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 1. ADMINISTRATION Part IV. Office of the Secretary of State Chapter 81. Elections The Office of the Secretary of State adopts the repeal of sec.81.11 and new sec.sec.81.11-81.29, regarding the use of funds under Chapter 19 of the Texas Election Code, without changes to the proposed text as published in the August 4, 1995, issue of the Texas Register (20 TexReg 5839). It was necessary to repeal sec.81.11 to allow for the adoption of new sec.sec.81. 11-81.29. New sec.sec.81.11-81.29 are necessary to provide clarification to voter registrars as to the intended use of Chapter 19 funds and outline procedures to be followed by them to obtain such funding. No comments were received concerning the repeal of sec.81.11. Two public hearings were held in response to the new sec. sec.81.11-81.29. The first was held in conjunction with the Secretary of State's 13th Annual Election Law Seminar for County Officials at 701 East 11th in Austin, Texas on August 10, 1995 from 2:00 to 3:30 p.m. Approximately 250 county voter registrars and representatives attended this hearing. A second hearing was held at the James Earl Rudder Building in Austin, Texas on August 22, 1995 from 1:30 to 3:00 p.m. There were 17 attendees at the second hearing. In addition 13 written comments were received concerning the proposed rules. The following comments were received concerning the proposed sections. COMMENT: The majority of comments received were opposed to sec.81.25, which disallows the purchase of promotional items with Chapter 19 funds. Section 81. 25 gives various examples of promotional items and defines these as novelties or items of nominal value. The commenters stated that promotional items generate interest in voter registration and result in increased communications with the voter registrars. RESPONSE: Upon reviewing the fiscal year 1993 ledger books, the Secretary of State found less than 20% of the county voter registrars used Chapter 19 funds to purchase some type of promotional materials. The voter registrar may choose to purchase promotional items with county funds and pay other expenses from Chapter 19 funds. While promotional items may not be purchased, sec. sec.81. 11- 81.29 allow voter registrars to use Chapter 19 funds for a variety of items that may have previously been paid for by the county such as voter registration computer service contracts and electronic office equipment. COMMENT: Some commenters stated that the Secretary of State does not have the authority to adopt rules related to the use Chapter 19 funds and should not adopt these rules pending the release Attorney General Opinion Request RQ-524. RESPONSE: The Secretary of State believes that it does have the authority to adopt these rules. COMMENT: Three commenters requested that the time period for Chapter 19 funded temporary employees be extended beyond the 26 weeks allowed in sec.81.22. RESPONSE: The county must provide for the permanent staffing of the voter registration office. Normal cyclical demands that precede each election date are part of the normal operation of the voter registrar's office and must be funded by the county. In addition, if the voter registrar estimates that an additional employee is needed each week of the year, the county must provide funding for this employee. Chapter 19 funds are to be used to employ temporaries on special projects to increase the efficiency of the voter registration office or increase the number of registered voters. COMMENT: Some commenters stated that much fewer items may be purchased under the new rules than previous rules. RESPONSE: On the contrary, the Secretary of State believes that the new rules provide for many more uses of Chapter 19 funds than previous rules. sec.sec.81.11-81.29 allow for the purchase of all types of office equipment, technology uses, voter registration training, NVRA expenses, and voter registration drives. These rules disallow only the purchase of furniture, office supplies, items required by federal or state law, and promotional items. COMMENT: One commenter stated that it would be easier for the Secretary of State to deduct the registration fee to attend the Secretary of State's annual election law seminar from each county's Chapter 19 fund. RESPONSE: An audit report issued to the Secretary of State required that no disbursements could be directly made from Chapter 19 funds to the Secretary of State. In addition, Chapter 19 funds are allocated to the State Comptroller of Public Accounts and are not in the Secretary of State's budget. COMMENT: A few commenters asked that these rules be amended to allow for the purchase of filing cabinets and office chairs. RESPONSE: The Secretary of State has determined that office furniture, including filing cabinets, is a required for operating the voter registration office and is not payable with Chapter 19 funds. The majority of comments received by the Secretary of State were in favor of disallowing the purchase of office furniture. COMMENT: One commenter asked that sec.81.13 be amended to delete the requirement that all purchase requests include a statement detailing the intended use of the item to be purchased. RESPONSE: The Secretary of State believes that by requiring this section of sec.81.13, it will easier to verify the voter registration purpose of each item. COMMENT: Several commenters asked that sec.81.28 be deleted. These commenters stated that the counties had already provided funding for NVRA expenses and this section would result in the counties' reducing the budget of the voter registration office. RESPONSE: House Bill 127, passed by the 74th Texas Legislature, amended sec.19.004 of the Texas Election Code to provide that Chapter 19 funds may be used to pay expenses incurred by the county as a result of the National Voter Registration Act. This provision was added to House Bill 127 by the House Elections Committee at the request of a tax assessor collector. COMMENT: One commenter argued that sec.81.17 was not necessary because Chapter 19 purchases are currently reviewed by the county auditor. RESPONSE: The statement is incorrect. The Secretary of State is the only authority that currently reviews Chapter 19 purchases. 1 TAC sec.81.11-81.29 The new sections are adopted under the Texas Election Code, sec.sec.31.003, 19.004, and 19.002(b), which provides the Secretary of State with the authority to obtain and maintain uniformity in the application, interpretation, and operation of provisions under the Texas Election Code and other election laws, and in performing such duties, to prepare detailed and comprehensive written directives and instructions based on such laws, and to adopt rules consistent with the Election Code. 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 September 6, 1995. TRD-9511306 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 1, 1995 Proposal publication date: August 4, 1995 For further information, please call: (512) 463-5660 1 TAC sec.81.11 The repeal is adopted under the Texas Election Code, sec. sec.31.003, 19.004, and 19.002(b), which provides the Secretary of State with the authority to obtain and maintain uniformity in the application, interpretation, and operation of provisions under the Texas Election Code and other election laws, and in performing such duties, to prepare detailed and comprehensive written directives and instructions based on such laws, and to adopt rules consistent with the Election Code. 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 September 6, 1995. TRD-9511307 Clark Kent Ervin Assistant Secretary of State Office of the Secretary of State Effective date: October 1, 1995 Proposal publication date: August 4, 1995 For further information, please call: (512) 463-5660 TITLE 16. ECONOMIC REGULATION Part IV. Texas Department of Licensing and Regulation Chapter 62. Career Counseling Services 16 TAC sec.62.80 The Texas Department of Licensing and Regulation adopts an amendment to sec.62.80, concerning career counseling services, without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6072). The amendment raises the fees for an original certificate of authority to cover the cost of administration and enforcement of the career counseling services program. The fees currently in place are below the amount required by the department to cover costs. Since the department is required to structure fees for each statute to pay for its own regulation, fees must be increased. The amendment will function by covering program costs. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 5221a-8, which provide the Texas Department of Licensing and Regulation with the authority to promulgate and enforce a code of rules and take all action necessary to assure compliance with the intent and purposes of the Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 7, 1995. TRD-9511461 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 463-7357 Chapter 64. Employers of Certain Temporary Common Workers 16 TAC sec.64.80 The Texas Department of Licensing and Regulation adopts an amendment to sec.64.80, concerning temporary common worker licensing fees, without change to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6072). The amendment increases the fees charged for licensing to cover the cost of administration and enforcement of the Act since the department is required to structure fees for each statute to pay for its own regulation. The section will function to cover program costs. Comments opposing the amendments were received from two individuals. Department revenue/expenditure data shows the fee increases are required to the meet legislative mandate to establish a fee schedule adequate to cover program costs. The amendment is adopted under Texas Civil Statutes, Article 5221a-10, which provide the Texas Department of Licensing and Regulation with the authority to promulgate and enforce a code of rules and take all action necessary to assure compliance with the intent and purposes of the Texas Temporary Common Workers Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 8, 1995. TRD-9511554 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 463-7357 Chapter 65. Boiler Division 16 TAC sec.65.80 The Texas Department of Licensing and Regulation adopts an amendment to sec.65.80, concerning the certification of boilers, without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6073). The amendment increases the certificate/inspection fees and exam administration fees for the American Petroleum Institute (API). The amendment allows the department to recover the cost of enforcement and administration as required for the inspection of boilers and the administration of exams. No comments were received regarding adoption of the amendment. The amendment is adopted under the Health and Safety Code, Chapter 755, which provides the Texas Department of Licensing and Regulation with the authority to promulgate and enforce a code of rules in keeping with standard usage for the construction, inspection, installation, use, maintenance, repair, alteration, and operation of boilers. 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 September 7, 1995. TRD-9511460 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 463-7357 Chapter 66. Registration of Property Tax Consultants 16 TAC sec.sec.66.10, 66.22, 66.65, 66.71, 66.82 The Texas Department of Licensing and Regulation adopts amendments to sec.sec.66.10, 66.22, 66.65, 66.71, and 66.82, concerning the registration of property tax consultants, without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6074). The amendments delete the definition of property tax consultant because it is defined in the statute, reflect statutory changes relating to continuing education course approval, set time requirements for maintaining client records, and increase the duplicate registration fee. No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 8886, which provide the Texas Department of Licensing and Regulation with the authority to promulgate and enforce a code of rules and take all action necessary to assure compliance with the intent and purposes of the statute. 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 September 7, 1995. TRD-9511464 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 463-7357 Chapter 68. Architectural Barriers 16 TAC sec.68.65, sec.68.80 The Texas Department of Licensing and Regulation adopts amendments to sec.68.65 and sec.68.80, concerning Architectural Barriers. Section 68.80 is adopted with changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6074). Section 68.65 is adopted without changes and will not be republished. The changes made to sec.68.80 were to round off the fees that were proposed as odd dollar amounts to the nearest $5.00 increment and increase the plan review fee for buildings valued from $200,001- $500,000 to $240. The amendment to sec.68.65 adds a statement that advisory board members may be reimbursed for expenses only when money has been appropriated for that purpose. The amendment to sec.68.80 raises fees to cover the cost of administration and enforcement of the architectural barriers program. The amendments will function to cover the cost of administration and enforcement of the Architectural Barriers Act. Comments opposing the proposal were received from the Texas Society of Architects and the Texas Association for Interior Design. The comments addressed the issue of standards and coordination of standards in relation to the proposed fee increase. The department is required by legislative mandate to establish a fee schedule adequate to cover program costs. The amendments are adopted under Texas Civil Statutes, Article 9102, Elimination of Architectural Barriers Act, which provide the Texas Department of Licensing and Regulation with the authority to promulgate and enforce a code of rules and take all action necessary to assure compliance with the intent and purposes of the Act. sec.68.80. Fees. (a) (No change.) (b) Fee Schedule: Figure 1: 16 TAC sec.68.80(b) (c)-(f) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on September 7, 1995. TRD-9511457 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 463-7357 Chapter 70. Industrialized Housing and Buildings 16 TAC sec.70.80 The Texas Department of Licensing and Regulation adopts an amendment to sec.70.80, concerning Industrialized Housing and Buildings, without changes to the proposed text as published in the August 8, 1995, issue of the Texas Register (20 TexReg 5983). The amendments increase third party agency registration fees, on-site inspection fees, standardize the monitoring fee, and add team leader as an alternative for an engineer for inspections requiring a team. The justification for the fee increase is that the current fees do not cover department cost for that task. The department is required to establish a fee schedule for each statute that will pay its administration cost. The amendment will function by covering program costs. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 5221f-1, which authorize the department to regulate industrialized housing and buildings. 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 September 7, 1995. TRD-9511463 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: August 8, 1995 For further information, please call: (512) 463-7357 Chapter 74. Elevators, Escalators, and Related Equipment 16 TAC sec.sec.74.10, 74.50, 74.65, 74.70, 74.80, 74.90, 74.100 The Texas Department of Licensing and Regulation adopts amendments to sec.sec.74.10, 74.50, 74.65, 74.70, 74.80, 74.90, and 74.100, concerning certification of elevators, escalators and related equipment, without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6075). The amendments correspond with legislative changes. The amendments function by adding definitions, and clarifying inspection requirements and fees, reimbursement of expenses to members of the advisory board, sanctions and technical requirements. No comments were received regarding adoption of the amendments. The amendments are adopted under the Health and Safety Code, Chapter 754, which provides the Texas Department of Licensing and Regulation with the authority to promulgate and enforce a code of rules and take all action necessary to assure compliance with the intent and purposes of the amended codes. 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 September 7, 1995. TRD-9511462 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 463-7357 Chapter 75. Air Conditioning and Refrigeration Contractor License Law 16 TAC sec.sec.75.10, 75.21, 75.60, 75.100 The Texas Department of Licensing and Regulation adopts amendments to sec.sec.75.10, 75.21, 75.60, and 75.100, concerning licensing for air conditioning and refrigeration contractors, without changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5119). The justification for the definitions and the technical rule on process cooling and heating is that industrial operations will have a clear guideline to follow in determining which work requires a licensed contractor when not performed by employees. The justification for the amendment to the rule on examinations is that applicants for licenses will have a more consistent and reliable examination because the department will be free to make changes based on professional psychometric studies to provide better examinations. The justification for the amendment to the provision for examiner contracts is that it is more efficient to go through the contract process biennially instead of annually. The amendments will function by increasing program integrity. One comment was received in favor of the amendments to sec.75.10 and sec.75. 100. No other comments were received during the comment period. The amendments are adopted under Texas Civil Statutes, Article 8861, which authorize the department to license and regulate air conditioning and refrigeration contractors. 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 September 7, 1995. TRD-9511458 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 463-7357 16 TAC sec.75.65, sec.75.80 The Texas Department of Licensing and Regulation adopts amendments to sec.75.65 and sec.75.80, concerning licensing for air conditioning and refrigeration contractors, without changes to the proposed text as published in the August 8, 1995, issue of the Texas Register (20 TexReg 5983). The justification for the statement on reimbursement of board members is that board members will understand that reimbursement authority rests with the legislature. The justification for the fee changes is that the cost to the department to issue a license is the same for either class and for new and renewal licenses, and that there is no justifiable reason to charge more for Class A than for Class B, or for new licenses than for renewal licenses. The amendments will function by increasing program integrity. No comments were received regarding adoption of the amendments. The amendments are adopted under Texas Civil Statutes, Article 8861, which authorize the department to license and regulate air conditioning and refrigeration contractors. 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 September 7, 1995. TRD-9511459 Jack W. Garison Executive Director Texas Department of Licensing and Regulation Effective date: October 1, 1995 Proposal publication date: August 8, 1995 For further information, please call: (512) 463-7357 TITLE 19. EDUCATION Part II. Texas Education Agency Chapter 61. School Districts Subchapter E. Board of Trustees Relationship 19 TAC sec.61.61 The Texas Education Agency (TEA) adopts an amendment to sec.61.61, concerning training for school board members, with changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5124). The change replaces the name "Central Education Agency" with the name "Texas Education Agency" to comply with Senate Bill (SB) 1, 74th Texas Legislature, 1995. Senate Bill 1 modified provisions of the Texas Education Code concerning school board member training. Previously, statute allowed training to be delivered by professional associations, universities, or private entities. Under the new statute, the State Board of Education (SBOE) must provide training through regional education service centers (ESCs). Section 61.61 specifies the amount, type, and delivery of training required of school board members. The amendment is necessary to provide a transition period between the old and new systems for delivering school board member training. The amendment ensures that anyone receiving training during this transition period will receive appropriate credit. Under SB 1, a rule adopted by SBOE normally does not take effect until the beginning of the school year that begins at least 90 days after the date the rule is adopted. However, the Bill provides that an SBOE rule may take effect earlier under certain circumstances. The SBOE, by an affirmative vote of at least two-thirds of the board members, adopts an earlier effective date of October 4, 1995. The earlier date is necessary to ensure appropriate credit is provided for school board member training conducted during the transition period during which rules concerning the new system of delivering training are developed and adopted. The Texas Association of School Boards and the Texas Association of School Administrators commented in favor of the amendment. The amendment is adopted under the Texas Education Code, sec.11.159, which directs SBOE to provide for school board member training. sec.61.61. Training for School Board Members. (a) Under the Texas Education Code, sec.11.159, the State Board of Education (SBOE) shall provide a training course for independent school district trustees to be offered by regional education service centers (ESCs). The training course shall recognize credit earned for any training provided under previous SBOE rule through March 1, 1996. (b) The training required in accordance with the Texas Education Code, sec.11.159, applies to each member of local school boards of trustees. (1) All board members shall participate in a local district orientation session within 60 days before or after their election or appointment; and shall complete a minimum of 20 hours of training from approved sponsors to gain a working knowledge of all the statewide standards on duties of a school board member prior to the end of their first year of service. (2) Board members, upon completion of the initial training required in paragraph (1) of this subsection, shall annually participate in an assessment of their training needs. The assessment should consider the statewide standards on duties of a school board member, the State Board of Education's designated priority topics, local student achievement information, compliance/accreditation reports, and local district issues as affected by the statewide standards. The results of this assessment will be used to establish a training plan to address the needs of individual school board members, as well as the local board as a whole. The training plan will identify the approved training activities each board member will complete during the year. At a minimum, local board members shall participate in six hours of training activities annually. (3) No training shall take place during a school board meeting unless that meeting is called for the delivery of school board training. (4) Training related to each of the Statewide Standards on Duties of a School Board Member and other approved training activities shall include information that will enable the board member to understand the role and responsibility of the board, president, individual board members, and the administrative role and responsibilities of the superintendent in regard to the standard presented. (c) Each regional education service center shall apply to the Texas Education Agency for approval to sponsor and provide programs to support the training required in subsection (b) of this section. Registration for the regional education service center training programs will be open to all interested persons, including current and prospective board members. (d) A registration fee shall be determined annually by the commissioner of education for regional education service centers to use to cover the costs of providing training programs. (e) Private and professional organizations, school districts, government agencies, and colleges/universities may apply for approval to sponsor programs to support the training required in subsection (b) of this section to the Texas Education Agency. (f) Sponsor approval shall be based upon the sponsor's ability to deliver quality programs which are comprehensive and in compliance with the State Board of Education approved statewide standards on duties of a school board member. Sponsors are encouraged to consider a variety of delivery systems for their training programs in order to meet the varying needs of school board members. Programs are to be at least one hour in length and may be delivered in segments of not less than 30 minutes. (g) The sponsoring agency shall provide verification of completion to the individual participant and to the participant's school district. (h) Program instructors must have documented training and/or experience in the subject areas in which they are delivering instruction. (i) Each education service center and other sponsors shall submit program dates to the Texas Education Agency at least 30 days prior to delivery. (j) Approved program sponsors shall be reviewed by the Texas Education Agency at least every five years, with audits scheduled at any time. The Texas Education Agency may also request a program evaluation from the participating board members at any time. All sponsors will maintain approved status for five years unless notified by the agency. (k) At least 50% of the required training in subsection (b) of this section shall be designed and delivered in a group setting by persons not employed or affiliated with the board member's local school district. Not more than 50% of the required training that is delivered by the local district may utilize self- instructional materials provided by preapproved sponsors. (l) Annually, at the meeting at which the call for election of board members is normally scheduled, the current president of each local board of trustees shall cause the minutes of the local board to reflect the board members who have and have not completed the required training and shall make this information available to the local media. (m) Noncompliance with school board member training requirements shall be reviewed and dealt with by the accreditation division as a governance problem. (n) Upon written request, the commissioner of education, in cases of extenuating circumstances, may grant an extension of time within which a local board member may complete the training requirement. 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 September 11, 1995. TRD-9511593 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: October 4, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 463-9701 Chapter 89. Adaptations for Special Populations Subchapter E. General Educational Development 19 TAC sec.89.113 The Texas Education Agency (TEA) adopts an amendment to sec.89.113, concerning the Texas certificate of high school equivalency, without changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5125). The rule is necessary to help reduce dropout rates and increase recovery of students who had previously dropped out of school. The in-school general educational development (GED) program is a high quality alternative to not earning a secondary credential, because an individual who possesses a certificate of high school equivalency can continue post-secondary education and obtain employment. The program enables a student in an at-risk situation to remain in school and earn a certificate of high school equivalency or continue toward a high school diploma. The rule specifies criteria an applicant must meet to be eligible to test for the certificate. The amendment would allow a student to take the test while enrolled in school and participating in an approved in-school preparation program. Without the amendment, schools could conduct preparation programs, but enrolled students would not be eligible to take the test. Separating preparation and testing would reduce the effectiveness of the program. Under Senate Bill (SB) 1, 74th Texas Legislature, 1995, a rule adopted by State Board of Education (SBOE) normally does not take effect until the beginning of the school year that begins at least 90 days after the date the rule is adopted. However, the Bill provides that an SBOE rule may take effect earlier under certain circumstances. The SBOE, by an affirmative vote of at least two-thirds of the board members, adopts an earlier effective date of October 4, 1995. The earlier date is necessary because students who entered the program during the 1994-1995 school year were admitted with the understanding that they would be allowed to take the test while enrolled in school. No public comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Education Code, sec.7.111, which directs the State Board of Education to provide for the administration of high school equivalency examinations. 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 September 11, 1995. TRD-9511594 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: October 4, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 463-9701 Chapter 109. Budgeting, Accounting, and Auditing Subchapter D. Adoptions by Reference 19 TAC sec.109.61 The Texas Education Agency (TEA) adopts an amendment to sec.109.61, concerning the adoption by reference of Change 30 to the financial accounting manual (Bulletin 679) for school districts and regional education service centers (ESCs), without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5363). The amendment is necessary to comply with state and federal laws and current accounting requirements. Change 30 updates the standard accounting system based on changes in state and federal law. It also provides the sample audit report format to be followed for the 1994-1995 fiscal year independent audit. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Education Code, sec.7.055, which directs the commissioner of education to adopt annually a budget for operating the Foundation School Program, the Texas Education Agency, and other programs for which the State Board of Education has responsibility. 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 September 11, 1995. TRD-9511595 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: October 2, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 463-9701 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 7. Corporate and Financial Regulation Subchapter P. Licensing and Examination of Third Party Administrators 28 TAC sec.7.1616 The Commissioner of Insurance adopts new sec.7.1616, which allows the Commissioner, and other entities statutorily recognized to administer policies and claims of impaired insurance companies, to utilize third party administrators (TPAs), that do not hold a certificate of authority to conduct business as a TPA in Texas, for the multi-jurisdictional administration of impaired insurance companies. Section 7.1616 is adopted with changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5139). New sec.7.1616 sets out the procedure for providing a limited certificate of authority to TPAs, licensed in other states, who desire to provide for the multi-jurisdictional administration of impaired insurance companies in Texas. Section 7.1616(e)(9) was changed to clarify that the TPA shall promptly notify the contracting entity of a request for information. Subsection (h) of sec.7. 1616 was amended to clarify that notification of suspension of the TPA's certificate of authority applies to those held in Texas as well as other states. New sec.7.1616 is necessary to establish efficient procedures for issuing a limited certificate of authority to non-Texas licensed TPAs who wish to provide for the multi-jurisdictional administration of impaired insurance companies in Texas. It defines the terms and sets out the procedures to be used in the licensing and regulation of these TPAs. For: The Texas Life, Accident, Health and Hospital Services Insurance Guaranty Association. Comment: A commenter asserts the commissioner has authority to adopt sec.7. 1616 because of the broad delegation of authority granted to the commissioner in the Insurance Code, Article 21.07-6. The commenter also states that the section will provide numerous benefits, including the following: 1) more efficient administration of a multi-jurisdictional impaired insurance company's estate through a single qualified administrator; 2) greater flexibility, efficiency and ease of oversight through the use of one TPA with experience and credibility to manage an entire estate; and 3) consistency in administration of plans because the policies are handled by one TPA. Agency Response: The department agrees. The new section is adopted pursuant to the Insurance Code, Articles 21.07-6 and 1.03A, and the Government Code, sec. sec.2001.004 et seq (Administrative Procedure Act). Article 21.07-6 authorizes the Texas Department of Insurance to establish fair and reasonable rules appropriate for the implementation and augmentation of the article. Article 1.03A provides that the Commissioner of Insurance may adopt rules and regulations to execute the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code, sec.sec.2001.004 et seq authorize and require each state agency to adopt rules of practice setting forth the nature and requirements of available procedures and to prescribe the procedures for adoption of rules by a state agency. sec.7.1616. Limited Certificate of Authority for Non-Texas-Licensed Third Party Administrators for Multi-Jurisdictional Impaired Insurance Companies Estate Administration. (a) Definitions. In addition to the definitions found in sec.7.1601 (Definitions) in this subchapter, the following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Contracting entity-Any person, corporation, association, or agency statutorily recognized to administer policies and claims of impaired insurance companies, including, but not limited to the Texas Life, Accident, Health and Hospital Services Insurance Guaranty Association. (2) Multi-jurisdictional impaired insurance company -An impaired insurance company which holds assets and issues policies in two or more states, including Texas. (b) Eligibility. A TPA not currently licensed in Texas is eligible to apply for a limited certificate of authority under this section if it holds certificates of authority or licenses to conduct business as a TPA in at least two other states that have licensing requirements that are comparable to those of this state. A TPA is not eligible for a limited certificate of authority under this section if the TPA does not hold a current certificate of authority, or is not currently licensed, in any other states. (c) Limited Certificate. An application for a limited certificate of authority under this section shall be limited to administration of a specific, identifiable, and single multi-jurisdictional impaired insurance company. (d) Application Requirements. Any eligible TPA must submit an application for a limited certificate of authority on TPA Form 8, which is adopted and incorporated by reference. The application shall include a $500 application fee. The application shall be made in the name of the corporation, partnership, or sole proprietor. The application shall include the following information: (1) a copy of all licenses or certificates of authority held by applicant to transact business as a TPA in all states of the United States and provinces of Canada, and a statement of whether the applicant's license or certificate is in good standing with each such state or province; (2) the name under which the applicant will transact business under the limited certificate of authority. If the name under which the applicant desires to transact business is so similar to that of another administrator or insurer that it is likely to mislead the public, the applicant must reserve a trade name under which it will operate in Texas, using TPA Form 1, which is adopted and incorporated by reference; (3) the principal place of business at which the applicant will transact business as a TPA, including the street and mailing addresses, and telephone number; (4) a description of the TPA and its services, facilities, personnel, and its ability to perform the duties required under the contract; (5) a designation of a person domiciled in this state upon whom process may be served in any legal action or proceeding based on a cause of action arising in this state against the TPA arising out of the administration of the policies for which the certificate is being sought; (6) the name and description of the multi-jurisdictional impaired insurance company for which the limited certificate of authority is sought; (7) a letter of intent, draft contract, or executed contract between the TPA and the contracting entity for the administration of the multi-jurisdictional impaired insurance company for which the limited certificate of authority is sought and the type of policies to be administered; (8) proof that the TPA has obtained a fidelity bond in an amount not more than 10% of the dollar volume of annual claim payments, but not less than $10,000; and (9) any other information requested by the Commissioner. (e) Minimum Contract Provisions. The letter of intent, draft contract, or executed contract between the TPA and the contracting entity shall contain the following minimum contractual safeguards: (1) contractual definitions of "payment" as required in the Insurance Code, Article 21.07-6, sec.12; (2) specific provisions for payment of various administrative fees; (3) contractual performance standards for accounting practices and processing claims; (4) the TPA must obtain and maintain a fidelity bond in an amount not more than 10% of the dollar volume of annual claim payments, but not less than $10,000; (5) the TPA must agree to on-site examination by the contracting entity, the Department, the Receiver, or the Special Deputy Receiver (SDR) of the multi- jurisdictional impaired insurance company. If the Department conducts an on-site examination, the TPA shall pay a $250 examination fee; (6) the TPA shall file an annual report on Form 8A with the Department, the contracting entity, and the Receiver or SDR, regarding the multi-jurisdictional impaired insurance company estate. Form 8A is adopted and incorporated by reference. The annual report shall include a $100 filing fee. The report shall contain general information about the TPA's administration of all policies and claims, as well as specific information regarding Texas policyholders and claims. The TPA shall provide any other information requested periodically by the Department, the contracting entity, and the Receiver or SDR of the multi- jurisdictional impaired insurance company; (7) the TPA shall provide written notice to all Texas policyholders of the TPA's name, address, and telephone number, with prior approval by the contracting entity of the form and content of notice; (8) the TPA shall provide separate accounting of premiums or contributions provided by Texas policyholders; (9) the TPA shall not use or disclose information in its custody or control without the prior approval of the contracting entity unless the information is sought by the Department, the Receiver, or the SDR of the multi-jurisdictional impaired insurance company, in which event the TPA shall promptly notify the contracting entity of the request and of the information disclosed; and (10) the TPA shall comply with all advertising requirements contained in the Insurance Code, Article 21.07-6, sec.15. (f) Criteria of Approval of Application. The Commissioner may approve an application for a limited certificate of authority to conduct business in this state as an administrator for the specific multi-jurisdictional impaired insurance company named if the Commissioner is satisfied that the application meets the criteria established in this section. The Commissioner may also consider the following criteria: (1) the applicant's standing in other states in which it currently holds a certificate of authority or license to transact business as a TPA; (2) the size and nature of the multi-jurisdictional impaired insurance company, in conjunction with the applicant's qualifications to perform all necessary duties in the administration of the policies and claims; (3) the TPA's financial condition is such that granting the limited certificate of authority would not be adverse to the public interest; and (4) the contracting entity's qualifications, expertise, and ability to monitor and to ensure the TPA's compliance with the contractual provisions for the administration of the policies and claims. (g) Expedited Approval Process. The Commissioner will approve or take action on the application filed pursuant to this section within 45 days of the date the Department determines the application is complete. If the Commissioner does not act to suspend the application within the 45-day period, the application will be granted for the limited purpose of this section and will continue in existence for the duration of the insolvency proceedings of the multi-jurisdictional impaired insurance company, unless sooner revoked by the Commissioner. (h) Enforcement. If the TPA defaults under or breaches any provisions of the contract in force for the administration of the policies issued by the multi- jurisdictional impaired insurance company, or if the TPA's license or certificate of authority is suspended or terminated in any other state for any reason, then either the Department or the contracting entity, or both, may pursue any and all available legal remedies against the TPA so as to protect the interests of the Texas policyholders. If an enforcement action is brought by the Department or the contracting entity against the TPA, venue for any lawsuit shall be in Travis County, Texas. Any enforcement action taken by either the Department or the contracting entity shall not require prior approval of the Department or the contracting entity. However, the Department or the contracting entity shall notify the other party of any default in the contract provisions and of any suspension or termination of a license or certificate of authority held by the TPA in Texas or in other states. (i) Denial or Revocation of Limited Certificate. After notice and opportunity for a hearing, the Commissioner may deny, cancel, or revoke the limited certificate of authority if the license holder is found to be in violation of, or to have failed to comply with a specific provision of the Insurance Code, any duly promulgated rule or regulation of the Department, or any provision of the contract in force for the administration of the policies issued by the multi- jurisdictional impaired insurance company. 