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 91. Texas Register Publication Schedule 1 TAC sec.91.113 The Office of the Secretary of State adopts an amendment to sec.91.113, concerning publication deadlines, without changes to the proposed text as published in the November 17, 1995, issue of the Texas Register. The section is being amended to change the filing deadlines for documents published in the Texas Register. Earlier filing deadlines are proposed to give the Texas Register more time to process a greater number of documents without adding new employees. Earlier filing deadlines also will permit more flexible printing deadlines and more competitive bidding for the Texas Register printing contracts. One comment was received from the Texas Workers' Compensation Commission regarding the deadline amendment. The commission commented that by backing up the deadline for document submission, the Register staff should have plenty of time to notify the agencies when a document is rejected for publication. The commission has found it difficult in the past to re-submit a document which was rejected because they were notified after the deadline. This has been a concern of the commission because it meets only once a month. The Register agrees with the comment. Texas Register staff will notify an agency's liaison of a rejection on the same day it is rejected. The amendment is adopted under the Texas Government Code, Chapter 2002, sec.017, which provides the Secretary of State with the authority to adopt rules relating to the administration of the Texas Register. sec.91.113. Deadlines. (a) For a Tuesday edition, all rule submissions must be received by Monday, 10:00 a.m. of the immediately preceding week. Miscellaneous documents and open meetings must be received by Wednesday, 10:00 a.m. of the immediately preceding week. (b) For a Friday edition, all rule submissions must be received by Wednesday, 10:00 a.m. of the immediately preceding week. Miscellaneous documents and open meetings must be received by 10:00 a.m. of the immediately preceding Monday. (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 December 14, 1995. TRD-9516357 Clark Kent Ervin Assistant Secretary of State Secretary of State Effective date: January 4, 1996 Proposal publication date: November 17, 1995 For further information, please call: (512) 463-5561 Part V. General Services Commission Chapter 111. Executive Administration Division Historically Underutilized Business Certification Program 1 TAC sec.111.24 The General Services Commission adopts new sec.111.24, concerning the Historically Underutilized Business Certification Program, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9235) Section 111.24 will allow for program review at least once every five years, but no later than two years following the release of the Federal Census Report. The new section ensures that goals for the utilization of women and minority- owned firms are "narrowly tailored" and are updated in accordance with more recent, relevant data. No comments were received regarding adoption of the new section. The new section is adopted under Chapter 684, sec.65(c), Acts, 73rd Legislature (1993), which provides the General Services Commission with the authority to promulgate rules necessary to implement the findings, conclusions, and recommendations of the Disparity Study mandated by that Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 13, 1995. TRD-9516296 David Ross Brown Assistant General Counsel General Services Commission Effective date: January 3, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 463-3960 Chapter 113. Central Purchasing Division Purchasing 1 TAC sec.113.8 The General Services Commission adopts an amendment to sec.113.8, concerning bidder preferences in purchasing, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9236). Amendment to sec.113.8 changes the name of the Texas Committee on Purchases of Products and Services of Blind and Severely Disabled Persons to the Texas Council on Purchasing from People with Disabilities as amended by House Bill 2658, sec.1, Acts, 74th Legislature (1995). The amendment correctly identifies the Texas Council on Purchasing from People with Disabilities. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resource Code, Title 8, Chapter 122, as amended by House Bill 2658, sec.1, Acts, 74th Legislature (1995). This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 13, 1995. TRD-9516295 David Ross Brown Assistant General Counsel General Services Commission Effective date: January 3, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 463-3960 Chapter 125. Travel and Transportation Division Texas Alternative Fuels Program 1 TAC sec.sec.125.63, 125.65, 125.69 The General Services Commission adopts amendments to sec.125.63 and sec.125. 65; and new sec.125.69, concerning the Texas Alternative Fuels Program, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9236) Amendments to sec.125.63 and sec.125.65 updates the language to correctly identify the name change from the Texas Air Control Board to the Texas Natural Resource Conservation Commission. New sec.125.69 will require all state agencies to use an alternative fuel exclusively in vehicles that are equipped from the manufacturer or modified by a conversion facility to be capable of operating on an alternative fuel. It also allows fore exceptions in certain cases. Amendments sec.125.63 and sec.125.65 will reduce confusion by deleting reference to the Texas Air Control Board. and correctly referring to the Texas Natural Resource Conservation Commission. New sec.125.69 adds the requirement that users of any state-owned vehicle capable of functioning on an alternative fuel to operate only on that fuel with certain exceptions. No comments were received regarding adoption of the amendments and new section. The amendments and new section are adopted under the Government Code, Title 10, Subtitle D, sec.2171.103, which provides the General Services Commission with authority to promulgate rules consistent with the 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 December 13, 1995. TRD-9516294 David Ross Brown Assistant General Counsel General Services Commission Effective date: January 3, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 463-3960 TITLE 7. BANKING AND SECURITIES Part I. Finance Commission of Texas Chapter 3. Banking Section Subchapter A. Securities Activities and Subsidiaries 7 TAC sec.3.6 The Finance Commission of Texas (the commission) adopts the repeal of sec.3.6, concerning state-chartered bank purchase of stock issued by corporations organized solely for the purpose of making agriculture loans, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9328). The repeal is necessary because sec.3.6 has been superseded by Texas Civil Statutes, Article 342-5.105(a)(2), which render the section obsolete. No comments were received regarding adoption of the repeal. The repeal is adopted pursuant to rulemaking authority under Texas Civil Statutes, Article 342-1.012(a)(1), which authorize the commission to adopt rules necessary or reasonable to implement and clarify the Texas Banking Act, Texas Civil Statutes, Articles 342-1.001 et seq. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516386 Everette D. Jobe General Counsel Finance Commission of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Subchapter B. General 7 TAC sec.sec.3.36-3-38 The Finance Commission of Texas (the commission) adopts new sec.sec.3.36-3.38, concerning the imposition and collection of ratable and equitable fees from banks and foreign bank agencies, to provide for recovery of the cost of maintenance and operation of the Texas Department of Banking (the department) and the cost of enforcing Texas Civil Statutes, Articles 342-1.001 et seq (the Texas Banking Act, sec.sec.1.001 et seq) (the Act). Nonsubstantive changes are made to the proposed text of each section as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9328). Existing sec.3.37 and sec.3.38 are repealed in this issue of the Texas Register . The fee system as adopted is substantially similar to the assessment system used in prior fiscal periods by the department and is merely being reduced to rule format as directed by the Act. The department revised its fee structure for the 1993-1995 biennium to incorporate a straight assessment basis, collected in installments. This system has advantages for both the department, banks and foreign bank agencies, in that it allows banks and foreign bank agencies to accrue for the amount due the department for its supervisory responsibility; provides a structure by which banks and foreign bank agencies pay their equitable costs of supervision; eliminates erratic and needed fluctuations in the department's receipts that result from a per examination billing method; allows the department to more accurately predict cash flows; allows the department to more properly schedule much-needed training and more adequately provide for staff educational requirements; and avoids the inordinate accumulation of excess funds. One difference from the former fee system used by the department is the provision for a reduction in fees for banks on an 18-month examination schedule. Section 3.36 provides that the department will make assessments on an annual basis (September 1-August 31). Assessments are calculated on a total of on-book and off-book assets. Because off-book assets generally require additional time and resources to examine, the assessment base includes both on-book and off-book assets to more equitably distribute the cost of bank regulation to those banks that require more resources to examine. Off-balance sheet items may fluctuate widely and sec.3.36(c) provides that the average balance of off-balance sheet items reflected in four sequential quarterly call reports, the last of which is the most recent March 31st call report, will be added to on-book assets to derive the assessment base for the next year. The assessment is billed annually effective September 1 of each year and is due in quarterly installments billed on the first day of September, December, March, and June. Section 3.36(e) requires the department to review all appropriations and expenditures and present the information to the Finance Commission no less frequently than once each biennium. The department, under sec.3.36(f), may adjust assessments for an individual bank or foreign bank, which during a year, falls into a different examination frequency. The department may adjust the annual assessment of a bank or foreign bank agency in the event of an acquisition or merger in subsections (f) or (g). The annual assessment will be based on combined assets on the date of the acquisition or merger. The department will make the adjustment during the quarter of the change in asset size. A financial institution converting to a state charter must pay an assessment beginning the quarter of conversion. Each bank or foreign bank agency, on the due date of the installment, must pay the full quarterly installment without proration for any reason. Section 3.36(g) provides that, after reviewing the results of actual expenditures to date and projected expenditures for the remainder of the fiscal year, the banking commissioner may lower the amount of any quarterly installment due from banks or foreign bank agencies, without commission approval. Section 3.36(h) provides that the department also may charge for special examinations and investigations in addition to other examinations at the rate of $500 per examiner day. The bank or foreign bank agency must also pay to the department an amount to cover actual travel expenses incurred by examiners. The commissioner may lower the uniform rate without commission approval. The commission, in subsection (i), may approve a special assessment to cover material expenditures, such as facilities repair and improvements and other extraordinary expenses. New sec.3.37 and sec.3.38 establish bank and foreign bank agency assessment schedules. These sections enable each bank and foreign bank agency to calculate their annual assessment with predictability. A bank's annual assessment is calculated using three factors: (1) a base assessment amount; (2) an incremental percentage rate; and, (3) the examination frequency. A foreign bank agency's annual assessment is calculated using a base assessment amount and an incremental percentage rate. The Office of the Comptroller of the Currency bases its assessments for national banks solely on asset size. The department believes that the use of a factor based on the frequency of a bank's examination schedule more accurately reflects the use of departmental resources related to the examination function. Banks that fall into an 18-month examination frequency, which consume fewer departmental resources, are therefore, subject to a factor that reduces their annual assessment. This advantage for smaller, well-managed banks is not available in the national bank system. In determining the percentage rate, the department had two goals. First, the department's goal was to keep costs the same or reduce costs to banks and foreign bank agencies. For example, in the fiscal year ending 1995, the department forgave one quarterly installment and reduced another. The department intends to continue to allow banks and foreign bank agencies to benefit from departmental cost reduction. Secondly, the department attempted to quantify the reduction in use of the departmental staff and resources by those banks that the department examines less frequently. Employee salaries, benefits and travel expenses account for approximately 85% of the department's expenditures. For this reason, the department conducted an extensive review of current and projected staffing needs in accordance with the statutory mandate to periodically examine banks and foreign bank agencies and to safeguard the safety and soundness of the state banking system. The department reviewed each division and its statutory responsibilities, revised application and other fees, and developed a system to provide that each of the department's supervisory programs become self-funding. The percentage rate also includes an historical overhead factor, which has remained unchanged for four years. The department will review this factor in 1996 for any necessary adjustments. State-chartered banks in Texas vary in size, complexity, nature of services and products offered to the public, nature of business locations, and degree of supervision required if the bank exhibits problem characteristics. For these reasons, state-chartered banks are placed into one of three examination frequencies: six-month, twelve-month, and 18-month. Any individual bank's placement in a specific examination frequency is the result of a combination of these factors. The criteria for placement in one examination frequency or another are currently set forth in the Commissioner's Examination Frequency Memorandum, Commissioner Numbered Memo 95-03, dated April 24, 1995. These criteria are subject to change, and the banking commissioner may reissue a pronouncement on examination frequencies. No comments were received regarding adoption of the new sections. The agency has made several nonsubstantive changes to better conform to Texas Register form and style guidelines, to correct an erroneous title to sec.3. 