) which proves a waste is Class 2 or Class 3; (6) it is identified as a Class 1 waste in sec.335.508 of this title (relating to Classification of Specific Industrial Solid Wastes); or (7) it is not a hazardous waste pursuant to sec.335.504 of this title (relating to Hazardous Waste Determination) and a generator chooses to classify the waste as Class 1. sec.335.508. Classification of Specific Industrial Solid Wastes. The following non-hazardous industrial solid wastes shall be classified no less stringently than according to the provisions of this section: (1) (No change.) (2) Empty containers that are a solid waste as defined in sec.335.1 (relating to Definitions) shall be subject to the following criteria: (A) A container which has held a Hazardous Substance as defined in 40 CFR Part 302, a Hazardous waste, a Class 1 waste, or a material which would be classified as a Hazardous or Class 1 waste if disposed of, and is empty per sec.335.41(f)(2) of this title (relating to Purpose, Scope and Applicability concerning empty containers): (i) (No change.) (ii) may be classified as a Class 2 waste if the container has a capacity of five gallons or less; or (iii) may be classified as a Class 2 waste if the container has a capacity greater than five gallons and: (I) the residue has been completely removed either by triple rinsing with a solvent capable of removing the waste, by hydroblasting, or by other methods which remove the residue; and (II) the container has been crushed, punctured, or subjected to other mechanical treatment which renders the container unusable; or (iv) may be classified as a Class 2 waste if the container is to be sent for recycling and: (I) the residue has been completely removed either by triple rinsing with a solvent capable of removing the waste, by hydroblasting, or by other methods which remove the residue; and (II) the container is not regulated under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) 40 CFR Part 165; and (III) the generator maintains documentation in accordance with sec.335.513 of this title (relating to Documentation Required) that demonstrates the container is being reclaimed; and (IV) the recycling activity involves shredding, dismantling, scrapping, melting, or other method that renders the container unusable. (B)-(C) (No change.) (3) Plant trash refers only to paper, cardboard, food wastes, and general plant trash. These wastes shall be subject to the following classification criteria: (A) The form code 999 ("PLANT TRASH") refers only to Class 2 waste originating in the facility offices or plant production area that is composed of paper, cardboard, linings, wrappings, paper and/or wooden packaging materials, food wastes, cafeteria waste, glass, aluminum foil, aluminum cans, aluminum scrap, stainless steel, steel, iron scrap, plastics, styrofoam, rope, twine, uncontaminated rubber, uncontaminated wooden materials, equipment belts, wirings, uncontaminated cloth, metal bindings, empty containers with a holding capacity of five gallons or less, uncontaminated floor sweepings, and/or food packaging, that are produced as a result of plant production, manufacturing, laboratory, general office, cafeteria, or food services operations. Also included in plant trash are personal cosmetics generated by facility personnel, excluding those cosmetics generated as a result of manufacturing or plant production operations. Plant refuse shall not include oils, lubricants of any type, oil filters, contaminated soils, sludges, wastewaters, bulk liquids of any type, or Special Wastes as defined by sec.330.2 of this title (relating to Definitions). (B) The form code 902 ("SUPPLEMENTAL PLANT PRODUCTION REFUSE") only applies to Class 2 Waste from production, manufacturing, or laboratory operations. The total amount of the supplemental plant production refuse (form code 902) shall not exceed 20% of the annual average of the total plant refuse (form code 999) volume or weight, whichever is less. Individual wastes which have been designated supplemental plant production refuse may be designated by the generator at a later time as a separate waste in order to maintain the supplemental plant production refuse at or below 20% of the appropriate plant refuse amount. For any waste stream, included with, removed from, or added to the supplemental plant refuse designation (form code 902), the generator must provide the notification information required pursuant to this subchapter. (4)-(5) (No change.) (6) Wastes which are petroleum substances or contain contamination from petroleum substances, as defined in sec.335.1 of this title (relating to Definitions) shall be classified as a Class 1 waste until a generator demonstrates that the waste's total petroleum hydrocarbon concentration (TPH) is less than or equal to 1,500 parts per million (ppm). Where hydrocarbons can not be differentiated into specific petroleum substances, then such wastes with a TPH concentration of greater than 1500 ppm shall be classified as a Class 1 waste. Wastes resulting from the cleanup of leaking underground storage tanks (USTs) which are regulated under Chapter 334, Subchapter K, of this title (relating to Petroleum Substance Waste) are not subject to classification under this subchapter. (7)-(9) (No change.) (10) Wastes which are hazardous solely because they exhibit a hazardous characteristic, which are not considered