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 September 8, 1995. TRD-9511562 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: September 29, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 463-6327 Chapter 26. Small Employer Health Insurance Regulations Subchapter B. Texas Health Reinsurance System Plan of Operation 28 TAC sec.26.201 The Texas Department of Insurance adopts new sec.26.201, concerning the Texas Health Reinsurance System, its Plan of Operation, and its procedure manuals. The adopted rule requires that the Texas Health Reinsurance System (hereinafter referred to as the "THR System") make available for inspection its Plan of Operation and procedures manual(s), if any, by interested persons at the Texas Department of Insurance and the THR System's regular place of business during normal business hours. The proposed rule also requires the THR System to publish notice in the Texas Register of: (1) any regular meeting, (2) any proposed and/or adopted amendments to its Plan of Operation or procedures manual(s), and (3) the text of certain proposed amendments to its Plan of Operation or procedure manual(s). Such information shall be published in the Texas Register as miscellaneous information provided as a public service. Section 26.201 is adopted without changes to the proposed text as published in the July 28, 1995 issue of the Texas Register (20 TexReg 5601). The THR System is subject to the Texas Open Meetings Act and the Texas Open Records Act, and this rule assists in providing public access to specific and important aspects of the THR System. The Texas Insurance Code, Article 26.55 contains notice and hearing requirements related to the Plan of Operation, and any amendments to the Plan of Operation must be approved in writing by the Commissioner of Insurance. This rule effectuates these provisions and also provides for additional notice to and participation of the public by requiring: (i) the Plan of Operation and any procedure manual(s) of the THR System be available for inspection at the Texas Department of Insurance and the business office of the THR System during regular business hours; and (ii) the publication of notice in the Texas Register of a) any regular meeting, b) any proposed and/or adopted amendments to its Plan of Operation and procedure manual(s) , and c) the text of certain proposed amendments to its Plan of Operation or procedure manual(s). Such information shall be published in the Texas Register as miscellaneous information provided as a public service. Section 26.201 requires: (i) the Plan of Operation and any procedure manual(s) of the THR System be made available for inspection at the Texas Department of Insurance and the business office of the THR System during regular business hours; and (ii) the publication of notice in the Texas Register of: a) any regular meeting, b) any proposed and/or adopted amendments to its Plan of Operation and procedure manual(s), and c) the text of certain proposed amendments to its Plan of Operation or procedure manual(s). If the amendment in question concerns "access to small employers health insurance" or "assessments," then any amendment(s) to its Plan of Operation and procedure manual(s) shall be submitted in full to the Texas Register for publication. Seven days notice and ten days notice after Board action is taken are required for items a), and for b) through c), respectively. Such information shall be published in the Texas Register as miscellaneous information provided as a public service. No comments were received on the proposed new section as published. No comments were received on the proposed new section, and therefore, no response is required. The new section is proposed pursuant to the Texas Insurance Code, Articles 1.03A and 26.51 et seq. Article 1.03A authorizes the Commissioner of Insurance to promulgate and adopt rules and regulations for the conduct and execution of duties and functions by the Department, and Article 26.55 requires the creation of a Plan of Operation for the THR 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 September 8, 1995. TRD-9511561 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: September 29, 1995 Proposal publication date: July 28, 1995 For further information, please call: (512) 463-6327 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 261. Introductory Provisions The Texas Natural Resource Conservation (TNRCC or commission) adopts the repeal of sec.sec.261.1-261.13 and also adopts new sec.sec.261.1-261.19 and 261.30, concerning the TNRCC procedural rules. The repeals are adopted without changes to the proposed text as published in the July 11, 1995, issue of the Texas Register (20 TexReg 5015). New sec. sec.261.1, 261.6, 261.10, 261.11, 261.13, 261.15, 261.17, and 261.18 are adopted with changes to the proposed text as published in the July 11, 1995, issue of the Texas Register (20 TexReg 5015). Sections 261.2-261.5, 261.7-261.9, 261.12, 261.14, 261.16, 261.19, and 261.30 are adopted without changes. The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. Additional proposed repeals were published in the July 28, 1995, issue of the Texas Register (20 TexReg 5601). The repeals are adopted without changes. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting and Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051-382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6 which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not a found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requester should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24 regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new paragraph to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263.26(2)(F) (now (2)(B)(vi)) concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B) (vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27 regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-by-case decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend the executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a crossreference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43, which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. Subchapter A. General Provisions 30 TAC sec.sec.261.1-261.13 The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code, the Health and Safety Code, and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511316 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Chapter 261. General Provisions Subchapter A. General Procedure 30 TAC sec.sec.261.1-261.19 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.261.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Applicant or petitioner-A party seeking a license, permit, order, or rule from the commission. Chief clerk-The chief clerk of the Texas Natural Resource Conservation Commission or any authorized individual designated by the chief clerk to act in his or her place. Commission-The Texas Natural Resource Conservation Commission. Commissioners' meeting -A public meeting or hearing at which a quorum of the commissioners consider matters scheduled for deliberation, such as rulemaking proceedings, applications, or judges' proposals for decision. Executive director -The executive director of the commission, or any authorized individual designated by the executive director to act in his or her place. General counsel -The general counsel of the commission, or any authorized individual designated by the general counsel to act in his or her place. Judge-An administrative law judge employed by SOAH. Party-Each person or agency named or admitted as a party to a proceeding. Person-An individual, corporation, organization, government or governmental subdivision or agency, business trust, partnership, association, or any other legal entity. Protestant-Any party opposing, in whole or in part, an application or petition filed with the commission. SOAH-State Office of Administrative Hearings. sec.261.2. Purposes of Rules. The purposes of these sections are to implement the powers and duties assigned to the commission under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, and other laws of this state, to establish the general policies of the commission, and to set forth the procedures to be followed in commission proceedings. To further these ends, these sections are adopted to simplify procedure, avoid delay, save expense, and facilitate the administration and enforcement of state law by the commission. These sections shall be given a fair and impartial construction to achieve their intended purposes. sec.261.3. Construction of Rules. Unless otherwise expressly provided for in these rules, the past, present, and future tense shall each include the other; the masculine, feminine, and neutral gender shall each include the other; and the singular and plural number shall each include the other. sec.261.4. Business Office and Mailing Address of the Commission. (a) Commission offices. The commission's offices are located at Park 35, 12015 North Interstate 35, Austin. The commission's mailing address is P.O. Box 13087, Austin, Texas 78711-3087. (b) Chief clerk's address. The chief clerk's mailing address is: Office of Chief Clerk, Texas Natural Resource Conservation Commission, Mail Code 105, P.O. Box 13087, Austin, Texas 787113087. The Chief clerk's office is located in Austin, Texas, Park 35, Building F, 12015 North Interstate 35. sec.261.5. Seal of the Commission. The seal of the commission will bear the words "Texas Natural Resource Conservation Commission" encircling the oak and olive branches common to other official state seals. sec.261.6. Commissioners' Meetings. (a) The commissioners shall meet as necessary for the conduct of the commission's business, at times specified by the commissioners and entered in the minutes, including special meetings at times and places in the state necessary for the performance of the commission's duties. The commission is subject to the Open Meetings Act, Texas Government Code, Chapter 551, and the Texas Water Code, sec.5.058, including any existing or future exceptions that may be provided by law. (b) The chairman of the commission, or in his absence, the acting chairman, shall preside at all meetings and hearings of the commissioners. (c) The chairman may continue a matter scheduled for a commissioners' meeting from time to time and from place to place. If the time and place for the meeting to reconvene are not announced at the meeting, the chief clerk shall send notice of the rescheduled meeting date to the parties no later than ten days before the rescheduled meeting. (d) Motions for continuance shall be in writing or stated on the record. The general counsel, either by agreement of the parties and any judge assigned to the matter, or on the general counsel's own motion, may reschedule the presentation of a matter at a commissioners' meeting. The chief clerk shall send notice of the rescheduled meeting date to the parties no later than ten days before the rescheduled meeting. sec.261.7. Minutes of Commissioners' Meetings. The minutes of commissioners' meetings are kept by the chief clerk of the commission in a form and manner as the commissioners may prescribe from time to time in accordance with existing laws. They shall be signed by the chairman and attested to by the chief clerk. sec.261.8. Designation of Executive Director. All functions, duties, and responsibilities of the commission arising designation of the Texas Water Rights Commission, the Texas Water Quality Board, the Texas Water Development Board, or the Texas Water Commission by the Governor prior to September 1, 1985, relating to any federal program shall be performed by the executive director, subject to the provisions of the Texas Water Code and the right of the commissioners to require prior commission approval of any action relating thereto to be taken by the executive director. sec.261.9. Official Records are Public. Subject to the limitations provided in the acts administered by the commission and the Open Records Act, Texas Government Code, Chapter 552, information collected, assembled, or maintained by the commission is public record open to inspection and copying during regular business hours. sec.261.10. Classified Data and Confidential Information. (a) Neither the commission nor any applicant by virtue of an application to or transaction with the commission may be required to disclose any classified data of the federal government or any confidential information relating to trade secrets, secret processes, or economics of operation; provided, however, that the composition of any defined waste subject to the jurisdiction of the commission may not be regarded as confidential information. Further, the commission may not be required to disclose to any person any information that, if released as requested, would give any advantage to competitors or bidders. (b) In accordance with subsection (a) of this section, a person submitting data or information may request that the data or information be designated as classified or confidential. If the commission or executive director agrees with the designation, the data or information is not open for public inspection, shall be kept in confidence by the agency, and may, upon request, be returned to the person submitting the data or information after it has served the purpose for which it was submitted. sec.261.11. Copies and Certificates. (a) Except as provided in the Copyright Revision Act of 1976, Title 17, United States Code, sec.261.10 of this title (relating to Classified Data and Confidential Information) and the Open Records Act, Texas Government Code, Chapter 552, upon the application of any person, accompanied by appropriate fees, the commission will furnish copies, certified or otherwise, as requested, of any of its proceedings or other official acts of record or of any map, paper, or document filed with the commission, or other official record, or of any information collected, assembled, or maintained by the commission in its files. Certified copies will be made as appropriate, under the hand of one of the following officials: the chairman of the commission, the executive director, or the chief clerk of the commission. Certified copies will be affixed with the seal of the commission as appropriate. (b) The commission may furnish copies at the rates published in its operating procedures, or will contract for the copies to be made at the expense of the person requesting them. In no event shall such fees for copies exceed those permitted by Texas Revised Civil Statutes, Article 3913. sec.261.12. Lost Records and Papers. When any papers or records in the custody and control of the commission are lost or destroyed, the parties, with the approval of the commission, may agree in writing on a brief statement of the matters contained therein or any person may at any time supply such lost records or papers as follows. (1) Any person may make a written sworn motion before the commission stating the loss or destruction of such record or papers, accompanied by certified copies of the originals, if obtainable, or by substantial copies thereof. (2) If, upon hearing, the commission is satisfied that they are substantial copies of the original, an order will be entered substituting such copies for the missing originals. (3) Such substituted copies will be filed with and constitute a part of the record and have the force and effect of the originals. sec.261.13. Inscriptions on Commission Vehicles. Vehicles assigned to or used by the Special Investigations Unit of the Enforcement Coordination and Litigation Division of the commission are exempt from bearing the inscription required in Texas Civil Statutes, Article 6701m-1. These vehicles are to be used primarily in the detection and investigation of criminal violations of state and federal environmental laws. The purpose of exempting these vehicles from the inscription requirements of Article 6701m-1 is to increase the effectiveness of commission investigators in detecting and investigating criminal violations of state and federal environmental laws, thereby allowing investigative personnel to accomplish their tasks undetected and to provide a greater degree of safety for these investigators, the state property being used in the investigation, and a greater degree of case integrity. sec.261.14. Conduct and Decorum in Commissioners' Meetings. (a) Participants shall not approach the commissioners bench without first obtaining leave from the chairman, and must never lean on or go behind the bench. (b) Participants should anticipate any need to set up or move furniture, appliances, or easels, and shall make advance arrangements with the chief clerk. (c) Participants should remain seated except to address the commissioners or to appropriately handle documents, exhibits, or physical evidence. (d) Participants, except commission personnel, shall address the commissioners from the podium. (e) Participants shall not ask argumentative questions, but may ask questions for informational or clarification purposes only. sec.261.15. Rulings in Evidentiary Hearings before the Commissioners. In evidentiary hearings before the commissioners, the presiding officer or a designee shall make all procedural and evidentiary rulings. sec.261.16. Docket System. The chief clerk shall assign a docket number to each matter scheduled for consideration during a commissioners' meeting or SOAH proceeding. sec.261.17. Document Filing Procedures. (a) All documents to be considered in a commissioners' meeting or by judges in contested cases shall be filed with the chief clerk. Hearing requests and responses shall also be filed with the chief clerk. (b) If a docket number has been assigned, it should appear on the first page of all filed documents. (c) Documents shall be filed by mail, facsimile, or hand delivery. If a person files a document by facsimile, he or she must file with the chief clerk the appropriate number of copies by mail or hand delivery within two days. (d) The original or one copy of a document shall be filed, except for documents to be considered at a commissioners' meeting. For documents to be considered at a commissioners' meeting, 11 copies shall be filed. (e) The time of filing is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk, or as evidenced by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. (f) The chief clerk shall accept all documents presented for filing. The chief clerk's acceptance is not a determination that the document meets filing deadlines or other requirements. (g) If the requirements of this section are not followed, the commissioners, or a judge in a SOAH proceeding, may choose not to consider the documents. In the absence of a waiver under subsection (h) of this section, the commissioners may choose not to consider documents filed within two days of a commissioners' meeting. (h) The judge may waive one or more of the requirements of this section, or impose additional filing requirements in the SOAH proceedings. The commissioners or general counsel may waive one or more of the requirements of this section, or impose additional filing requirements for commissioners' meetings. (i) This section does not apply to offers of evidence during a hearing. sec.261.18. Service on Judge, Parties, and Interested Persons. (a) For responses to requests for hearing, copies of all documents filed with the chief clerk shall be served on the executive director, the public interest counsel, the applicant, and any persons filing hearing requests, no later than the day of filing. (b) For contested case hearings, copies of all documents filed with the chief clerk shall be served on the judge and all parties no later than the day of filing. (c) All documents filed and served under this section shall include a certificate of service, certifying compliance with this section, and signed by the person or attorney filing the document. Failure to timely furnish copies may be grounds for withholding consideration of the document. (d) Service by mail is complete upon deposit in the mail, properly addressed, with postage prepaid. Service by courierreceipted delivery is complete upon the courier taking possession. Service by facsimile is complete when sent to the recipient's current facsimile number. Service by facsimile after 5:00 p.m. local time of the recipient shall be deemed served on the following day. Judges may impose different service requirements for SOAH proceedings. sec.261.19. Computation of Time. In computing any period of time prescribed or allowed by regulations of the commission, by order of the commission, or by any applicable statute, the period shall begin on the day after the act, event, or default in question and it shall conclude on the last day of that designated period, unless it is a Saturday, Sunday, or legal holiday on which the Office of the Chief Clerk is closed, in which event the period runs until the end of the next day that is neither a Saturday, Sunday, nor a legal holiday. 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 August 31, 1995. TRD-9511317 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter B. Expiration 30 TAC sec.261.30 The new section is adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.261.30. Expiration. This chapter will expire on May 31, 1996. 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 August 31, 1995. TRD-9511318 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Chapter 263. General Rules The Texas Natural Resource Conservation (TNRCC or commission) adopts the repeal of sec.sec.263.1-263.37 and also adopts new sec.sec.263.1-263.12, 263.21- 263.28, and 263.40, concerning the TNRCC procedural rules. The repeals are adopted without changes to the proposed text as published in the July 11, 1995, issue of the Texas Register (20 TexReg 5015). Sections 263.1-263.3, 263.6-263. 9, 263.11, 263.12, and 263.21-263.28 are adopted with changes to the proposed text as published in the July 11, 1995, issue of the Texas Register (20 TexReg 5015). Sections 263.4, 263.5, 263.10, and 263.40 are adopted without changes. The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. Additional proposed repeals were published in the July 28, 1995, issue of the Texas Register (20 TexReg 5601). The repeals are adopted without changes. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting and Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6 which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not a found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requester should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24 regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. This clarification is in no way intended to limit the ability of governmental entities to request hearings or be designated parties in contested case hearings. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new paragraph to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263.26(2)(F) (now (2)(B)(vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B) (vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27 regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-by-case decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a cross-reference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43, which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. 30 TAC sec.sec.263.1-263.37 The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code, the Health and Safety Code, and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511319 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Chapter 263. Processing of Application, Evaluation of Request for Contested Case Hearing Subchapter A. Final Approval By Executive Director 30 TAC sec.sec.263.1-263.12 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.263.1. Applicability and Definitions. (a) Sections 263.1-263.7 of this title (relating to Applicability; Executive Director Shall Review Application; Notice that Executive Director Will Issue Final Approval; Executive Director's Final Approval; Remand for Consideration by Executive Director; Motion for Reconsideration; and Eligibility of Executive Director) apply to applications for permits or other approvals listed in subsection (b) of this section, including applications for a new permit, or to renew, modify, amend, or transfer a permit. The sections also apply to applications which seek an order that has the effect of issuing, renewing, modifying, amending, or transferring a permit. Notwithstanding the two prior sentences, subsection (d) of this section (concerning definitions) applies to all of this chapter. (b) The following applications shall be included: (1) water rights permits or certificates of adjudication; (2) wastewater discharge permits; (3) municipal solid waste and industrial and hazardous waste permits; (4) on-site waste water disposal system permits; (5) underground injection control permits; (6) radioactive waste or radioactive material permits or licenses; (7) weather modification measures permits; (8) certificates of convenience and necessity; (9) requests for extensions of time to commence or complete construction of a dam; (10) water and wastewater utility rate matters under Texas Water Code, Chapters 11, 12, or 13; (11) district matters under Texas Water Code, Chapters 49-66, except the following: (A) an appeal under Texas Water Code, sec.49.052 by a member of a district board concerning his removal from the board; (B) an application under Texas Water Code, Chapter 49, Subchapter K, concerning the dissolution of a district; (C) an application under Texas Water Code, sec.49.456 for authority to proceed in bankruptcy; and (D) an appeal under Texas Water Code, sec.54.239, concerning a decision of a board involving the cost, purchase, or use of facilities. (12) commission approval under Texas Local Government Code, Chapter 395, concerning a district's proposed impact fees, charges, assessments or contributions; and (13) appointments to the board of directors of districts created by special law. (c) Sections 263.1-263.7 of this title do not apply to: (1) applications for emergency or temporary orders; (2) applications for temporary permits; (3) applications that are part of a consolidated proceeding covering additional matters to which the sections do not apply; or (4) air quality permits, authorizations, or other approvals under the Texas Clean Air Act. (d) The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Applicant or petitioner-A party seeking a license, permit, order, or rule from the commission. (2) Chief clerk-The chief clerk of the Texas Natural Resource Conservation Commission or any authorized individual designated by the chief clerk to act in his or her place. (3) Commission-The Texas Natural Resource Conservation Commission. (4) Commissioners' meeting-A public meeting or hearing at which a quorum of the commissioners consider matters scheduled for deliberation, such as rulemaking proceedings, applications, or judges' proposals for decision. (5) Executive director-The executive director of the commission, or any authorized individual designated by the executive director to act in his or her place. (6) General counsel-The general counsel of the commission, or any authorized individual designated by the general counsel to act in his or her place. (7) Judge-An administrative law judge employed by SOAH. (8) License-The whole or part of any commission permit, certificate, approval, registration, or similar form of permission required by law. (9) Party-Each person or agency named or admitted as a party to a proceeding. (10) Person-An individual, corporation, organization, government or governmental subdivision or agency, business trust, partnership, association, or any other legal entity. (11) SOAH-State Office of Administrative Hearings. sec.263.2. Executive Director Shall Review Application. (a) The executive director shall review an application that is subject to sec.sec.263.1-263.7 of this title (relating to Applicability; Executive Director Shall Review Application; Notice that Executive Director Will Issue Final Approval; Executive Director's Final Approval; Remand for Consideration by Executive Director; Motion for Reconsideration; and Eligibility of Executive Director) and determine whether it meets the following requirements: (1) public notice has been issued as required by law and commission rules, and the notice explained that the executive director will issue final approval of the application unless there is a protest or request for hearing filed with the chief clerk; (2) the application meets all relevant statutory and administrative criteria; (3) the application does not raise new issues that require the interpretation of commission policy; (4) the executive director's staff and public interest counsel do not raise objections; and (5) no timely protests or requests for hearing are filed with the chief clerk, or the application has become uncontested because the applicant and the persons who filed the protests or requests have agreed in writing to the action to be taken by the executive director or the protests or requests for hearing have been withdrawn in writing. If parties have been named for a hearing, only the written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status, is needed. (b) The executive director shall not issue final approval of an application if a timely protest or request for hearing is filed even though the commissioners have denied the protest or request under the procedure set forth in Subchapter B of this chapter (relating to Evaluation of Request for Contested Case Hearing, Referral of Application to State Office of Administrative Hearings). The executive director shall refer the application to the commissioners for final action. The executive director may issue final approval if the applicant and all persons who filed the protests or requests have agreed in writing to the action to be taken by the executive director. sec.263.3. Notice that Executive Director Will Issue Final Approval. The chief clerk shall publish notice in the Texas Register that the executive director will issue final approval of the permit or other approval. The notice shall describe the deadline to file a motion for reconsideration. The notice should be published at the same time as other public notice required by law or commission rules. The date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. sec.263.4. Executive Director's Final Approval. (a) The executive director may issue final approval of an application if it meets the requirements of sec.263.2 and sec.263.3 of this title (relating to Executive Director Shall Review Application and Notice that Executive Director Will Issue Final Approval). (b) The permit or other approval shall be effective when signed by the executive director. sec.263.5. Remand for Consideration by Executive Director. At any time during the processing of an application, if all protests, objections, and requests for hearing concerning the application are withdrawn, the commissioners, or the judge if SOAH holds jurisdiction over the application, may remand the application for the executive director's consideration under sec.sec.263.1-263.7 of this title (relating to Applicability; Executive Director Shall Review Application; Notice that Executive Director Will Issue Final Approval; Executive Director's Final Approval; Remand for Consideration by Executive Director; Motion for Reconsideration; and Eligibility of Executive Director). sec.263.6. Motion for Reconsideration. (a) The applicant, public interest counsel, or other person may file with the chief clerk a motion for reconsideration of the executive director's final approval of an application. (b) A motion for reconsideration must be filed with the chief clerk not later than the 20th day after the date on which the chief clerk mailed to the applicant the signed permit or other approval. In addition to a specific motion for reconsideration, the commissioners shall consider as a motion for reconsideration any objection, protest, or request for hearing filed with the chief clerk not later than the 20th day after the date on which the chief clerk mailed to the applicant the signed permit or other approval. (c) If the applicant is the only person who files a motion for reconsideration, the executive director shall evaluate the motion and may revise and reissue the permit or other approval. Before reissuance, the executive director must republish notice in the Texas Register under sec.263.3 of this title (relating to Notice that Executive Director Will Issue Final Approval), with a description of the revisions to the permit or other approval. (d) A decision by the executive director, including a permit issued by the executive director, is not affected by the filing of a motion for reconsideration under this section unless expressly so ordered by the commissioners. If a motion for reconsideration is not acted on by the commissioners within 45 days after the date on which chief clerk mailed the signed permit or approval to the applicant, the motion shall be deemed overruled. When a motion for reconsideration is overruled by commission action or pursuant to this subsection, the Texas Government Code, sec.2001.146, regarding motions for rehearing in contested cases is inapplicable and no motions for rehearing shall be filed. To the extent applicable, the commission decision may be subject to judicial review pursuant to Texas Water Code, sec.5. 351 or the Texas Health and Safety Code, sec.361.321. sec.263.7. Eligibility of Executive Director. The executive director may issue Texas pollutant discharge elimination system (TPDES) permits or other TPDES- related approvals under sec.sec.263.1-263.7 of this title (relating to Applicability; Executive Director Shall Review Application; Notice that Executive Director Will Issue Final Approval; Executive Director's Final Approval; Remand for Consideration by Executive Director; Motion for Reconsideration; and Eligibility of Executive Director) only if he or she does not receive, and has not during the previous two years received, a significant portion of income directly or indirectly from permit holders or applicants for a permit. (1) For the purposes of this section: (A) "Significant portion of income" means 10% or more of gross personal income for a calendar year, except that it means 50% or more of gross personal income for a calendar year if the recipient is over 60 years of age and is receiving that portion under retirement pension, or similar arrangement. (B) "Permit holders or applicants for a permit" does not include any department or agency of a state government, such as a Department of Parks or a Department of Fish and Wildlife. (C) "Income" includes retirement benefits, consultant fees, and stock dividends. (2) For purposes of this section, income is not received "directly or indirectly from permit holders or applicants for a permit" when it is derived from mutual fund payments, or from other diversified investments for which the recipient does not know the identity of the primary sources of income. sec.263.8. Air Quality Permits. (a) This section and sec.sec.263.9-263.12 of this title (relating to Air Quality Permits-Executive Director Shall Review Application; Permits-Executive Director's Final Approval; Air Quality Permits Remand for Consideration by Executive Director; and Air Quality Permits-Motion for Reconsideration) apply to applications for air quality permits or other approvals under the Texas Health and Safety Code, sec.sec.382.051-382.053, and sec.382.055, including applications for a new permit, or to renew, modify, amend, or transfer a permit. The sections also apply to applications which seek an order which has the effect of issuing, renewing, modifying, amending, or transferring a permit. (b) This section and sec.sec.263.9-263.12 of this title do not apply to: (1) applications for emergency orders; (2) applications that are part of a consolidated proceeding covering additional matters and to which the sections do not apply; (3) registrations for standard exemptions under Chapter 116 of this title (relating to Control of Air Pollution by Permits for New Construction or Modification). (4) federal operating permits. sec.263.9. Air Quality Permits-Executive Director Shall Review Application. (a) The executive director shall review an application which is subject to sec.sec.263.8-263.12 of this title (relating to Air Quality Permits; Air Quality Permits-Executive Director Shall Review Application; Permits-Executive Director's Final Approval; Air Quality Permits-Remand for Consideration by Executive Director; and Air Quality Permits-Motion for Reconsideration) and determine whether it meets the following requirements: (1) public notice has been issued as required by law and commission rules; (2) the application meets all relevant statutory and administrative criteria; (3) the executive director's staff does not raise objections. (4) no timely requests for hearing are filed with the chief clerk, or the application has become uncontested because the applicant and the persons who filed the requests have agreed in writing to the action to be taken by the executive director or the protests or requests for hearing have been withdrawn in writing. If parties have been named for a hearing, only the written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status, is needed. (b) The executive director shall not issue final approval of an application if a timely request for hearing is filed even though the commissioners have denied the request pursuant to the procedures set forth in Subchapter B of this chapter (relating to Evaluation of Request for Contested Case Hearing, Referral of Application to State Office of Administration Hearings). The executive director shall refer the application to the commissioners for final action. The executive director may issue final approval if the applicant and all persons who filed the requests have agreed in writing to the action to be taken by the executive director. sec.263.10. Air Quality Permits-Executive Director's Final Approval. (a) The executive director may issue final approval of an application if it meets the requirements of sec.263.8 and sec.263.9 of this title (relating to Air Quality Permits and Air Quality Permits-Executive Director Shall Review Application). (b) The permit or other approval is effective when signed by the executive director. sec.263.11. Air Quality Permits-Remand for Consideration by Executive Director. At any time during the processing of an application, if all protests, objections, and requests for hearing concerning the application are withdrawn, the commissioners, or the judge if SOAH holds jurisdiction over the application, may remand the application for the executive director's consideration under sec.sec.263.8-263.12 of this title (relating to Air Quality Permits; Air Quality Permits-Executive Director Shall Review Application; Air Quality Permits- Executive Director's Final Approval; Air Quality Permits Remand for Consideration by Executive Director; and Air Quality Permits-Motion for Reconsideration). sec.263.12. Air Quality Permits-Motion for Reconsideration. (a) An applicant or a person affected by a decision of the executive director, with the exception of a decision regarding a federal operating permit, may file with the chief clerk a motion for reconsideration of the executive director's final approval of an application. Any person filing a motion for reconsideration under this section must identify with specificity the issues that form the basis of the appeal. (b) A motion for reconsideration must be filed with the chief clerk not later than the 30th day after the date the executive director mailed the signed permit or other approval to the applicant. (c) If the applicant is the only person who files a motion for reconsideration, the executive director shall evaluate the motion and may revise and reissue the permit or other approval. (d) If a motion for reconsideration is not acted on by the commissioners within 45 days after the date on which the executive director mailed the signed permit or approval to the applicant, the motion shall be deemed overruled. When a motion for reconsideration is overruled by commission action or pursuant to this subsection, Texas Government Code, sec.2001.146, regarding motions for rehearing in contested cases is inapplicable and no motions for rehearing shall be filed. To the extent applicable, the commission decision may be subject to judicial review pursuant to Texas Water Code, sec.5. 351 or Texas Health and Safety Code, sec.361.321. (e) A decision made by the executive director, including a permit issued by the executive director, is not affected by the filing of a motion for reconsideration under this section unless expressly so ordered by the commissioners. 