38, and to conform statutory citations to new codification references. The new sections are adopted under the Act, sec.1.012(a)(4), which authorizes the commission to adopt rules to provide for the recovery of the cost of maintenance and operation of the department and the cost of enforcing the Act through the imposition and collection of ratable and equitable fees for notices, applications, and examinations. The Act, sec.2.008(b) and sec.9. 002(b), specifically provide that each bank or foreign bank agency must pay the cost of examination, the equitable or proportionate cost of maintenance and operation of the department, and the cost of enforcement of the Act through the imposition and collection of fees established by the commission under the Act, sec.1.012(a)(4). As required by the Act, sec.1.012(b), in proposing these sections, the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. sec.3.36. Annual Assessments and Specialty Examination Fees. (a) Authority. The assessment schedule contained in this section is made under the authority contained in Texas Civil Statutes, Article 342-1. 012(a)(4) (the Texas Banking Act, sec.1.012(a)(4)). (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Assessable assets-The sum of on-book assets and average off-book assets of a bank or foreign bank agency. (2) Average off-book assets-The average of the off-balance sheet items reported by a bank in its most recent March 31st call report and the three immediately preceding call reports, as adjusted under subsection (c) of this section and pursuant to the instructions accompanying the assessment form applicable to and submitted by the bank or foreign bank agency. (3) Call report-The quarterly, consolidated report of condition and income (including domestic and foreign subsidiaries) promulgated in a form by the Federal Financial Institutions Examination Council and prepared and filed by a bank or foreign bank agency under state and federal law. (4) Examination frequency-The frequency of which a bank is subject to examination by the department. The criteria for placement into one of three examination frequencies are set forth in Commissioner Numbered Memo 95-03. (5) On-book assets-The total assets reported by a bank on the balance sheet contained in its most recent March 31st call report. (c) Calculation of average off-book assets. A bank must calculate a four- quarter average of off-book assets, as adjusted under this subsection, using the most recent March 31st call report and the three preceding call reports, as a component of assessable assets. In general, the bank must sum all line items for which values are included on "Schedule RC-L-Off-Balance Sheet Items," with the exception of: (1) amount of financial standby letter of credit conveyed to others; (2) amount of performance standby letter of credit conveyed to others; (3) participations in acceptances conveyed to others by the reporting bank; and (4) gross commitments to sell. (d) Annual assessment. The department will establish the annual assessment for each bank and foreign bank agency effective September 1 of each year. Each bank and foreign bank agency must pay to the department the annual assessment fee, in quarterly installments as billed effective September 1, December 1, March 1, and June 1 of each year, except that an installment may be adjusted under subsections (f) and (g) of this section. Assessments will be calculated on the total assessable assets. The assessment will be calculated on the basis of the factors identified in and in the manner described in sec.3. 37 of this title (relating to Calculation of Annual Assessment for Banks) or sec.3.38 of this title (relating to Calculation of Annual Assessment for Foreign Bank Agencies). (e) Review of assessment factors. The department will review all appropriations authorities, expenditure patterns, and other costs related to bank or foreign bank agency examination and supervision functions, and present to the finance commission no less frequently than once each biennium such information and a calculation chart that sets forth the annual assessment factors. (f) Interim adjustments. (1) If a bank or foreign bank agency's size, condition, or other characteristics change sufficiently during a year to cause the bank or foreign bank agency to fall into a different examination frequency, the department will adjust the annual assessment in the quarter of the change to reflect only the quarter or quarters of the year in which the bank or foreign bank agency falls into a different examination frequency. (2) In the event of an acquisition or merger involving a surviving state bank or foreign bank agency, the department will adjust the annual assessment in the quarter of the acquisition or merger to reflect only the quarter or quarters of the year in which the bank or foreign bank agency falls into a different asset group as a result of the acquisition or merger. The asset group will be calculated on the basis of the combined assessable assets, including branches, of the surviving bank or foreign bank agency. (3) A financial institution converting to a state bank must pay to the department an assessment beginning in the quarter of the conversion to reflect only the quarter or quarters of the year in which the financial institution is a state bank. (4) Each bank or foreign bank agency, on the due date of an assessment installment, must pay to the department the full quarterly installment of the assessment for the next three-month period without proration for any reason. (g) Adjustment of an installment. The commissioner may, after review and consideration of actual expenditures to date and projected expenditures for the remainder of the fiscal year, lower the amount of an installment due from banks or foreign bank agencies, without the prior approval of the finance commission. (h) Specialty examination fees. (1) Examinations of fiduciary activities and other special examinations and investigations, including but not limited to examinations of representative offices of foreign bank agencies, affiliates, and third-party contractors, are subject to a separate charge to cover the cost of time and expenses incurred in these examinations. (2) The bank or foreign bank agency shall pay to the department a fee for examination under this subsection calculated at a uniform rate of $500 per examiner per day to cover the cost of the examinations including the salary expense of examiners plus a proportionate share of department overhead allocable to the examination function. The commissioner may lower the uniform rate without the prior approval of the finance commission. (3) In connection with an examination under this subsection, a bank or foreign bank agency shall also pay to the department an amount for actual travel expenses incurred by the examiners, including mileage, public transportation, food, and lodging, in addition to paying the examination fee set forth in paragraph (2) of this subsection. (i) Special assessments. The finance commission may approve a special assessment to cover material expenditures, such as major facility repairs and improvements and other extraordinary expenses. sec.3.37. Calculation of Annual Assessment for Banks. The annual assessment for a state bank is calculated as described in sec.3.36 of this title (relating to Annual Assessments and Speciality Examination Fees), based on the values in the following table: Figure 1: 7 TAC sec.3.37 sec.3.38. Calculation of Annual Assessment for Foreign Bank Agencies. The annual assessment for a foreign bank agency is calculated as described in sec.3.36 of this title (relating to Annual Assessments and Speciality Examination Fees), based on the values in the following table: Figure 2: 7 TAC sec.3.38 This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516389 Everette D. Jobe General Counsel Finance Commission of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 7 TAC sec.3.37 The Finance Commission of the State of Texas (the commission) adopts the repeal of sec.3.37, concerning application fees and recovery of investigative costs, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9330). This section is amended and recodified as sec.15.2, and adopted in this issue of the Texas Register . Adoption of the repeal is therefore necessary to avoid conflict with new sec.15.2. No comments were received regarding adoption of the repeal. The repeal is adopted pursuant to rulemaking authority under Texas Civil Statutes, Article 342-1.012(a)(1) (the Texas Banking Act, sec.1.012(a)(1)), which authorize the commission to adopt rules necessary or reasonable to implement and clarify the Texas Banking Act. As required by the Texas Banking Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516387 Everette D. Jobe General Counsel Finance Commission of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 7 TAC sec.3.38 The Finance Commission of Texas (the commission) adopts the repeal of sec.3.38, concerning conversion between a state banking association and a limited banking association, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9331). The repeal is necessary because recently enacted Texas Civil Statutes, Article 342-3.502 (the Texas Banking Act, sec.3.502), incorporate the provisions of sec.3.38, rendering the section obsolete. No comments were received regarding adoption of the repeal. The repeal is adopted pursuant to rulemaking authority under the Texas Banking Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Texas Banking Act. As required by the Texas Banking Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516388 Everette D. Jobe General Counsel Finance Commission of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Subchapter E. Banking House and Other Facilities 7 TAC sec.3.91 The Finance Commission of Texas (the commission) adopts the repeal of sec.3.91, concerning establishment and closing of a branch facility, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9331). This section is amended and recodified as sec.15.42, and is adopted in this issue of the Texas Register to address establishment and closing of a branch facility. The repeal is therefore necessary to avoid conflict with new sec.15.42, and is further necessary because of changes made regarding branch facilities by enactment of Texas Civil Statutes, Articles 342-1.001 et seq (Texas Banking Act, sec.sec.1.001 et seq), and the adoption of a new chapter governing corporate activities in this issue of the Texas Register. No comments were received regarding adoption of the repeal. The repeal is adopted pursuant to rulemaking authority under the Texas Banking Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Texas Banking Act. As required by the Texas Banking Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516390 Everette D. Jobe General Counsel Finance Commission of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 7 TAC sec.3.92 The Finance Commission of Texas (the commission) adopts the repeal of sec.3.92, concerning naming and advertising of bank facilities, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9332). A new sec.3.92 is adopted in this issue of the Texas Register , concerning a different subject, security at unmanned teller machines. The repeal is necessary because Texas Civil Statutes, Article 342-917, the statute that underlies sec.3.92, was repealed effective September 1, 1995, by Act of May 18, 1995, 74th Legislature, Chapter 914, sec.26(1), 1995 Texas Session Law Service 4451, 4551, in connection with enactment of the Texas Banking Act, Texas Civil Statutes, Articles 342-1.001 et seq. No provision similar to Article 342-917 is contained in the Texas Banking Act, although the commission may have adequate authority to regulate identification of bank facilities should it choose to do so. No comments were received regarding adoption of the repeal. The repeal is adopted pursuant to rulemaking authority under Texas Civil Statutes, Article 342-1.012(a)(1) (the