hazardous debris as defined in 40 CFR sec.268.2(g), which are subsequently stabilized and no longer exhibit a hazardous characteristic and which meet the land disposal restrictions as defined in 40 CFR Part 268 may be classified according to the Class 1 or Class 2 classification criteria as defined in sec.335.505, sec.335.506, and sec.335.508 of this title (relating to Class 1 Waste Determination; Class 2 Waste Determination; and Classification of Specific Industrial Solid Wastes). sec.335.515. Enforcement. (a)-(b) (No change.) (c) When establishing corrective actions and penalty amounts involving violations of this subchapter, the executive director should consider circumstances which mitigate the nature or extent of the violations in accordance with applicable rules and statutes. sec.335.521. Appendices. (a) Appendix 1. (1) Table 1. Figure 1: 30 TAC sec.335.521(a)(1) (2) Table 2. Figure 2: 30 TAC sec.335.521(a)(2) (3) Table 3. Figure 3: 30 TAC sec.335.521(a)(3) (b) Appendix 2. Figure 4: 30 TAC sec.335.521(b) (c) Appendix 3. Figure 5: 30 TAC sec.335.521(c) (d) Appendix 4. Figure 6: 30 TAC sec.335. 521(d) 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 May 8, 1995. TRD-9505733 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: May 30, 1995 Proposal publication date: November 18, 1994 For further information, please call: (512) 239-6087 TITLE 34. PUBLIC FINANCE Part III. Teacher Retirement System of Texas Chapter 25. Membership Credit The Teacher Retirement System of Texas (TRS) adopts amendments to sec.sec.25. 1, 25.21, and 25.182, concerning the meaning of full-time service, compensation subject to deposit and credit, and yearly increments of credit, without changes to the proposed text as published in the December 13, 1994, issue of the Texas Register (19 TexReg 9839). The justification for the amendments is clarification for tax qualification purposes and clarification of installment payments for certain types of service. The amendment to sec.25.1 adds an inclusive floor needed for tax qualification purposes to the guidelines set out in this section for full-time service. The amendment to sec.25.21 reflects federal law dealing with maximum amounts of annual compensation that may be reported and used for calculating benefits. The amendment to sec.25.182 allows members purchasing out-of-state credit to have multiple installment agreements. The law was changed by the Legislature in 1993 to allow purchase of credit after five years and allows an additional year with each year of actual credit up to a maximum of ten years. No comments were received regarding adoption of the amendments. Service Eligible for Membership 34 TAC sec.25.1 The amendment is adopted under the Government Code, Chapter 825, sec.825. 102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 10, 1995. TRD-9505753 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: December 13, 1994 For further information, please call: (512) 370-0506 Compensation 34 TAC sec.25.21 The amendment is adopted under the Government Code, Chapter 825, sec.825. 102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 10, 1995. TRD-9505754 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: December 13, 1994 For further information, please call: (512) 370-0506 Installment Payments 34 TAC sec.25.182 The amendment is adopted under the Government Code, Chapter 825, sec.825. 102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 10, 1995. TRD-9505755 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: December 13, 1994 For further information, please call: (512) 370-0506 Chapter 27. Termination of Membership and Refunds 34 TAC sec.27.2, sec.27.10 The Teacher Retirement System of Texas (TRS) adopts an amendment to sec.27. 2 and new sec.27.10, concerning the withdrawal of funds by a non-eligible person and forfeitures which may not increase benefits, without changes to the proposed text as published in the December 13, 1994, issue of the Texas Register (19 TexReg 9840). The justification for the amendment and the new section is to clarify TRS' compliance with Federal Internal Revenue Code requirements related to qualified plans. The amendment to sec.27.2 makes it clear that picked up deposits by an employer cannot be withdrawn until the member terminates employment with the employer. The new sec.27.10 makes it clear that benefits to remaining members may not be increased due to termination of membership. No comments were received regarding adoption of the amendment and new section. The amendment and new section are adopted under the Government Code, Chapter 825, sec.825.102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 10, 1995. TRD-9505756 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: December 13, 1994 For further information, please call: (512) 370-0506 Chapter 29. Benefits The Teacher Retirement System of Texas (TRS) adopts amendments to sec.sec.29. 11, 29.34, 29.40, 29.50, and 29.51; and new sec.sec.29.17 and 29.52-29.54. Section 29.17, concerning the latest date for the commencement of benefits, is adopted with changes to the proposed text as published in the February 28, 1995, issue of the Texas Register (20 TexReg 1406). Amendment to sec.29.11, concerning amendments to actuarial tables, is adopted without changes to the proposed text as published in the December 30, 1994, issue of the Texas Register (19 TexReg 10491). Amendments to sec.sec.29.34, 29.40, 29.50, and 29. 