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 August 31, 1995. TRD-9511320 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter B. Evaluation Of Request For Contested Case Hearing, Referral Of Application To State Office Of Administrative Hearings 30 TAC sec.sec.263.21-263.28 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.263.21. Contested Case Hearing Required. (a) If the executive director, a commissioner, the applicant, or, in the case of an air permit hearing, any of those persons or a state legislator, requests a contested case hearing concerning an application, the person making the request shall make the request to the chief clerk. (b) The executive director shall determine the sufficiency of requests for hearing on utility matters listed in this subsection. If a request for hearing meets the requirements in this subsection, the executive director shall refer the hearing request to the chief clerk. The executive director shall review the requests for hearing concerning the following matters and shall use the specified standards for reviewing the requests: (1) if a utility files a statement of intent to change rates under Texas Water Code, sec.13.187, the executive director shall evaluate any complaints or requests for hearing received in response and determine if a hearing is required. (2) if a person files an application or petition concerning a certificate of convenience and necessity under Texas Water Code, Chapter 13, Subchapter G, the executive director shall evaluate any complaints or requests for hearing received in response and determine if a hearing is required. (3) if a person files an appeal under Texas Water Code, sec.13.043 invoking the commission's appellate jurisdiction over water, sewer, or drainage rates, the executive director shall evaluate the appeal and determine if a hearing is required. sec.263.22. Request for Hearing by Affected Person. (a) When authorized by law, affected persons may request that a contested case hearing be held concerning an application. (b) A request for hearing must be in writing and filed with the chief clerk. The request must substantially comply with the following: (1) give the name, address, and daytime telephone number of the person who files the request. If the request is made by a group or association, the request must identify one person by name, address, daytime telephone number, and, where possible, fax number, who shall be responsible for receiving all official communications and documents for the group; (2) identify the person's personal justiciable interest affected by the application; (3) state a clear and unambiguous request for a contested case hearing; and (4) provide other information required by the public notice of application. (c) The deadline to file a request for a hearing is determined by law and commission rule, and shall be specified in the public notice of the application. (d) The chief clerk shall respond in writing to a request for hearing, protest, or other response to the notice of application to explain how the person may submit public comment to the executive director and to describe alternative dispute resolution under commission rules. sec.263.23. Processing of Request for Hearing. (a) This section applies to an application that is the subject of a request for hearing filed under sec.263.22 of this title (relating to Request for Hearing by an Affected Person). (b) The chief clerk shall deliver or mail to the executive director, the public interest counsel, and the applicant copies of all documents filed with the chief clerk in response to public notice of an application. (c) After a request for hearing is filed, and the executive director has filed a statement that technical review of the application is complete, the chief clerk shall begin processing the request. The executive director shall file a statement with the chief clerk when technical review is complete. The executive director may file the statement with the chief clerk either before or after public notice of the application is issued. (d) The chief clerk shall process the request for hearing by taking the following actions: (1) refer the application and request for hearing to the alternative dispute resolution director. The alternative dispute resolution director shall try to resolve any dispute between the applicant and the person making the request for hearing; and (2) schedule the request for hearing for a commissioners' meeting. The chief clerk should try to schedule the request for a commissioners' meeting that will be held approximately 30 days after the later of the following: (A) the deadline to request a hearing specified in the public notice of the application; or (B) the date the executive director filed the statement that technical review is complete. (e) The executive director, the public interest counsel, and the applicant may submit a written response to the request for hearing no later than 15 days before the commissioners' meeting at which the commissioners will evaluate the request for hearing. A response shall be filed with the chief clerk, and served on the same day to the executive director, the public interest counsel, the applicant, and any persons filing hearing requests. (f) The person who filed the request for hearing may submit a written response no later than five days before the scheduled commissioners' meeting at which the commissioners will evaluate the request for hearing. A response shall be filed with the chief clerk, and served on the same day to the executive director, the public interest counsel, and the applicant. (g) The executive director, a commissioner, the applicant, or, in the case of an air permit hearing, any of those persons or a state legislator, may file a request with the chief clerk that the application be sent directly to SOAH for a hearing. If a request is filed under this subsection, the commissioners' scheduled consideration of the request for hearing will be cancelled. (h) The commissioners will evaluate the request for hearing at the scheduled commissioners' meeting, and may take one of the following actions: (1) determine that a request for hearing does not meet the requirements of this subchapter, and approve or deny the application; (2) determine that a request for hearing meets the requirements of this subchapter, and direct the chief clerk to refer the case to SOAH for hearing; or (3) require the chief clerk to refer the case to SOAH. The referral may specify that SOAH should prepare a recommendation on the sole question of whether the request meets the requirements of this subchapter. (i) During the commissioners' meeting the commissioners may determine whether the application should be processed under the requirements of Chapter 265, Subchapter F of this title (relating to Special Procedures for Freezing the Process). When evaluating whether the provisions of that subchapter should apply, the commissioners may consider: the number and sophistication of the parties or potential parties; the expected length of the hearing; and the complexity of the issues. (j) When SOAH receives jurisdiction of a proceeding, the commissioners shall provide to the judge a list of issues or areas that must be addressed. In addition, the commissioners may identify and provide to the judge at any time additional issues or areas that must be addressed. sec.263.24. Substantive Requirements. (a) A request for a contested case hearing must meet the following requirements: (1) the request is made by an affected person; and (2) the request is reasonable. (b) The commissioners are not required to hold a hearing if the commissioners determine that the basis of a person's request for hearing as an affected person is not reasonable or is not supported by competent evidence. sec.263.25. Determination of Affected Person. (a) For any application, an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by the application. An interest common to members of the general public does not qualify as a personal justiciable interest. (b) Governmental entities including local governments and public agencies with authority under state law over issues contemplated by the application may be considered affected persons. (c) All relevant factors shall be considered, including but not limited to the following: (1) whether the interest claimed is one protected by the law under which the application will be considered; (2) distance restrictions or other limitations imposed by law on the affected interest; (3) whether a reasonable relationship exists between the interest claimed and the activity regulated; (4) likely impact of the regulated activity on the health, safety, and use of property of the person; (5) likely impact of the regulated activity on use of the impacted natural resource by the person; and (6) for governmental entities, the statutory authority over or interest in the issues relevant to the application. sec.263.26. Determination of Reasonableness of Request for Hearing. The determination of the reasonableness of a request for a hearing shall be based on the following: (1) for permits other than air quality permits, whether the request for a hearing is based solely on something other than concerns within the jurisdiction of the commission; and (2) for air quality permits: (A) requests that are considered unreasonable, include requests concerning an amendment, modification, or renewal that would not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted. (B) the following shall also be considered: (i) whether the project is an emissions reduction project including: (I) whether there are no increases in emissions of any contaminants and the reduction project is not driven by a non-compliance situation; and (II) whether the project will have both emission reductions and incidental increases where the net effect is an emission reduction; (ii) whether the project is mandated by commission rule; (iii) the location of the proposed project; (iv) whether the applicant requests authority to substitute an equivalent or more efficient control device; (v) whether the request for a contested case hearing is based solely on something other than concerns about air pollution; (vi) the extent to which the person requesting a hearing is likely to be impacted by the emissions; and (vii) the applicant's compliance history. (C) Notwithstanding subparagraphs (A) and (B) of this paragraph, a request may be determined reasonable if the application involves a facility for which the applicant's compliance history contains violations which are unresolved and which constitute a recurring pattern of egregious conduct which demonstrates a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct the violations. sec.263.27. Request for Contested Case Hearing by Group or Association. (a) A group or association may request a contested case hearing only if the group or association meets all of the following requirements: (1) one or more members of the group or association would otherwise have standing to request a hearing in their own right; (2) the interests the group or association seeks to protect are germane to the organization's purpose; and (3) neither the claim asserted nor the relief requested requires the participation of the individual members in the case. (b) The executive director, the public interest counsel, or the applicant may request that a group or association provide a description of how the group or association meets the requirements of subsection (a) of this section. The request and response shall be filed according to the procedure in sec.263.23(e) and (f) of this title (relating to Processing of Request for Hearing). sec.263.28. Request for SOAH to Acquire Jurisdiction Over Case. If the chief clerk receives authorization pursuant to this subchapter to refer an application to SOAH, the chief clerk shall take the following actions: (1) file a Request for Setting of Hearing form, or Request for Assignment of Administrative Law Judge form, whichever is appropriate; (2) issue public notice of the hearing as required by law, and in coordination with the policies and procedures of SOAH. 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 August 31, 1995. TRD-9511321 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter C. Expiration 30 TAC sec.263.40 The new section is adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.263.40. Expiration. This chapter will expire May 31, 1996. 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 August 31, 1995. TRD-9511322 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Chapter 264. Alternative Dispute Resolution 30 TAC sec.sec.264.2, 264.3, 264.5-264.8, 264.10, 264.20 The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts amendments to sec.sec.264.2, 264.3, 264.5-264.8, 264.10, and new sec.264.20, concerning the TNRCC procedural rules. The amendments and new section are adopted without changes to the proposed text as published in the July 11, 1995, issue of the Texas Register (20 TexReg 5015). The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. Additional proposed repeals were published in the July 28, 1995, issue of the Texas Register (20 TexReg 5601). The repeals are adopted without changes. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting & Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051-382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice, which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6, which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requester should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24 regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new paragraph to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263.26(2)(F) (now (2)(B)(vi)) concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B) (vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27, regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-by-case decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend the executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a cross-reference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43, which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. The amendments are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code, the Health and Safety Code, and other laws of Texas and to establish and approve all general policy of the commission. sec.264.2. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Commission-The Texas Natural Resource Conservation Commission. When used in connection with a hearing, the word "commission" includes any judge assigned to the proceeding. Judge-An administrative law judge employed by SOAH. Protested matter -A request for a license, permit, order, or other formal authorization from the commission which is opposed by an affected person. SOAH-State Office of Administrative Hearings. sec.264.3. Informal Disposition of Protested/Contested Matters. Unless precluded by law, informal disposition may be made of any protested or contested matter by stipulation, consent order, agreed settlement, mediation, or default. Mediator. (a) For each matter which has been referred for resolution through alternative dispute resolution procedures, the alternative dispute resolution director shall assign a mediator, from the pool of mediators employed by the commission, to facilitate the informal disposition of such contested matter. The alternative dispute resolution director may assign a substitute or additional mediator to a proceeding without the necessity of duplicating any duty or function performed by the previous mediator. (b) A mediator who is not a commission or SOAH employee may be used for the alternative dispute resolution procedures provided that: (1)-(2) (No change.) (3) the outside mediator agrees to be subject to the direction of the commission's alternative dispute resolution director and also subject to all time limits imposed by the director, the judge, statute, or regulation. (c) Whenever an outside mediator is used, the following shall apply. (1) Any governmental subdivision or entity that is a statutory party to the hearing, such as the commission's executive director and public interest counsel, is prohibited from paying for the outside mediator. (2)-(3) (No change.) sec.264.6. Mediator Pool: Qualifications. (a) The commission shall establish a pool of mediators to resolve contested matters through alternative dispute resolution procedures. (1)-(2) (No change.) (b) If the mediator is a judge, that person will not also sit as the judge for the case. sec.264.7. Time Period. (a) (No change.) (b) Formal alternative dispute resolution. In contested matters concerning applications filed pursuant to the Texas Water Code, Chapters 26 and 27, and the Texas Health and Safety Code, Chapter 361, formal alternative dispute resolution procedures shall not be employed until the executive director has completed processing the subject application or petition and has issued a draft permit or determined that a draft permit should not be issued. Upon unanimous motion of the parties and at the discretion of the judge, the provisions of this subsection may apply to contested hearings concerning applications filed pursuant to the Texas Water Code, Chapters 26 and 27, and the Texas Health and Safety Code, Chapter 361. In such cases, it is within the discretion of the judge to continue the hearing to allow the use of formal alternative dispute resolution procedures. (1)-(3) (No change.) (4) It is within the discretion of the judge, upon a unanimous motion of the parties, to continue the hearing for a reasonable period of time not to exceed 14 days, to allow alternative dispute resolution procedures to continue towards a settlement or towards agreeing to contested issues. sec.264.8. Stipulations. When alternative dispute resolution procedures do not result in the full settlement of a contested matter, the parties, in conjunction with the assigned mediator, shall limit the contested issues through the entry of written stipulations. Such stipulations shall be forwarded or formally presented to the judge assigned to conduct the hearing on the merits for inclusion in the hearing record. sec.264.10. Confidentiality of Communications in Alternative Dispute Resolution Procedures. (a)-(c) (No change.) (d) If this section conflicts with other legal requirements for disclosure of communications or materials, the issue of confidentiality may be presented to the judge to determine, in camera, whether the facts, circumstances, and the context of the communications or materials sought to be disclosed warrant a protective order of the judge or whether the communications or materials are subject to disclosure. (e) The mediator may not communicate with the judge or any commissioner, directly or indirectly, on any aspect of Alternative Dispute Resolution negotiations which are deemed confidential by this section. sec.264.20. Expiration. This chapter will expire on May 31, 1996. 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 August 31, 1995. TRD-9511323 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Chapter 265. Procedures Before Public Hearings The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts the repeal of sec.sec.265.1-265.9, 265.10-265.24, 265.26-265.51, 265.53- 265. 55, and proposes new sec.sec.265.1, 265.2, 265.21-265.30, 265.41-265.45, 265.47, 265.48, 265.60-265.73, 265.81-265.88, 265.101-265.104, 265.106-265.113, 265. 121-265.134, 265.141-265.145, 265.151-265.166, and 265.170, concerning the TNRCC procedural rules. The repeals are adopted without changes to the proposed text as published in the July 11, 1995, issue of the Texas Register (20 TexReg 5015). Sections 265.1, 265.23-265.26, 265.29, 265.30, 265.41, 265.42, 265.45, 265.46, 265.60-265.63, 265.71, 265.81, 265.88, 265.101, 265.104, 265.107, 265.129, 265.141, 265.154, 265.156, 265.157, 265.162, 265. 163, and 265.165 are adopted with changes to the proposed text as published in the July 11, 1995, issue of the Texas Register (20 TexReg 5015). Sections 265.2, 265.21, 265.22, 265.27, 265.28, 265.43, 265.44, 265.47, 265.48, 265.64-265.70, 265.72, 265.73, 265.82-265.87, 265.102, 265.103, 265.106, 265. 108-265.113, 265.121-265.128, 265.130-265.134, 265.142-265.145, 265.151-265. 153, 265.155, 265.158-265.161, 265.164, 265.166, and 265.170 are adopted without changes. Section 265.46 is being withdrawn by the commission. The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. Additional proposed repeals were published in the July 28, 1995, issue of the Texas Register (20 TexReg 5601). The repeals are adopted without changes. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting and Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051-382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice, which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6, which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not a found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requester should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24 regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new paragraph to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263.26(2)(F) (now (2)(B)(vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B) (vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27, regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. One commenter suggested the prehearing procedures contained in Chapter 265, Subchapter F, sec.265.103 (governing hearings subject to the freeze rules), should be more broadly applicable to all permit hearings before the agency. Therefore, the commission agrees with this suggestion and adopts a new sec.265. 60, containing prehearing requirements similar to those in the Subchapter F. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-bycase decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend the executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a cross-reference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43, which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. Subchapter A. General Procedures sec.sec.265.1-265.9 The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code, the Health and Safety Code, and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511324 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Chapter 265. Contested Case Hearings Subchapter A. Definitions 30 TAC sec.265.1, sec.265.2 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code, the Health & Safety Code, and other laws of Texas and to establish and approve all general policy of the commission. sec.265.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. APA-The Administrative Procedure Act (Texas Government Code, Chapter 2001) Applicant or petitioner-A party seeking a license, permit, order, or rule from the commission. Chief clerk-The chief clerk of the commission or any authorized individual designated by the chief clerk to act in his or her place. Commission-The Texas Natural Resource Conservation Commission. When used in connection with a hearing that may be conducted by SOAH, the word "commission" includes any judge assigned to the proceeding. Complainant-Any party who has filed a signed, written complaint with the commission against any party subject to the jurisdiction of the commission. Executive director -The executive director of the commission, or any authorized individual designated by the executive director to act in his or her place. General counsel -The general counsel of the commission, or any authorized individual designated by the general counsel to act in his or her place. Intervenor-Any party otherwise not defined. Judge-An administrative law judge employed by SOAH. License-The whole or part of any commission permit, certificate, approval, registration, or similar form of permission required by law. Licensing-The commission process respecting the granting, denial, renewal, revocation, suspension, annulment, withdrawal, or amendment of a license. Party-Each person or agency named or admitted as a party. Person-Any individual, partnership, corporation, association, governmental subdivision, or public or private organization of any character other than an agency. Petitioner-See Applicant. Pleadings-Written allegations filed by parties concerning their respective claims, such as applications, protests, complaints, claims, and other similar documents, including those submitted by the executive director and the public interest counsel. Presiding officer -The chairman or acting chairman of the commission. When used in connection with a proceeding conducted by a judge, "presiding officer" means the judge, or if more than one judge is conducting a proceeding, the judge so designated. Protestant-Any party opposing, in whole or in part, an application or petition filed with the commission. Register-The Texas Register. Respondent-Any party against whom any complaint has been filed. SOAH-State Office of Administrative Hearings. sec.265.2. Evidentiary Hearing Held by Commissioners. When an evidentiary hearing is held before one or more commissioners, the rules of this chapter will apply. "Judge" shall mean the commissioner presiding over the hearing. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511325 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter B. General Discovery Rules 30 TAC sec.sec.265.10-265.20 The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511326 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter B. General Rules 30 TAC sec.sec.265.21-165.30 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.21. Administrative Law Judges. (a) The commission delegates to judges employed by the Natural Resource Conservation Division of SOAH the authority to preside at public hearings designated by the commission and to report to the commission on such hearings in the manner provided by law. Proceedings referred by the commission to SOAH will be assigned to judges by the chief administrative law judge. When the chief administrative law judge assigns more than one judge to hear a particular proceeding, one of the judges will be designated as the presiding judge and shall resolve all procedural and evidentiary questions. (b) The presiding judge shall have authority to do the following: (1) set hearing dates; (2) convene the hearing at the time and place specified in the notice for the public hearing; (3) establish the jurisdiction of the commission concerning the subject matter under consideration; (4) rule on motions and on the admissibility of evidence and amendments to pleadings; (5) designate and align parties and establish the order for presentation of evidence; (6) administer oaths to all persons presenting testimony in a manner calculated to impress the witness with the importance and solemnity of the promise to adhere to the truth; (7) examine witnesses; (8) issue subpoenas when required to compel the attendance of witnesses, or the production of papers and documents related to the hearing; (9) commission and require the taking of depositions, to compel other forms of discovery in accordance with these sections, and to issue sanctions under these sections for noncompliance with discovery rulings; (10) set prehearing conferences and require prehearing orders; (11) ensure that information and testimony are introduced as conveniently and expeditiously as possible, including limiting the time of presentation without prejudicing any rights of parties to the proceeding; (12) limit testimony to matters under the commission's jurisdiction; (13) recess any hearing from time to time and from place to place; (14) reopen the record of a hearing, prior to issuance of a proposal for decision, for additional evidence where necessary to make the record more complete; and (15) exercise any other appropriate powers necessary or convenient to carry out his or her responsibilities. sec.265.22. Substitution of Judges. The chief administrative law judge may, for good cause, assign a substitute or additional judge to a proceeding without the necessity of duplicating any duty or function performed by the previous judge. sec.265.23. Representation at Hearings. (a) Representative of record. A representative of record is one who has appeared in a proceeding or whose name is subscribed to any application or other pleading or to some agreement of the parties filed in the proceedings. The representative shall be considered to have continued as representative of record to the end of the proceeding with the commission unless there is a statement to the contrary appearing in the record. (b) Number of representatives heard. Not more than one representative for each party or aligned group of parties shall be heard on any question or in the hearing except upon special leave of the judge. (c) Conduct of representatives. (1) Representatives shall observe the letter and spirit of the Texas Lawyer's Creed, as adopted by the Texas Supreme Court, and the State Bar of Texas' Texas Disciplinary Rules of Professional Conduct, including those provisions concerning improper ex parte communications with the commissioners and judges. (2) Representatives shall advise their clients and witnesses of applicable requirements of conduct and decorum. (3) All objections, arguments, and other comments by a representative shall be directed to the judge and not to other participants. sec.265.24. Conduct and Decorum. (a) Generally. (1) All persons, parties, representatives, witnesses, and other participants in a commission proceeding shall conduct themselves with proper dignity, courtesy, and respect for the commission, judge, parties, witnesses, and all other participants. No participant shall engage in any activity that interferes with commissioners' meetings or proceedings. (2) All participants in commission proceedings shall refer to and address other participants respectfully by using appropriate titles and surnames. (3) All participants shall enter the meeting or hearing room before the scheduled time for each session. When the judge calls the meeting or hearing to order, complete order shall be observed. (4) All participants shall, and observers may, register their presence by completing a registration form and submitting it to the judge. (5) At the discretion of the judge, there shall be no smoking in commissioners' meetings or proceedings. (6) All participants shall dress appropriately for a commission proceeding. Attorneys shall dress the same as for an appearance in a district court of this state. (b) Disorderly conduct. No person may conduct himself in a commission proceeding in any manner which interferes with the orderly and dignified conduct of commission business. In a hearing before a judge, the judge shall first warn a person violating this section to refrain from the specific conduct in violation. Upon further violation of this section by the same person, the judge may exclude that person from the proceeding for such time and under such conditions as are necessary to correct the situation. Violation of this section shall also be sufficient cause for the Judge to recess the hearing. Subject to the provisions of sec.265.71 of this title (relating to Interlocutory Appeals and Certified Questions), no objections to any action taken by the judge under this section will be considered by the commission until it considers the proposal for decision. sec.265.25. Consolidation and Severance. (a) Consolidation. Consistent with notices required by law, the judge may consolidate related matters if the consolidation will not injure any party and may save time and expense or otherwise benefit the public interest and welfare. The commissioners may, when they refer matters to SOAH, direct that the matters be consolidated for hearing. (b) Severance. The judge may sever issues in a proceeding or hold special hearings on separate issues if doing so will not injure any party and may save time and expense or benefit the public interest and welfare. sec.265.26. Ex Parte Communications. (a) No ex parte communications. Unless required for the disposition of an ex parte matter authorized by law, during the pendency of a contested case either at the State Office of Administrative Hearings or before the commission, no party, person, or their representatives shall communicate directly or indirectly with any commissioner or the judge concerning any issue of fact or law relative to the pending case, except on notice and opportunity for all parties to participate. (b) Utilizing special skills of the commission. The judge may seek the special skills or knowledge of commission staff in evaluating the evidence in a contested case. The judge shall follow the following procedure. (1) The judge shall issue an order, copied to all parties, asking the executive director to assign a staff person with expertise who has not participated in the proceeding or in the processing of the matter being considered for potential consultation. (2) All communications between the designated staff expert and the judge shall be either recorded or in writing, and all such communications submitted to or considered by the judge shall be made available as public records when the proposal for decision is issued. (3) During the pendency of the case either before the judge or at the commission, no party, person or their representatives shall communicate directly or indirectly with the designated staff expert assigned to help the judge concerning any issue of fact or law relative to the pending case, except on notice and opportunity for all parties to participate. sec.265.27. Burden of Proof. In any proceeding other than a proceeding involving a proposed change of rates, the burden of proof is on the moving party. The burden of proof in a proceeding involving a proposed change of rates is governed by sec.291.12 of this title (relating to Burden of Proof). sec.265.28. Audio Recording of Proceedings. The judge shall cause each proceeding to be recorded on audio cassette tape. Any person may obtain a copy of the tape recording from the judge or, after conclusion of the hearing, may submit a request to the chief clerk accompanied by payment of all reproduction costs. sec.265.29. Witness Fees. (a) A person who is not a party and who is subpoenaed or otherwise compelled to attend any hearing or proceeding to testify, to give a deposition, or to produce books, records, papers, or other objects that may be necessary and proper for the purpose of the proceeding pursuant to this section is entitled to receive: mileage reimbursement, at the current rate of mileage reimbursement for state employees as established by the legislature, for going to, and returning from the place of the hearing or the place where the deposition is taken, if the place is more than 25 miles from the person's place of residence; and a minimum fee of $70 or the amount equal to state employees' current maximum travel reimbursement for overnight lodging plus meals as established by the legislature, whichever is greater, for each day or part of a day the person is necessarily present as a witness or deponent. This fee shall be paid to the witness or deponent even if overnight lodging is not used, and the fee shall not be prorated for parts of days. (b) Mileage and fees to which a witness is entitled under this section shall be paid by the party at whose request the witness appears or the deposition is taken, on presentation of proper vouchers sworn by the witness and approved by the judge. sec.265.30. Transcriptions of Hearings. (a) Official hearings reporter. Consistent with its court reporting services agreement, the commission will provide a certified shorthand hearings reporter to make a verbatim record and transcript of any commissioners' meeting, hearing, or other proceeding upon the timely request of any person. The hearings reporter provided by the commission shall be the official reporter for commission proceedings. If the commission does not provide a hearings reporter a party may, at his own expense, furnish a certified shorthand hearings reporter who the commission may designate as the official reporter for the proceeding. (b) Requests for hearings reporter services. (1) A request for a verbatim record or transcript of a proceeding may be submitted at any time, but shall be submitted in writing to the chief clerk of the commission or the judge and shall specify the name, mailing address, and daytime telephone number of the requester; the name and date of the commission proceeding; and a statement of whether a transcript is requested. A request for a transcript of a proceeding already reported may be made directly to the hearings reporter. (2) A person requesting a verbatim record without a transcript of a proceeding shall pay the applicable reporting fees in the commission's court reporting services agreement. (3) A person requesting a transcript of a proceeding shall pay for at least an original and two copies of the transcript in addition to any applicable reporting fees in accordance with the commission's court reporting services agreement. The hearings reporter shall provide the commission the original and one copy of the transcript free of charge. (4) Upon his or her own motion, the judge may request a verbatim record and an original and two copies of a transcript of a proceeding. (5) In hearings expected to last three days or more, the applicant may be required to pay for the transcript up front, by the judge, subject to reimbursement from other parties upon assessment of costs. (c) Cancellation of hearings reporter services. A person who causes the judge to cancel a hearing or meeting for which a verbatim record or transcript has been requested is responsible for paying the hearings reporter, upon demand, the full daily reporting fee in the commission's court reporting services agreement unless the cancellation occurs more than 24 hours prior to the scheduled beginning of the hearing or meeting. (d) Assessment of reporting and transcription costs. (1) Upon the timely filed motion of a party or upon its own motion, the commission may assess reporting and transcription costs to one or more of the parties participating in the proceeding. The commission shall consider the following factors in assessing reporting and transcription costs: (A) the party who requested the transcript; (B) the financial ability of the party to pay the costs; (C) the extent to which the party participated in the hearing; (D) the relative benefits to the various parties of having a transcript; (E) the budgetary constraints of a state or federal administrative agency participating in the proceeding; (F) in rate proceedings, the extent to which the expense of the rate proceeding is included in the utility's allowable expenses; and (G) any other factor which is relevant to a just and reasonable assessment of costs. (2) The commission will not assess reporting or transcription costs to statutory parties who are precluded by law from appealing any ruling, decision, or other act of the commission. (3) In any proceeding where the assessment of reporting or transcription costs is an issue, the judge shall provide the parties an opportunity to present evidence and argument on the issue. A judge shall include in the proposal for decision a recommendation for the assessment of costs. (4) The parties may agree upon the division or assessment of reporting and transcription costs. The terms of such an agreement shall be made part of the record of the proceeding. (e) Payment of reporting or transcription assessment. (1) Each party assessed a reporting or transcription cost in a commission proceeding shall pay the assessment in full within ten days after the commission's order is final, as provided by the APA. The assessment shall be paid by check payable to the order of the hearings reporter firm that reports or transcribes the proceeding, or as otherwise ordered by the commission. Payment shall be remitted to the chief clerk of the commission or as otherwise ordered by the commission. (2) If a party fails to pay the assessment in accordance with subsection (a) of this section the commission may forward the matter to the attorney general of Texas for prosecution and collection. (3) Upon a party's filing its sworn motion showing good cause for failure to pay its assessment in accordance with subsection (a) of this section, accompanied by tender of payment of the party's assessment in full, the commission may grant an exception to the time within which payment must have been made under subsection (a) of this section, accept the payment, and otherwise enforce its assessment. (f) Sale of transcript copies. The hearings reporter may sell copies of a transcript of a commission proceeding in accordance with the commission's court reporting services agreement, but the commission shall not be precluded from complying with the Open Records Act, Texas Government Code, Chapter 552. 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 August 31, 1995. TRD-9511327 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter C. Special Procedures for Freezing the Process 30 TAC sec.sec.265.21-265.24, 265.26-265.35 The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511328 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter D. Discovery 30 TAC sec.sec.265.36-265.49 The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and the Texas Health and Safety Code, sec. sec.361.011, 361.017, 361.024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511331 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter C. General Procedures point=10.04p set=10.04p>30 TAC sec.sec.265.41-265.45, 265.47, 265.48 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5. 105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.41. Informal Proceeding/Remand to Executive Director. (a) A commission proceeding may be conducted as an informal proceeding when in the judgment of the judge the conduct of a proceeding under informal procedures will: (1) result in savings of time or costs to all parties; (2) lead to a negotiated or agreed settlement of facts or issues in controversy; and (3) not prejudice the rights of any party. (b) If, during an informal proceeding, all parties reach a negotiated or agreed settlement which in the judgment of the judge settles all facts or issues in controversy, the proceeding shall not be a contested case under the APA and no proposal for decision nor detailed findings of fact and conclusions of law will be made. If a settlement is reached the judge may remand the proceeding to the executive director for processing under Chapter 263, Subchapter A of this title (relating to Final Approval by Executive Director). (c) If the parties do not reach a negotiated or agreed settlement of all facts and issues in controversy, the judge may adjourn the informal proceeding and convene a contested case hearing under standard hearing procedures as otherwise provided for in commission regulations. sec.265.42. Withdrawing the Application. (a) Absent the commissioners' authorization or agreement of the parties, an applicant may not withdraw an application without prejudice once the judge has taken jurisdiction over the application. The judge will forward the request to withdraw the application and a recommendation to the commissioners. (b) In addition to the commissioners' authorization or agreement of the parties, the application may also be withdrawn without prejudice if the applicant reimburses the other parties all costs the other parties have incurred in the permitting process for the subject application. sec.265.43. Procedure Before Preliminary Hearing. (a) Conference before preliminary hearing. (1) At the discretion of the judge, a conference before hearing may be held at a time and place stated in the notice. If notice of the conference is not given in the notice of public hearing, notice of the conference shall be mailed at least ten days prior to the conference or the conference may be held at the public hearing date, time, and place stated in the notice of public hearing. If notice of public hearing is required to be published, notice of a conference to be held prior to the initial public hearing date shall be published at least ten days prior to the conference. (2) A conference may be held to consider the following: (A) the formulation and simplification of issues; (B) the necessity or desirability of amending pleadings; (C) the possibility of making admissions or stipulations; (D) the procedure at the hearing; (E) the identification of and specification of the number of witnesses; (F) the filing and exchange of prepared testimony and exhibits; (G) the designation of parties; (H) the scheduling of discovery; and (I) any other matters which may expedite the hearing or otherwise facilitate the hearing process. (3) At the discretion of the judge, additional conferences before the hearing may be scheduled and held without the necessity of publication. (b) Recordation of conference action. As determined by the judge, action taken at the conference shall be reduced to writing and made a part of the record or a statement thereof shall be made on the record at the close of the conference or at the hearing. After a prehearing conference, the judge may make appropriate rulings concerning matters discussed at the conference. sec.265.44. Initial Pleadings. Applications, petitions, complaints, and other pleadings which initiate new proceedings before the commission should be delivered to the executive director, together with all related materials, for initial processing and review in accordance with the rules of the commission. sec.265.45. Executive Director Forwards Initial Pleadings to the Commission. After an application, petition, or other document initiating a new proceeding and requiring action by the commissioners is processed, the executive director shall forward the pleading to the chief clerk for disposition. Pleadings, including those of the executive director and the public interest counsel, shall be accompanied by an agenda action request if the proceeding is to be immediately set for a commissioners' meeting. sec.265.47. Affidavit of Publication. Any notice which an applicant is required to publish shall be published in the manner required by law and as directed by the commission. The applicant shall cause the publisher of the notice to furnish a tear sheet copy of the published notice and a publisher's affidavit which the applicant shall file with the commission as quickly as possible following publication, but not less than ten days before the scheduled date of action or date of hearing on the application. The affidavit shall state the date or dates on which the notice was published and the pertinent counties in which the newspaper is of general circulation. The publisher's affidavit and tear sheet shall be considered prima facia evidence of publication. sec.265.48. Effect of Failure to Furnish Affidavit. Failure to furnish evidence of publication of the notice in the manner required may be deemed evidence of abandonment of the application. If the affidavit of publication is not timely filed, the scheduled action or hearing on the application may be postponed and action withheld pending receipt of the affidavit. The application may be dismissed without prejudice if the affidavit of publication is not received within a reasonable time. 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 August 31, 1995. TRD-9511330 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter E. Sanctions 30 TAC sec.sec.265.50, 265.51, 265.53-265.55 The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorize the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511342 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter D. Hearing Procedures 30 TAC sec.sec.265.60-265.73 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5. 