Texas Banking Act, sec.1.012(a)(1)), which authorize the commission to adopt rules necessary or reasonable to implement and clarify the Texas Banking Act. As required by the Texas Banking Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516391 Everette D. Jobe General Counsel Finance Commission of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 The Finance Commission of Texas (the commission) adopts new sec.3.92, concerning user safety at unmanned teller machines, sometimes referred to as automated teller machines or ATMs, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9332). The text of sec.3.92 will not be republished. Existing sec.3.92 concerned a different subject and is repealed in this issue of the Texas Register . Texas Civil Statutes, Article 342-903d (referred to as the ATM User Safety Act), as enacted by Act of May 27, 1995, 74th Legislature, Chapter 647, 1995 Texas Session Law Service 3528, governs user safety at unmanned teller machines. Provisions in the ATM User Safety Act purport to cross-reference to other provisions of the Texas Banking Code, Texas Civil Statutes, Articles 342-101 et seq, for definitional purposes, but the Texas Banking Code was in large part repealed by Act of May 18, 1995, 74th Legislature, Chapter 914, sec.26, 1995 Texas Session Law Service 4451, 4551, in connection with the adoption of the Texas Banking Act. Section 3.92(a) therefore contains definitions designed to facilitate understanding of these cross-references to repealed statutes. The commission is aware that physical security of customers, employees, and property is of great concern to financial institutions and has been federally regulated by the Bank Protection Act of 1968 (12 United States Code, sec.1882) and Regulation P (12 Code of Federal Regulation, sec.sec.216.1 et seq). The ATM User Safety Act expands these requirements by specifying detailed requirements for unmanned teller machine security procedures, and further requires the commission to adopt rules to implement it. Accordingly, the section provides additional clarification in those areas in which the ATM User Safety Act is not already explicit or is otherwise ambiguous. Safety procedures at ATMs must be in place no later than September 1, 1996, and required notices to customers must occur no later than January 1, 1996 and annually thereafter. In developing the section, the commission was mindful of trends relating to the Bank Protection Act. That federal statute was implemented by extremely detailed regulations with specifications relating to security cameras and specific requirements for all manner of equipment and procedures. Over a period of time, the regulation became outdated on a more and more frequent basis so that the requirements of the regulation did not keep pace adequately with changes in the security field. As a result, in 1991 the regulatory scheme was amended to provide a broad framework with each financial institution expected to implement the security requirements as fit the institution, its community, changes in technology, and other relevant factors. In developing the section, the commission expects the same sort of procedure to be used by affected institutions. In other words, only a broad framework is established by the section. One comment was received that was generally supportive of adoption of the section. Additional suggestions made by the commenter were rejected as explained further in the following paragraphs. Section sec.3.92(b) clarifies that candle foot power of lighting is to be measured under normal conditions, i.e., without complicating factors such as fog, rain, snow, sand or dust storm. The commenter suggested that the standard for lighting be expressed in terms of wattage. This suggestion is rejected. Wattage is a measure of power consumption, not light. Further, the statutory standard is expressed in terms of candle foot power, and candle foot power is readily measurable by a conventional light meter. Special procedures for addressing noncompliance by landlords or owners of leased property on which ATMs are located is addressed by sec.3.92(c). Annual safety evaluations are required in proposed sec.3.92(d). Financial institutions should notify landlords who fail to follow recommendations to improve the safety of an access area. The requirement of ATM User Safety Act, sec.5, that customers be notified of basic safety precautions, is set forth in proposed sec.3.92(e), including required timing and recommended content of the notice. The commenter suggested permitting the notice to be printed on the back of the customer's monthly statement as a method of simplifying the disclosure, pointing out that the disclosure would thus be available year round rather than once annually. After careful consideration, the agency respectfully rejects the suggestion on the basis that a special disclosure will more likely attract the attention of the customer and be read. However, the section will not prohibit printing the disclosures on the back of the statement as an additional step if a bank is so inclined. The ATM User Safety Act, sec.7(b)(1), grants authority to the commission to require video surveillance equipment at ATM sites. The commission has determined that video surveillance equipment at ATM sites has limited utility and practicality, and may in fact lead a customer into a false sense of security. Accordingly, the commission declines to require video surveillance equipment at all ATM sites. Whether video surveillance equipment, alarm systems, or security officers are appropriate at a particular ATM sites will depend on the safety evaluation of the owner or operator of the ATM that is required under the ATM User Safety Act, sec.4. The owner or operator may determine that unconnected or fake video surveillance equipment is appropriate. If the owner or operator determines that working video surveillance equipment is appropriate, the owner or operator must provide for selecting, testing, operating, and maintaining appropriate equipment. Section 3.92(g) indicates that the ATM User Safety Act applies to ATMs located in a bank vestibule if there is 24 hour access from outside the building. Section sec.3.92(h) requires that the security officer of a financial institution certify compliance with the ATM User Safety Act and this subchapter on an annual basis. The new section is adopted under the authority of Texas Civil Statutes, Article 342-903d, sec.7(a), as enacted by Act of May 27, 1995, 74th Legislature, Chapter 647, 1995 Texas Session Law Service 3528, 3530, which requires the commission to adopt rules regarding enforcement and implementation of that 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 December 15, 1995. TRD-9516392 Everette D. Jobe General Counsel Finance Commission of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 7 TAC sec.3.93 The Finance Commission of Texas (the commission) adopts the repeal of sec.3.93, concerning loan production offices, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9334). The repeal is necessary because sec.3.93 has been superseded by Texas Civil Statutes, Article 342-3.205 and Article 342-8.003, which render the section obsolete. No comments were received regarding adoption of the repeal. The repeal is adopted pursuant to rulemaking authority under Texas Civil Statutes, Article 342-1.012(a)(1), which authorize the commission to adopt rules necessary or reasonable to implement and clarify the Texas Banking Act, Texas Civil Statutes, Articles 342-1.001 et seq. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516393 Everette D. Jobe General Counsel Finance Commission of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Part II. Banking Department of Texas Chapter 10. Trust Companies 7 TAC sec.10.5 The Finance Commission of Texas (the commission) adopts the repeal of sec.10.5, regarding authorized investments of trust companies, without changes to the proposed text as published in the August 8, 1995, issue of the Texas Register (20 TexReg 5975). A new sec.10.5 is adopted in this issue of the Texas Register. The repealed section is outdated and ambiguous regarding permissible investments of trust companies. The new adopted section is directly in response to a petition for rulemaking filed by a regulated trust company seeking clarification of existing sec.10.5 and the meaning of "readily marketable investments." Other flaws were noted in existing sec.10.5 and the section is therefore repealed and replaced. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 342-1106(b), which authorize the commission to adopt general rules and regulations as may be necessary to accomplish the purposes of trust company regulation, and Texas Civil Statutes, Article 342-1.012(a)(2) (the Texas Banking Act, sec.1.012(a)(2)) , which authorize the commission to adopt rules to preserve the safety and soundness of trust companies. The Texas Banking Act is applicable to trust companies by virtue of Texas Civil Statutes, Article 342-1102, sec.1. As required by the Texas Banking Act, sec.1.012(b), the commission considered the need to promote a stable trust company environment, provide the public with convenient, safe, and competitive trust services, and allow for economic development within this state. 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 December 15, 1995. TRD-9516374 Everette D. Jobe General Counsel Banking Department of Texas Effective date: January 5, 1996 Proposal publication date: August 8, 1995 For further information, please call: (512) 475-1300 The Finance Commission of Texas (the commission) adopts new sec.10.5, regarding the investment of corporate assets of trust companies, with nonsubstantive changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9334). Former sec.10.5 is repealed in this issue of the Texas Register. The proposed rule is directly in response to a petition for rulemaking filed by a regulated trust company seeking clarification of existing sec.10.5 and the meaning of "readily marketable investments." Other flaws were noted in existing sec.10.5 and the section is therefore repealed and replaced. Under the section as adopted, a trust company is required to maintain a measure of liquidity by maintaining an amount at least equal to 40% of its capital and certified surplus in readily marketable investments, defined to include insured certificates of deposit, investment securities in which state banks can invest without limitation, publicly traded corporate debt or equity securities, or another investment that can be converted to cash within four business days. The remainder of a trust company's corporate assets may be invested at the discretion of the trust company except that a trust company may not invest an amount in excess of 15% of its capital and certified surplus in the securities of a single issuer without the prior written consent of the banking commissioner. The adopted section further authorizes the banking commissioner, on application and in the exercise of discretion, to reduce the amount of investments in readily marketable investments from the 40% restriction. No comments were received regarding adoption of the new section. The citation form for the Texas Banking Act has been changed in the adopted section to conform to the manner in which the Texas Banking Act has been codified. One cross reference to sec.10.1 has been corrected to refer to the proper title of that section. The new section is adopted under Texas Civil Statutes, Article 342-1106(b), which authorize the commission to adopt general rules and regulations as may be necessary to accomplish the purposes of trust company regulation, and Texas Civil Statutes, Article 342-1.012(a)(2) (Texas Banking Act, sec.1.012(a)(2)), which authorize the commission to adopt rules to preserve the safety and soundness of trust companies. The Texas Banking Act, sec.1.012, is applicable to trust companies by virtue of Texas Civil Statutes, Article 342-1102, sec.1. As required by the Texas Banking Act, sec.1.012(b), the commission has considered the need to promote a stable trust company environment, provide the public with convenient, safe, and competitive trust services, and allow for economic development within this state. sec.10.5. Authorized Investments. (a) A trust company shall maintain an amount equal to 40% of its capital and surplus as defined in sec.10.1 of this title (relating to Ratable Increases in Required Capital) in investments that are readily marketable and can be converted to cash within four business days, including: (1) federally insured certificates of deposit issued by a depository institution; (2) securities in which state banks can invest without limitation under Texas Civil Statutes, Article 342-5.101 (Texas Banking Act, sec.5.101); or (3) corporate debt or equity securities registered or approved for registration and traded on a national securities exchange or authorized for quotation on an automated quotation system sponsored by a registered securities association. (b) The banking commissioner may, on application and in the exercise of discretion consistent with protecting safety and soundness, reduce the amount of investments required under subsection (a). (c) Subject to Subsection (a) of this section, a trust company may invest its corporate assets in any investment permitted by law. Without the prior written consent of the banking commissioner, a trust company may not invest an amount in excess of 15% of its capital and certified surplus in the securities of a single issuer except as otherwise provided in the Texas Banking 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 authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516375 Everette D. Jobe General Counsel Banking Department of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Chapter 15. Orders of Commissioner 7 TAC sec.15.1, sec.15.2 The Finance Commission of Texas (the commission) adopts the repeal of sec.15.1 and sec.15.2, or the entirety of Chapter 15, concerning removal orders and appeal of supervisor and conservator decisions, respectively, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9343). Chapter 15 is now the repository of new sections regarding corporate activities, adopted in this issue of the Texas Register. Section 15.1 established a procedure for review of conservator or supervisor actions, and is now obsolete in that such review procedures are incorporated into Texas Civil Statutes, Article 342-6.010 (the Texas Banking Act, sec.6.110). Section 15.2 construed the law with respect to two conflicting sections of now repealed Texas Civil Statutes, Article 342-412, and clarified that the banking section of the commission no longer existed and references to the banking section should be understood to be references to the commission. Those difficulties are also eliminated by the Texas Banking Act, sec.sec.6.003-6. 