51; and new sec.sec.29.52-29.54 are adopted without changes to the proposed text as published in the December 13, 1994, issue of the Texas Register (19 TexReg 9840). The change in sec.29.17 consists of deleting language in paragraph (2) requiring a member to apply for retirement upon termination of employment in order for benefits to commence to be distributed. The justification for the new sections and amendments is to clarify TRS' compliance with Federal Internal Revenue Code requirements related to qualified plans. The amendment to sec.29.11 protects members from adverse consequences from changing tables and adds protection for TRS as a qualified plan. New sec.29.17 further clarifies the latest date for the commencement of benefits. The amendment to sec.29.34 makes the distribution of death benefits clear for Internal Revenue purposes. The amendment to sec.29.40 makes it clear that distributions to beneficiaries are at least as rapid as the option elected by the member. The amendment to sec.29.50 defines annual benefit, annual additions, annual compensation code, defined benefit plan fraction, defined contribution plan, defined contribution plan fraction, employer, and member contributions. Amendment to sec.29.51 makes the plan limitation on retirement benefits clear. New sec.29.52 explains adjustments to annual benefit limits. New sec.29.53 explains the limitations for participants in defined contribution plans as they relate to TRS. New sec.29.54 defines some special provisions as to high paid participants in the plan. No comments were received regarding adoption of the new sections and amendments. Retirement 34 TAC sec.29.11 The amendment is adopted under the Government Code, Chapter 825, sec.825. 102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 10, 1995. TRD-9505757 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: December 30, 1994 For further information, please call: (512) 370-0506 34 TAC sec.29.17 The new section is adopted under the Government Code, Chapter 825, sec.825. 102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. sec.29.17. Latest Date for Commencement of Benefits. A member's benefits shall be distributed, or commence to be distributed to the member no later than April 1 of the year following the calendar year in which such member: (1) attains age 70 1/2; or (2) terminates employment, whichever of this paragraph or paragraph (1) of this section occurs later. Distributions to the member and the member's beneficiary shall be made in accordance with the Internal Revenue Code, sec.401(a)(9)(D) thereof relating to incidental death benefits. 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 May 10, 1995. TRD-9505759 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: February 28, 1995 For further information, please call: (512) 370-0506 Death Before Retirement 34 TAC sec.29.34 The amendment is adopted under the Government Code, Chapter 825, sec.825. 102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 10, 1995. TRD-9505760 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: December 13, 1994 For further information, please call: (512) 370-0506 Post Retirement Increases 34 TAC sec.29.40 The amendment is adopted under the Government Code, Chapter 825, sec.825. 102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 10, 1995. TRD-9505761 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: December 13, 1994 For further information, please call: (512) 370-0506 Plan Limitations 34 TAC sec.sec.29.50-29.54 The amendments and new sections are adopted under the Government Code, Chapter 825, sec.825.102, which authorizes the Teacher Retirement System to adopt rules for the administration of the funds of the retirement system. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on May 10, 1995. TRD-9505762 John R. Mercer Interim Executive Director Teacher Retirement System of Texas Effective date: June 1, 1995 Proposal publication date: December 13, 1994 For further information, please call: (512) 370-0506 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 48. Community Care for Aged and Disabled In-Home and Family Support Program 40 TAC sec.sec.48.2702, 48.2707, 48.2710, 48.2711 The Texas Department of Human Services (DHS) adopts amendments to sec.sec.48. 2702, 48.2707, 48.2710, and 48.2711, without changes to the proposed text as published in the March 24, 1995, issue of the Texas Register (20 TexReg 2195). The justification for the amendments is to update procedures for applications, receipts, and time frames for client notifications. The amendments will function by providing a faster reconciliation of subsidy grants in some situations, by providing possible faster services for applicants removed from the waiting list, and more clearly defining time frames for written notifications. No comments were received regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 35, which provides the department with the authority to administer public and support services for persons with disabilities programs. The amendments implement the Human Resources Code, sec. sec.22.001-22.024 and sec.sec.35.001-35.012. 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 May 11, 1995. TRD-9505747 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: June 15, 1995 Proposal publication date: March 24, 1995 For further information, please call: (512) 450-3765