105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.60. Preliminary Hearings. (a) First preliminary hearing. After the required notice has been issued, the judge shall convene a preliminary hearing to consider the jurisdiction of the commission over the proceeding. If jurisdiction is established, the judge shall: (1) accept public commentary and name the parties; (2) set a discovery and procedural schedule; and (3) allow the parties an opportunity for settlement negotiations. (b) First preliminary hearing and evidentiary hearing combined. When specifically noticed in the notice of hearing or agreed to by all parties in attendance at the preliminary hearing the judge may proceed with the evidentiary hearing on the same date of the first preliminary hearing. (c) Additional preliminary hearings. One or more preliminary hearings may be held to discuss: (1) formulating and simplifying issues; (2) evaluating the necessity or desirability of amending pleadings; (3) evaluating the entering of stipulations; (4) determining the procedure at the hearing; (5) specifying the number and identity of witnesses; (6) filing and exchanging prepared testimony and exhibits; (7) scheduling discovery; and (8) other matters that may expedite or facilitate the hearing process. sec.265.61. Designation of Parties. (a) Determination by judge. All parties to a proceeding shall be determined at the first day of hearing or when the judge otherwise designates. To be admitted as a party, a person must have a justiciable interest in the matter being considered and must, unless the person is specifically named in the matter being considered, appear at the preliminary hearing in person or by representative and seek to be admitted as a party. The determination of party status shall be based upon the standards set forth in sec.263.25 of this title (relating to Determination of Affected Person). After parties are designated, no other person will be admitted as a party except upon a finding of good cause and extenuating circumstances and that the hearing in progress will not be unreasonably delayed. At the discretion of the judge, persons who are not parties may be permitted to make or file statements. (b) Statutory parties. (1) The executive director and public interest counsel of the commission are designated as parties to all commission proceedings. (2) The Texas Water Development Board shall be designated a party to any commission proceeding in which the board requests party status. (3) The Texas Parks and Wildlife Department shall be designated a party in commission proceedings on applications for permits to store, take, or divert water if the department requests party status. (4) The statutory parties shall have such procedural rights and obligations as may be specified by applicable statutes and rules of the commission. (c) Alignment of participants. Participants (both party and non-party) may be aligned according to the nature of the proceeding and their relationship to it. The judge may require participants of an aligned class to select one or more persons to represent them in the proceeding. (d) Effect of postponement. If a hearing on an application is postponed for any reason, including the applicant's failure to provide notice as required by law, any person designated as a party retains party status. sec.265.62. Persons Not Parties. Persons who are not designated as parties to the proceeding may register their protest or make comments orally or in writing. Such protest or comments shall be included in the files of the proceeding, but shall not be considered by the judge as evidence in the record. Additionally, a person who is not a party to the proceeding may, at the judge's request, submit questions to the judge. At the discretion of the judge, the judge may address any such questions to witnesses in the proceeding where it appears that such questioning may lead to a full disclosure of the facts without unduly delaying the hearing or burdening the record. sec.265.63. Appearance. (a) Any person may appear at a hearing in person or by authorized representative. A person appearing in a representative capacity may be required to prove his authority. (b) Except for good cause and extenuating circumstances, the applicant or petitioner shall appear at the public hearing. Failure to so appear may be grounds for withholding consideration of a matter or for dismissal without prejudice. (c) Whenever it is necessary or proper for any party to an application or proceeding to make an affidavit, it may be made by either the party or a representative, unless otherwise provided by statute. sec.265.64. Rights and Obligations of Parties at the Hearing. (a) Rights. A party has the right to conduct discovery, present a direct case, cross-examine witnesses in the hearing, make oral and written arguments, obtain copies of all pleadings, motions, replies, and other filed documents, receive copies of all notices issued by the commission concerning the application to which the person is a party, and, as directed by the judge, otherwise fully participate as a party in the proceeding. A person may seek leave to withdraw his or her party status at any time upon written request to the judge or by request stated on the record during a hearing. Party status is not withdrawn unless and until the judge grants the request for leave to withdraw. (b) Order of presentation. (1) In all proceedings, the moving party shall have the right to open and close. Where several matters have been consolidated, the judge will designate who will open and close. The judge will determine at what stage intervenors will be permitted to offer evidence and argument. After all parties have completed the presentation of their evidence, the judge may call upon any party for further material or relevant evidence upon any issue. (2) Before the moving party opens in a permit hearing, the executive director's Staff shall open with a simple statement of its preliminary position on the application and, in a permit hearing, will present the Staff's draft permit including special provisions, if any. In a permit hearing, the applicant presents evidence to meet its burden of proof on the application, any opponents present evidence, the Public Interest Counsel presents evidence, and the Staff presents its evidence. In all cases, the applicant shall be allowed to close with its rebuttal. Any party may present a rebuttal case when another party presents evidence which could not have been reasonably anticipated. (c) Cross-examination of witnesses. Witnesses shall be subject to cross- examination by any party in conformance with any alignment required by the judge under sec.265.61(c) of this title (relating to Designation of Parties) . The judge may allow persons who are not parties to submit questions for witnesses to the judge as set out in sec.265.62 of this title (relating to Persons Not Parties). sec.265.65. Continuance. (a) The presiding officer may continue a public hearing or meeting from time to time and from place to place. If the time and place for the proceeding to reconvene are not announced at the hearing or meeting, a notice shall be mailed at a reasonable time to all parties and other persons who, in the judgment of the presiding officer, may be affected by action taken as a result of the hearing. (b) Motions for continuance shall be in writing or stated on the record, and shall be sworn unless the facts alleged therein to show good cause are part of the record of the proceeding. sec.265.66. Motions. A motion, unless made during a hearing, shall be made in writing, shall set forth the relief or order sought, and shall be timely filed with the judge. If parties have been designated, a copy shall be furnished by the movant to each applicant, petitioner, and other party of record. Any reply to the motion shall be timely filed with the judge with copies served on the other parties. Failure to furnish copies may be grounds for withholding consideration of the motion or reply. Unless otherwise directed by the judge, motions based on matters which do not appear of record must be supported by affidavit. When necessary in the judgment of the judge, a hearing will be held to consider any motion. sec.265.67. Conference After Preliminary Hearing. (a) Upon written notice or notice stated in the record in any proceeding, parties or their representatives may be directed to appear at a specified time and place for a conference to consider the following: (1) the formulation and simplification of issues; (2) the necessity or desirability of amending the pleadings; (3) the possibility of making admissions or stipulations; (4) the procedure at the resumption of the hearing; (5) the identification and specification of the number of witnesses; (6) the filing and exchange of prepared testimony and exhibits; (7) the designation of parties; (8) the scheduling of discovery; and (9) any other matters which may expedite the hearing or otherwise facilitate the hearing process. (b) As determined by the judge, action taken at the conference shall be reduced to writing and made a part of the record or a statement thereof shall be made on the record at the close of the conference or at the hearing. After a hearing conference, the presiding officer may make appropriate rulings concerning matters discussed at the conference. sec.265.68. Agreements to be in Writing. No agreement between parties or their representatives affecting any pending matter will be considered by the judge unless it is in writing, signed and filed as a part of the record, or unless it is announced at the hearing and entered of record. sec.265.69. Evidence. (a) General admissibility of evidence. (1) Irrelevant, immaterial, or unduly repetitious evidence shall be excluded. The Texas Rules of Civil Evidence as applied in nonjury civil cases in the district courts of this state shall be followed. When necessary to ascertain facts not reasonably susceptible of proof under those rules, evidence not admissible thereunder may be admitted, except where precluded by statute, if it is of a type commonly relied upon by reasonably prudent men in the conduct of their affairs. The judge shall give effect to the rules of privilege recognized by law. (2) When a proceeding will be expedited and the interest of parties will not be prejudiced substantially, testimony may be received in written form. The prepared testimony of a witness upon direct examination, either in narrative or question and answer form, may be admitted into evidence as if read or presented orally, upon the witness' being sworn and identifying the same as a true and accurate record of what his testimony would be if given orally. The witness shall be subject to clarifying questions and to cross-examination, and the prepared testimony shall be subject to objection. (3) Testimony will be received only from witnesses called by a party or his or her representative or the judge. The presiding officer may allow or request testimony from any person whose position is not adequately represented by any party, subject to cross-examination by all parties or their representatives. Such testimony may be allowed at the presiding officer's discretion. All parties shall have an opportunity to take discovery of such person. (b) Stipulation. Evidence may be stipulated by agreement of all parties. The judge and commission will determine the weight, if any, to be accorded stipulated evidence. (c) Prefiled testimony and exhibits. The judge may require parties to prepare their direct testimony in written form if the judge determines that a proceeding will be expedited and that the interests of the parties will not be prejudiced substantially. The judge may require the parties to file and serve their direct testimony and exhibits prior to the beginning of the hearing. (d) Abstracts of documents. When documents are numerous, the presiding officer may receive in evidence only those which are representative and may require the abstracting of relevant data from the documents and the presentation of the abstracts in the form of an exhibit. Parties shall have the right to examine the documents from which the abstracts are made. (e) Exhibits. (1) Exhibits of a documentary character shall not exceed 8-1/2 by 11 inches unless they are folded to the required size. Maps and drawings which are offered as exhibits shall be rolled or folded so as not to unduly encumber the record. Exhibits not conforming to this rule may be excluded. (2) Each exhibit offered shall be tendered for identification and placed in the record. Copies shall be furnished to the presiding officer, each of the parties, and the hearings reporter, unless the presiding officer shall rule otherwise. (3) In the event an exhibit has been identified, objected to, and excluded, it may be withdrawn by the offering party. If withdrawn, the exhibit will be returned and the offering party waives all objections to the exclusion of the exhibit. If not withdrawn, the exhibit shall be included in the record for the purpose of preserving the objection to the exhibit. (f) Official notice. (1) The presiding officer may take official notice of all facts judicially cognizable. In addition, the presiding officer may take official notice of any generally recognized facts within the specialized knowledge of the commission. (2) The presiding officer shall notify all parties before or during the evidentiary hearing or by reference in preliminary reports, drafts of orders, or otherwise, of any material officially noticed, including any memoranda or data prepared by the executive director and relied upon by the commission in prior proceedings. All parties shall be afforded an opportunity to contest any material so noticed. sec.265.70. Objections. Objections shall be timely noted in the record. Formal exception to the ruling of the judge is not necessary to preserve the objecting party's right on appeal. sec.265.71. Interlocutory Appeals and Certified Questions. (a) No interlocutory appeals may be made to the commissioners by a party to a proceeding before a judge. (b) On a motion by a party served on the judge or on the judge's own motion, the judge may certify a question to the commissioners. Certified questions may be made at any time during a proceeding, regarding commission policy, jurisdiction, or the imposition of any sanction by the judge which would substantially impair a party's ability to present its case. Policy questions for certification purposes include, but are not limited to: (1) the commissioners' interpretation of its rules and applicable statutes; (2) which rules or statutes are applicable to the proceeding; or (3) whether commission policy should be established or clarified as to a substantive or procedural issue of significance to the proceeding. (c) The judge shall file the certified question with the chief clerk and serve copies on the parties. Within five days after the certified question is filed, parties to the proceeding may file briefs or replies. The chief clerk shall provide copies of the certified question and any briefs or replies to the general counsel and commissioners. Upon the request of the general counsel or a commissioner to the general counsel, the certified question will be scheduled for consideration during a commissioners' meeting. The chief clerk shall give the judge notice of the scheduling. The judge may, in his or her discretion, abate the hearing until the commissioners answer the certified question, or continue with the hearing if the judge determines that no party will be substantially harmed by proceeding while awaiting a response. If no request to set the question for consideration is received from the general counsel by the chief clerk within 15 days after filing, the request will be deemed denied by operation of law. sec.265.72. Oral Argument. At the conclusion of the hearing, oral argument may be heard upon request of the parties or upon directive of the judge. Reasonable time limits may be prescribed. The judge may require or accept written briefs in lieu of oral arguments. When any matter heard before the judge is presented to the commissioners for final decision, further oral argument may be heard by the commissioners. sec.265.73. Submittal of Findings of Fact and Conclusions of Law. The judge may request that the parties submit proposed findings of fact and conclusions of law separately stated. 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 August 31, 1995. TRD-9511332 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter E. Discovery and Sanctions 30 TAC sec.sec.265.81-265.88 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.81. Discovery. (a) Power to authorize discovery. The presiding officer may allow any form of voluntary discovery and may compel any form of discovery authorized by the APA. (b) Forms of discovery: voluntary and compellable. (1) Voluntary discovery. Voluntary forms of discovery are highly favored by the commission. Parties must attempt to engage in voluntary discovery before seeking compelled discovery. Voluntary forms of discovery include requests for admission, interrogatories, requests for information, and all forms of compellable discovery voluntarily engaged in, such as depositions, the production of documents and things, or entry onto land pursuant to the APA. Copies of all voluntary discovery documents shall be filed with all parties, but need not be filed with the commission unless otherwise directed by the presiding officer. During voluntary discovery, the Texas Rules of Civil Procedure may be used for guidance by the requesting and responding parties. Any response made to a voluntary discovery request, other than a response objecting to the request, may be used in the same manner as if the discovery had been ordered by the presiding officer pursuant to the APA. (2) Compellable discovery. Compellable discovery includes all those forms of discovery authorized by the APA. A party may request the judge to compel discovery after voluntary discovery attempts have failed by filing a discovery motion at least ten days before the hearing on the merits. Motions to compel discovery may be filed less than ten days before the hearing on the merits upon a showing of good cause. Copies of all compellable discovery documents, including answers and objections thereto, shall be served on all other parties and the judge. Affidavits regarding actions taken to engage in voluntary discovery may be considered as evidence in ruling upon motions to compel discovery and attendant requests for continuance. sec.265.82. Scope of Discovery. (a) Except as provided in subsection (b) of this section or sec.265.86 of this title (relating to Protective Orders), parties may obtain discovery regarding any matter which is relevant to the subject matter of the proceeding whether it relates to the position of the party seeking discovery or the position of the other party. It is not grounds for objection that the information sought will be inadmissible at the hearing if the information sought appears reasonably calculated to lead to the discovery of admissible evidence. (b) The following matters are not discoverable: (1) the work product of an attorney; (2) the written statements of potential witnesses and parties, except that any person, whether a party or not, shall be entitled to obtain, upon request, a copy of a statement he has previously made concerning the action or its subject matter and which is in the possession, custody, or control of any party; (3) the identity, mental impressions, and opinions of an expert who has been retained or specially employed by another party in anticipation of a commission proceeding or in preparation for hearing, or any documents or tangible things containing such information if the expert will not be called as an expert witness, except that the identity, mental impressions, and opinions of an expert who will not be called to testify as an expert and any documents or tangible things containing such impressions and opinions are discoverable if the consulting expert's opinion or impressions have been reviewed by a testifying expert; (4) with the exception of discoverable communications prepared by or for experts, any communication passing between agents or representatives or the employees of any party to the proceeding or communications between any party and his agents, representatives, or their employees, where made subsequent to the filing of the application, petition, complaint, motion, report, or other initial pleading upon which the proceeding is based, and made in connection with the prosecution, investigation, or protest of the subject of the proceeding. (c) Nothing in this section shall be construed to render nondiscoverable the identity and location of any potential party, any person having knowledge of relevant facts, any expert who is expected to be called as a witness in the action, or of any consulting expert whose opinions or impressions have been reviewed by a testifying expert. sec.265.83. Types of Discovery. (a) Interrogatories to parties. Interrogatories may be used as a form of voluntary discovery under sec.265.81 of this title (relating to Discovery). (b) Admission of facts and of genuineness of document. Requests for admission may be used as a form of voluntary discovery from other parties under sec.265.81 of this title. (c) Requests for information. Requests for information may be used by any party as a part of voluntary discovery pursuant to sec.265.81 of this title. Requests for information by the Executive Director of the commission for matters arising out of the commission's rate setting jurisdiction under Texas Water Code, Chapters 11 and 12, or the commission's statutory responsibilities under Texas Water Code, Chapter 13, are deemed part of the commission's investigatory powers to which answers may be compelled upon proper motion and notice to all parties. Failure to adequately respond to requests for information by the executive director of the commission may result in sanctions authorized for compellable discovery pursuant to sec.265.86 of this title (relating to Protective Orders). sec.265.84. Issuance of Subpoena or Commission to take Deposition. (a) Upon proper request by a party, the judge shall issue subpoenas and commissions to take depositions. A request for issuance shall be filed with the chief clerk, and a copy shall be served on the judge and the parties. (b) Before seeking issuance of either a subpoena or commission, the requestor shall attempt to secure voluntary appearance of the witness or production of materials. If this is not possible, the requestor shall indicate what circumstances prevent such voluntary appearance or production in the request. (c) If the requestor and witness sign an "Agreement to Waive Fee" form, subpoenas and commissions may be issued without a witness fee deposit. Only a non-party witness or deponent is entitled to receive this fee. (d) If the witness fee is not waived, the requestor shall make the witness fee deposit in the appropriate amount as indicated on the forms requesting issuance. This amount is based on an estimate of the mileage to be traveled to and from the hearing or deposition, if over 25 miles, and days expected to be spent in the hearing or deposition. This deposit should be made payable to the commission and should be filed with chief clerk and must be made before issuance of the subpoena or commission. (e) Upon deposit of all necessary monies and completion of all forms, the subpoena or commission shall be issued to the requestor to effect service. sec.265.85. Form of Subpoena. The heading of the subpoena shall be "The Texas Natural Resource Conservation Commission." It shall state the style of the hearing, that the hearing is pending before SOAH, the time and place at which the witness is required to appear, and the party at whose insistence the witness is summoned. It shall be signed by the chief clerk, but need not be under the seal of the commission and the date of issuance shall be noted thereon. It may be made returnable forthwith, or on any date for which hearing of the docketed matter may be set. It shall be addressed to any sheriff or constable of the State of Texas or other person authorized to serve subpoenas as provided in the Texas Rules of Civil Procedure, Rule 178. sec.265.86. Protective Orders. On motion specifying the grounds and made by any person against or from whom discovery is sought, the judge may make any ruling in the interest of justice necessary to protect the party against whom compellable discovery is sought from undue burden, unnecessary expense, harassment or annoyance, or invasion of personal, constitutional, or property rights. Specifically, the judge's authority as to such rulings extends to, although it is not necessarily limited by, any of the following: (1) ruling that requested discovery not be sought in whole or in part, or that the extent or subject matter of discovery be limited, or that it not be undertaken at the time or place specified; (2) ruling that the discovery be undertaken only by such method or upon such terms and conditions or at the time and place directed by the presiding officer; or (3) ruling that results of discovery be sealed or otherwise adequately protected; that its distribution be limited; or that its disclosure be restricted. sec.265.87. Duty to Supplement. A party who has responded to a request for voluntary or compellable discovery that was correct and complete when made is under no duty to supplement his response to include information thereafter acquired, except the following shall be supplemented not less than ten days prior to the hearing on the merits unless the presiding officer finds that a good cause exists for permitting or requiring later supplementation. (1) A party is under a duty seasonably to supplement his response if he obtains information upon the basis of which: (A) he or she knows that the response was incorrect or incomplete when made; or (B) he or she knows that the response, though correct and complete when made, is no longer true and complete and the circumstances are such that failure to amend the answer is in substance misleading. (2) If the party expects to call an expert witness when the identity or subject matter of such expert witness' testimony has not been previously disclosed in response to an appropriate inquiry directly addressed to these matters, such response must be supplemented to include the name, address, and telephone number of the expert witness and the substance of the testimony which the expert witness is expected to testify, as soon as is practical, but in no event less than ten days prior to the hearing on the merits except on leave of the judge. (3) In addition, a duty to supplement answers may be imposed by ruling of the judge or agreement of the parties, or at any time prior to hearing through new requests for supplementation of prior answers. sec.265.88. Sanctions for Failure to Comply with Discovery. (a) If a person fails to comply with a subpoena or commission for deposition issued by the judge, the commission or the party requesting the subpoena or commission for deposition may seek enforcement under the APA, sec.2001.201. (b) If the judge finds a party is abusing voluntary discovery or if the judge finds that any interrogatory or request for information is unreasonably frivolous, oppressive, or harassing, or that a response or answer is unreasonably frivolous or made for the purpose of delay, then the judge shall allow compellable discovery. Affidavits regarding actions taken to engage in voluntary discovery may be considered as evidence in considering motions for compelled discovery and attendant motions for continuance. In considering motions for continuance occasioned by failure of voluntary discovery, the presiding officer may consider the degree of abuse in addition to other pertinent factors in setting new deadlines for compelled discovery and the hearing on the merits. (c) If the judge finds a party is abusing compelled discovery, the judge may do any of the following: (1) suspend processing of the application or petition if the applicant or petitioner is noncompliant; (2) disallow any further discovery of any kind or a particular kind by the noncompliant party; (3) rule that particular facts shall be regarded as established for the purposes of the proceeding in accordance with the claim of the party obtaining the discovery ruling; (4) limit the noncompliant party's participation in the proceeding; (5) disallow the noncompliant party's presentation of evidence on issues that were the subject of the discovery request; (6) disallow part or all of applicant's attorney fees from inclusion in the rate base in water and sewer utility cases; (7) recommend to the commission that the hearing be dismissed with or without prejudice; (8) allow evidence to be introduced against a party abusing discovery which would otherwise be excluded for not meeting the deadline for exchange of such evidence; (9) allow testimony against a party abusing discovery which would otherwise be excluded for not meeting the deadline established for listing potential witnesses; and (10) charge all or any part of the expense of discovery against the offending party or its representatives. 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 August 31, 1995. TRD-9511343 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter F. Special Procedures for Freezing the Process Procedures 30 TAC sec.sec.265.101-265.104, 265.106-265.113 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.101. Applicability. (a) The provisions of this subchapter shall apply to permit hearings as designated in the notice of hearing, except as provided below, as well as to other hearings designated by the judge for good cause. (1) Except by agreement of the parties, the provisions of this subchapter do not apply to permit hearings at which jurisdiction is established prior to July 22, 1994. (2) Notwithstanding the designation made in the notice of hearing, an application may either be included in, or excluded from, the applicability of this subchapter or any portion of this subchapter by: (A) agreement of the parties only with the approval of the judge; or (B) by the judge for good cause. Good cause may include without limitation a finding that the lack of complexity of a proceeding in a hearing does not warrant the implementation of all or a portion of this subchapter. (b) When evaluating whether the provisions of this subchapter should apply to a permit hearing, the judge shall consider at a minimum: (1) the number and sophistication of the parties or potential parties; (2) the expected length of the hearing; and (3) the complexity of the issues. The judge shall allow the parties to present evidence and argument regarding this determination. (c) If a judge orders a permit application to be placed under the provisions of this subchapter after the notice of hearing, the judge shall allow reasonable time for: (1) the executive director and public interest counsel to comply with sec.265.102 of this title (relating to Procedures Applicable to the Executive Director and Public Interest Counsel); and (2) all parties to comply with sec.265.103 of this title (relating to First Preliminary Hearing). (d) The provisions of other chapters of this title and other subchapters of this chapter are inapplicable to proceedings to which this subchapter applies only to the extent that such provisions conflict with this subchapter. sec.265.102. Procedures Applicable to the Executive Director and Public Interest Counsel. (a) Executive director. (1) After the executive director has conducted his technical review of an application, the executive director shall prepare a proposed permit based on the application submitted. The executive director shall develop an initial position recommending issuance, issuance with additional or different permit provisions, or denial of the permit. If the executive director recommends issuance with additional or different permit provisions, he or she shall specify those provisions in a document separate from the proposed permit. If the executive director's recommendation is to deny, he or she shall issue a document summarizing the basis for his or her position. The proposed permit and additional documents prepared by the executive director shall be forwarded to the Chief Clerk's Office for filing and setting. This provision does not impair the executive director's ability to return applications pursuant to sec.281.18 and sec.281.19 of this title (relating to Applications Returned and Technical Review). (2) The executive director may change his or her position based on evidence or other new information. The executive director shall timely notify all parties on the record or in writing if he or she changes his or her opinion, and the other parties shall be afforded the opportunity to respond. (b) Public Interest Counsel. The Public Interest Counsel shall comply with all time frames and procedures relevant to protestants pursuant to this chapter, unless otherwise determined by the judge. sec.265.103. First Preliminary Hearing. After the required notice has been given and a request for hearing has been received, a judge will convene a public hearing to take jurisdiction over the application, accept public commentary, designate parties, and set a discovery and procedural schedule. At this hearing, the judge shall address the jurisdiction of the commission over the proceeding. If jurisdiction is established, the following shall occur: (1) the judge shall accept public commentary and name the parties; (2) the judge shall set acceptable methods of service of pleadings, motions, and discovery; (3) the executive director shall provide his evaluation and assessment pursuant to sec.265.102 of this title (relating to Procedures Applicable to the Executive Director and Public Interest Counsel) along with the proposed permit and any additional documents prepared by the executive director related to his or her assessment; (4) the applicant shall submit proposed findings of fact and conclusions of law; (5) the applicant shall identify what constitutes the application and shall provide a total of two copies of the permit application, for use by all of the protestants in the case. These copies shall include all notices of deficiency and the applicant's response to those notices; (6) the executive director and the applicant shall provide their witness lists; (7) the parties shall raise their claims of confidentiality of portions of the application or agency files in a request for a protective order; and (8) the judge shall establish a procedural schedule for the hearing consistent with the provisions of sec.265.104 of this title (relating to Discovery Schedule and Freezing the Process for Hearings Conducted Pursuant to this Subchapter). Without limiting sec.265.102(a)(2) of this title, based on the executive director's position, the judge may also set a procedural schedule for the executive director to file responses or issues lists in accord with the time periods set out in sec.265.104 of this title. sec.265.104. Discovery Schedule and Freezing the Process for Hearings Conducted Pursuant to this Subchapter. (a) First discovery period. The first discovery period shall extend 30 to 80 days beginning immediately after the date on which jurisdiction is established, as set out in full in sec.265.121(a)(1) of this title (relating to Discovery in Hearings Held under Subchapter F). (b) Protestants' first list of issues. On the last day of the first discovery period, the protestants shall identify issues based on the proposed findings of fact and conclusions of law submitted by the applicant pursuant to sec.265.103(4) of this title (relating to First Preliminary Hearing), and shall include a statement as to the basis of the protestant's dispute on each issue. In addition, on the last day of the first discovery period, protestants may also raise new issues and proposed findings of fact and conclusions of law. (c) Second discovery period. The second discovery period shall extend 30 to 80 days beginning immediately after the protestants' list of issues is submitted, as set out in full in sec.265.121(a)(2) of this title. (d) Applicant's response. The applicant may respond to issues raised by the protestants no later than the last day of the second discovery period by amending its application and/or proposed findings of fact and conclusions of law at this time, responses being limited to the issues raised by the other parties. Given the nature and degree of amendment, the application may be remanded by the judge to the executive director for further technical review. The application may be subject to additional notice, discovery, and hearing requirements. Subsequent to the time for filing a response pursuant to this subsection, the applicant may not file any amendment to its application except as provided in subsection (g) of this section. (e) Third discovery period. This period shall extend 20 to 45 days immediately following the conclusion of the second discovery period, and shall be limited in accordance with sec.265.121(a)(3) of this title. (f) Protestants' second list of issues. On or before the last day of the third discovery period, protestants are entitled to submit a second list of issues. The protestants' second list of issues shall be limited in scope to the applicant's response as provided in subsection (d) of this section. (g) Applicant's second response. The applicant may respond to issues raised in the protestants' second list of issues within seven days after the third discovery period. The applicant may be allowed by the judge to respond with a minor amendment and proposed findings of fact and conclusions of law limited to protestants' second list of issues, within seven days of the third discovery period. Issues related to any minor amendment filed by the applicant will be considered by the judge at the prehearing conference for inclusion in the final issue list. Subsequent to the time for filing a response pursuant to this subsection, the applicant may not file any amendment except by agreement of the parties. (h) Prehearing meeting. A prehearing meeting may be held within three to ten days after the conclusion of the third discovery period, depending upon whether protestants submit a second list of issues. The prehearing meeting is a meeting of the parties without the judge. At this meeting, the parties shall bring for submission to the judge and exchange among parties findings of fact, conclusions of law, stipulations, and exhibits. The parties may have the proceedings recorded. If parties do not convene a meeting pursuant to this subsection, they shall submit to the judge and exchange among parties findings of fact, conclusions of law, stipulations, and exhibits within three or ten working days after the conclusion of the third discovery period. (i) Prehearing conference and order. Within seven to 14 days after the conclusion of the third discovery period, the judge shall hold a prehearing conference. (1) All parties shall address the stipulations of the proposed findings of fact and conclusions of law beginning with the applicant. The judge shall determine which issues remain and which findings of fact and conclusions of law have been stipulated. Proposed findings and conclusions shall be treated as follows. (A) A proposed finding or conclusion stipulated by all parties shall be regarded as established. (B) A proposed finding or conclusion that has not been stipulated, was on the other parties' issue list, and for which the other parties have a reasonable basis for continuing to contest the issue, may be raised as an issue at the hearing. The reasonableness of the other parties' basis for contesting the issue may receive further inquiry by the judge during the prehearing conference. If the examiner determines that the other parties have not shown a reasonable basis for contesting the finding or conclusion and the executive director did not raise the issue as a basis for permit denial, the judge shall deem the finding or conclusion stipulated. (2) Exhibits shall be offered and marked and the judge will rule on their admissibility insofar as possible. At hearing all objections to exhibits, which could have been cured if raised in a timely manner, shall be deemed waived if they were not raised during the prehearing conference. Parties wishing to offer exhibits at any time subsequent to the prehearing conference shall notify all other parties as soon as practicable of their intention to seek leave to submit additional exhibits. The judge has the discretion to permit the offer of exhibits not submitted at the prehearing conference for good cause. Good cause includes the need for one party to prepare an exhibit in response to another party's exhibit first seen at the prehearing conference, the need to prepare an exhibit in response to the direct testimony of another party, and other cases which are justified by the party seeking to submit the exhibit. (3) The judge shall set final case time limitations at or before the prehearing conference. (4) The judge shall promptly incorporate all rulings and determinations in a written prehearing order. (j) Failure to comply with schedules. Parties who do not identify issues, make amendments, propose findings of fact and conclusions of law, or submit responses in accord with the schedules established under this subchapter and with the judge's orders implementing it will be regarded as waiving the right to pursue them in an evidentiary hearing conducted pursuant to this subchapter. (k) Final preparation. Final preparation for hearing shall extend no more than 14 calendar days from the date of the prehearing conference. (l) Evidentiary hearing. The evidentiary hearing shall extend from five to no more than 25 calendar days in duration immediately following final preparation for hearing, subject to extension by the judge for good cause. The judge shall set reasonable time limitations for the presentation of the cases of all parties in order to limit the hearing to this time period. (m) Proposal for decision. The judge shall issue a Proposal for Decision within 20 to 55 days from the conclusion of the evidentiary hearing. (n) Modification of schedules. The scheduled periods set out in this section are presumptively the time limits, but they may be modified in exceptional circumstances for good cause either by the judge or by agreement of the parties with approval of the judge for good cause. Good cause may include without limitation a finding that the complexity or lack thereof of a proceeding warrants modification of one or more of the scheduled periods. (o) Motion for rehearing. A party may not raise for the first time on motion for rehearing an issue of fact or law which it has not previously raised as a contested issue unless the issue is related to: (1) a procedural irregularity; or (2) changed circumstance, where the issue is material and a party demonstrates good cause for failure to raise it as an issue prior to the prehearing conference. Notwithstanding the foregoing, the commission may exercise its discretion to address an issue not raised by the other parties or remand an issue depending on the evidence in the record. sec.265.106. Identification of Witnesses. The judge shall require the parties to exchange lists of witnesses who will be called to testify at the evidentiary hearing. The witness lists shall include the names and addresses of the witnesses and a brief description of the subject matter of their anticipated testimony. (1) The witness lists of the applicant and the executive director shall be submitted on the day that jurisdiction is established over the proceeding, and may be amended by these parties to address the protestants' and Public Interest Counsel's list of issues. (2) The witness lists of the protestants and Public Interest Counsel shall be submitted when the protestants and Public Interest Counsel list their issues. (3) Parties may call rebuttal witnesses not identified on their witness lists only on a showing of good cause and after the parties are afforded a reasonable opportunity to conduct discovery. (4) The judge may allow a party to amend its witness list upon a showing of good cause. The parties shall have sufficient time, as determined by the judge, to take discovery on newly added witnesses, as authorized in this paragraph or by paragraphs (1)-(3) of this section. There is a continuing obligation to update witness lists as soon as the need for and identity of the new witness is reasonably known. sec.265.107. Limiting the Number of Witnesses. At the request of a party or on the judge's own motion, the judge may reduce excessive numbers of witnesses identified pursuant to sec.265.106 of this title (relating to Identification of Witnesses), as follows. (1) The judge may direct the party to do one of the following: (A) voluntarily reduce its listed witnesses to a specified number; or (B) provide a summary of the expected testimony of each witness sufficiently specific to show the need for the testimony. (2) The judge may use the witness lists and any summaries of testimony provided to strike witnesses whose testimony would be unduly repetitious or irrelevant, or in order to render discovery and the hearing process manageable. (3) If a party fails or refuses to comply with the directions of the judge pursuant to this section, the judge may limit or strike the testimony of witnesses called by the party in any reasonable manner. sec.265.108. Rebuttal. (a) Except as provided by subsection (b) of this section, the applicant, as the party with the burden of proof, is the only party allowed to present a rebuttal case. In all cases, the applicant shall be allowed to close with its rebuttal. (b) If a party can demonstrate that evidence was presented by another party which could not have been reasonably anticipated at the time that party presented its direct case, the party may present a rebuttal case upon leave of the judge. (c) Rebuttal cases must be presented within the time limitations set by the judge in the prehearing order. sec.265.109. Prefiled Testimony. (a) Unless otherwise directed by the judge, any party shall have the option to prefile all or any part of the testimony of all or any one of its witnesses. One party's election to prefile shall not control another party's decision regarding whether to prefile testimony. If a party decides to use prefiled testimony, it shall notify the other parties and the judge on or before the last day of the second discovery period, identifying the relevant witness(es). (b) The judge may direct all parties to prefile their entire direct cases. If all direct testimony is prefiled, whether by judge's order or by agreement of the parties: (1) no party shall be allowed to go beyond the scope of its prefiled testimony on direct examination; and (2) the judge may limit or prohibit non-adverse crossexamination if unnecessary to the development of a complete evidentiary record. (c) The live presentation of prefiled testimony at the evidentiary hearing shall be limited as provided by the judge within the scope of the original prefiled testimony to introductory material, corrections to the prefiled testimony, and a brief summary. The live presentation shall generally last no more than 30 minutes for each prefiled witness. (d) The judge shall set the deadline for the filing of prefiled testimony at a reasonable time before the evidentiary hearing. The factors the judge shall consider include the complexity of the material, the expected length of the material, the number of witnesses or issues that are to be presented by prefiled testimony, and the acceptable method of presenting objections. sec.265.110. Supplementing Prefiled Testimony and Objections. (a) At the discretion of the judge, prefiled testimony may be supplemented with the introduction of newly discovered evidence, or when it becomes obvious to the witness that the original prefiled testimony was false or incomplete, or when substantive evidence has been excluded as a result of the judge's ruling on an objection to prefiled testimony. (b) If prefiled testimony is supplemented as provided in this section, the other parties may be afforded the opportunity to supplement their prefiled testimony or prefiled objections. Supplementation by the other parties shall be limited to those subjects which were supplemented by the original witness. sec.265.111. Witness Shall Attend Hearing. Every witness summoned in any hearing shall attend the hearing from day to day, and from place to place, until discharged by the judge or party summoning such witness. If any witness after being duly subpoenaed fails to attend, such witness may be subject to any remedies available through district court to the party summoning the witness. sec.265.112. Evidence. (a) In contested cases, irrelevant, immaterial, or unduly repetitious evidence will be excluded. (b) Whenever necessary to ascertain facts not reasonably susceptible of proof under the Texas Rules of Civil Evidence, evidence not admissible thereunder may be admitted, except where precluded by statute, if it is of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs. sec.265.113. Additional Testimony. When it appears to be necessary to the administration of justice, the judge may permit additional evidence to be offered at any time. 