012, rendering this section obsolete. No comments were received regarding adoption of the repeals. The repeals are adopted pursuant to rulemaking authority under the Texas Banking Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Texas Banking Act. As required by the Texas Banking Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. 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 December 15, 1995. TRD-9516376 Everette D. Jobe General Counsel Banking Department of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Chapter 15. Corporate Activities The Finance Commission of Texas (the commission) adopts sec.sec.15.1-15.6 (Subchapter A); sec.15.23 and sec.15.24 (Subchapter B); sec.15.41 and sec.15.42 (Subchapter C); and sec.15.61 and sec.15.62 (Subchapter D), of new Chapter 15, concerning corporate activities. Sections 15.1, 15.3-15.6, 15.23, 15.41, 15.42, 15.61, and 15.62 are adopted with nonsubstantive changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9343). Section 15.2 and sec.15.24 are adopted without changes from the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9343), and will not be republished. Adopted sections are published separately by subchapter as required by the Texas Register, preceded by this common preamble. Existing sec.15.1 and sec.15.2 are repealed in this issue of the Texas Register , as are other sections in this title that the adopted sections replace, as noted further in the following discussion. With some exceptions, the adopted sections represent rewrites of previously existing sections to conform regulations on corporate activities to newly enacted Texas Civil Statutes, Articles 342-1.001 et seq (the Texas Banking Act, sec.sec.1.001 et seq) (the Act). Pursuant to the Act, the State Banking Board is eliminated effective September 1, 1995, and its powers and duties transferred to the Banking Commissioner of Texas (banking commissioner) and the commission. The substantive provisions of Chapter 31 of this title (relating to the State Banking Board) that have continuing vitality are rewritten and adopted as new sections in Chapter 15, and all sections of Chapter 31 are repealed in this issue of the Texas Register. Section sec.3.37 of this title (relating to Application Fees and Cost Deposits) and sec.3.91 of this title (relating to Establishment and Closing of a Branch Facility) are also repealed in this issue of the Texas Register and replaced by new sections in Chapter 15. Subchapter A (relating to Fees and Other Provisions of General Applicability) In Subchapter A, sec.15.1 is the definitions section for Chapter 15; sec.15.2 is a rewrite of now repealed sec.3.37; sec.15.3 is new for the purpose of providing expedited application handling for certain banks and trust companies; sec.15.4 is new for the purpose of providing for disposition of abandoned applications; and sec.15.5 is new setting out general guidelines and requirements for the contents and confirmation of public notices in newspapers of general circulation. Finally, sec.15.6 is a rewrite of now repealed sec.31.4 of this title (relating to Applications to Engage in Certain Businesses: Notices to Applicants; Application Processing Times; Appeals). Section 15.1 (relating to Definitions) Section 15.1 is the general definitions section for the chapter. Several definitions have been clarified in response to comments. Section 15.2 (relating to Filing Fees and Cost Deposits) The purpose of the commission in adopting now repealed sec.3.37 was to reduce the heavy reliance of the Texas Department of Banking (the department) on examination fees and to impose appropriate application and filing fees and cost deposits to make identifiable services self-sustaining to the extent possible. Since sec.3.37 became effective in November of 1993, the need for changes in the fee structure has become apparent as a result of passage of the Act, changes in the banking and trust industries, policy changes made within the department, and inadvertent omissions made when existing sec.3.37 was first adopted. Repealed sec.3.37 did not set a fee for an application for authorization to purchase assets and assume liabilities. The department incurs material costs in processing such applications. In addition, a significant shift in assets is occurring in the banking industry, and the department anticipates the number of purchase of assets and assumption of liabilities transactions will increase, straining the resources of the department. New sec.15.2(b) sets a $4,000 fee for purchase of assets and assumption of liabilities transactions. Section 15.2 also increases the fee for applications involving acquisition of control (change of control) to $5,000 because these applications consume a great deal of staff time in reviewing the applications for the purpose of making recommendations for decision. In comparison, the Office of the Comptroller of the Currency charges a fee of $10,200 for processing a change of control application, and the Texas Savings and Loan Department recently revised its rules to require a $10,000 fee for change of control applications. The fee for holding company filings is also increased in sec.15.2 to $500 for transactions involving both bank and non-bank subsidiaries because processing costs continue to rise, largely due to the complexity of the transactions. Standard branch application filing fees will remain at $1,500 under the adopted section, although under certain conditions this fee may be lowered to $500 for eligible institutions. Because Texas Civil Statutes, Article 3921, was repealed by the 74th Legislature in connection with adoption of the Act, the additional filing fee for amendments to the articles of association, expressed as a percentage of any increase in authorized capital, is deleted in the adopted new section. Section 15.3 (relating to Expedited Filings) Section 15.3 establishes a procedure by which an eligible bank may file an expedited branch application (relating to the establishment and closing of a branch facility) or an expedited application for branch or home office relocations less than one mile with no abandonment of the community. Adopted sec.15.3 also allows an eligible trust company to file an expedited application for home office relocation where there is no abandonment of the community. Subject to certain exceptions set out in the section, eligible bank and trust companies are allowed to file less detailed applications which will reduce department processing time which will, in turn, reduce expense to the department. The filing fee for an expedited application is $500 and is the sole filing fee. Section 15.4 (relating to Required Information and Abandoned Filings). Section 15.4 is a new section. This section authorizes the department to investigate and evaluate facts related to submitted filings (applications, requests, notices, and protests) and to require the submission of additional information, including an opinion of counsel or an opinion, review or compilation prepared by a certified public accountant. In addition, sec.15.4 permits the department to consider as abandoned any submitted or accepted filing which is not complete within the established time periods, or with regard to which the necessary filing fees are not timely paid. The department has found that, in many instances, submitted filings are unnecessarily delayed because of failure to pay necessary fees or to provide requested information in a timely manner. Applications and other filings must be processed based on current information. In addition, submitted filings that are not accompanied by the necessary fees strain the resources of the department and utilize processing time which could be expended on submitted filings which are in full compliance. Section 15.5 (relating to Public Notices) Section 15.5 is the general section related to required public notices. This section as adopted sets out, in general, the required contents of public notices. The new sec.15.5 prohibits the publication of the required notice solely in specialized newspapers which are directed to a specific interest group or occupation, such as legal or court related newspapers. Section 15.6 (relating to Applications to Engage in Certain Businesses: Notices to Applicants; Application Processing Times; Appeals) Section 15.6 is based on existing sec.31.4, repealed in this issue of the Texas Register. Promulgation of procedural rules for processing permit applications and issuing permits is required by Government Code, sec.2005.003. Although adopted sec.15.6 is a version of now repealed sec.31.4 as edited to conform to the Act, no significant changes are made. Subchapter B (relating to Bank and Trust Company Charters) The two adopted sections of Subchapter B are based on two of the three sections in Chapter 31, Subchapter B, of this title (relating to Bank Applications), which are repealed in this issue of the Texas Register. Because of the elimination of the State Banking Board, all sections in Chapter 31 are rewritten and adopted as part of Chapter 15. The commission anticipates additional rulemaking under Subchapter B and therefore reserves the numbers for sec.15.21 and sec.15.22 for future expansion. Adopted sec.15.23 is a rewrite of now repealed sec.31.20 without significant change except to conform to the Act and to this chapter. Adopted sec.15.24 is a rewrite of now repealed sec.31. 21, also without significant change except to conform to the Act and to this chapter. Subchapter C (relating to Bank Offices) Subchapter C contains two sections, sec.15.41 and sec.15.42. Adopted sec.15.41 is based on now repealed sec.31.22 (relating to Applications for Change of Domicile) and is substantially similar as rewritten to adapt to changes made in law by the Act. Adopted sec.15.42 is based on now repealed sec.3.91 (relating to Establishment and Closing of a Branch Facility) without substantive changes except to conform to the Act and to this chapter. Subchapter D (relating to Trust Company Applications) Subchapter D is based on Chapter 31, Subchapter C, of this title (relating to Trust Company Applications), all sections of which are repealed in this issue of the Texas Register. Adopted sec.15.61 is based on now repealed sec.31.40 and to this chapter. Adopted sec.15.62 is based on now repealed sec.31. 41, edited to conform to the Act and to this chapter. Section 15.62 also adds a new subsection requiring that an exempt trust company seeking nonexempt status comply with all requirements for a new charter application. Comments Received Two comments were received regarding adoption of the sections, both generally favorable to adoption but with suggestions. One commenter argues that the provisions of sec.15.42(f)(2) requiring an applicant for a branch office to respond within ten days after a detailed protest is filed with the department is inherently uncertain because the date of filing may vary from the date received by the applicant, and suggests that the response time be measured by the date the protest is received by the applicant. The agency respectfully disagrees on the basis that the methodology chosen permits the hearings officer to more objectively determine filing deadlines. Further, sec.15.42(f)(3) permits extensions of time for good cause, which includes failure of a party to timely serve filed documents on an opposing party. To clarify how time is measured the agency has added a reference to Rule 21a, Texas Rules of Civil Procedure, as governing methods and manner of authorized service and the computation of time periods, also see 7 TAC sec.9.3(b). The commenter also points to allegedly redundant language in sec.15.42(f)(2). The agency disagrees; the concluding sentence of sec.15.42(f)(2) refers to distribution of comments from persons who are not parties to the proceeding and is therefore not redundant of the requirement that parties serve each other with copies of filed documents. The second commenter, Texas Bankers Association (TBA), requested clarification in a number of instances. First, the definition of eligible bank refers to the existence of an enforcement order as a disqualification. The definition is clarified to refer to enforcement orders issued by a banking regulatory agency as a disqualification. Second, TBA requested the addition of language to sec.15.2(e) to ensure that cost reimbursement is based on actual, reasonable costs and that the banking commissioner's authority to waive or reduce collection of fees and costs is applied on a nondiscriminatory basis. The agency generally concurs and has made changes to both subsections (d) and (e) of sec.15.2. Actual cost is determined with reference to sec.3.36(h), as adopted in this issue of the Texas Register . Third, TBA requested clarification that the $500 fee for expedited filing under sec.15.3 is the entire fee and not an additional fee. The agency concurs that the $500 fee is the entire fee and has slightly modified the text of sec.15.3(d) to address this issue. TBA questions whether the $2,500 fee for authorization of additional mergers is justified, stating that the historic practice has been to charge one fee for a merger regardless of the number of parties. The comment is based on a misconception and the agency disagrees. Under repealed sec.3.37, the department charged $3,000 for a simple two party merger and an additional $1, 500 for the corollary branch application, for a total fee of $4,500. Each additional party to the merger in excess of two resulted in another fee of $3, 000. New sec.15.2(b) actually reduces the filing fee in both instances. The branch application fee is no longer charged, so the total fee is always lower than under repealed sec.3.37. Further, in the case of a multiple party merger, the fee for each additional party is reduced to $2,500 if the parties are affiliated. TBA also questions the appropriateness of a $4,000 fee for authorization to establish a subsidiary and the factors that distinguish that fee and the $500 fee for a standard subsidiary notice letter. The agency declines to change either fee. Under repealed sec.3.37, the fee for a subsidiary application was $1,500, and the experience of the department has demonstrated that questions of first impression regarding whether a bank may engage in a novel activity through a subsidiary require an inordinate amount of time and research to resolve. Applicants have not dependably submitted exhaustive research on the question to aid the department and the $1,500 fee has not recouped the cost of processing. On the other hand, routine subsidiary formation has been simplified under the Act. Therefore, the fee in such an instance has been reduced to $500. TBA suggests that sec.15.3 contain a time line for department response to expedited filings. The agency concurs, and a new subsection (f) is added based in part on sec.15.42(f). TBA also suggests that sec.15.4(b) contain a time line for the department to notify an applicant that an application is complete. The agency concurs with the comment and amends sec.15.4 to add a new subsection (b). Conforming changes are made to sec. sec.15.3(c)(10), 15.6(b) sec.15.41(a), and 15. 42(b). TBA also requests that sec.15.5, relating to form and content of public notice, be amended to apply to "any other activity requiring public notice." The agency concurs and sec.15.5(a) has been edited in clarification. Finally, TBA requested deletion of sec.15.42(e)(3)(F) as overly broad and confusing. The agency disagrees with the comment. Repealed sec.13.91(g)(3)(G) contained substantially the same language and no confusion has arisen to the knowledge of the agency. The indicated factor, responsiveness to criticisms in examination reports and operation in substantial compliance with law, are directly relevant to whether the banking commissioner has or should have supervisory or regulatory concerns. The agency also notes that the list of considerations in sec.15.42(e)(3) is open-ended; deletion of the factor in sec.15.42(e)(3)(G) would not therefore remove the item from consideration. The agency has further made minor corrections to sec. sec.15.1, 15.4-15.6, 15.23, 15.41, 15.61, and 15.62 to change the legal citation to the Act to its recent codification in Texas Civil Statutes and to better conform to Texas Register form and style guidelines, especially with regard to cross-references to other sections. Section 15.41(c) is also clarified to provide, as required by the Act, sec.3.202(c), that an application to relocate home office is subject to the same standards as a branch application. All changes made to the adopted sections are considered nonsubstantive and in the nature of clarifications or corrections. Subchapter A. Fees and Other Provisions of General Applicability 7 TAC sec.sec.15.1-15.6 The new sections are adopted under the Texas Banking Act (the Act), sec.1. 012(a)(1), which authorizes the commission to adopt rules necessary or reasonable "to implement and clarify" the Act, and under Texas Civil Statutes, Article 342-1106(b), which authorize the commission to adopt general rules and regulations as may be necessary to accomplish the purposes of trust company regulation. In addition, the sections are adopted under the Act, sec.1.012(a)(4) and sec.2.006(b), which provides the commission with the authority to establish reasonable and necessary fees for the maintenance and administration of the Act. Additional statutory authority for certain fees can be found in the Act, sec.3.003(a) (bank charter fees and costs), sec.3.004(b) (expenses for charter investigation), sec.4.002(a) (fees and costs for review of acquisition of control), sec.9.004(a) (registration fees for foreign bank agencies), and sec.9.006(a) (registration fees for foreign bank representative offices). With respect to application of the adopted sections to trust companies, Texas Civil Statutes, Article 342-1102, specifically makes selected provisions of the Act applicable to trust companies. As required by the Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. sec.15.1. Definitions. Words and terms used in this chapter that are defined in Texas Civil Statutes, Article 342-1.001 et seq (the Texas Banking Act, sec.1.001 et seq) (the Act), have the same meanings as defined in the Act. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Accepted filing -Includes any application, request, notice, or protest filed under the Act, this chapter or any rule or regulation adopted pursuant to the Act in which the banking commissioner has received sufficient information to reach an informed decision, the appropriate fee has been paid pursuant to sec.15.2 of this title (relating to Filing Fees and Cost Deposits), and the banking commissioner has notified the person or entity who submitted the filing, in writing, that the submission is complete and has been accepted for filing. Community-The area delineated by a state bank as the local community or communities that comprise a state bank's entire community pursuant to the Community Reinvestment Act (CRA), 12 United States Code (USC), sec.sec.2901 et seq and any rules or regulations adopted pursuant to CRA. The community may include the delineated area for the purposes of CRA in which the person or entity that is required or authorized to publish public notice proposes to engage in business, is currently engaged in business, or wishes to abandon. Day-A calendar day. Eligible bank-A state bank that: (A) possesses tangible equity capital in excess of 6.0% of tangible assets or is operating in compliance with a capital plan approved in writing by the banking commissioner; (B) received a composite rating of either 1 or 2 as defined by the Uniform Financial Institutions Rating System at the most recent examination by the department or federal regulatory agencies; (C) received a CRA rating of either outstanding or satisfactory at the bank's most recent inspection by the appropriate federal regulatory agency; (D) is not presently operating in violation of a regulatory condition or commitment letter imposed by a state or federal banking regulatory agency; and (E) is not presently operating under a memorandum of understanding; determination letter or other notice of determination; order to cease and desist, or other state or federal administrative enforcement order issued by a state or federal banking regulatory agency. Eligible trust company-A Texas chartered trust company that: (A) possesses capital and surplus that equals or exceeds current minimum statutory or regulatory requirements; (B) received a composite rating of either 1 or 2 as defined by the Uniform Financial Institution Rating System at the most recent examination by the department or federal regulatory agencies; (C) is not presently operating in violation of a regulatory condition or commitment letter; and (D) is not presently operating under a memorandum of understanding, determination letter or other notice of determination, order to cease and desist, or other state or federal administrative enforcement order. General interest items-Include, but are not limited to, local and international news, weather, sports, features, comics, entertainment and advertisements directed to the general public. Newspaper of general circulation-A newspaper that: (A) devotes not less than 25% of its total column lineage to general interest items, provided that a newspaper of general circulation does not include a specialized newspaper or other periodical directed to a specific interest group or occupation, such as a legal notice or court related newspaper; (B) is published at least once a week; (C) is entered as second class postal matter in the county where published; and (D) has been published regularly and continuously for at least 12 months before the applicant, protesting party or other entity publishes notice, provided that a weekly newspaper is considered to have been published regularly and continuously if the newspaper omits not more than three issues in a 12-month period. Public notice-Any matter including an application, request, notice, or protest, whether by proclamation or declaration, required or authorized to be published in a newspaper of general circulation by the Act, this chapter, or any rule or regulation adopted pursuant to the Act, or required to be published by the banking commissioner. Submitted filing -Includes any initial application, request, notice, or protest filed under the Act, this chapter or any rule or regulation adopted pursuant to the Act, that is neither an accepted filing nor been abandoned. sec.15.3. Expedited Filings. (a) Eligible banks may file an expedited filing according to forms and instructions provided by the department solely for the following matters: (1) branch applications pursuant to the Act, sec.3.203, and sec.15.42 of this title (relating to Establishment and Closing of a Branch Facility); (2) branch relocations less than one mile with no abandonment of the community pursuant to the Act, sec.3.203; and (3) home office relocations less than one mile with no abandonment of the community pursuant to the Act, sec.3.202(c). (b) Eligible trust companies may file an expedited filing according to forms and instructions provided by the department solely for home office relocations where there is no abandonment of the community pursuant to the Act, sec.3.202(b) and (c) (applicable to trust companies pursuant to Texas Civil Statutes, Article 342-1102, sec.1). (c) Notwithstanding another provision of this section, the banking commissioner may deny expedited filing treatment to an eligible bank or eligible trust company, in the exercise of discretion, if the banking commissioner finds that the filing involves one or more of the following: (1) the proposed transaction involves significant policy, supervisory, or legal issues; (2) approval of the proposed transaction is contingent on additional statutory or regulatory approval by the banking commissioner or another state or federal regulatory agency; (3) the proposed transaction will result in a fixed asset investment in excess of the limitation contained in the Act, sec.5.001(b); (4) the proposed transaction requires the approval of the banking commissioner under the Act, sec.4.107(b); (5) the proposed transaction involves an issue of parity between state and national banks pursuant to the Act, sec.3.010; (6) the proposed transaction significantly impacts the strategic plan of the bank or trust company; (7) the proposed transaction will result in a decrease in the tangible leverage capital ratio of a state bank below 6.0% of assets or, in the case of a trust company, would cause capital and surplus to fall below current minimum statutory or regulatory requirements; (8) the proposed transaction will result in an abandonment of the community pursuant to the Act, sec.3.202(d); (9) the proposed transaction involves an issue of regulatory concern as determined by the banking commissioner in the exercise of discretion; or (10) the application is deficient and specific additional information is required, or the filing fee has not been paid. (d) The sole filing fee for an expedited filing is $500. (e) The department shall notify the applicant on or before the 15th day after receipt of the application if expedited filing treatment is not available under this section. Such notification must be in writing and must indicate the reason why expedited treatment is not available. Notification is effective when mailed by the department and is not subject to appeal. (f) Unless the applicant is otherwise notified by the department, an expedited filing is approved on the 15th day after the later of the date the application is complete and accepted for filing, or expiration of the period for filing a comment, protest, response or reply, whichever is the last to occur, unless a protest is filed. If a protest is filed, the application will be processed under sec.15.41 of this title (relating to Written Notice or Applications for Change of Home Office) or sec.15.42, whichever is applicable. sec.15.4. Required Information and Abandoned Filings. (a) Required Information. The banking commissioner may investigate and evaluate facts