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 August 31, 1995. TRD-9511344 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Discovery 30 TAC sec.sec.265.121-265.134 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.121. Discovery in Hearings Held under Subchapter F. (a) Except when otherwise ordered by the judge, discovery in hearings held under this subchapter will be separated by time and manner into three distinct periods. Within the time frame set for each period in this subsection, the judge shall have the discretion to set the duration of each discovery period. (1) First discovery period. The first discovery period shall extend 30 to 80 days from the date that jurisdiction is taken by SOAH. This period is reserved for the protestants' discovery from the applicant. The applicant may conduct limited discovery related to the nature of each protestant (including, for example, the type and date of organization, purpose, and number of members) and whether the source of funding is by a competitor of the applicant. (2) Second discovery period. The second discovery period shall extend 30 to 80 days from the end of the first discovery period. Discovery during this period shall consist of the following: (A) the protestant may discover from the staff; (B) the applicant may discover from the protestant and the staff; the number of interrogatories available to the applicant during the second discovery period shall be reduced by the number of interrogatories submitted during the first discovery period; and (C) the staff may discover from the protestant and the applicant. (3) Third discovery period. The third discovery period shall extend 20 to 45 days from the end of the second discovery period. During this period, any discovery by the protestant or the applicant from the staff shall be limited to the staff's position regarding the applicant's response, and the staff's position regarding the protestants' issues. Discovery from the applicant and the protestant shall be limited to the scope of the listed issues as provided in sec.265.104(b) of this title (relating to Discovery Schedule) and the applicant's response as provided in sec.265.104(d) of this title. The judge shall have discretion to limit or expand discovery in this period further in the interest of fairness. The judge shall identify which of the time periods listed in paragraphs (1) or (2) of this subsection applies to discovery for those parties not fitting into the categories discussed as appropriate. (b) Whenever discovery is sought of the staff of the executive director in any of the discovery periods, it shall be in accord with the following provisions. (1) Beginning at the time jurisdiction is taken, all parties shall have access to all unprivileged documents in the agency's files without the necessity of submitting an Open Records request or a Request for Production. It shall be the agency's responsibility to ensure that documents protected from discovery as provided for under law are removed from agency public files and that all assertions of privilege by the executive director relating to those agency files are made at the time jurisdiction is taken or other timely manner. (2) The executive director shall answer Interrogatories and Requests for Production during the second and third discovery periods. (3) The executive director shall be subject to depositions during the second and third discovery periods under the following conditions. (A) Each deposition shall be limited to a total of four hours. (B) Any party seeking to depose a staff witness shall attempt to set the time and date of the deposition through agreement with the staff. (C) The staff shall not be required to submit to a date for the deposition less than ten days from the date of the request. (D) The staff shall not be required to submit to a deposition any later than a date 20 days prior to the prehearing conference. (E) All depositions of staff witnesses shall be taken in Austin in one of the commission office buildings. (F) All of these requirements may be waived by agreement of the staff or by the judge on a showing of good cause. (c) Voluntary discovery may be sought at any time by any party. sec.265.122. Forms and Scope of Discovery; Protective Orders; Supplementation of Responses. (a) Forms of discovery. For purposes of hearings held under this subchapter, all forms of discovery are deemed compellable. Permissible forms of discovery for hearings under this subchapter include: (1) oral or written depositions of any party or nonparty; (2) written interrogatories; (3) requests of a party for admissions of facts and the genuineness or identity of documents or things; (4) requests and motions for production, examination, and copying of documents or other tangible materials; and (5) requests and motions for entry upon and examination of real property. (b) Scope of discovery. Except as provided in subsection (c) of this section, unless otherwise limited by order of the judge in accordance with these rules, the scope of discovery is as follows. (1) In general. Parties may obtain discovery regarding any matter which is relevant to the subject matter in the pending proceeding. It is not grounds for objection that the information sought will be inadmissible at hearing if the information sought appears to be reasonably calculated to lead to the discovery of admissible evidence. It is also not grounds for objection that an interrogatory propounded pursuant to sec.265.125 of this title (relating to Interrogatories to Parties) involves an opinion or contention that relates to fact or the application of law to fact, but the judge may order that such an interrogatory not be answered until after designated discovery has been completed or until a prehearing conference or other later time. It is also not grounds for objection that a request for admission propounded pursuant to sec.265.126 of this title (relating to Requests for Admissions) relates to statements or opinions of fact or of the application of law to fact or mixed questions of law and fact or that the documents referred to in a request may not be admissible at trial. (2) Documents and tangible things. A party may obtain discovery of the existence, description, nature, custody, condition, location, and contents of any and all documents (including papers, books, accounts, drawings, graphs, charts, photographs, electronic or videotape recordings, and any other data compilations from which information can be obtained and translated, if necessary, by the person from whom production is sought, into reasonably usable form) and any other tangible things which constitute or contain matters relevant to the subject matter in the proceeding. A person is not required to produce a document or tangible thing unless it is within the person's possession, custody, or control. Possession, custody, or control includes constructive possession such that the person need not have actual physical possession. As long as the person has a superior right to compel the production from a third party (including an agency, authority, or representative), the person has possession, custody, or control. The executive director and the public interest counsel of the commission are not required to amass, assemble, collect, compile, gather, and/or sort the materials described in this paragraph if those materials are readily available in the commission's records. (3) Land. (A) During the appropriate discovery period, a party may obtain a right of entry upon designated land or other property in the possession or control of a person upon whom a request or motion to produce is served when the designated land or other property is relevant to the application which is the subject of the hearing for the purpose of inspection and measuring, surveying, photographing, testing or sampling the property, or any designated object or operation thereon. This provision is not intended to affect any statutory rights authorizing access. If a person has a superior right to compel a third person to permit entry, the person with the right has possession or control. Upon request of the controller or possessor of the land, the judge may order that entry upon the land be subject to any existing safety regulations or protections of trade secrets or processes, and may impose other reasonable restrictions on this right as necessary. Unless otherwise ordered by the judge, the parties shall enter into a standard Agreement for Entry Upon Land which contains the following: (i) a release and indemnification provision; (ii) allowance for all parties to split samples; (iii) a provision that the controller of the land shall allow entry within a reasonable period of time after the request; and (iv) a provision that the controller of the land shall have the right to accompany the party entering the property. (B) The parties may request and the judge will rule on whether a party intending to take samples shall be required to reveal the types of samples and methodology and parameters of tests performed on those samples prior to or subsequent to entry upon land. (4) Potential parties and witnesses. A party may obtain discovery of the identity and location (name, address, and telephone number) of any potential party and of persons having knowledge of relevant facts. A person has knowledge of relevant facts when he or she has or may have knowledge of any discoverable matter. The information need not be admissible in order to satisfy the requirements of this subsection and personal knowledge is not required. (5) Experts and reports of experts. Discovery of the facts known, mental impressions, and opinions of experts, otherwise discoverable because the information is relevant to the subject matter in the pending proceeding, but which were acquired or developed in anticipation of trial and the discovery of the identity of experts from whom the information may be learned may be obtained only as follows. (A) General. A party may obtain discovery of the identity and location (name, address, and telephone number) of an expert who may be called as an expert witness, the subject matter of which the witness is expected to testify, the mental impressions and opinions held by the expert, and the facts known to the expert (regardless of when the factual information was acquired) which relate to or form the basis of the mental impressions and opinions held by the expert. The disclosure of the same information concerning an expert used for consultation and who is not expected to be called as an expert witness at trial is required if the consulting expert's opinion or impressions have been reviewed by a testifying expert. (B) Reports. A party may also obtain discovery of documents and tangible things, including all tangible reports, physical models, compilations of data, and other materials prepared by an expert or for an expert in anticipation of the expert's hearing and deposition testimony. The disclosure of material prepared by an expert used for consultation is required even if it was prepared in anticipation of trial if the consulting expert's opinions or impressions have been reviewed by a testifying expert. (C) Determination of status. The judge has discretion to compel a party to make the determination and disclosure of whether an expert may be called to testify within a reasonable and specific time. (D) Reduction of report to tangible form. If the discoverable factual observations, tests, supporting data, calculations, photographs, or opinions of an expert who will be called as an expert witness have not been recorded and reduced to tangible form, the judge may order these matters reduced to tangible form and produced within a reasonable time. (6) Statements. Any person, whether or not a party, shall be entitled to obtain, upon written request, his own statement previously made concerning the matter which is the subject of the hearing, or its subject matter, which is in the possession, custody, or control of any party. If the request is refused, the person may move for a judge's order under sec.265.141 of this title (relating to Abuse of Discovery; Sanctions). For the purpose of this paragraph, a statement previously made is: (A) a written statement signed or otherwise adopted or approved by the person making it; and (B) a stenographic, mechanical, electrical, or other type of recording, or any transcription thereof which is a substantially verbatim recital of a statement made by the person and contemporaneously recorded. (c) Exemptions. The following matters are protected from disclosure by privilege. (1) Work product. The work product of an attorney, subject to the exceptions of Texas Rules of Civil Evidence Rule 503(d), which shall govern as to work product as well as to attorney-client privilege; (2) Experts. The identity, mental impressions, and opinions of an expert who has been informally consulted or of an expert who has been retained or specially employed by another party in anticipation of, or preparation for hearing, or any documents or tangible things containing such information if the expert will not be called as an expert witness, except that the identity, mental impressions, and opinions of an expert who will not be called to testify as an expert and any documents or tangible things containing such impressions and opinions are discoverable if the consulting expert's opinion or impressions have been reviewed by a testifying expert; (3) Written statements. The written statements of potential witnesses and parties, when made in connection with, or in anticipation of, the prosecution, investigation, defense, or protest of the particular application or petition that is the subject of the proceeding, except that persons, whether parties or not, shall be entitled to obtain, upon request, copies of statements they have previously made concerning the application or petition or its subject matter and which are in the possession, custody, or control of any party. The term "written statements" includes: (A) a written statement signed or otherwise adopted or approved by the person making it; and (B) a stenographic, mechanical, electrical, or other type of recording, or any transcription thereof which is a substantially verbatim recital of a statement made by the person and contemporaneously recorded. For purposes of this paragraph, a photograph is not a statement. (4) Party communications. Communications between agents or representatives or the employees of a party to the hearing or communications between a party and that party's agents, representatives, or employees, when made in connection with the prosecution, investigation, defense, or protest of the particular application or petition that is the subject of the particular proceeding, or in anticipation of the prosecution, protest, or defense of any claims made in a part of the pending hearing. This exemption does not include communications prepared by or for experts that are otherwise discoverable. For the purposes of this paragraph, a photograph is not a communication. (5) Other privileged information; any matter protected from disclosure by any other privilege. Upon a showing that the party seeking discovery has substantial need of the materials and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means, a party may obtain discovery of the materials otherwise exempt from discovery by paragraphs (3) and (4) of this subsection. Nothing in this subsection shall be construed to render non-discoverable the identity and location of any potential party, any person having knowledge or relevant facts, any expert who is expected to be called as a witness during trial, or of any consulting expert whose opinions or impressions have been reviewed by a testifying expert. (d) Presentation of objections. Either an objection, a motion to compel, or a motion for protective order made by a party to discovery shall preserve that objection without further support or action by the party unless the objection or motion is set for special hearing and determined by the judge. At any reasonable time, any party may request a special hearing on any objection, motion to compel, or motion for protective order. The failure of a party to obtain a ruling prior to trial on any objection to discovery, motion to compel, or motion for protective order does not waive such objection or motion. In objecting to an appropriate request within the scope of subsection (b) of this section, a party seeking to exclude any matter from discovery on the basis of an exemption or immunity from discovery must specifically plead the particular exemption or immunity from discovery relied upon and at or prior to any special hearing, shall produce any evidence necessary to support such claim either in the form of affidavits served at least seven days before the special hearing or by testimony. If the judge determines that an in camera inspection and review by the judge of some or all of the requested discovery is necessary, the objecting party must segregate and produce the discovery to the judge in a sealed wrapper or by answers made in camera to deposition questions, to be transcribed and sealed in event the objection is sustained. When a party seeks to exclude documents from discovery and the basis for objection is undue burden, unnecessary expense, harassment or annoyance, or invasion of personal, constitutional, or property rights rather than a specific immunity or exemption, it is not necessary for the judge to conduct an inspection and review of the particular discovery before ruling on the objection. After the date on which answers are to be served, objections are waived unless an extension of time has been obtained by agreement or order of the judge or good cause is shown for the failure to object within such period. (e) Protective orders. On motion specifying the grounds and made by any person against or from whom discovery is sought under these rules, the judge may make any order in the interests of justice necessary to protect the movant from undue burden, unnecessary expense, harassment or annoyance, or invasion of personal, constitutional, or property rights. Insofar as the applicant is claiming confidentiality of any part of the permit application, the applicant shall request a protective order at the time that jurisdiction is taken. All other claims of confidentiality shall be handled as they arise, according to the timelines established under subsection (d) of this section. Unless amended by the judge, a standard order developed by SOAH shall be used. Motions or responses made under this section may have exhibits attached including affidavits, discovery pleadings, or any other documents. Specifically, the judge's authority as to such orders extends to, but is not limited by, any of the following: (1) ordering that requested discovery not be sought in whole or in part, or that the extent or subject matter of discovery be limited, or that it not be undertaken at the time or place specified; (2) ordering that the discovery be undertaken only by such method or upon such terms and conditions or at the time and place directed by the judge. (f) Duty to supplement. A party who has responded to a request for discovery that was correct and complete when made is under no duty to supplement his response to include information thereafter acquired, except the following shall be supplemented not less than 30 days prior to trial unless the judge finds that a good cause exists for permitting or requiring later supplementation. (1) A party is under a duty reasonably to supplement his response if he obtains information upon the basis of which: (A) he knows that the response was incomplete and incorrect when made; (B) he knows that the response, though correct and complete when made, is no longer true and complete and the circumstances are such that failure to amend the answer is in substance misleading. (2) If the party expects to call an expert witness when the identity or the subject matter of such expert witness' testimony has not been previously disclosed in response to an appropriate inquiry directly addressed to these matters, such response must be supplemented to include the name, address, and telephone number of the expert witness and the substance of the testimony concerning which the expert witness is expected to testify, as soon as is practical, but in no event less than 30 days prior to trial, except on leave of the judge. (3) In addition, a duty to supplement answers may be imposed by order of the judge or agreement of the parties, or at any time prior to trial, through new requests for supplementation or prior answers. (g) Discovery disputes. (1) Discovery motions. All discovery motions shall contain a certificate by the party filing same that efforts to resolve the discovery dispute without the necessity of judge intervention have been attempted and failed. (2) Motions to compel and for protective orders. Whenever a discovery dispute arises, the disputing party shall file a motion to compel or for protective order. Any response shall be filed within five working days of receipt. The response may be a showing of good cause for extra time to respond. The judge shall rule within five working days of the response. (3) Finality of judge's ruling. No discovery issues shall be certified to the commission. sec.265.123. Stipulations Regarding Discovery Procedure. Unless the judge orders otherwise, the parties may, by written agreement: (1) provide that depositions be taken before any person, at any time or place, upon any notice, and in any manner and when so taken may be used like other depositions; and (2) modify the procedures provided by these rules for other methods of discovery. An agreement affecting a deposition upon oral examination is enforceable if the agreement is recorded in the deposition transcript. sec.265.124. Discovery and Production of Documents and Things for Inspection, Copying, or Photography. (a) Any party may serve upon any other party a request: (1) to produce and permit the party making the request or someone acting on his behalf, to inspect, sample, test, photograph, and/or copy, any designated documents or tangible things which constitute or contain matters within the scope of and subject to the limitations of sec.265.122 of this title (relating to Forms and Scope of Discovery; Protective Orders; Supplementation of Responses) which are in the possession, custody, or control of the party upon whom the request is served; or (2) to permit entry upon designated land or other property in the possession or control of the party upon whom the request is served for the purpose of inspection and measuring, surveying, photographing, testing, or sampling the property or any designated object or operation within the scope of sec.265.122 of this title. (b) The request shall set forth the items to be inspected either by individual item or by category, and describe each item and category with reasonable particularity. The request shall specify a reasonable time, place, and manner for making the inspection and performing the related acts. (c) The party upon whom the request is served shall make the documents available in Texas and shall serve a written response which shall state, with respect to each item or category of items, that inspection or other requested action will be permitted as requested, and he shall thereafter comply with the request, except only to the extent that he makes objections in writing to particular items, categories or items, stating specific reasons why such discovery should not be allowed. (d) A true copy of the request and response, together with proof of the service thereof on all parties, shall be filed promptly with the judge by the party making it, except that any documents produced in response to a request need not be filed. (e) A party who produces documents for inspection shall produce them as they are kept in the usual course of business, or shall organize and label them to correspond with the categories in the request. The judge may require all documents to be produced in usable form, which may require production of computer disks. The judge may also require a party to provide reasonable indices to its documents or computerized information produced in response to discovery requests, and to maintain a log of documents produced. (f) Testing or examination shall not extend to destruction or material alteration of an article without notice, hearing, and prior approval by the judge. (g) In order to avoid unnecessary duplication, the judge shall, whenever convenient, group parties for document production. (h) The judge may determine on a case-by-case basis a reasonable allocation of costs associated with the production. (i) The request shall be served upon every party to the hearing. The party upon whom the request is served shall serve a written response and objections, if any, within 21 days after the service of the request. The time for making a response may be shortened or lengthened by the judge. (j) If objection is made to a request or to a response, either party may file a motion and seek relief pursuant to sec.265.122 of this title or sec.265.141 of this title (relating to Abuse of Discovery; Sanctions). sec.265.125. Interrogatories to Parties. (a) Any party may serve upon any other party written interrogatories to be answered by the party served, or, if the party served is a public or private corporation, or a partnership or association, or governmental agency, by an officer or agent who shall furnish such information as is available to the party. Upon request of the judge, a true copy of the interrogatories and the written answers or objections, together with proof of service, shall be filed promptly with the judge by the party making them, except that when an interrogatory is answered by reference as permitted in paragraph (2) of this subsection, the records so referenced need not be filed. (1) Service. When a party is represented by an attorney, service of interrogatories and answers to interrogatories shall be made on the attorney unless service upon the party himself is ordered by the judge. Copies of all interrogatories and answers to interrogatories shall be sent to every other party. (2) Scope. Interrogatories may relate to any matters which can be inquired into under sec.265.122 of this title (relating to Forms and Scope of Discovery; Protective Orders; Supplementation of Responses), but the answers, subject to any objections as to admissibility, may be used only against the party answering the interrogatories. Where the answer to an interrogatory may be derived or ascertained from public records, or from the business records of the party upon whom the interrogatory has been served or from an examination, audit, or inspection of such business records, or from a compilation, abstract, or summary based thereon, and the burden of deriving or ascertaining the answer is substantially the same for the party serving the interrogatory as for the party served, it is sufficient answer to such interrogatory to specify the records from which the answer may be derived or ascertained and, if applicable, to afford the party serving the interrogatory reasonable opportunity to examine, audit, or inspect such records and to make copies, compilations, abstracts, or summaries. The specification of records provided shall include sufficient detail to permit the interrogating party to locate and identify as readily as can the party served, the records from which the answers may be ascertained. (3) Discovery periods. The availability of interrogatories shall be limited according to the discovery period, as described in sec.265.121 of this title (relating to Discovery in Hearings held under Subchapter F). (A) In the first or second discovery period each party shall be allowed to serve one set of interrogatories, as permitted in Rule 168(5) of the Texas Rules of Civil Procedure. If the applicant has used interrogatories during the first discovery period, the interrogatories shall be considered as part of the total number of interrogatories the applicant is allowed during the second discovery period. (B) In the third discovery period, each party shall also be allowed a second set of 20 interrogatories. (b) Interrogatories may be served after a deposition has been taken, and a deposition may be sought after interrogatories have been answered, but the judge, on motion of the deponent or the party interrogated, may make such protective order as justice requires. (c) Unless other time limits are set by the judge or by agreement of the parties, the party upon whom the interrogatories have been served shall serve answers upon the party submitting the interrogatories within the time specified by the party serving the interrogatories, which specified time shall not be less than 21 days after the service of the interrogatories. The judge may enlarge or shorten the time for serving answers or objections. (d) The number of questions, including subsections, in a set of interrogatories served during the first or second discovery period shall be limited so as not to require more than 30 answers. In the second set of interrogatories allowed in the third discovery period, the interrogatories shall be limited so as not to require more than 20 answers. Each part of a compound question will be considered a separate question. No more than two sets of interrogatories may be served by a party to any other party, except by agreement or as may be permitted by the judge upon a showing of good cause. The judge may reduce or enlarge the number of interrogatories or sets of interrogatories if justice so requires. Furthermore, the judge may group parties specifically for discovery purposes, in order to limit the number of questions that must be answered by any party. In the event that parties are grouped, the judge may increase the allowable number of interrogatories beyond that specified in Rule 168(5) of the Texas Rules of Civil Procedure to the extent fairness requires. The provisions of sec.265.122 of this title are applicable for the protection of the party from whom answers to interrogatories are sought under this section. (e) The interrogatories shall be answered separately and fully in writing under oath. Answers to interrogatories shall be preceded by the question or interrogatory to which the answer pertains. True copies of the interrogatories, and answers and objections thereto, shall be served on all parties or their attorneys, and copies thereof shall be provided to any additional parties upon request. The answers shall be signed and verified by the person making them and the provisions of sec.265.63(c) of this title (relating to Affidavit by Representative) shall not apply. (f) A party may serve written objections to specific interrogatories or portions thereof. Objections must be served within 14 days of receiving the interrogatories. Answers only to those interrogatories, or portions thereof, to which objection is made, shall be deferred until the objections are ruled upon and for such additional time thereafter as the judge may direct. sec.265.126. Requests for Admissions. (a) Request for admission. (1) At any time after jurisdiction over the application or petition has been taken by the judge except as provided in sec.265.142 of this title (relating to Sanctions for Failure to Serve or Deliver Copy of Pleadings and Motions), a party may serve upon any other party a written request for the admission, for purposes of the pending proceeding only, of the truth of any matters within the scope of sec.265.122 of this title (relating to Forms and Scope of Discovery; Protective Orders; Supplementation of Responses) set forth in the request that relate to statements or opinions of fact or of the application of law to fact, including the genuineness of any documents described in the request. Except by agreement of the parties or upon leave of the judge, a party may serve only one set of admissions upon any other party. (2) Copies of the documents shall be served with the request unless they have been or are otherwise furnished or made available for inspection or copying. Whenever a party is represented by an attorney of record, service for a request for admissions shall be made on his attorney unless service on the party himself is ordered by the judge. Upon request of the judge, a true copy of a request for admissions or of a written answer or objection, together with proof of the service thereof, shall be promptly filed with the judge by the party making it. (3) Each matter of which an admission is requested shall be separately set forth. The judge may specify the dates by which the admission may be served, answered, specifically denied, or objected to as provided in this section. The matter is admitted without necessity of a judge's order unless, within 14 days after service of the request, or within such time as the judge may allow, or as otherwise agreed by the parties, the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or by his attorney. (4) If objection to a requested admission is made, the reason therefore shall be stated. (5) The answer to a requested admission shall specifically deny the matter or set forth in detail the reasons that the answering party cannot truthfully admit or deny the matter. A denial shall fairly meet the substance of the requested admission, and when good faith requires that a party qualify his answer or deny only a part of the matter of which an admission is requested, he shall specify so much of it as is true and qualify or deny the remainder. (6) An answering party may not give lack of information or knowledge as a reason for failure to admit or deny unless he states that he has made reasonable inquiry and that the information known or easily obtainable by him is insufficient to enable him to admit or deny. (7) A party who considers that a matter of which an admission is requested presents a genuine issue for hearing may not, on that ground alone, object to the request; he may, subject to the provisions of sec.265.141 of this title (relating to Abuse of Discovery; Sanctions), deny the matter or set forth reasons why he cannot admit or deny it. (b) Effect of admissions. (1) Any matter admitted under this section is conclusively established as to the party making the admission unless the judge, on motion and for good cause shown, permits withdrawal or amendment of the admission. (2) Subject to the provisions of sec.265.122 of this title governing duty to supplement discovery responses, the judge may permit withdrawal or amendment of responses and deemed admissions upon a showing of good cause for such withdrawal or amendment if the judge finds that the parties relying upon the responses and deemed admissions will not be unduly prejudiced and that the presentation of the merits of the proceeding will be subserved thereby. sec.265.127. Depositions. (a) Type of deposition. The types of depositions allowed shall include those under of the Texas Rules of Civil Procedure. The deposing party shall have the option of selecting the type of deposition, but in all cases a recording shall be made. When a party seeks a deposition that is not transcribed by a court reporter, any other party may, at its own cost, provide for a court reporter. (b) Deposition witnesses. The judge may order that all deposition witnesses be made available in Texas. At the time of deposition the witness shall be prepared to testify about those issues and opinions for which the witness is identified. sec.265.128. Issuance of Subpoena or Commission to Take Deposition. A subpoena or commission to take deposition shall be issued under sec.265.84 of this title (relating to Issuance of Subpoena or Commission to take Deposition). sec.265.129. Sanctions for Failure to Comply with Subpoena or Commission to Take Deposition. If a person fails to comply with a subpoena or commission to take deposition, the commission or the requesting party may seek enforcement under the APA, sec.2001.201. sec.265.130. Non-Stenographic Recording; Deposition by Telephone. (a) Non-stenographic recording. Any party may cause the testimony and other available evidence at a deposition upon oral examination to be recorded by other than stenographic means, including videotape recordings, upon leave of the judge, and the non-stenographic recording may be presented at trial in lieu of reading from a stenographic transcription of the deposition, subject to the following. (1) Any party intending to make a non-stenographic recording shall give five day's of notice to all other parties by mail, return receipt requested, and shall specify in said notice the type of non-stenographic recording which will be used. (2) After notice is given, any party may make a motion for relief under sec.265.122 of this title (relating to Forms and Scope of Discovery; Protective Orders; Supplementation of Responses). If a special hearing session is not held prior to the taking of the deposition, the non-stenographic recording shall be made subject to the judge's ruling at a later time. (3) Any party shall have reasonable access to the original recording and may obtain a duplicate copy at his own expense. (4) The expense of a non-stenographic recording shall not be taxed as costs, unless before the deposition is taken, the parties so agree, or the judge so orders, for good cause shown, on motion and notice. (5) The non-stenographic recording shall not dispense with the requirement of a stenographic transcription unless the judge shall so order on motion and notice before the deposition is taken and such order shall make such provision concerning the manner of taking, preserving, and filing the non-stenographic recording as may be necessary to assure that the recorded testimony will be intelligible, accurate, and trustworthy. Such order shall not prevent any party from having stenographic transcription made at his own expense. In the event of an appeal, the non-stenographic recording shall be reduced to writing at the expense of the party making the recording. (b) Deposition by telephone. The parties may stipulate in writing, or the judge may, upon motion, order that a deposition be taken by telephone. For the purposes of this section and sec.265.12(a) of this title (relating to Issuance of Subpoena or Commission to Take Deposition) and sec.265.141 of this title (relating to Abuse of Discovery; Sanctions), a deposition taken by telephone is taken in the district and at the place where the deponent is to answer questions propounded to him. sec.265.131. Failure of Party or Witness to Attend or to Serve Subpoena; Expenses. (a) Failure of party giving notice to attend. If the party giving the notice of the taking of an oral deposition fails to attend and proceed therewith and another party attends in person or by attorney pursuant to the notice, the judge may recommend that the commission order the party giving the notice to pay to such other party the reasonable expenses incurred by him and his attorney in attending, including reasonable attorney fees. (b) Failure of witness to attend. If a party gives notice of the taking of an oral deposition of a witness and the witness does not attend because of the fault of the party giving the notice, if another party attends in person or by attorney because he expects the deposition of that witness to be taken, the judge may recommend that the commission order the party giving the notice to pay to such other party the reasonable expenses incurred by him and his attorney in attending, including reasonable attorney fees. sec.265.132. Deposition Examination, Cross-Examination, and Objections. (a) Written cross-questions on oral examination. At any time before the expiration of ten days from the date of the service of the notice to take oral deposition, any party, in lieu of participating in the oral examination may serve written questions on the party proposing to take the deposition, who shall cause them to be transmitted to the officer authorized to take the deposition, who shall propound them to the witness and record the answers verbatim. (b) Oath. Every person whose deposition is taken upon oral examination shall be first cautioned and sworn to testify the truth, the whole truth, and nothing but the truth. (c) Examination. The witness shall be carefully examined; his testimony shall be recorded at the time it is given and thereafter transcribed by the officer taking the deposition or by some person under his personal supervision. (d) Objections to testimony. The officer taking the oral deposition shall not sustain objections made to any of the testimony or fail to record the testimony of the witness because an objection is made by any of the parties or attorneys engaged in taking the testimony. Any objections made when the deposition is taken shall be recorded with the testimony and reserved for the action of the judge before whom the cause is pending. Absent express agreement recorded in the deposition to the contrary: (1) objections to the form of questions or the nonresponsiveness of answers are waived if not made at the taking of an oral deposition; and (2) except as provided in paragraph (1) of this subsection, or unless otherwise provided by agreement of the parties recorded by the officer in the deposition transcript, the judge shall not be confined to objections made at the taking of testimony. sec.265.133. Submission to Witness; Changes; Signing. (a) When the testimony is fully transcribed, the deposition officer shall transmit or provide the original deposition transcript to the witness, or if the witness is a party with an attorney of record, to the attorney of record, for examination and signature by the witness before any officer authorized to administer an oath, unless such examination and signature are waived by the witness and by the parties. (b) No erasures or obliterations of any kind are to be made to the original testimony as transcribed by the deposition officer. Any changes in form or substance which the witness desires to make shall be furnished to the deposition officer by the witness, together with a statement of the reasons given by the witness for making such changes. The changes and the statement of the reasons for the changes shall be attached to the deposition by the depositions officer. The deposition transcript and any changes shall then be subscribed by the witness under oath, before any officer authorized to administer an oath, unless the parties by stipulation waive the signing or the witness is ill or cannot be found or refuses to sign. (c) If the witness does not sign and return the original deposition transcript within 20 days of its submission to him or his counsel of record, the deposition officer shall sign a true copy of the transcript and state on the record the fact of the waiver of examination and signature or of the illness or absence of the witness or the fact of the refusal to sign together with the reason, if any, given therefor. The copy of the deposition transcript may then be used as fully as though signed, unless on motion to suppress, the judge determines that the reasons given for the refusal to sign require rejection of the deposition in whole or in part. sec.265.134. Use of Deposition Transcripts in Commission Proceedings. (a) Use of deposition transcript in same proceeding. (1) Use of depositions. At trial or upon a hearing on a motion, any part or all of a deposition taken in the same proceeding, insofar as admissible under the Texas Rules of Civil Evidence, may be used by any person for any purpose against any party who was present or represented at the taking of the deposition or who had reasonable notice thereof. Further, the Texas Rules of Civil Evidence shall be applied to each question and answer as though the witness were then present and testifying. Depositions shall include the original transcripts or any certified copies thereof. Unavailability of the deponent is not a requirement for admissibility. (2) Included within meaning of "same proceeding." Substitution of parties pursuant to these rules does not affect the right to use depositions previously taken. (3) Parties joined after deposition taken. If one becomes a party after a deposition is taken and has an interest similar to that of any party described in paragraphs (1) or (2) of this subsection, the deposition is admissible against him if he has had a reasonable opportunity, after becoming a party, to redepose the deponent, and has failed to exercise that opportunity. Any existing deposition may be used by parties joined after the deposition is taken for any purpose against any party in accordance with paragraphs (1) and (2) of this subsection. (b) Use of deposition transcript taken in different proceeding. At trial or upon the hearing of a motion or an interlocutory proceeding before a judge, any part or all of a deposition taken in a different proceeding may be used subject to the provisions and requirements of the Texas Rules of Civil Evidence. Further, the Texas Rules of Civil Evidence shall be applied to each question and answer as though the witness was then present and testifying. (c) Motion to suppress. When a deposition transcript has been delivered by the deposition officer and notice of delivery given at least one entire day before the day on which the case is called for trial, errors and irregularities in the notice of delivery, and errors in the manner in which the testimony is transcribed or the deposition transcript is prepared, signed, certified, sealed, endorsed, delivered, or otherwise dealt with by the deposition officer are waived, unless a motion to suppress the deposition transcript or some part thereof is made and notice of the written objections made in the motion is given to every other party before trial commences. 