related to a submitted filing or accepted filing to the extent necessary to reach an informed decision. The banking commissioner may require any person or entity connected with the matter to which the submitted or accepted filing pertains to submit additional information, including, but not limited to, an opinion of counsel with respect to a matter of law or an opinion, review or compilation prepared by a certified public accountant. (b) On or before the 15th day after initial submission of an application, the banking commissioner shall issue a written notice informing the applicant either that all filing fees have been paid and the application is complete and accepted for filing, or that the application is deficient and specific additional information is required. (c) Time Limit For Providing Required Information. Unless otherwise provided for in the Act, this chapter or rules and regulations adopted pursuant to the Act, all required information necessary for the banking commissioner to declare that a submission is an accepted filing shall be provided to the department on or before the 61st day after the date of the initial submission of the filing. A person or entity may request an automatic 30-day extension of time to submit required information if the request is in writing and is received by the department prior to the end of the initial 60-day period provided for in this subsection. An additional extension may be requested in writing if such request is received prior to the expiration of the automatic extension. The additional extension shall be granted only if there is a finding of good and sufficient cause, in the banking commissioner's discretion, to grant an extension. Notice of the decision of the banking commissioner shall be mailed to the person or entity seeking the extension within ten days of the receipt of the request by the department. (d) Abandoned Filing. The banking commissioner may determine any submitted or accepted filing to be abandoned, without prejudice to the right to refile, if the information required by the Act, this chapter, or any rule or regulation adopted pursuant to the Act, or additional requested information, is not furnished within the time period specified by subsection (b) of this section or as requested by the banking commissioner in writing to the person or entity making the submission. The banking commissioner may determine a submitted or accepted filing for which fees required by the Act or by this chapter are not paid within 30 days of receipt of the initial submission to be abandoned. (e) Notice. The banking commissioner shall give written notice of any submitted or accepted filing considered to be abandoned. Notice of abandonment shall be effective upon mailing by the department. Fees paid related to an abandoned filing are nonrefundable. sec.15.5. Public Notice. (a) General. A person or entity required or authorized to file public notice, including a person or entity requesting authorization for a merger, purchase of assets, a conversion, an applicant for a foreign bank agency, or another application requiring public notice, shall publish notice in a newspaper of general circulation in its specified community and in such other locations as may be required by the banking commissioner. (b) Contents. The public notice must state that a filing is being made; the date (or expected date) of the filing; sufficient information describing the proposed transaction, and other related information required by the Act, this chapter, or rules and regulations adopted pursuant to the Act; and any other information as may required by the banking commissioner. In addition, the notice must include substantially the following text as a separately stated paragraph: "Any person wishing to comment on this application, either for or against, may file written comments with the Texas Department of Banking, 2601 North Lamar Boulevard, Austin, Texas 78705-4294 on or before the 14th day after the date of this publication. Such comments will be made a part of the record before and considered by the banking commissioner. Any person wishing to formally protest and oppose (describe type of application in general terms) and participate in the application process may do so by filing a written notice of protest with the Texas Department of Banking on or before the 14th calendar day after the date of this publication accompanied by a protest filing fee of $2,500. The protest fee may be reduced or waived by the banking commissioner upon a showing of substantial hardship." (c) Publisher's Affidavit. A person or entity required to file public notice under this section shall file with the banking commissioner a copy of the notice and a publisher's affidavit attesting to the date of publication. (d) One Publication Sufficient. Unless otherwise required by the Act or rules and regulations adopted pursuant to the Act, one public notice publication per submitted or accepted filing in each community specified by the banking commissioner is sufficient if in substantial compliance with this section and chapter and with the Act, as determined by the banking commissioner. The banking commissioner reserves the right to require additional publication based on a determination that a particular publication is insufficient or is otherwise not in compliance. (e) Other Acceptable Public Notice. The banking commissioner may determine that public notice required by another regulatory agency satisfies the public notice requirements of this section. sec.15.6. Applications for Bank & Trust Charter: Notices to Applicants; Application Processing Times; Appeals. (a) Form of Application. An application to engage in a business under the Act, sec.3.003, or Texas Civil Statutes, Article 342-1101, must be filed on a form prescribed by the banking commissioner. (b) Notice to Applicant. The banking commissioner shall issue a written notice as required by sec.15.4 of this title (relating to Required Information and Abandoned Filings) informing the applicant either that all filing fees have been paid and the application is complete and accepted for filing, or that the application is deficient and specific additional information is required. (c) Action on Applications. The banking commissioner shall approve or deny an application for a state bank or trust company charter or an application for conversion of a financial institution to a state bank on or before the 180th day after the date the application is accepted for filing, unless extended by written agreement between the applicant and the banking commissioner; provided that, if the application is protested, the banking commissioner shall convene a hearing on or before the 90th day after the date the protest is received and shall render a decision in accordance with Chapter 9 of this title (relating to Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings). (d) Violation of Processing Times. If an application is not protested or a hearing is not convened, an applicant may appeal directly to the banking commissioner for a timely resolution of a dispute arising from a violation of a processing period set forth in this section. An applicant may appeal by filing a written request with the banking commissioner on or before the 30th day after the date the decision is made on the application, requesting review by the banking commissioner to determine whether the established period for the granting or denying of the application has been exceeded. The decision on the appeal shall be based on the written appeal filed by the applicant, any response by the department, and any agreements between the parties. The banking commissioner may convene a hearing to take evidence on the matter. (e) Decision on Appeal. The banking commissioner shall decide the appeal in the applicant's favor if the banking commissioner determines that the time periods established in this section have been exceeded and the department has failed to establish good cause for the delay. The banking commissioner shall issue a written decision to the applicant on or before the 60th day after the filing of an appeal. If an appeal is decided in an applicant's favor, the department will reimburse the application fee paid by the applicant. A decision in favor of the applicant under this subsection does not affect a decision to grant or deny the application based on applicable substantive law without regard to whether the application was timely processed. 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 December 15, 1995. TRD-9516377 Everette D. Jobe General Counsel Texas Department of Banking Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Subchapter B. Bank Charters 7 TAC sec.15.23, sec.15.24 The new sections are adopted under the Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary or reasonable "to implement and clarify" the Act, and under Texas Civil Statutes, Article 342-1106(b), which authorize the commission to adopt general rules and regulations as may be necessary to accomplish the purposes of trust company regulation. In addition, the sections are adopted under the Act, sec.1.012(a)(4) and sec.2. 006(b), which provides the commission with the authority to establish reasonable and necessary fees for the maintenance and administration of the Act. Additional statutory authority for certain fees can be found in the Act, sec.3.003(a) (bank charter fees and costs), sec.3.004(b) (expenses for charter investigation), sec.4.002(a) (fees and costs for review of acquisition of control), sec.9.004(a) (registration fees for foreign bank agencies), and sec.9. 006(a) (registration fees for foreign bank representative offices). With respect to application of the adopted sections to trust companies, Texas Civil Statutes, Article 342-1102, specifically makes selected provisions of the Act applicable to trust companies. As required by the Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. sec.15.23. Application For Interim Bank Charters. (a) General. The banking commissioner may issue an interim state bank charter solely for the purpose of facilitating the acquisition, reorganization, or merger of a pre-existing bank, if the resulting bank will engage in the business of banking in substantially the same markets. The applicant must submit the application for an interim bank charter on a form prepared and prescribed by the banking commissioner and tender the required filing fee pursuant to sec.15.2 of this title (relating to Filing Fees and Cost Deposits). The applicant must describe in detail the entire transaction in which the interim bank charter is proposed to be used and identify the resulting bank after completion of the transaction. (b) Public Notice. Upon submission of application, the applicant shall publish notice as required by sec.15.5 of this title (relating to Public Notice) and in the community where the resulting bank is to be located. (c) Public Comment. No hearing will be held regarding the issuance of an interim bank charter unless the banking commissioner, in the exercise of discretion, sets and convenes a hearing. Persons or entities submitting comments will not be entitled to further notice of or participation in the interim bank charter application proceedings. (d) Adequacy of Capital. The banking commissioner shall determine the adequacy of capital for a proposed interim bank charter, except that an interim bank may not be chartered with a capital less than $5,000. 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 December 15, 1995. TRD-9516378 Everette D. Jobe General Counsel Banking Department of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Subchapter C. Bank Offices 7 TAC sec.15.41, sec.15.42 The new sections are adopted under the Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary or reasonable "to implement and clarify" the Act, and under Texas Civil Statutes, Article 342-1106(b), which authorize the commission to adopt general rules and regulations as may be necessary to accomplish the purposes of trust company regulation. In addition, the sections are adopted under the Act, sec.1.012(a)(4) and sec.2. 006(b), which provides the commission with the authority to establish reasonable and necessary fees for the maintenance and administration of the Act. Additional statutory authority for certain fees can be found in the Act, sec.3.003(a) (bank charter fees and costs), sec.3.004(b) (expenses for charter investigation), sec.4.002(a) (fees and costs for review of acquisition of control), sec.9.004(a) (registration fees for foreign bank agencies), and sec.9. 006(a) (registration fees for foreign bank representative offices). With respect to application of the adopted sections to trust companies, Texas Civil Statutes, Article 342-1102, specifically makes selected provisions of the Act applicable to trust companies. As required by the Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. sec.15.41. Written Notice or Applications for Change of Home Office. (a) General. A state bank may change its home office to one of its previously established branch locations pursuant to the Act, sec.3.202(b), by filing a written notice with and in the form prescribed by the banking commissioner and submitting the required filing fee pursuant to sec.15.2 of this title (relating to Filing Fees and Cost Deposits). A state bank desiring to change its home office to any other location pursuant to the Act, sec.3. 202(c), must file an application with and in the form prescribed by the banking commissioner along with appropriate filing fee pursuant to sec.15.2 of this title (relating to Filing Fees and Cost Deposits). Eligible banks may file an expedited application pursuant to sec.15.3 of this title (relating to Expedited Filing). The banking commissioner shall issue a written notice as required by sec.15.4 of this title (relating to Required Information and Abandoned Filings) informing the applicant either that all filing fees have been paid and the application is complete and accepted for filing, or that the application is deficient and specific additional information is required. (b) Public Notice. (1) Within 14 days of the initial submission of a written application under the Act, sec.3.202(c), the applicant shall publish notice of the submission, as required by sec.15.5 of this title (relating to Public Notice). Notice shall be published in the community where the current home office of the bank is located and in the community of proposed home office. (2) The notice must comply with the content requirements of sec.15.5(b) of this title (relating to Public Notice) and must also disclose the current location and the proposed home office location. (c) Public Comment and Protest. For a period of 14 days after publication of notice or such longer period as the banking commissioner may allow for good cause shown, the public may submit written comments or protests regarding an application under the Act sec.3.202(c). Persons submitting comments are not be entitled to further notice of or participation in the proceedings. In the event of a properly filed protest, each protesting party has the rights and responsibilities of a protesting party to a branch application under sec.15.42 of this title (relating to Establishment and Closing of a Branch Office). sec.15.42. Establishment and Closing of a Branch Office. (a) Forms. A state bank that desires to establish and operate a branch office must complete and file a branch application on forms prescribed by the department. Eligible banks may file an expedited application pursuant to sec.15. 3 of this title (relating to Expedited Filing). (b) Filing. The banking commissioner shall issue a written notice as required by sec.15.4 of this title (relating to Required Information and Abandoned Filings) informing the applicant either that all filing fees have been paid and the application is complete and accepted for filing, or that the application is deficient and specific additional information is required. (c) Public Notice. (1) Within 14 days of the initial submission of its application, the applicant shall publish notice of the application as required by sec.15.5 of this title (relating to Public Notice). Notice shall be published in the community of the proposed branch. (2) The notice must comply with the content requirement of sec.15.5(b) of this title (relating to Public Notice) and shall also include the proposed location of the branch or service area. (d) Public Comment and Protest. For a period of 14 days after publication of notice or such longer period as the banking commissioner may allow for good cause shown, the public may submit written comments or protests regarding the application. Persons submitting comments will not be charged any fees or costs, but are not entitled to further notice of or participation in the branch application proceedings. Each protesting party has the rights and responsibilities set forth in subsections (f) and (g) of this section. (e) Criteria for branch approval: "Significant supervisory or regulatory concerns." (1) In concluding whether the banking commissioner should have significant supervisory concerns regarding a proposed branch, the banking commissioner will consider the financial condition of the applicant, the financial effect of the branch on the applicant, the management abilities of the applicant, and the history and prospects of the applicant and its affiliates regarding fulfillment of responsibilities to regulatory agencies and to the public, including, but not limited to, the responsibility of the applicant to meet the credit needs of its entire community pursuant to the Community Reinvestment Act (CRA), 12 United States Code, sec.2901 et seq. An application will ordinarily be denied if the applicant is in less than satisfactory financial condition as of its most recent examination or has a less than satisfactory rating regarding compliance with CRA. (2) In concluding whether the banking commissioner should have significant regulatory concerns regarding a proposed branch, the banking commissioner will consider the need to maintain a sound banking system. The banking commissioner will follow the principles that the marketplace normally is the best regulator of economic activity, and that healthy competition promotes a sound and more efficient banking system that serves customers well. Accordingly, absent significant supervisory concerns, the general policy of the banking commissioner is to approve applications to establish and operate branches, provided that approval would not otherwise violate the provisions of federal or state law (including any requirements for federal banking agency approval). (3) In evaluating whether the banking commissioner should have significant supervisory or regulatory concerns as set forth in paragraphs (1) and (2) of this subsection, the banking commissioner will consider written material in the record, including the application, comments on file, protests on file, and any replies of the applicant, the department's files as they relate to the current financial condition of the applicant, and any data that the banking commissioner may properly officially notice. Specifically, the banking commissioner shall approve a branch if the following considerations are met: (A) the department's files do not indicate significant regulatory concerns as they relate to the current financial condition of the applicant, including but not limited to its capital, asset quality, management, earnings and liquidity (these files are confidential pursuant to Texas Banking Act, Chapter 2, Subchapter B, and such rules and regulations adopted pursuant to the Act, are not open or available to either the applicant or a protesting party or to the public); (B) the costs of establishing the proposed branch office, including costs of purchasing or leasing the branch site, necessary furnishings, staffing and equipment and the effect of these costs do not significantly affect the operations of the applicant as a whole; (C) the projected earnings appear reasonable and sufficient to support expenses attributable to the branch without jeopardizing the safety and soundness of the applicant; (D) the depth and quality of management of the applicant and the proposed branch is sufficient to justify a belief that the bank will operate in compliance with the Act; (E) the bank has demonstrated compliance with CRA as determined by the rating assigned in the applicant's most recent CRA evaluation; (F) the applicant has demonstrated a responsiveness to recommendations made in past state and federal bank examination reports and the applicant has generally been operated in substantial compliance with all applicable state and federal laws, and (G) there are no areas of general supervisory concern as determined by the banking commissioner in the exercise of discretion. (4) The banking commissioner will direct the department to assemble, evaluate, and make a recommendation regarding all relevant documentation and data as set forth in this subsection within 30 days after the later of the date the application is complete and accepted for filing, or expiration of the period for filing a comment, protest, response or reply, whichever is the last to occur; provided, however, that if a hearing is granted pursuant to subsection (g) of this section, the banking commissioner will request the administrative law judge for the Finance Commission of Texas (administrative law judge) to discharge this function through the hearings process. Portions of the record so assembled that are confidential pursuant to Texas Banking Act, Chapter 2, Subchapter B, must be segregated and clearly marked as confidential. (5) The banking commissioner shall either approve, conditionally approve or deny the application on or before the 30th day after receipt of the department's recommendation in the event no hearing is to be held. (f) Protest. (1) A protest may be initiated by notifying the department in writing of the intent to protest the application within the time period allowed by subsection (d) of this section, accompanied by the filing fee as set forth in sec.15.2(c) of this title (relating to Filing Fees and Cost Deposits). If the protest is untimely, the filing fee will be returned to the protesting party. If the protest is timely, the department will notify the applicant of the protest and mail or deliver a complete copy of the non-confidential sections of the application to the protesting party on or before the 14th day after receipt of the protest or the application, whichever occurs later. (2) The protesting party shall file a detailed protest responding to each substantive statement contained in the non-confidential sections of the application within 20 days after receipt of the application. The protesting party's response must indicate with regard to each such statement whether it is admitted or denied. The applicant shall file a written reply to the detailed response on or before the tenth day after the response is filed. Both the detailed response and the reply thereto must be verified by affidavit and must contain a certificate of service on the opposing party. When applicable, statements in the response and in the reply may be supported by references to data available in sources of which official notice may properly be taken. Comments received by the department and any replies of the applicant to such comments will also be made available to the protesting party. (3) The banking commissioner may extend any time period set forth in this subsection for good cause shown. Good cause includes, but is not limited to, failure of the department to furnish required documentation, forms or information within a reasonable time to permit its effective use by the recipient, or failure of a party to timely serve a filed document on an opposing party. The filing date is the date the document is actually received by the department and not the date of mailing. Failure to timely file a required document is considered an abandonment of the application or protest, as applicable. Rule 21a, Texas Rules of Civil Procedure, shall govern methods and manner of authorized service and the computation of time periods under this subsection. (g) Hearing. (1) Pursuant to Texas Banking Act, sec.3.203, the banking commissioner may not be compelled to hold a hearing prior to granting or denying approval to establish a branch. (2) In the exercise of discretion, the banking commissioner may consider granting a hearing on a branch application at the request of either the applicant or a protesting party. The banking commissioner may order a hearing even if no hearing has been requested by the parties. A party requesting a hearing must indicate with specificity what issues are involved that cannot be determined on the basis of the record compiled pursuant to subsection (e) of this section and why the issues cannot be so determined. The request for hearing and the banking commissioner's decision with regard to granting a hearing will be made a part of the record. (3) If a hearing is not requested or if a request for hearing is denied, the banking commissioner will consider the application in the manner set forth in and solely on the basis of the written record established pursuant to subsection (e) of this section. (4) If a hearing is granted, the administrative law judge shall enter appropriate order(s) and conduct the hearing within 30 days after the date the hearing was granted, or as soon thereafter as is reasonably possible, under Chapter 9 of this title (relating to Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings) and the Administrative Procedure Act (Texas Government Code, Chapter 2001). Issues will be limited to those on which testimony is absolutely necessary, and the administrative law judge may require testimony to be submitted in written form and prefiled. No evidence will be received on matters that are not in dispute. No issues or evidence will be considered that are not relevant to the standards set forth in subsection (e) of this section or that are not supported by the application, response, or reply. (5) A proposal for decision, exceptions and replies to such proposal for decision, the final decision of the banking commissioner, and motions for rehearing are governed by Chapter 9 of this title (relating to Rules of Procedure for Contested Case Hearings, Appeals, and Rulemakings). (h) Beginning Operations. Any activity approved pursuant to this section must commence within 18 months from the date of approval unless the banking commissioner extends that date in writing. Approval will automatically expire 18 months from the date of approval if no extension is granted. (i) Emergency Branches. The procedures set forth in subsections (c), (d) , (f), and (g) of this section do not apply to branch applications made as a part of a transaction for the purpose of assuming all or a portion of the assets and liabilities of any financial institution deemed by the banking commissioner to be in hazardous condition. The banking commissioner may authorize banks to establish temporary branch locations in the event of an emergency as defined by the Act, sec.8.201. The procedures set forth in subsections (c), (d), (f) and (g) of this section do not apply to situations in which the banking commissioner has authorized a temporary branch location because of an emergency. (j) Branch Relocation. A bank may, with prior written approval of the banking commissioner, relocate an approved branch. The bank shall file an application to relocate a branch accompanied by the required application fee pursuant to sec.15.2 of this title (relating to Filing fees and Cost Deposits). The bank shall also publish notice pursuant to sec.15.5 of this title (relating to Public Notice). Notice shall be published in the community, of the current branch and of the proposed branch. (k) Closing a Branch. Before closing an approved branch, a bank shall comply with the notice requirements of federal law, and shall provide the department with a copy of the branch closing notice filed with the appropriate federal banking regulator simultaneously with its filing. Once the branch has been closed, the bank cannot thereafter reopen the branch except upon application for a new branch in compliance with this section. 