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 August 31, 1995. TRD-9511345 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Sanctions 30 TAC sec.sec.265.141-265.145 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5. 105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.141. Abuse of Discovery; Sanctions. (a) Motion for sanctions or order compelling discovery. A party, upon reasonable notice to all other parties and to all other persons affected thereby, may apply for sanctions or an order compelling discovery as follows. (1) Motion. According to subparagraphs (A)-(D) of this paragraph, the discovering party may move for an order compelling a designation, an appearance, an answer or answers, or inspection or production in accordance with the request, or apply to the judge for imposition of any sanction authorized by subsection (b)(2) of this section without the necessity of first having obtained a judge's order compelling such discovery: (A) if a party or other deponent which is a corporation or other entity fails to designate the persons or persons to testify on the deponent's behalf, and, if the deponent so desires, the matters on which each person designated will testify; or (B) if a party, or other deponent, or a person designated to testify on behalf of a party or other deponent fails: (i) to appear before the officer who is to take his deposition, after being served with a proper notice; or (ii) to answer a question propounded or submitted upon oral examination or upon written questions; or (C) if a party fails: (i) to serve answers or objections to interrogatories after proper service of the interrogatories; or (ii) to answer an interrogatory; or (iii) to serve a written response to a request for inspection after proper service of the request; or (iv) to respond that discovery will be permitted as requested or fails to permit discovery as requested in response to a request for inspection; (D) if a party fails to comply with any person's written request for the person's own statement. (2) Depositions upon oral examination. When taking a deposition on oral examination, the proponent of the question may complete or adjourn the examination before he applies for an order. (3) Protective orders. If the judge denies the motion in whole or in part, the judge may make an appropriate protective order. (4) Material misrepresentations. Material misrepresentations, including misleading statements or omissions of material information in any application material, or in response to a discovery request or in testimony, constitutes a violation and may be punished by the judge with the full range of sanctions, including a recommendation of denial of the relief requested in the hearing by the responsible party. (5) Evasive or incomplete answer. For purposes of this section, an evasive or incomplete answer is to be treated as a failure to answer. (b) Failure to comply with order or with discovery requests. (1) Sanctions by court. If a deponent fails to appear or to be sworn or to answer a question after being directed to do so by a judge, the failure may be appealed to district court by the movant as provided by law. (2) Sanctions by judge and commission. If a party or an officer, director, or managing agent of a party or a person designated under subsection (a)(1) of this section to testify on behalf of a party fails to comply with proper discovery requests or to obey an order to provide or permit discovery, including an order made under subsection (a) of this section, the judge may impose any of the authorized sanctions or he or she may, after notice and hearing, make such orders, or recommendations to the commission, in regard to the failure as are just, and among others, the following: (A) a judge's order disallowing any further discovery of any kind or of a particular kind by the disobedient party; (B) a judge's order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order; (C) a judge's order refusing to allow the disobedient party to support or oppose designated claims, or prohibiting him or her from introducing designated matters in evidence; (D) a judge's order striking out pleadings, or parts thereof, or staying further proceedings until the order is obeyed. The commission may issue an order dismissing, with or without prejudice, the application, petition, or proceedings or any part thereof; and (E) a judge's order charging all or any part of the expense of discovery against the offending party or its representatives. (c) Abuse of discovery process in seeking, making, or resisting discovery. If the judge finds a party is abusing the discovery process in seeking, making, or resisting discovery or if the judge finds that any interrogatory or request for inspection or production is unreasonably frivolous, oppressive, or harassing, or that a response or answer is unreasonably frivolous or made for the purposes of delay, then the judge, or the commission may, after notice and hearing, impose any authorized sanction or recommend that the commission dismiss the proceedings. Such order of sanction shall be subject to review on appeal when the commission's order becomes final. (d) Failure to comply with requests for admissions. (1) Deemed admission. Each matter of which an admission is requested shall be deemed admitted unless, within the time provided for in sec.265.126 of this title (relating to Requests for Admission), the party to whom the request is directed serves upon the party requesting the admissions a sufficient written answer or objection in compliance with the requirements of sec.265.126 of this title, addressed to each matter of which an admission is requested. For purposes of this section, an evasive or incomplete answer may be treated as a failure to answer. (2) Motion. The party who has requested the admission may move to determine the sufficiency of the answers or objections. Unless the judge determines that an objection is justified, the judge may order that an answer be served. If the judge determines that an answer does not comply with the requirements of sec.265.126 of this title, the judge may order either that the matter be admitted or that an amended answer be served. (e) Failure to respond to or supplement discovery. A party who fails to respond to or supplement his response to a request for discovery shall not be entitled to present evidence which the party was under a duty to provide in a response or supplemental response or to offer the testimony of an expert witness or of any other person having knowledge of discoverable matter, unless the judge finds that good cause, sufficient to require admission, exists. The burden of establishing good cause is upon the party offering the evidence and good cause must be shown in the record. sec.265.142. Sanctions for Failure to Serve or Deliver Copy of Pleadings and Motions. If any party fails to serve on or deliver to the other parties a copy of any pleading, plea, motion, prefiled testimony or prefiled objections, or other application for a judge's order, the judge may, in his discretion, on notice and hearing: (1) order all or any part of such document stricken; or (2) direct that such party shall not be permitted to present grounds for relief, protest, or defense contained therein. sec.265.143. Failure to Identify Witnesses. A party shall be barred from calling a witness who has not been identified pursuant to sec.265. 106 of this title (relating to Identification of Witnesses). sec.265.144. Failure to Identify Testimony. Absent good cause, a witness shall be barred from testifying about matters which were not identified by the sponsoring party in its witness list and amendments thereto, and/or in that witness' prefiled testimony, when election to prefile testimony has been noticed by the sponsoring party or when prefiled testimony has been directed by the judge. sec.265.145. Barring Exhibits. Absent good cause under sec.265. 104(i)(2) of this title (relating to Discovery Schedule and Freezing the Process for Hearings Conducted Pursuant to this Subchapter), an exhibit shall not be accepted into the record which was not offered at the prehearing conference. 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 August 31, 1995. TRD-9511346 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter G. Post-Hearing Procedures 30 TAC sec.sec.265.151-265.166 The new sections are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.151. Pleadings Prior to Proposal for Decision. Before the proposal for decision is issued, briefs or proposed findings of fact may be filed only when permitted or requested by the judge. sec.265.152. Judge's Proposal for Decision. (a) Judge's proposal for decision. After closing the hearing record, the judge will file a written proposal for decision with the chief clerk within 30 working days and will send a copy by certified mail to each party. If the judge is unable to file the proposal within the 30 days, the judge shall request an extension from the commission by filing a request with the chief clerk. Neither the judge's failure to request an extension, the commission's failure to grant the requested extension, nor the judge's failure to file the proposal within the 30-day or extended period shall in any way affect the validity of the judge's proposal for decision or the commission's jurisdiction, consideration, or action relative to the proposal for decision. (b) Judge's proposal for decision: adverse to a party. A written proposal for decision shall be filed by the judge who conducted the hearing or by a substitute judge who has read the record. If the proposal for decision is adverse to a party to the proceeding, it shall contain a statement of the reasons for the proposal as well as findings of fact and conclusions of law which support the proposal. If any party has filed proposed findings of fact upon request and by leave of the judge in accordance with sec.265.73 of this title (relating to Submittal of Findings of Fact and Conclusions of Law), the judge shall include with his proposal for decision recommended rulings on all findings of fact so proposed. Where more than one judge has been assigned to hear a particular proceeding, the presiding judge will issue the proposal for decision and the other assigned judge or judges may file comments thereto. (c) Judge's proposal for decision: not adverse to any party. If the proposal for decision is not adverse to any party to the proceeding, the judge may informally dispose of the matter by proposing to the commission an order which need not contain findings of fact, conclusions of law, or reasons for the proposal. If the proposal for decision is not adverse to any party and a permit is to be issued, the judge need not propose an order to the commission. sec.265.153. Waiver of Right to Review Judge's Proposal. Any party may waive the right to review and comment upon the judge's proposal for decision. The waiver shall be either in writing or stated on the record at the hearing. sec.265.154. Pleadings Following Proposal for Decision. (a) Pleadings. Unless right of review has been waived, any adversely affected party may, within ten days after the date of issuance of the proposal for decision, file exceptions or briefs. Proposed findings of fact may be filed when permitted or requested by the commission. Any replies to exceptions, briefs, or proposed findings of fact shall be filed within 20 days after the date of issuance of the proposal for decision. (b) Amended and supplemental pleadings. Unless otherwise provided in these sections, the Texas Rules of Civil Procedure pertaining to amended and supplemental pleadings in trials before the district courts of this state shall apply in hearings before the commission. (c) Motions. A motion, unless made during a hearing, shall be made in writing, shall set forth the relief or order sought, and shall be timely filed with the chief clerk. Any reply to the motion shall be timely filed with the chief clerk. Unless otherwise directed by the commissioners, motions based on matters which do not appear of record must be supported by affidavit. When necessary in the judgment of the commissioners, a hearing will be held to consider any motion. (d) Change of filing deadlines. The general counsel may change the deadlines to file pleadings following the proposal for decision. A party requesting a change must file a written request with the chief clerk, and must serve a copy on the general counsel, the judge, and the other parties. The request must explain that the party requesting the change has contacted the other parties, and whether the request is opposed by any party. The request must include proposed dates (preferably a range of dates) and must indicate whether the judge and the parties agree on the proposed dates. sec.265.155. Judge May Amend Proposal for Decision. The judge may amend the proposal for decision pursuant to exceptions, replies, or briefs submitted by the parties without the proposal for decision again being served on the parties. sec.265.156. Scheduling Commissioners' Meetings. (a) The chief clerk, in coordination with the judge, shall schedule motions by parties requiring commission action and the presentation of the proposal for decision. The judge, when transmitting the proposal for decision, shall notify the parties of the date of the commissioner's meeting and the deadlines for the filing of exceptions and replies. The general counsel, either by agreement of the parties and the judge, or on the general counsel's own motion, may reschedule the presentation of the proposal for decision. The chief clerk shall send notice of the rescheduled meeting date to the parties no later than ten days before the rescheduled meeting. (b) Consistent with notices required by law, the commissioners may consolidate related matters if the consolidation will not injure any party and may save time and expense or otherwise benefit the public interest and welfare. (c) The commissioners may sever issues in a proceeding or hold special hearings on separate issues if doing so will not injure any party and may save time and expense or benefit the public interest and welfare. sec.265.157. Oral Presentation Before the Commissioners. In proceedings where a judge has held a public hearing and has issued a proposal for decision or other report to the commissioners, all oral presentations before the commissioners shall be limited to five minutes each, excluding time for answering questions, unless the chairman establishes other limitations. Before the commissioners' meeting the general counsel may alot time for oral presentations. Oral presentations and responses to questions shall be directed to the commissioners. sec.265.158. Conduct and Decorum in Commissioners' Meetings and Hearings. (a) The chairman, or in his or her absence, the acting chairman, shall preside over all meetings and hearings of the commission and have control of the floor. (b) Participants shall not approach the commission's bench without first obtaining leave from the chairman, and must never lean on or go behind the bench. (c) Participants should anticipate any need to set up or move furniture, appliances, or easels, and shall make advance arrangements with the chief clerk. (d) Participants should remain seated except to address the commission or to appropriately handle documents, exhibits or physical evidence. (e) Participants, except commission personnel, shall address the commission from the podium. (f) Participants shall not ask argumentative questions, but may ask questions for informational or clarification purposes only. sec.265.159. Remand to Judge. The commission may remand any proceeding to a judge with instructions as to the subject matter of further hearings, if any, and the judge's duties in preparing supplemental materials or revised orders for the commission's final adoption. sec.265.160. Decision. (a) Final decision. The commission shall make its final decision upon the expiration of 20 days or later, following service of the judge's proposal for decision, unless the parties have waived review under sec.265.153 of this title (relating to Waiver of Right to Review Judge's Proposal). The final decision, if adverse to any party, shall include findings of fact and conclusions of law separately stated. If any party has filed proposed findings of fact at the request of the judge in accordance with sec.265.73 of this title (relating to Submittal of Findings of Fact and Conclusions of Law), the commission will include in its final decision a ruling on the proposed findings of fact, unless waived by the party. (b) Prompt final decision. The commission's final decision customarily will be rendered within 60 days after the date the hearing is finally closed. In a case heard by a judge, a longer period of time may be necessary in order to present the matter to the commission for final decision. If additional time is likely to be required, that fact shall be announced by the judge at the conclusion of the hearing. sec.265.161. After Public Hearing Before the Full Commission-Pleadings Prior to Final Decision. In matters heard before a majority of the commission, briefs or proposed findings of fact may be filed when permitted or requested by the commission. The general counsel shall set the deadlines for filing such documents. sec.265.162. After Public Hearing Before the Full Commission-Final Decision. The commission shall by written order make its final decision which, if adverse to any party, shall include findings of fact and conclusions of law separately stated. If any party filed proposed findings of fact at the commission's request, the commission will include in its final decision a ruling on the proposed findings of fact, unless waived by the party. sec.265.163. Motion for Rehearing. (a) Filing motion. Except as provided by the APA, a motion for rehearing is a prerequisite to an appeal. The motion shall be filed in writing with the chief clerk within 20 days after the date the party or his attorney of record is notified of the final decision or order. A party or attorney of record is presumed to have been notified on the date that the final decision or order is mailed by first-class mail. On or before the date of filing of a motion for rehearing, a copy of the motion shall be mailed or delivered to all parties with certification of service furnished to the commission. The motion shall contain the following information: (1) the name and representative capacity of the person filing the motion; (2) the style and official docket number assigned by SOAH, and official docket number assigned by the commission; (3) the date of the final decision or order; and (4) a concise statement of each allegation of error. (b) Reply to motion for rehearing. A reply to a motion for rehearing must be filed with the chief clerk within 30 days after the date a party or his attorney of record is notified of rendition of the final decision or order. A party or attorney of record is presumed to have been notified on the date that the final decision or order is mailed by first-class mail. (c) Ruling on motion for rehearing. (1) Upon the request of the general counsel or a commissioner, the motion for rehearing will be scheduled for consideration during a commissioners' meeting. Unless the commission rules on the motion for rehearing within 45 days after the date the party or his attorney of record is notified of rendition of the final decision or order, the motion is overruled by operation of law. (2) A motion for rehearing may be granted in whole or in part. When the motion for rehearing is granted, the final decision or order is nullified. The commission may reopen the hearing to the extent it deems necessary. Thereafter, the commission shall render a final decision or order as required by these sections. (d) Modification of time limits. The time limits specified in this section may be modified as follows: (1) the commission or the general counsel may extend the period of time for filing motions for rehearing and replies and for taking action on the motions so long as the period for taking agency action is not extended beyond 90 days after rendition of the final decision or order; or (2) in the event of an extension, the motion for rehearing is overruled by operation of law on the date fixed by the order, or in the absence of a fixed date, 90 days after the date of the final decision or order; or (3) by agreement of the parties with the approval of the commission. sec.265.164. Decision Final and Appealable. A decision or order of the commission is final, in the absence of a timely motion for rehearing, on the expiration of the period for filing a motion for rehearing. A decision or order of the commission is final and appealable on the date of rendition of the order overruling the motion for rehearing or on the date the motion is overruled by operation of law. sec.265.165. Appeal of Final Decision. (a) File petition. A person affected by a final decision or order of the commission may file a petition for judicial review within 30 days after the decision or order is final and appealable. (b) The record. The record in a contested case shall include the following: (1) all pleadings, motions, and intermediate rulings; (2) evidence received or considered; (3) a statement of matters officially noticed; (4) questions and offers of proof, objections, and rulings on them; (5) summaries of the results of any conferences held before or during the hearing; (6) proposed findings, exceptions, and briefs; (7) any decision, opinion, or report by the officer presiding at the hearing; (8) prefiled testimony; and (9) the final order and all interlocutory orders. sec.265.166. Costs of Record on Appeal. A party who appeals a final decision in a contested case shall pay all costs of preparation of the original or a certified copy of the record of the agency proceeding that is required to be transmitted to the reviewing court. A charge imposed as provided by this section is considered to be a court cost and may be assessed by the court in accordance with the Texas Rules of Civil Procedure. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511347 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Subchapter H. Expiration 30 TAC sec.265.170 The new section is adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361. 024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.265.170. Expiration. This chapter will expire May 31, 1996. 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 August 31, 1995. TRD-9511348 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 11, 1995 For further information, please call: (512) 239-1966 Chapter 267. Procedures During Public Hearing 30 TAC sec.sec.267.1-267.26 The Texas Natural Resource Conservation Commission (TNRCC) adopts the repeal of sec.sec.267.1-267.26, concerning the TNRCC procedural rules. The repeals are adopted without changes to the proposed text as published in the July 28, 1995, issue of the Texas Register (20 TexReg 5601). The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting and Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051-382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice, which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6 which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not a found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requestor should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24 regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new paragraph to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263.26(2)(F) (now (2)(B)(vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B) (vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue, but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27, regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-by-case decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend the executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a cross-reference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43, which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511334 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 28, 1995 For further information, please call: (512) 239-1966 Chapter 269. Procedures After Public Hearings Before a Hearings Examiner 30 TAC sec.sec.269.1-269.11 The Texas Natural Resource Conservation Commission (TNRCC) adopts the repeal of sec.sec.269.1-269.11, concerning the TNRCC procedural rules. The repeals are adopted without changes to the proposed text as published in the July 28, 1995, issue of the Texas Register (20 TexReg 5601). The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting and Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice, which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6 which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not a found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requester should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24 regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new subsection to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263.26(2)(F) (now (2)(B)(vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B) (vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27, regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-by-case decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend the executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a cross-reference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43, which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511335 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 28, 1995 For further information, please call: (512) 239-1966 Chapter 271. Procedures After Public Hearing Before the Full Commission 30 TAC sec.271.1, sec.271.2 The Texas Natural Resource Conservation Commission (TNRCC) adopts the repeal of sec.271.1 and sec.271.2, concerning the TNRCC procedural rules. The repeals are adopted without changes to the proposed text as published in the July 28, 1995, issue of the Texas Register (20 TexReg 5601). The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting and Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6 which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not a found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requester should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24, regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new subsection to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263.26(2)(F) (now (2)(B)(vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B) (vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27, regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-by-case decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend the executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a cross-reference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43, which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511336 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 28, 1995 For further information, please call: (512) 239-1966 Chapter 273. Procedures After Final Decision 30 TAC sec.sec.273.1-273.8 The Texas Natural Resource Conservation Commission (TNRCC) adopts the repeal of sec.sec.273.1-273.8, concerning the TNRCC procedural rules. The repeals are adopted without changes to the proposed text as published in the July 28, 1995, issue of the Texas Register (20 TexReg 5601). The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting and Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051-382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice, which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6 which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not a found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requester should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24 regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new subsection to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263.26(2)(F) (now (2)(B)(vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B) (vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27, regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-by-case decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend the executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a crossreference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43, which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. The repeals are adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511337 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 28, 1995 For further information, please call: (512) 239-1966 Chapter 337. Enforcement Rules The Texas Natural Resource Conservation Commission (TNRCC) adopts amendments to sec.sec.337.3, 337.8, and 337.9, the repeal of sec.337.4, new sec.337. 4, amendments to sec. sec.337.21, 337.24, 337.27, 337.28, 337.30, 337.32-337.34, 337.36-337.45, 337.47, 337.48, 337.50-337.57, and new sec.337.31, concerning the TNRCC procedural rules. Sections 337.3, 337.4, 337.8, 337.9, 337.27, 337. 31, 337.32, 337.40, and 337.43 are adopted with changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5166). Sections 337.21, 337.24, 337.28, 337.30, 337.33, 337.34, 337. 36-337.39, 337.41, 337.42, and 337.44-337.57 and the repeal of sec.337.4 are adopted without changes. New sec.337.80 is being withdrawn by the commission. The commission staff requested the Texas Register to republish the entire adopted chapters, including sections that were adopted without changes to the published proposed rules, in order to provide the reader the complete adopted rules. As explained in the preamble to the proposed rules, this rulemaking project concerns the commission's procedural rules, and is intended to implement recent legislation in Senate Bills (SB) 12, 741, and 1546. SB 12 directs the State Office of Administrative Hearings (SOAH) to conduct contested case hearings (other than hearings before one or more commissioners). SB 741 authorizes the commission to delegate to the executive director the authority to act on uncontested applications. SB 1546 requires the commission to adopt rules concerning whether a person is an "affected person" who is entitled to request a hearing and participate in a hearing. As part of the project the commission has attempted to reorganize its procedural rules into a more logical format. The commission limited the scope of review of this project so that the new rules could be finally adopted by September 1, 1995, which is the effective date of SB 12 and SB 1546. The commission intends that this "Phase I" review will be followed by "Phase II," which will cover a more deliberate and in-depth evaluation of the procedural rules. With the exception of the rules in Chapter 337, the rules adopted in Phase I will expire on May 31, 1996. The deadline ensures that the commission will move forward with the Phase II project. A public hearing was held on August 10, 1995, where one person presented testimony. The person also submitted written comment during the comment period. A second public hearing was scheduled for August 17, 1995, however, no person appeared or requested to submit testimony. The following organizations and individuals commented on the proposed rules: Amoco Corporation; Browning-Ferris Industries; Brown McCarroll & Oaks Hartline; Clark, Thomas & Winters; Gardere & Wynne, L.L.P.; Harris County; Henry, Lowerre, Johnson, Hess & Frederick; Houston Lighting and Power; Lower Colorado River Authority; Lloyd, Gosselink, Fowler, Blevins & Mathews, P.C.; Law Offices of Locke Purnell Rain Harrell; Texas Mid-Continent Oil and Gas Association; Thompson & Knight; TU Services; and Vinson & Elkins. A commenter generally suggested the need to codify informal precedent believed to be followed by the Office of Hearing Examiners. The examiners were polled, as suggested by the commenter, and the rules appear to codify all precedent currently observed. One commenter proposed revising sec.261.1 by modifying the definitions of "executive director" and "general counsel" by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel to delegate matters to their respective staff. Several commenters noted that sec.261.17(e), which equates time of filing of a document with receipt by the chief clerk was unclear and could create problems. One commenter proposed the revision of sec.261.17(e), regarding time of filing documents, by clarifying that receipt by the chief clerk will be as evidenced by the date stamp affixed on the document by the chief clerk's office. The commission agrees that this proposal will help avoid confusion; furthermore, to avoid the inequity that may arise if the transmittal of a mailed document is delayed between the TNRCC mail room and the chief clerk's office, the commission adopts revisions to proposed sec.261.17(e) which clarify that the time of filing documents is upon receipt by the chief clerk as evidenced by the date stamp affixed to the document by the chief clerk's office or by the date stamp affixed to the document or envelope by the commission mail room, whichever is earlier. Several commenters proposed revising sec.261.17(g) in order to allow a SOAH judge discretion to disallow non-compliant filings. The commission agrees with this proposed revision because it will promote the efficient administration of the hearings process and has incorporated the change in the adopted rule. One commenter proposed revising sec.261.17(h) to require a showing of just cause before modification of filing requirements by a judge, the commission, or the general counsel in order to provide predictability and consistency in commission filing procedures. The commission does not agree that the proposed rule will result in unpredictable or inconsistent filing requirements and therefore does not adopt this proposed revision. One commenter suggested that a provision in the enforcement procedure rules should be added to Chapter 261, so that the provision applies to all commission contested cases. In the enforcement rules, sec.337.27(a) (now sec.337. 4(l)) provides that the deadline to file a document is extended three days if service of notice of the deadline is by mail or by fax. The commission agrees that its ultimate goal should be consistent procedural rules for all contested cases. However, the scope of this rulemaking project is to implement the new legislation and to provide for a general reorganization of procedure rules. The provision in the enforcement rules, which comes from the Texas Rules of Civil Procedure, was adopted in June 1995 and has yet to endure the "test of time." The commission will revisit the issue in the Phase II rulemaking project, and will adopt the provision for all contested cases or delete it. One commenter suggested the amendment of sec.261.18(d) to clarify whether the 5:00 p.m. service deadline for facsimile transmission applies to the start of the transmission or the completion of the transmission. The commission has not adopted this revision because the proposed rule regarding service by facsimile transmission is consistent with Rule 21a of the Texas Rules of Civil Procedure. Several commenters suggested that sec.261.18(d) be revised to require all documents served by facsimile to be followed with service by mail or hand delivery. In allowing documents to be served by facsimile, the commission is following the lead of the Texas Rules of Civil Procedure. Those rules do not require supplemental service by mail or hand delivery. If, while working on Phase II, the commission learns that many documents sent by facsimile are not being received, it may reconsider this rule. One commenter suggested that sec.261.19, concerning the computation of time, should be amended to add the special provision from the Texas Rules of Civil Procedure on calculating deadlines that are five days or less. The proposed section is the same as the current sec.263.14. The commission believes the issue should be revisited in the Phase II rulemaking project. The next comments concern Chapter 263, Subchapter A, on the commission's delegation of authority to the executive director to issue final approval of permits. A commenter suggested that the subchapter did not go far enough to ensure consistent procedure among the commission's various programs on processing applications. The commission agrees that further consistency should be explored. However, in this rulemaking project, the commission attempted to codify existing procedure, including the differences among the program areas. This issue will be explored in Phase II. A commenter generally critiqued the commission's notice of application process as part of her comments on the proposed rules on delegation. The commission agrees that a fresh look needs to be given to the entire notice issue and will undertake that review in Phase II. The commission revised sec.263.1(b)(10) to clarify the scope of delegation concerning water utility matters. Water utility matters may be filed under Texas Water Code, Chapter 11 as well as or in conjunction with Chapters 12 and 13, and so the commission added a reference to Chapter 11 to clarify that all water utility matters may be delegated under Chapter 263. A commenter recommended an amendment to sec.263.1(b), concerning the commission's delegation of authority to the executive director to issue final approval of district matters. The commenter recommended the scope of delegation be expanded beyond the approval of the creation of a district or the issuance of bonds. The commission agrees the scope of delegation should be expanded so that the executive director will have authority to issue final approval of not only the creation of a district and the issuance of bonds, but also a broad array of other approvals a district must obtain from the commission. The broader delegation is reasonable because the other approvals are generally less significant than approving the creation of a district or the issuance of bonds. The delegation will facilitate the review of district applications, a great number of which are uncontested. The commission also agrees this section should be amended to include the delegation of authority to approve applications filed under Texas Water Code, Chapters 4966. Chapter 49 was created by SB 626, and contains many provisions previously found in Chapters 50-66. The delegation also will cover the few remaining provisions in the older chapters. The rule as adopted allows a broad delegation to the executive director, but requires the commissioners to issue any final approval on several types of difficult matters, including the approval of a district to proceed in bankruptcy. Several commenters suggested that sec.263.1(c) contained a typographical error and that the section should be read as a declaration of negative application. The commission has corrected the error. A commenter suggested that the commission delete sec.263.1(c)(2), thus allowing the executive director to approve temporary permits. The commission agrees that this may be an appropriate delegation, but, since it is not part of current practice, it will be considered in Phase II. A commenter suggested revising sec.263.1(c)(4) to make it consistent with sec.263.8(a), by adding the phrase "or other approvals under the Texas Health and Safety Code, sec.sec.382.051-382.055." The commission believes that sec.263.1(c) (4) and sec.263.8(a) address different issues; the commission has added language clarifying the relationship between the rules. A commenter proposed deleting sec.263.2(a)(3), which allows the executive director to approve applications only when they do not raise new issues that require interpretation of commission policy. The commission disagrees, because this language tracks the current commission resolution. This issue may be considered further in Phase II. Some commenters suggest that sec.263.2(a)(4) and (5) should be revised so that the executive director can approve an application even if there is a protest (but not a request for hearing) by the public or the public interest counsel. Another commenter suggested that the public interest counsel should not be authorized to contest an otherwise uncontested matter and proposed revising sec.263.2(a)(4) to require that any objections raised by the public interest counsel be based upon statutory or administrative criteria and supported by sworn testimony or other competent evidence. The commission will maintain the rule in its current form because it reflects current practice, which allows the executive director to approve an application only if it is uncontested. The provision essentially allows the public or the public interest counsel to bring a permit application to the attention of the commissioners when the executive director's staff has already completed its technical review of the application. The commission intends that the procedure will allow for the quick resolution of the matter by the commissioners. The commission will reevaluate the rule in Phase II to ensure this is occurring. A commenter suggested revising sec.263.2(a)(5) to allow the executive director to approve an application if the commission has denied all requests for hearing. This issue also concerns sec.263.9, concerning air quality permits. The commission does not adopt the proposed revision because under the adopted procedure, the commissioners will decide if a hearing request is valid. The commission anticipates that if the commissioners determine that all hearing requests on an application are invalid, the commissioners will approve the application at that time. The commission believes this is the quickest procedure to resolve such applications. The commission also notes that SB 741 allows the commission to delegate only "uncontested" matters to the executive director. A commenter proposed a revision to sec.263.2(a)(5) to insert the phrase "that comply with sec.263.22" after "no timely protests or requests for hearing" in order to correspond appropriately with Chapter 263, Subchapter B. The commission disagrees in that applications on which there are apparently inadequate hearing requests will be considered by the commissioners rather than by the executive director. 263.3 is ambiguous because it does not clearly state when notice of executive director action is published in the Texas Register . The rule reflects current practice, which calls for the chief clerk to publish notice in the Texas Register at the same time as other notice of application requirements are met. For many types of applications, this means the chief clerk publishes notice in the Texas Register concurrently with the applicant's publication of notice in a newspaper. The commission has amended the section to clarify that the date of publication in the Texas Register will not affect the determination of any deadline to request a hearing. Such deadline is determined by statute, other commission rule, and the completion of other notice requirements. Several commenters recommended changes to sec.263.6, concerning the procedure on motions for reconsideration of an approval issued by the executive director. A commenter recommended that the persons who may file a motion should be limited to those who requested a hearing. A commenter recommended that a person who files a motion for reconsideration must have a justiciable interest. Commenters recommended that the motion must identify the basis of the motion, or that "any objection" should not be a sufficient basis for filing a motion for reconsideration. These issues also affect sec.263.12, concerning air quality permits. The commission will maintain the rule in its current form because it reflects current practice. The provision essentially allows the public to bring a permit application to the attention of the commissioners for 20 days after the date the executive director issues approval. The commission points out that during the period the commission considers a motion for reconsideration, sec.263.4(b) provides that the approval issued by the executive director will remain in effect. Concerning the standards by which the commission will review the motion, the commission will rely on the law and commission policy which applies to the application. The commission will investigate the commenters' suggestions during Phase II. A commenter questioned the procedure where a person may file a motion for reconsideration, yet only the applicant is mailed notice of the executive director's approval of the application. Another commenter suggested removing the second sentence of sec.263.6(b), under which objections, protests, or requests for hearing filed after the executive director approves an application will be treated as motions for reconsideration. Again, these procedures are current practice, so the commission will not change them now. Also, the procedures, which may seem out of place taken alone, are part of an overall simple procedure which allows a person to bring a permit application to the attention of the commissioners. A late request for hearing is treated as if it is a motion for reconsideration so that there is no need to return a request for hearing to a requester so that it can be mailed back to the commission with modifications and a new title, "motion for reconsideration." The significance of a motion for reconsideration is, however, different than that of a request for hearing. The executive director has already issued the permit and it remains in effect while any motion for reconsideration is considered. The commission will evaluate whether the permit was issued according to rules, statutes, and commission policy, and the commission may deny the motion for reconsideration by not acting on it. Concerning the commenter's comments on notice, the commission believes it should not create new notice requirements in addition to the one Texas Register notice in the rules. Several commenters proposed revising sec.263.6(d) to clarify that a motion for rehearing is not necessary if a motion for reconsideration is deemed overruled because the commissioners have not acted on it. The commission agrees with these comments and has revised the section to state that when a motion for reconsideration is deemed overruled, the commission decision is final and subject to judicial review. A commenter suggested adding language to sec.263.6 which states that when a motion for reconsideration is filed, the permit or approval issued by the executive director shall remain in effect pending commission action on the motion. The commission agrees and has added the language. The commenter also suggested language that a commission order modifying the executive director's approval would take effect only when the order became final and appealable, thus allowing the executive director's approval to stand until the expiration of the time period for a motion for rehearing. However, the commissioners should retain the discretion to determine when their orders take effect. The commission has deleted a similar provision from sec.263.12(e), concerning air quality permits for the same reason. The commission revised sec.263.7 on the eligibility of the executive director to issue final approval of permits to clarify the guidelines. The adopted rule uses the language found in the Code of Federal Regulations concerning the requirements for a state program to obtain delegation of the National Pollutant Discharge Elimination System. The language is more specific than the proposed rule, which tracked the language in HB 2015. The commission revised sec.263.8 and sec.263.12 so that Chapter 263 does not cover the delegation of authority to the executive director to approve federal operating permits. The subject is covered by 30 TAC Chapter 122. A commenter suggested revising sec.263.9(a)(4) to reflect that when parties have been named for a hearing, only they, and not all who requested a hearing need to agree to the executive director's final approval of an application. The commission agrees there should be a specific rule on air permitting cases concerning settlements when parties already have been named. Similar to the other provisions in this section, the rule allows a remand only if there is a written agreement of all persons in attendance at the preliminary conference and named parties, and in attendance and who requested party status. Again, the commission notes that SB 741 allows the commission to delegate only uncontested matters to the executive director. The commission also has revised the parallel provision in sec.263.2(a)(5). A commenter suggested adding language to sec.263.12 to allow the public interest counsel to file a motion for reconsideration of the executive director's action on an uncontested air quality permit application. The commission will not adopt the suggestion because it does not reflect current practice. The commission may review the issue in Phase II. The next comments concern Chapter 263, Subchapter B, on the evaluation of a request for hearing. Several commenters argued that the rules will limit public participation in the permitting process. They suggest that the rules establish an informal process so that public comment could be given by persons other than parties in a contested case. The commission agrees that public input is important and believes that these rules, although emphasizing contested case procedures, do allow for and encourage public input. The notice of application routinely gives the name and phone number of the permit engineer so that the public can offer comments and ask questions concerning the application. The revised sec.263.23, discussed as follows, requires that all requests for hearing be referred to the commission's alternative dispute resolution (ADR) director so that a negotiated settlement may be investigated. Routing hearing requests through the ADR Section should encourage informal resolution of disputed permitting issues. Also, sec.263.22 requires the chief clerk to inform persons requesting hearings of commenting and other ADR procedures. Section 265.62 allows persons who are not parties to offer public comment and register protests which become part of the file. The commission revised sec.263.21(b) to clarify the procedure for evaluating a request for hearing concerning a utility matter. The commission does not intend to make broad changes in procedure through this Phase I project, and accordingly has revised the section to show (as is current practice) that the executive director's staff evaluates requests for hearing concerning utility matters. The delegation of this duty to the executive director is reasonable, because under the relevant statutes the determination as to whether to schedule a hearing is fairly formulaic. For example, for rate cases the statute calls for a hearing if a certain number or percentage of customers request a hearing. Several commenters questioned whether the requirements for requesting a hearing, including the deadline, should be left to the discretion of the person drafting the notice of application, as apparently permitted by sec.263. 22(b)(4) and (c). The commission does not intend to have the person drafting the public notice add major substantive requirements on their own. However, different statutes and rules require specific notice provisions which would be impracticable to comprehensively list here. Concerning the deadline to file a request, the commission has amended the rule to clarify that the deadline is as determined by law and commission rule, and that such deadline will be specified in the notice. A commenter suggested that sec.263.22(b)(2) be amended to require that a personal justiciable interest need only be "potentially" affected by the application to be a valid request. The commission disagrees, and believes it should track the statutory language of SB 1546. The commission, in response to an informal comment, amended sec.263.22 so that the content of a request for hearing must substantially comply with the requirements of the section. However, even though requests for hearing do not have to show absolute compliance with the requirements of sec.263.22, the requesters must ultimately show they are entitled to a hearing. The commission adopts a revised sec.263.23(e) and (f) which allows the executive director, the applicant, and the public interest counsel the opportunity to respond and comment on a request for hearing. The requester then has an opportunity to respond. As sec.263.23(h) makes clear, the commission will grant a request for hearing only if it "meets the requirements of this subchapter." A commenter recommended adding a statement to sec.263.22 and sec.263.24, that if a hearing request does not follow the requirements of sec.263.22 for the content of a written request, then the person will not be allowed to participate in the contested case hearing. Another commenter suggested that the hearing request should contain the specific basis of the requesting person's challenge to the application together with all of the information set out in sec.sec.263.25-265.27. Another commenter proposed a revision to sec.263.22(b) (2) to require a requester to not only identify their personal justiciable interest but also to explain that interest, to clarify that it is not sufficient to merely recite the factors listed in sec.263.25(b) or sec.263.27. The commission does not adopt the suggestions for the reasons explained in the preceding paragraph. The commission will continue to scrutinize this issue in Phase II. A commenter proposed revising sec.263.22 by adding sec.263.22(e) to allow the chief clerk to "weed out" protests that do not facially comply with the requirements of the rules and to allow the executive director to issue final approval of permits that do not receive any compliant requests for hearing. The current practice does not allow for the chief clerk to make such decisions, and so the commission will not make the change. SB 12 allows the executive director to approve only uncontested permits. The commission is concerned as to whether the law allows the chief clerk to make this determination. The commission will note, however, that staff has contemplated the commenter's idea but has not a found a clear test to identify requests that "do not facially comply." The adopted procedure under sec.263.23 calls for a request to be quickly considered by the commissioners, which should avoid potential inconvenience that results from not giving greater authority to the chief clerk. The commission will revisit the issue in Phase II. Several commenters had general concerns about sec.263.23 and the procedure published in the proposed rules where the general counsel makes a preliminary decision on a request for hearing. The commission has continued to evaluate the issue of the proper role for the general counsel since the time of publication. During the interim the commission has become concerned that the proposed role for the general counsel may create the appearance that the general counsel is a participant in the case or a decision maker. This could impair his role as a counselor to the commissioners. A commenter suggested that having the commissioners act on hearing requests would create the appearance of impropriety, and that a judge should make such decisions. The commenter suggested that the judge could convene a prehearing conference to evaluate both the requests for hearing and party status. The commission believes there is no appearance of impropriety by having the commissioners act on requests for hearing. The commission does not adopt the proposed procedure because the commission desires to evaluate the validity of requests for hearing before the applicant and other persons must commit resources to litigating a case before a SOAH judge. The commission has considered whether to create a greater role for ADR by encouraging its use in the early stages of a dispute. ADR could facilitate public participation without the high costs associated with a contested case hearing. The commission concludes that ADR should be encouraged by making the process available to the persons involved in every dispute that relates at least in part to a request for hearing. While ADR will be available, ADR will only be used where the persons who are in conflict are willing to participate. Given the commission's limited resources, the commission expects that the ADR director will agree to work with the disputants only if all persons are prepared to negotiate. Another commenter proposed that the commission implement a commissioners/ADR procedure for reviewing hearing requests. The commenter recommended the commission: 1) reduce the general counsel's involvement to that of an advisor instead of a decision maker; 2) limit the proceedings before the commission to the pleadings and preclude oral testimony outside the scope of the pleadings; 3) set timelines for review/referral to ADR; 4) set the standards under which the commission will review requests for hearing; 5) set the standards and procedure for referral to SOAH concerning the eligibility of persons for party status; and 6) set an express procedure for the applicant to concede the standing issue. The commission responds by adopting a revised sec.263.23 which establishes a procedure whereby the commissioners make the decision on the adequacy of hearing requests and which allows for opportunity for ADR. The adopted rule does not contemplate the ADR staff making decisions or recommendations regarding the adequacy of hearing requests so that they may maintain their role as negotiators. The commission agrees with and adopts suggestion numbers 1, 5, and 6. The commission does not adopt suggestion number 2 because although generally the commission will make its determination based solely upon the pleadings and not consider oral argument, additional flexibility may sometimes be needed. The commission does not adopt suggestion number 3 because the rules do not provide for ADR review of the adequacy of requests for hearing, and because sec.263.23(d) implicitly requires that any mediation will occur within 30 days after the end of the notice period or the notice of technical completeness, whichever is later. The commission does not adopt suggestion number 4, but will revisit the issue during Phase II. A commenter suggested that, upon challenge to a request for hearing, the requester should be required to submit affidavits or other competent evidence to support the request. The commission agrees that, under some circumstances, a requestor may be required to submit other competent evidence and has added SB 1546's provision on competent evidence to sec.263.24. The commission will continue to consider the issue of "competent evidence" in Phase II. Several commenters have questioned whether the determination of the validity of a hearing request is separate and distinct from the issue of "standing" to be named a party at the preliminary hearing. Because the notice of application and the notice of hearing are separate and distinct, the commission believes that the hearing request and the party status issues are and should remain distinct inquiries. The commission's granting of a hearing request is a preliminary matter which is sufficient to cause the dispute to be referred to SOAH. After the notice of hearing is published and persons appear at the preliminary hearing and request to be named parties, the other parties are free to challenge the granting of party status. The judge, using the criteria set out in sec.265.61 (which adopts the criteria in sec.263.24), is free to make an independent determination based upon the evidence and arguments presented at the hearing. Several commenters suggested that if a person did not request a hearing, the person could not be named a party at the preliminary hearing. Additionally, a commenter suggested that if the person who requested the hearing fails to attend the preliminary hearing, no other persons attending could be named parties and the matter would be deemed uncontested. Such substantive changes from current practice are beyond the scope of this rulemaking. A commenter criticized the provision, now in sec.263.23(h), which allows the commissioners to act on an application at the time it denies a request for hearing concerning the application. This procedure is current practice and expedites the review of applications for which no valid hearing request is received. A commenter suggested the statutory requirement from SB 1546 that a hearing request be supported by "competent evidence" be added to sec.263.24. The commission agrees and has incorporated the language in this section. One commenter proposed a revision to sec.263.24, pertaining to substantive requirements for hearing requests, to require the request to comply with the requirements of sec.263.22 and to be supported by uncontroverted competent evidence. The commission responds that the requirements of sec.263.22 are procedural requirements, whereas the requirements of sec.263.24 are substantive requirements. To avoid confusion that may result from combining the substantive and procedural requirements, the commission has not adopted the proposed change. The commission also responds that it partly agrees with the second suggested change to sec.263.24 regarding competent evidence and therefore, has adopted a revision to sec.263.24, tracking the language of SB 1546. The commission disagrees with the second suggested revision to sec.263.24 to the extent that it goes over and beyond the requirements of SB 1546 and would require support by uncontroverted competent evidence. The commission adopts sec.263.25, which lists factors to be used to determine an affected person. The factors are broad and do not distinguish between different types of applications. In Phase II, the commission will evaluate whether to adopt more specific factors. Several commenters suggested giving the judge more or less authority on granting party status. Other comments concerned how the commissioners' decision to grant a request for hearing should affect the determination of party status at the hearing. The commission believes the decisions should be separate and independent, but agrees that the judge should use the same criteria to determine party status as the commissioners use to determine whether an affected person has requested a hearing. While the same criteria apply, different and additional information may be available to the judge and different individuals may be seeking party status. The commission accordingly adopts a revised sec.265.61 (on party status) which refers to sec.263.25. The commission notes that the Texas Supreme Court has held that standing is a jurisdictional question. A party may request a certified question on jurisdiction. See sec.265.71. The commission will continue to consider this rule in Phase II. Several commenters requested clarification of sec.263.25 (which implements SB 1546), concerning the status of governmental entities including state agencies and political subdivisions. One commenter pointed out the numerous Texas statutes under which both the TNRCC and other governmental entities exercise authority over natural resource and pollution issues. They argue that other governmental entities have a legitimate stake in TNRCC proceedings when other governmental agencies also have authority over the subject matter. The commission has amended sec.263.25 to clarify that governmental entities including local governments may be affected persons. Several commenters recommended amending sec.263.25(b)(3) (now (c)(3)), concerning one of the factors used to determine whether a requester is an affected person. The commission agrees the statement "whether a reasonable nexus exists between the interest claimed and the activity regulated" could invite legal arguments borrowing from Texas' complicated case law on forum non conviens, which was not intended. The commission has replaced the word "nexus" with "relationship." The commission responded to an informal comment by amending sec.263.25(b) (now (c)) to include the phrase "but not limited to" to clarify that the list of relevant factors in determining whether a requester is an affected person is not limited to those specifically listed in sec.263.25(b). However, one commenter suggested deleting the words "including the following" in order to limit the scope of the factors considered to those that are listed. The commission rejects this latter suggestion because the commission's intent is to consider all relevant factors. Several commenters requested a clarification of sec.263.25(b)(2) (now (c)(2)) on the factor "distance restrictions or other limitations imposed by law on the affected interest." This paragraph shows the commission will consider factors specified by law. For example, if there is an application for a standard exemption for a concrete batch plant a person is not entitled to a hearing if he or she resides farther than 440 yards from the proposed plant (Texas Health and Safety Code, sec.382.058(c)). One commenter argued that one of the factors used to determine an affected person, "the use of the impacted natural resource by the affected person," is redundant and should be deleted. The commission disagrees that this provision, found in sec.263.25(b)(5) (now (c)(5)), is redundant. The provision restates past practice where the commission has allowed a person to request a hearing on an application when the person did not own property adjacent to a proposed facility but did use the resources affected by the facility. For example, the gulf coast shrimping industry has participated in hearings concerning the water discharges from commercial shrimp farms. The shrimpers did not own property adjacent to the facilities, but they did use and were concerned about the Laguna Madre, into which the facilities discharge and which is the habitat of native shrimp. The new sec.263.25(a), which is taken from SB 1546, suggests this analysis of "affected person" should continue. The section provides that an affected person is one who has a personal justiciable interest related to a legal right, duty, privilege, power, or economic interest affected by an application. The new law does not require a person to own property adjacent to the facility. A commenter suggested adding a new paragraph to sec.263.25(b) (now (c)), to state that if one party clearly has standing, the judge should not be precluded from allowing other parties to participate in the hearing provided that they do not frustrate the hearing. The commission does not adopt the suggested addition because both current commission practice and SB 1546 focus on whether the person seeking party status has a personal justiciable interest. A commenter suggested that the words "for non-air quality permits" be added to sec.263.26(1) for clarification. The section has been amended by adding the words "for permits other than air quality permits." A commenter suggested that the commission should recognize a legislative courtesy to request hearings concerning all permitting matters, such as is created by statute concerning air quality matters. Absent specific statutes, the commission declines to add such a rule. A commenter proposed revising sec.263.26 to add requirements that a request: (1) be made by an affected person; (2) identify a legitimate contested issue; and (3) is supported by sworn testimony or other competent evidence. The commission believes the amendment may confuse the separate issues that a request must be made by an affected person and must be reasonable. A commenter questioned the extent of the change in the test used to determine the reasonableness of a request for hearing concerning an air quality permit. This (sec.263.26(2)(A)) is taken from SB 1125. A commenter requested clarifying sec.263.26(2)(A) on hearing requests on an air permit application when there is no proposed increase in allowable emissions. The commission will maintain the current language, which is taken from SB 1125. A commenter suggested the commission clarify or delete sec.263. 26(2)(F) (now (2)(B)(vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commission agrees the factor, concerning the impact of emissions on the person requesting a hearing, is much like the "affected person" criterion. However, the commission believes the factor, which is taken from the current sec.263.37, should be retained and that any changes in the factor will be analyzed in Phase II. Two commenters suggested the commission amend sec.263.26(2)(F) (now (2)(B)(vi)), concerning a factor used to determine the reasonableness of hearing requests on air quality permits. The commenters proposed that the factor be amended to read: "[t]he extent to which the person requesting a hearing is likely to be impacted by the emissions increase ." They argue that this will clarify the rule on evaluating hearing requests for an application that does not propose an increase in allowable emissions. The commission disagrees. Section 263.26(2)(A) is clear that when an applicant seeks an amendment, modification, or renewal of an air quality permit that will not result in an increase in allowable emissions and will not result in the emission of an air contaminant not previously emitted, then a request for hearing by an affected person will be considered unreasonable unless there is a significant ongoing compliance problem. 263.26 omitted the provision in SB 1125 regarding the commission's authority to determine a request is reasonable if the facility has a compliance history containing violations that are unresolved and constitute a recurring pattern of egregious conduct demonstrating a consistent disregard for the regulatory process, including the failure to make a timely and substantial attempt to correct violations. The commission has amended the rule to include this provision. Several commenters proposed revising sec.263.27 by generalizing the requirements for a request for hearing by a group or association by evaluating standing for these entities based upon the common law of Texas as construed by Texas courts in civil suits. This rule language would be substituted for the listed factors in the rule. The factors are based upon the Texas Supreme Court's opinion in Texas Association of Business v. Texas Air Control Board, 852 S.W.2d 440 (Texas 1993). A commenter also suggested adding a requirement that an association seeking standing have written authority from the governing body of the association, and adding a requirement that associations designate a specific individual to whom all official communications and documents can be sent. The commission responds that the requirements in sec.263.27 are taken verbatim from the court case and that specific requirements in the rules, as opposed to generalized language, more effectively places groups and associations on notice of the requirements. The commission does not adopt the second recommendation because whether an association has written authority from its governing body is not a standing issue but rather a separate issue that can be litigated at the contested case hearing. Finally, the commission agrees with the suggestion that an association should designate a specific individual for service. The commission has included this requirement in sec.263.22(b)(1). A commenter suggested that an association that requests a hearing should be required to explain how it meets the three-part Texas Association of Business test, set out in sec.263.27, in its initial hearing request. The commission agrees that an association must demonstrate that it meets the test, but will require the demonstration on an "as requested" basis. The rule has been amended accordingly. A commenter proposed the revision of sec.263.27 to clarify the extent to which associations may request a hearing when there is a "competitor situation. " The rule does state that one or more members of the association must have individual standing for the association to request a hearing. Whether an individual has standing in a competitor situation must to some extent depend upon the interpretation of sec.263.25(a), which is from SB 1546. The section requires that the requestor have a personal justiciable interest, which may be an economic interest affected by the application. The commission believes the answer to the commenter's question may require an analysis of not only the federal cases he cites, but also the new statute. The commission notes that the commenter did not recommend revised language, and concludes that this question should be made a subject of Phase II. A commenter suggested the addition of language that would require the commission to deny a hearing to a group or association where it was demonstrated that an individual had been enrolled in the group for the sole purpose of conferring standing upon the group. The commission declines to adopt the proposal because it does not reflect the Texas Association of Business criteria nor reflect current practice. Several commenters had suggestions and questions about the list of issues that the executive director would prepare and submit to SOAH under sec.263.28. The commission has moved this provision to sec.263.23(j) so the commissioners can fulfill the SB 12 requirement. The commission will most likely submit a general description of issues and areas to be considered, such as "does this hazardous waste application meet all statutory and regulatory requirements and will the public health and safety be protected?" The judge will narrow the issues and focus the hearing. One commenter suggested that sec.263.28 clarify that the chief clerk would receive direction from the general counsel to refer a matter to SOAH. Under the rules adopted, such direction will be made by the commissioners. The commission deleted part of sec.263.28, which called for the chief clerk to mail notice of the referral of a case to SOAH. There is no current practice to mail notice of the referral of a case. The interested persons will learn of the referral either through the issuance of an order at a commissioners' meeting or by notice of the hearing. The commission will review this procedure over the next few months and may address this issue in Phase II. The commission also deleted the parallel provision in sec.337.3. A commenter suggested the commission define and clarify the use of several words in the procedural rules, including "contested case," "contested case hearing," "evidentiary hearing," "proceeding," and "matter." The commission will review the issue in Phase II. A commenter proposed modifying the definitions of "executive director" and "general counsel" in sec.265.1 by inserting the words "in writing" after "any authorized individual designated." The commission disagrees with this suggestion because the proposed change would unduly limit the flexibility of the executive director and general counsel in delegating matters to their respective staff. A commenter suggested the amendment of sec.265.23 to clarify that an attorney representing a party must be licensed to practice law in Texas. However, the commission's current practice does not require that a party be represented by a lawyer, much less that the lawyer be licensed in Texas. Accordingly, the commission has amended the section to clarify the requirements for a "representative." Another commenter proposed to delete the ambiguous reference to "canons of ethics" and instead refer to the codes of conduct which apply to Texas attorneys. The commission agrees with the commenter that the reference to the canons of ethics is confusing. The commission amended the rule so that it refers to the Texas Disciplinary Rules of Professional Conduct as well as the Texas Lawyer's Creed. The commission added "[u]nless required for the disposition of an ex parte matter authorized by law,..." to sec.265.26, concerning ex parte communications. The phrase is taken from the ex parte provision in the Texas Administrative Procedure Act, and was interpreted by the courts in County of Galveston v. Texas Department of Health, 724 S.W.2d 115 (Texas Appellate-Austin, 1987, writ ref'd n.r.e.). In this case, the court determined that the Administrative Procedure Act authorized a commissioner to seek the legal advice of the general counsel concerning a contested case without allowing the parties the opportunity to participate in the communication. The commission added the provision to its rule so that it is clear the commissioners may individually seek the legal advice of the general counsel concerning contested cases. A commenter suggested the clarification of sec.265.26 that no party may directly or indirectly communicate ex parte with any staff member assigned to assist a judge under sec.265.26(b). The commission agrees with the recommendation and has made the change. A commenter proposed a revision to sec.265.27, regarding the burden of proof to reflect a recent bill before the Legislature which did not become law. The commission will not adopt the revision because it does not reflect current practice. A commenter proposed deleting sec.265.30(b)(5), which authorizes a judge to require an applicant to pay for a transcript up front if a hearing is expected to last three days or more. The commission considers this change unnecessary since the commission retains the authority to allocate costs among the parties in the final order. Several commenters suggested that sec.265.41, concerning informal proceedings should be clarified. The commission agrees and has amended the rule to clarify that the judge may remand a settled case to the executive director for final disposition. A commenter proposed revisions to sec.265.42, regarding the withdrawal of an application, by either deleting the section entirely or by restricting the authority to require the applicant to reimburse other parties for all costs incurred in the permitting process to only those circumstances where the applicant has engaged in intentional misrepresentation or shown bad faith. The commission will evaluate the proposed revision in Phase II. A commenter objected to sec.265.43, which allows a judge to hold a conference before naming parties in a contested case. The commenter argued that persons who might be affected by the actions taken at the conference, but not present, would be adversely affected by the decisions without adequate opportunity to participate. The rule reflects current practice at the agency, and is taken from current sec.265.6 and sec.265.7. The published notice currently provides this opportunity to participate. A commenter suggested adding language to sec.265.45 that would make it clear that the chief clerk is responsible for filing and docketing of pleadings. The suggested changes are already in proposed sec.261.16. One commenter suggested adding language to sec.265.46 to make it clear that acceptance of a pleading by the chief clerk is not a determination upon the acceptability of the pleading. This concept is already contained in sec.261. 17(f) and does not need to be repeated. Therefore, this subsection has been deleted. A commenter suggested that a conflict exists between sec.265.61 and sec.265. 62. The commission disagrees that these provisions are in conflict. However, this issue will be revisited in Phase II to ensure that no confusion exists in the rule. A commenter suggested that sec.265.61(a) should require that a person meet the factors required for an "affected person" in order to become a party. The commission agrees and has made the change. A commenter suggested that sec.265.61(a) should be changed to allow parties to be designated only on the first day of hearing. The commenter also recommended that the word "extenuating" be changed to "extraordinary" circumstances. This change is outside the scope of the current rulemaking, however the commission will evaluate the suggestions in Phase II. A commenter recommended deleting sec.265.69, regarding evidence. The comment is outside the scope of the current rulemaking, however, the commission will evaluate the recommendation in Phase II. Several commenters suggested changing sec.265.71 to ensure that applicants can challenge the judge's decision on party status before going through the hearing process. The commission believes that it should continue the current practice, which allows challenges to party status through a certified question. A commenter suggested that the filing deadlines for certified questions under sec.265.71 were too short for meaningful response. The commission believes that the deadlines are adequate because the parties will have sufficient warning and notice at the hearing of any action by the judge to certify a question. A commenter recommended that oral argument under sec.265.72 be limited to parties. The commission does not adopt the recommendation because the examiner currently makes a case-by-case decision on allowing oral argument. A commenter suggested including a reference to the discovery privilege in the Texas Environmental, Health and Safety Audit Privilege Act, HB 2473, in sec.265.82(b), concerning discovery. At this time, the commission is developing guidelines and procedures for the implementation of the requirements of this law. Therefore, the commission will evaluate the suggestion in Phase II after a final decision on the implementation of HB 2473 has been made. A commenter suggested the addition of a provision similar to those in the federal and Texas rules of civil procedure which requires a good faith basis for filing pleadings. The commission will evaluate the proposal in Phase II. A commenter pointed out that SB 12 allows a judge to impose a sanction by charging discovery expenses against an offending party. The commission has added this provision to sec.265.88(c) (and to sec.265.141) on discovery sanctions. The commenter also argued that the commission does not have authority to allow a sanction that prejudices an application, as is specified under sec.265.88(c)(1). The commission will review the issue in Phase II. Several commenters made numerous substantive comments on Chapter 265, Subchapter F, the "freeze rules." The commission believes that these comments offer valuable insights. However, since this rulemaking is intended to be non- substantive, those comments will be considered in Phase II. A commenter believes that the proposed sec.265.101(a) will expand the scope of the "freeze rules" beyond their current applicability. This section is not intended to expand the reach of these rules, but rather to adapt the process of determining whether the freeze rules apply to hearings conducted by SOAH. A commenter suggested that sec.265.101(a) be clarified to indicate that the judge is not bound by the notice of hearing provision that the "freeze" rules would be applied to the case. The commission agrees, and has clarified the rule. The commission declines to adopt several other commenters' recommendations on this issue. 265.129 on sanctions is confusing because the word "commission" appears three times with two separate meanings. The commission has adopted the recommended clarification. A commenter suggested that the date for filing exceptions and replies be triggered, under sec.265.154, by the filing of the Proposal for Decision (PFD) with the chief clerk, not by date of issuance of the PFD. The commission and SOAH have agreed to continue the current practice of advising the parties of the date exceptions and replies are due in a cover letter with the issuance of the PFD. A commenter recommended that oral argument under sec.265.157 be limited to parties. The commission declines to adopt this recommendation because current commission practice is to determine on a case-by-case basis who will be allowed to make oral argument. A commenter suggested that any commissioner, as well as the general counsel, should be able to set a motion for rehearing for consideration. The commission agrees and the suggested language has been added. A commenter suggested adding language to sec.265.165 to clarify that the record in a contested case should include the final order and all interlocutory orders. The commission agrees and has made the change. A commenter supported the proposed amendments to the enforcement procedure rules, Chapter 337. A commenter suggested that the agency allow public participation in formal enforcement proceedings. Current procedures do not allow third party participation in an enforcement hearing. However, the process allows for public participation by providing for comment at a commissioners' meeting before the adoption of any enforcement order. Adoption of this comment would be beyond the scope of the current rulemaking project. A commenter suggested correction of an apparent typographical error. Section 337.4 allows the filing of either an original or a copy of a document with the chief clerk; it was not intended to require the filing of both. A commenter suggested adding language to sec.337.4 to give the judge at SOAH the same discretion to reject improperly filed documents as the commissioners have. The commission agrees and has added the language. A commenter suggested deleting sec.337.24(d), arguing that the executive director should not have the authority to amend the executive director's proposed recommendation indiscriminately. This subsection was not proposed to be amended and the suggestion is outside the scope of this rulemaking. A commenter suggested conforming sec.337.27(b) to the language in proposed sec.261.18(c), clarifying certificate of service procedures. The commission agrees, but has taken the extra step of deleting the subsections in sec.337.27 and substituting a crossreference to sec.337.4. A commenter suggested adding a requirement in sec.337.27 that service by fax must be accompanied by hard copy within two days. The commission feels such a requirement is unnecessary, but will continue to study the situation during Phase II. A commenter suggested conforming the language in sec.337.40 to the language in proposed sec.265.71, dealing with certified questions. The commission agrees and has made the conforming changes. A commenter suggested changes to sec.337.43 which allows an automatic continuance for settlement negotiations. The commission agrees that the section needs clarification and has rewritten the section accordingly. A commenter suggested revision to this section dealing with the burden of proof in contested enforcement actions. This section was not proposed to be amended and the suggestion is outside the scope of this rulemaking. The proposed sec.337.80 provided that Chapter 337 shall expire on May 31, 1996. The commission does not adopt the section after reconsidering the fact that the enforcement rules were only recently adopted in their current form. The commission concludes that the expiration term is not needed or warranted. Subchapter A. Enforcement Generally 30 TAC sec.sec.337.3, 337.4, 337.8, 337.9 The amendments and new section are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361. 011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.337.3. Definitions. Unless specifically defined in this chapter, all terms used in these rules bear the same definitions ascribed by the Texas Water Code, the Texas Health and Safety Code, the APA, the Rules of Procedure of the commission (TNRCC), and the substantive regulations promulgated by the TNRCC. The terms specifically defined for the purposes of this chapter are as follows. Chief clerk-The chief clerk of the Texas Natural Resource Conservation Commission or any authorized individual designated by the chief clerk to act in his or her place. Commissioners' meeting -A public meeting or hearing at which a quorum of the commissioners consider matters scheduled for deliberation, such as rulemaking proceedings, applications, or judges' proposals for decision. Contested enforcement case hearing-The evidentiary hearing on the merits in a contested enforcement case, presided over by the commissioners or SOAH. Judge-An administrative law judge employed by SOAH. Pleadings-Any written petition, answer, motion, or other written instrument, except exhibits, including an "EDPR," filed with the commission or a judge in a contested enforcement case; further defined in sec.337.24 of this title (relating to Requirements for Pleadings Other than EDPR). SOAH-State Office of Administrative Hearings. Texas Pollutant Discharge Elimination System (TPDES) -The state program for issuing, amending, terminating, monitoring, and enforcing permits, and imposing and enforcing pretreatment requirements, under Clean Water Act, sec.sec.307, 402, 318, and 405, the Texas Water Code, and Texas Administrative Code regulations. sec.337.4. Filing and Service Procedures for Documents, Notice. (a) All documents to be considered in a commissioners' meeting or by judges in contested cases shall be filed with the chief clerk. Hearing requests and responses shall also be filed with the chief clerk. (b) If a docket number has been assigned, it should appear on the first page of all filed documents. (c) Documents shall be filed by mail, facsimile, or hand delivery. If a person files a document by facsimile, he or she must file with the chief clerk the appropriate number of copies by mail or hand delivery within two days. (d) The original or one copy of a document shall be filed, except for documents to be considered at a commissioners' meeting. For documents to be considered at a commissioners' meeting, 11 copies shall be filed. (e) The time of filing is upon receipt by the chief clerk. (f) The chief clerk shall accept all documents presented for filing. The chief clerk's acceptance is not a determination that the document meets filing deadlines or other requirements. (g) If the requirements of this section are not followed, the commissioners, or a judge in a SOAH proceeding, may choose not to consider the documents. In the absence of a waiver under subsection (h) of this section, the commissioners may choose not to consider documents filed within two days of a commissioners' meeting. (h) The judge may waive one or more of the requirements of this section, or impose additional filing requirements in SOAH proceedings. The commissioners or general counsel may waive one or more of the requirements of this section, or impose additional filing requirements for commissioners' meetings. (i) This section does not apply to offers of evidence during a hearing. (j) A person who files a document (other than the initial pleading in an enforcement action) with the chief clerk, or gives notice as required by this chapter shall comply with the following service requirements: (1) the document or notice shall be served on the same day on the judge and all parties; (2) the person or attorney shall include a certificate of service, certifying compliance with this section, and signed by the person or attorney filing the document. Failure to timely furnish copies may be grounds for withholding consideration of the document; (3) service by mail is complete upon deposit in the mail, properly addressed, with postage prepaid. Service by courier-receipted delivery is complete upon the courier taking possession. Service by facsimile is complete when sent to the recipient's facsimile number. Service by facsimile after 5:00 p.m. local time of the recipient shall be deemed served on the following day. Judges may impose different service requirements for SOAH proceedings; (4) where proof of service of notice or a written instrument is relevant, the executive director may offer proof in accordance with sec.337. 26(d) of this title (relating to Notice of Executive Director's Preliminary Report). (k) The service requirements of subsection (j) of this section do not apply if the document or notice is presented during a hearing, or as otherwise expressly provided for in these rules. (l) For purposes of this chapter, and with the exception of periods for filing and replying to exceptions pursuant to sec.337.53 of this title (relating to Amending the Proposal for Decision), whenever a party has the right or is required to do some act within a prescribed period after the service of a notice or other paper upon him and the notice or paper is served upon him by mail or telephonic document transfer, three days shall be added to the prescribed period. sec.337.8. Enforcement Hearings. If required by law, an enforcement hearing shall be held prior to the commissioners' issuance of any final enforcement order. In cases for which an enforcement hearing is not required by law to be held prior to issuance of an enforcement order, the commissioners may elect to hold a hearing, on its own motion, or upon the request of the executive director, prior to issuing a final enforcement order or direct SOAH to hold such a hearing. In those cases for which an enforcement hearing is not required by law to be held prior to issuance of an enforcement order, or for which procedures for an enforcement hearing are not specifically prescribed by rule or statute, the commissioners may elect to have such hearings be held by SOAH under rules prescribed by the commission, including the procedures established by this chapter for contested enforcement cases. sec.337.9. Enforcement Guidelines. The executive director may use enforcement guidelines which are neither rules nor precedents, but rather announce the manner in which the agency expects to exercise its discretion in future proceedings. These guidelines do not establish rules which the public is required to obey or with which it is to avoid conflict. These guidelines do not convey any rights or impose any obligations on members of the public. These guidelines will be available to the public under the terms of the Texas Open Records Act, Texas Government Code, Chapter 552. 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 August 31, 1995. TRD-9511338 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 239-1966 30 TAC sec.337.4 The repeal is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511339 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 239-1966 Subchapter B. Contested Enforcement Case Hearings 30 TAC sec.sec.337.21, 337.24, 337.27, 337.28, 337.30-337.34, 337. 36-337.45, 337.47, 337.48, 337.50-337.57 The amendments and new section are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.011, and the Texas Health and Safety Code, sec.sec.361. 011, 361.017, 361.024, and 382.017, which authorized the TNRCC to adopt any rules necessary to carry out its powers and duties under the Water Code and other laws of Texas and to establish and approve all general policy of the commission. sec.337.21. Contested Enforcement Case Hearings to be Held by SOAH. In a contested enforcement case, unless the commission chooses to hear the case itself, SOAH shall have the delegated authority to preside over the case proceedings in accordance with the rules of this chapter. sec.337.24. Pleadings Other than the Executive Director's Preliminary Report (EPDR). (a)-(b) (No change.) (c) Up to seven days prior to the hearing, parties may file pleadings, supplemental or amended, so long as such do not operate as an unfair surprise to the opposite party. Amendments after that time will be at the discretion of the judge and may constitute grounds for a continuance. (d)-(e) (No change.) sec.337.27. Service of Notice and Pleadings. The requirements for the service of notice and pleadings is as specified in sec.337.4 of this title (relating to Filing and Service Procedures for Documents, Notice). sec.337.28. Answer. (a)-(e) (No change.) (f) A respondent may consent in writing to parts of the EDPR, initial petition, or amended or supplemental petition, whichever is the most recent pleading. He/she may also enter into agreements with the executive director regarding evidence or other issues pending in the enforcement action by stipulations presented in writing to the judge. sec.337.30. Agreed Orders. (a)-(b) (No change.) (c) When an agreement is reached, the case may then be set for consideration of an agreed order on the commission's agenda as soon as practicable, without need for a proposal for decision from the judge. sec.337.31. Request for SOAH to Acquire Jurisdiction Over Case. Not less than 30 days after the respondent has filed an answer under sec.337.28 of this title (relating to Answer), either the respondent or the executive director may request that the chief clerk refer the case to SOAH for a contested enforcement case hearing. The parties may request this referral by filing a letter with the chief clerk and serving that letter on the other parties. If the chief clerk receives authorization pursuant to this subchapter to refer a case to SOAH, the chief clerk shall take the following actions: (1) file a Request for Setting of Hearing form, or Request for Assignment of Administrative Law Judge form, whichever is appropriate. The executive director's petition or EDPR shall serve as the list of issues or areas that must be addressed, which the chief clerk shall file with SOAH; (2) issue public notice of the hearing as required by law, and in coordination with the policies and procedures of SOAH. sec.337.32. Consolidation and Severance. Once SOAH has assumed jurisdiction over the contested case, the executive director may consolidate or sever cases or claims involving any person or persons against whom the executive director has a right to proceed, including the consolidation or severance of claims involving different media, with permission of the judge. The judge may sever contested enforcement cases or claims involving any number of parties, upon motion by any respondent, where the respondent can show that he/she would be unduly prejudiced if severance were not granted. sec.337.33. Continuance. A motion for continuance of any contested enforcement case hearing shall be granted by the judge whenever justice may require. All motions for continuance must be supported by an affidavit or by sworn written motion by the person or persons having knowledge of the facts supporting the motion. sec.337.34. Preliminary Hearing. (a) To assist in the disposition of the enforcement action without undue expense or burden to the parties, SOAH may, at the request of any party or on its own motion, direct the parties and their respective representatives to appear before it for a Preliminary Hearing to consider: (1)-(5) (No change.) (b) The judge shall make an order that recites the actions taken at the Preliminary Hearing, and such order shall control the subsequent course of the action, unless modified by the judge to prevent injustice. sec.337.36. Rights of Parties in Contested Enforcement Case Hearings. A party has the right to conduct discovery; present a direct case; cross-examine witnesses; make oral and written arguments; obtain copies of all pleadings, motions, replies, and other filed documents; receive copies of all notices issued by the commission concerning the contested enforcement case to which he/she is a party; and, as directed by the judge, otherwise fully participate as a party in the contested enforcement case. sec.337.37. Discovery. (a) Discovery generally. The judge may order that discovery be conducted in accordance with Rules 166b-169 of the Texas Rules of Civil Procedure, through a scheduling order as discussed in sec.337.34(a)(3) of this title (relating to Preliminary Hearing), so long as the Rules of Civil Procedure are interpreted in a manner consistent with this chapter, the Texas Water Code, the Texas Health and Safety Code, and the APA. (b) (No change.) (c) Scope of discovery. Parties may obtain discovery regarding any matter which is relevant to the subject matter of the proceeding. It is not ground for objection that the information sought will be inadmissible at hearing, if the information sought appears reasonably calculated to lead to the discovery of admissible evidence. Nor is it ground for objection that the discovery request involves an opinion or contention that relates to fact, the application of law to fact, or mixed questions of law and fact, but the judge, upon a party's motion, may order that such a request need not be answered until a later date. (d) Protective orders. On motion specifying the grounds and made by any person against or from whom discovery is sought, the judge may make a ruling in the interest of justice necessary to protect the person from undue burden, unnecessary expense, harassment or annoyance, or invasion of personal, constitutional or property rights. Specifically, the judge may issue an order: (1) (No change.) (2) that the discovery be undertaken only by such method or upon such terms and conditions or at the time and place directed by the judge; (3) that results of discovery be sealed or otherwise adequately protected, that its distribution be limited, or that its disclosure be restricted. However, in considering such an order, no order or decision issued by the judge or the commission may be sealed and other records filed pursuant to contested enforcement case procedures shall be presumed to be open to the general public. That presumption of openness may be overcome only upon a showing of all of the following: (A)-(B) (No change.) (C) sealing of the records in question can be achieved in accordance with the Texas Open Records Act, Texas Government Code, Chapter 552 (Vernon Supplement 1992). (e) Discovery compellable. The judge may compel any form of discovery if a party to a contested enforcement case fails to comply with appropriate rules. A party may file a motion to compel discovery at least ten days prior to hearing. Motions to compel discovery may be filed less than ten days prior to a hearing upon a showing of good cause. (f) (No change.) sec.337.38. Abuse of Discovery; Sanctions. (a) (No change.) (b) If a judge requires, or approves an agreement between the parties requiring that parties identify their witnesses according to a discovery schedule, the judge may impose as a sanction upon a party who violates such requirement, that the party be barred from calling any witness not properly identified. (c) Absent good cause, a witness shall be barred from testifying about matters which were not identified by the sponsoring party in its witness list and amendments thereto, and/or in that witness' prefiled testimony, when election to prefile testimony has been noticed by the sponsoring party or when prefiled testimony has been directed by the judge. (d) In addition to the foregoing, if a respondent fails to comply with discovery procedures, the judge may issue a proposal for decision recommending preclusion of the offending party from contesting a given issue of fact, or that a default judgment be rendered against the respondent, in accordance with sec.337.29 of this title (relating to Default Order). sec.337.39. Summary Judgment. (a)-(b) (No change.) (c) Oral testimony. No oral testimony shall be received at a hearing on the motion for summary judgment. At the discretion of the judge, oral argument of counsel may be presented on the motion. Partial Summary Judgment shall be rendered if the pleadings, admissions, affidavits, stipulations, and exhibits on file in the case at the time of the hearing show that, except as to the amount of penalties and the extent of any technical requirements, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion. A summary judgment may be based on uncontroverted testimonial evidence of an interested witness, or of an expert witness as to subject matter concerning which the judge must be guided solely by the opinion testimony of experts, if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted. (d) Partial summary judgment. If a motion for summary judgment is denied, in whole or in part, the judge may, if practicable, ascertain what facts are not in dispute or are incontrovertible by examining the evidence filed, interrogating counsel, and/or directing a conference. The judge may then make a ruling denying the motion and specifying what facts, if any, will be deemed established for all purposes in the enforcement hearing. sec.337.40. Interlocutory Appeals. (a) No interlocutory appeals may be made to the commission by a party to a contested enforcement case before a judge, except on jurisdictional issues. However, at any time during a contested enforcement case, on a motion by a party, or on the judge's own motion, the judge may certify a question to the commission for guidance regarding commission policy, jurisdiction or the imposition of any sanction by the judge that would substantially impair a party's ability to present his/her case. Policy questions for certification purposes include, but are not limited to: (1) the commissioners' interpretation of its rules and applicable statutes; (2) which rules or statutes are applicable to the proceeding; or (3) whether commission policy should be established or clarified as to a substantive or procedural issue of significance to the proceeding. (b) The judge shall file the certified question with the chief clerk and serve copies on the parties. Within five days after the certified question is filed, parties to the proceeding may file briefs or replies. The chief clerk shall provide copies of the certified question and any briefs or replies to the general counsel and commissioners. Upon the request of the general counsel or a commissioner to the general counsel, the certified question will be scheduled for consideration during a commissioners' meeting. The chief clerk shall give the judge notice of the scheduling. The judge may, in his or her discretion, abate the hearing until the commissioners answer the certified question, or continue with the hearing if the judge determines that no party will be substantially harmed by proceeding while awaiting a response. If no request to set the question for consideration is received from the general counsel by the chief clerk within 15 days after filing, the request will be deemed denied by operation of law. sec.337.41. Final Prehearing Conference. (a) Upon a request by any party, and at the discretion of the judge, the judge may order that the parties and/or their designated representatives appear before him/her for a final prehearing conference as close to the time of an enforcement hearing as is reasonable under the circumstances. The purposes of such a conference are to: (1)-(4) (No change.) (b) The judge may prepare, or may order that the parties draft, a prehearing order in preparation for the final prehearing conference. Such an order, upon the judge's approval, will control the subsequent course of the enforcement hearing. (c) If a party or his/her representative fails to appear at a prehearing conference, is substantially unprepared to participate in the conference, or fails to participate in good faith, the judge, upon motion or on the judge's own initiative, may make such orders as are just, including those included in sec.337.38 of this title (relating to Abuse of Discovery; Sanctions). sec.337.42. Exhibits. (a) (No change.) (b) Each exhibit offered shall be tendered for identification and placed in the record. Copies shall be furnished to the judge, each of the parties, and the hearings reporter, unless the judge rules otherwise. (c) (No change.) sec.337.43. Automatic Continuance for Settlement Negotiations. At any time after a case has been referred to SOAH, the parties to an enforcement action shall, upon filing of a joint motion with the judge, be granted an indefinite continuance if it is sought for the purpose of allowing the parties to engage in and complete settlement negotiations which will dispose of all or part of the action. Upon subsequent written request by any party to the case, the judge shall return the docket to active status and convene a prehearing conference for the purpose of establishing a revised prehearing/discovery schedule to govern the timing of the enforcement hearing and the events leading up to that hearing. sec.337.44. Agreements to be in Writing. No agreement between parties or their representatives affecting any pending matter will be considered by the judge unless it is in writing, signed by the parties, and filed as a part of the record; or is announced at the contested enforcement case hearing and entered of record. sec.337.45. Presentation of Evidence. (a)-(d) (No change.) (e) If in the opinion of the judge, it appears that the presentation of live testimony in a contested enforcement case hearing may last for more than five working days, the judge may order that the parties introduce their witnesses' direct testimony through prefiled written questions and answers. If the judge so orders, the parties shall provide the pre-filed testimony for each witness it intends to present at the enforcement hearing to all other parties of record within a reasonable time prior to the presentation of the testimony of the witness at hearing, with such reasonable time period to be determined by the judge. The prefiled testimony of a witness shall not be admissible if the witness is not available at the hearing for cross-examination. sec.337.47. Order of Presentation. In all contested enforcement case hearings, the executive director shall have the right to open and close. After all parties have completed the presentation of their evidence, the judge may call upon any party for further material or relevant evidence upon any issue. In all cases, the executive director shall be allowed to close with its rebuttal. At the discretion of the judge, a party may present a re-rebuttal case when another party presents evidence which could not have been reasonably anticipated. sec.337.48. Oral Argument. At the conclusion of the hearing, oral argument may be heard upon the request of the parties or upon the directive of the judge. Reasonable time limits may be established by the judge. The judge may require or accept written briefs in lieu of or in addition to oral argument. sec.337.50. Financial Inability to Pay; Amount Necessary to Obtain Compliance. (a) (No change.) (b) A party asserting a claim under this section must produce all financial records that would be potentially relevant to that issue within 30 days of raising that claim, but no later than 30 days prior to the specified date for hearing without leave from the judge. The executive director is not required to make a discovery request for such financial records. The failure of the party raising such a claim to provide all potentially relevant financial records within the time discussed in this subsection shall constitute a waiver of the claim. sec.337.51. Proposal for Decision (PFD). (a) After closing the hearing record in any contested enforcement case hearing, the judge shall file a written PFD, which shall contain a statement of the reasons for the proposal, findings of fact, conclusions of law, a proposal for remedial relief (technical ordering provisions) where appropriate, and one of the following recommendations: (1)-(3) (No change.) (b) The proposal may also contain rulings on any findings of fact and conclusions of law that have been submitted by the parties, and other provisions deemed appropriate by the judge. (c) When recommending the assessment of an administrative penalty, the judge shall analyze each factor prescribed by the applicable statute to be considered by the commission in determining the amount of the penalty. The judge shall recommend to the commission an appropriate penalty amount based upon the evidence adduced at the hearing and the factors articulated in the applicable statutes. (d) Weight to be given by the judge to individual statutory factors for determining penalty amount need not be equal and may vary depending on the facts of the particular case. The absence of evidence as to any particular factor does not negate the ability of the judge to arrive at a finding of an appropriate penalty based upon the totality of the circumstances, though such lack of evidence may be a factor in determining the penalty amount. sec.337.52. Waiver of Right to Review Proposal for Decision (PFD). Any party may waive the right to review and comment upon the judge's PFD. The waiver shall be in writing or stated on the record at the hearing. sec.337.53. Pleadings Following Proposal for Decision (PFD). Unless right of review has been waived under sec.337.51 of this title (relating to Waiver of Right to Review Proposal for Decision), any party may, within 20 days after the date of issuance of the proposal for decision, file exceptions or briefs. Any replies to such pleadings shall be filed within 30 days after the date of issuance of the proposal for decision. These deadlines may be changed upon the written agreement of the parties with approval of the judge. sec.337.54. Amending the Proposal for Decision (PFD). The judge may file an amended proposal for decision in response to exceptions, replies, or briefs submitted by the parties. The parties are not entitled to file exceptions or briefs in response to the amended PFD, but may raise any issues before the commission as permitted by the commission at the time of oral presentation. sec.337.55. Motion to Re-open the Record after Proposal for Decision (PFD). After the PFD has been filed in a contested enforcement case, along with any subsequent pleadings in accordance with sec.337.53 of this title (relating to Pleadings Following Proposal for Decision) and sec.337.54 of this title (relating to Amending the Proposal for Decision), the commission, on the motion of any party or on its own motion, may order the judge to reopen the record for further proceedings on specific issues in dispute. The commission's order shall include instructions as to the subject matter of further proceedings and the judge's duties in preparing supplemental materials or revised orders based upon those proceedings for the commission's final adoption. sec.337.56. Commission's Decision after Contested Enforcement Case Hearing. (a) After its receipt of the judge's proposal for decision, the commission shall review the proposal and shall issue a decision, which shall contain findings of fact and conclusions of law, provisions requiring remedial relief (technical ordering provisions), as necessary, and one of the following findings: (1)-(3) (No change.) (b)-(d) (No change.) sec.337.57. Notice of Decisions and Orders. (a) Notice of enforcement orders and decisions. For rulings, orders, or decisions issued by the commission or a judge in a contested enforcement case, parties shall be given notice, either personally or by first class mail, in accordance with the APA, sec.2001.142. Notice shall also be given in accordance with the Texas Health and Safety Code, sec.382.096, where applicable. (b)-(c) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on August 31, 1995. TRD-9511340 Lydia Gonzalez-Gromatzky Acting Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 239-1966 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 15. Medicaid Eligibility The Texas Department of Human Services (DHS) adopts amendments to sec.sec.15. 215, 15.315, 15.605, and 15.607, without changes to the proposed text as published in the July 25, 1995, issue of the Texas Register (20 TexReg 5484). The amendments are justified to add the Health Insurance Premium Payment (HIPP) Reimbursement Program, as required by the Social Security Act, including the policy that participation in HIPP is a condition of eligibility; to change the name of the nursing facility waiver program; and to correct an error in the medical effective date language in the rule. The amendments will function by ensuring that DHS will be in compliance with federal law and the rules will be correct and consistent in associated program areas. The department received no comments regarding adoption of the amendments. Subchapter B. Medicare and Third-Party Resources 40 TAC sec.15.215 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs; and under Texas Civil Statutes, Article 4413 (502), sec.16, which provide the Health and Human Services Commission with the authority to administer federal medical assistance funds. 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 September 6, 1995. TRD-9511395 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: October 1, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 450-3765 Subchapter C. Basic Program Requirements 40 TAC sec.15.315 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs; and under Texas Civil Statutes, Article 4413 (502), sec.16, which provide the Health and Human Services Commission with the authority to administer federal medical assistance funds. 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 September 6, 1995. TRD-9511396 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: October 1, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 450-3765 Subchapter G. Application for Medicaid 40 TAC sec.15.605, sec.15.607 The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs; and under Texas Civil Statutes, Article 4413 (502), sec.16, which provide the Health and Human Services Commission with the authority to administer federal medical assistance funds. 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 September 6, 1995. TRD-9511397 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: October 1, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 450-3765 Chapter 54. Family Violence Program The Texas Department of Human Services (DHS) adopts the repeal of sec.sec.54. 101-54.104, 54.201-54.208, 54.301-54.312, and 54.401-54.405 and adopts new sec.sec.54.101, 54.201-54.207, 54.301-54.313, 54.401-54.414, 54.501-54.526, 54. 601-54.610, 54.701-54.718, and 54.801-54.813. Section 54.711 and sec.54.804 are adopted with changes to the proposed text as published in the July 18, 1995, issue of the Texas Register (20 TexReg 5209). Sections 54.101-54.104, 54.201- 54.208, 54.301-54.312, 54.401-54.405, 54.101, 54.201-54.207, 54.301-54. 313, 54.401-54.414, 54.501-54.526, 54.601-54.610, 54.701-54.710, 54.712-54.718, 54.801-54.803, and 54.805-54.813 are adopted without changes and will not be republished. The repeals and new sections are justified to update the rules to match the federal and state laws and regulations. The repeals and new sections will function by ensuring that shelter centers will operate under a uniform set of rules and will provide consistent services and accurate information for victims of family violence. Comments were received from three organizations: Montgomery County Women's Shelter, Collin County Women's Shelter, and Denton County Friends of the Family, Inc. The comments identified requests for clarification and several concerns. The following is a compilation of the comments received and DHS's responses. Section 54.512(c)-One comment indicated that three years and 90 days is excessive for retention of records related to application, screening, and interviewing materials. Response: DHS has determined that the time mandated for record retention is necessary and is based on statute of limitations laws and standard audit time periods. Sections 54.519(c)(4)(C); 54.519(c)(5); 54.718(b)(3)(A); and 54.718(b)(12) -One organization opposed the inclusion of specific training points for staff and volunteer training. Response: DHS upholds the inclusion of this training, and adopts these sections as proposed. Section 54.708(a)(4)-One comment was made which indicated the need for clarification regarding allowable client file documentation in order to protect the liability of the shelter center program and its staff, volunteers, and board members. Response: The rules allow the shelter sole discretion to determine what must be included to protect the liability of the shelter center program and its staff, volunteers, and board members. DHS is adopting the rules as proposed. Section 54.710(a)(3) and sec.54.710(c)-One comment was made opposing the 45-day limit for the release of information of non-residents, and also, opposing the rule mandating that only one agency and person be listed on each release of information form. Response: DHS believes the revised rules regarding release of information ensure that the client's entitlement of confidentiality is adequately protected. During this first year, DHS will review the potential workload of shelters. Section 54.804(a)(2)(B)-One comment was received requesting clarification of "cooperative living agreement" since it must be included in the client orientation. Response: DHS is expanding sec.54.804(2)(B) to define "cooperative living agreement." Section 54.809(a)(3)-One comment received indicated concern that small shelters with limited staff would have difficulties accompanying clients to court. Response: The rule does not require staff to accompany clients to court. The rule requires that shelter centers provide support or accompaniment to clients in their pursuit of legal options. Support or accompaniment may be provided by volunteers, legal advocates, or staff and pursuit of legal options does not specifically mean court. DHS is adopting this section as proposed. Section 54.810(d)-Two comments were received regarding the rule that shelter centers cannot mandate attendance for group counseling. One comment was received requesting clarification of groups verses house meetings, and what could be mandated. Response: The Human Resource Code, Chapter 51 requires that shelter centers ensure access to counseling services but does not mandate attendance. House meetings are group activities and are not considered counseling services; house meeting attendance is not mandated by this rule. DHS is adopting this section as proposed. The department has initiated a minor editorial change to sec.54.711 that changes the term "writ of attachments" to "writs of attachment." Administration 40 TAC sec.sec.54.101-54.104 The repeals are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511398 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Shelter Center Operational Requirements 40 TAC sec.sec.54.201-54.208 The repeals are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511400 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Shelter Center Services 40 TAC sec.sec.54.301-54.312 The repeals are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511402 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Contracting Requirements 40 TAC sec.sec.54.401-54.405 The repeals are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511404 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Subchapter A. Definitions 40 TAC sec.54.101 The new section is adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511399 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Subchapter B. Board of Directors 40 TAC sec.sec.54.201-54.207 The new sections are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511401 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Subchapter C. Contract Standards 40 TAC sec.sec.54.301-54.313 The new sections are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511403 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Subchapter D. Fiscal Management 40 TAC sec.sec.54.401-54.414 The new sections are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511405 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Subchapter E. Shelter Personnel 40 TAC sec.sec.54.501-54.526 The new sections are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511406 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Subchapter F. Facility Safety and Health 40 TAC sec.sec.54.601-54.610 The new sections are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511411 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Subchapter G. Program Administration 40 TAC sec.sec.54.701-54.718 The new sections are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. sec.54.711. Court Orders. (a) Shelter centers must have written procedures for responding to court orders, such as subpoenas, search warrants, or writs of attachment. The written procedures must include: (1) what to do when a process server comes with a court order; (2) on whom court orders may be served, such as the custodian of records; (3) which attorney(s) should be contacted; (4) who will discuss the subpoena with the victim of family violence, and at what point; and (5) circumstances under which records might be released. (b) Residents must be notified when a court order affects them or their records. (c) The custodian of the records must be responsible for maintaining control over the records and court access to the records. 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 September 6, 1995. TRD-9511412 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Subchapter H. Service Delivery 40 TAC sec.sec.54.801-54.813 The new sections are adopted under the Human Resources Code, Title 2, Chapter 51, which provides the department with the authority to contract for family violence shelter-center services and to adopt rules necessary to implement these services. sec.54.804. Initial Delivery of Direct Services. (a) Initial delivery of adult direct services. Shelter centers must (1) ensure and document that new adult residents have face-to-face contact with a staff person within 16 hours of the resident's admission. (2) have written procedures ensuring that each adult resident is provided an orientation within 16 hours of the resident's arrival about shelter center services. The orientation must be documented and include but not be limited to: (A) explanation of services available; (B) cooperative living agreement, an agreement between the shelter and the residents promoting health, safety, and daily shelter operations; (C) length of stay; (D) termination policy; (E) residents' rights; (F) nondiscrimination statement; (G) grievance procedures; (H) safety and security procedures, including medication; (I) confidentiality and limits of confidentiality, and (J) waivers of liability. (b) Initial delivery of children's direct services and designating an advocate. Shelter centers must (1) have written procedures ensuring that new child residents and/or parent residents will have face-to-face contact with the designated children's staff. This service must be documented; (2) designate at least one staff person, either paid or volunteer, to act as a children's advocate; and (3) document in writing that the designated staff acting as children's advocate has the following: (A) knowledge of child development, parenting skills, and dynamics of family relationships; (B) sensitivity to the needs of children; (C) ability to respond in a constructive, supportive manner to the resident parent and child in crisis; (D) ability to plan and implement activities for children; and (E) knowledge of the local network of children's services. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on September 6, 1995. TRD-9511413 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: September 27, 1995 Proposal publication date: July 18, 1995 For further information, please call: (512) 450-3765 Chapter 94. Nurse Aides 40 TAC sec.sec.94.2, 94.5, 94.11 The Texas Department of Human Services (DHS) adopts amendments to sec.sec.94. 2, 94.5, and 94.11, without changes to the proposed text as published in the July 28, 1995, issue of the Texas Register (20 TexReg 5609). The justification for the amendments is to comply with the final federal enforcement regulations which affect the training and competency evaluation program. In addition, sec.94.5 clarifies that an individual eligible for the free-standing competency evaluation program (CEP) examination may retest twice on the failed CEP examination, as permitted by the Code of Federal Regulations. The amendments will function by complying with federal regulations. No comments were received regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 32; the Health and Safety Code, Chapter 250; and Texas Civil Statutes, Article 4413 (502), sec.16. The Human Resources Code, Chapters 22 and 32, provides the department with the authority to administer public and medical assistance programs. The Health and Safety Code, Chapter 250, provides the department with the authority to administer the nurse aide program and registry. Texas Civil Statutes, Article 4413(502), sec.16, provide the Health and Human Services Commission with the authority to administer medical assistance funds. 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 September 6, 1995. TRD-9511414 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: October 1, 1995 Proposal publication date: July 28, 1995 For further information, please call: (512) 450-3765