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 December 15, 1995. TRD-9516379 Everette D. Jobe General Counsel Banking Department of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Subchapter D. Trust Company Applications 7 TAC sec.15.61, sec.15.62 The new sections are adopted under the Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary or reasonable "to implement and clarify" the Act, and under Texas Civil Statutes, Article 342-1106(b), which authorize the commission to adopt general rules and regulations as may be necessary to accomplish the purposes of trust company regulation. In addition, the sections are adopted under the Act, sec.1.012(a)(4) and sec.2. 006(b), which provides the commission with the authority to establish reasonable and necessary fees for the maintenance and administration of the Act. Additional statutory authority for certain fees can be found in the Act, sec.3.003(a) (bank charter fees and costs), sec.3.004(b) (expenses for charter investigation), sec.4.002(a) (fees and costs for review of acquisition of control), sec.9.004(a) (registration fees for foreign bank agencies), and sec.9. 006(a) (registration fees for foreign bank representative offices). With respect to application of the adopted sections to trust companies, Texas Civil Statutes, Article 342-1102, specifically makes selected provisions of the Act applicable to trust companies. As required by the Act, sec.1.012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. sec.15.61. Applicability of Texas Banking Act. (a) Applications for state trust company charters shall be made pursuant to Texas Civil Statutes, Article 342-1101, the Act, sec.sec.3.003-3.006, and sec.15.6 of this title (relating to Applications for Bank and Trust Charter) . A trust company is required to incorporate and may not organize as a limited banking association. (b) A trust company may not change its home office without prior approval from the banking commissioner pursuant to the Act, sec.3.202(c). A trust company that desires to change its home office shall file an application with and in the form prescribed by the banking commissioner in accordance with sec.15.41 of this title (relating to Written Notice or Application for Change of Home Office). sec.15.62. Exempt Trust Companies. (a) Texas Civil Statutes, Article 342-1103, sec.6, states that a trust company that has been granted an exemption by the banking commissioner remains subject to certain provisions of the Texas Banking Code, including "Articles 5 and 14, Chapter III of this code (Articles 342-305 and 342-314, Vernon's Texas Civil Statutes)." Such statutory references are to provisions regarding the granting of charters, currently the Act, sec. sec.3.003-3.006, and change of home office, currently the Act, sec.3.202, as they were numbered prior to renumbering and rearrangement by Acts 1993, 73rd Legislature, Chapter 765, effective August 30, 1993, and repeal and re-enactment by Acts 1995, 74th Legislature, Chapter 914, effective September 1, 1995. The Act, sec.sec.3.003-3. 006 and 3.202, will be applied to exempt trust companies as if correctly referenced in Texas Civil Statutes, Article 342-1103, sec.6. (b) An approval granted to an exempt trust company for a change of home office without proof of the factors listed in the Act, sec.3.003(b), is conditioned upon the trust company maintaining its exempt status. An exempt trust company that is granted such a conditional change of home office may not transact business with the general public from its new home office, regardless of a change in its exempt status, until and unless the banking commissioner affirmatively makes the findings listed in the Act, sec.3.003(b). (c) No approval will be granted to an exempt trust company for a change to nonexempt trust company status, until and unless the banking commissioner affirmatively makes the findings listed in the Act, sec.3.003. The exempt trust company must comply with the provisions of the Act, sec.sec.3.003-3.006 and with the provisions of this chapter. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516380 Everette D. Jobe General Counsel Banking Department of Texas Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Part III. State Banking Board Chapter 31. Miscellaneous The Finance Commission of Texas (the commission) adopts the repeal of the entirety of Title 7, Chapter 31, specifically sec.sec.31.1-31.4 (Subchapter A), sec.sec.31.20-31.22 (Subchapter B), and sec.31.40 and sec.31.41 (Subchapter C), concerning rules and procedures governing the affairs of the State Banking Board, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9355). Notice of the repeal of each subchapter is published separately as required by the Texas Register , preceded by this common preamble. Pursuant to recently enacted Texas Civil Statutes, Articles 342-1.001 et seq (the Texas Banking Act, sec.sec.1.001 et seq) (the Act), the State Banking Board is eliminated effective September 1, 1995, and its powers and duties transferred to the Banking Commissioner and the commission. The substantive provisions of these sections that have continuing vitality are adopted as new sections in Title 7, Chapter 15, in this issue of the Texas Register. No comments were received regarding adoption of the repeals. Subchapter A. Procedures 7 TAC sec.sec.31.1-31.4 The repeals are adopted pursuant to rulemaking authority under the Act, sec.1.012(a)(1)), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Act. As required by the Act, sec.1. 012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516381 Everette D. Jobe General Counsel State Banking Board Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Subchapter B. Bank Applications 7 TAC sec.sec.31.20-31.22 The repeals are adopted pursuant to rulemaking authority under the Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Act. As required by the Act, sec.1. 012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516382 Everette D. Jobe General Counsel State Banking Board Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Subchapter C. Trust Company Applications 7 TAC sec.31.40, sec.31.41 The repeals are adopted pursuant to rulemaking authority under the Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Act. As required by the Act, sec.1. 012(b), the commission considered the need to promote a stable banking environment, provide the public with convenient, safe, and competitive banking services, preserve and promote the competitive parity of state banks with national banks and other depository institutions in this state consistent with the safety and soundness of state banks and the state bank system, and allow for economic development within this state. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516383 Everette D. Jobe General Counsel State Banking Board Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 Part IV. Texas Savings and Loan Department Chapter 67. Savings and Deposit Accounts 7 TAC sec.67.17 The Finance Commission of Texas adopts new sec.67.17, concerning user safety at unmanned teller machines, sometimes referred to as automated teller machines (ATMs), or remote service units, without changes to the proposed text as published in the November 3, 1995, issue of the Texas Register (20 TexReg 9107). Texas Civil Statutes, Article 342-903d (referred to as the ATM User Safety Act), as enacted by Act of May 27, 1995, 74th Legislature, Chapter 647, 1995 Texas Session Law Service 3528, governs user safety at unmanned teller machines. Provisions in the ATM User Safety Act purport to cross-reference to other provisions of the Texas Bank Code, Texas Civil Statutes, Articles 342-101 et seq, for definitional purposes, but the Texas Banking Code was in large part repealed by Act of May 18, 1995, 74th Legislature, Chapter 914, sec.26, 1995 Texas Session Law Service 4451, 4551, in connection with the adoption of the Texas Banking Act. Section 77.115(a) therefore contains definitions designed to facilitate understanding of these cross-references to repealed statutes. The commission is aware that physical security of customers, employees, and property is of great concern to financial institutions and has been federally regulated by the Bank Protection Act of 1968 (12 United States Code, sec.1882) and Regulation P (12 Code of Federal Regulations, sec.sec.216.1 et seq). The ATM User Safety Act expands these requirements by specifying detailed requirements for unmanned teller machine security procedures, and further requires the commission to adopt rules to implement it. Accordingly, the proposed section provides additional clarification in those areas in which the ATM User Safety Act is not already explicit or is otherwise ambiguous. Safety procedures at ATMs must be in place no later than September 1, 1996, and required notices to customers must occur no later than January 1, 1996 and annually thereafter. In developing this section, the commission was mindful of trends relating to the Bank Protection Act. That federal statute was implemented by extremely detailed regulations with specifications relating to security cameras and specific requirements for all manner of equipment and procedures. Over a period of time, the regulation became outdated on a more and more frequent basis so that the requirements of the regulation did not keep pace adequately with changes in the security field. As a result, in 1991 the regulatory scheme was amended to provide a broad framework with each financial institution expected to implement the security requirements as fit the institution, its community, changes in technology, and other relevant factors. In developing this section, the commission expects the same sort of procedure to be used by affected institutions. In other words, only a broad framework is established by this section. Section 67.17(b) clarifies that candle foot power of lighting is to be measured under normal conditions, i.e., without complicating factors such as fog, rain, snow, sand or duststorm. One commenter to the Department of Banking suggested that the standard for lighting be expressed in terms of wattage. This suggestion is rejected. Wattage is a measure of power consumption, not light. Further, the statutory standard is expressed in terms of candle foot power, and candle foot power is readily measurable by a conventional light meter. Special procedures for addressing noncompliance by landlords or owners of leased property on which ATMs are located is addressed by sec.67.17(c). Annual safety evaluations are required in sec.67.17(d). Financial institutions should notify landlords who fail to follow recommendations to improve the safety of an access area. The requirement of ATM User Safety Act, sec.5, that customers be notified of basic safety precautions, is set forth in sec.67.17(e), including required timing and recommended content of the notice. The commenter to the Department of Banking suggested permitting the notice to be printed on the back of the customer's monthly statement as a method of simplifying the disclosure, pointing out that the disclosure would thus be available year round rather than once annually. After careful consideration, the agency rejected the suggestion on the basis that a special disclosure will more likely attract the attention of the customer and be read. However, the section will not prohibit printing the disclosures on the back of the statement as an additional step if an institution is so inclined. The ATM User Safety Act, sec.7(b)(1), grants authority to the commission to require video surveillance equipment at ATM sites. The commission has determined that video surveillance equipment at ATM sites has limited utility and practicality, and may in fact lead a customer into a false sense of security. Accordingly, the commission declines to require video surveillance equipment at all ATM sites. Whether video surveillance equipment, alarm systems, or security officers are appropriate at a particular ATM site will depend on the safety evaluation of the owner or operator of the ATM that is required under the ATM User Safety Act, sec.4. The owner or operator may determine that unconnected or fake video surveillance equipment is appropriate. If the owner or operator determines that working video surveillance equipment is appropriate, the owner or operator must provide for selecting, testing, operating, and maintaining appropriate equipment. Section 67.17(g) indicates that the ATM User Safety Act applies to ATMs located in a savings bank vestibule if there is 24-hour access from outside the building. Section 67.17(h) requires that the security officer of a financial institution certify compliance with the ATM User Safety Act and this subchapter on an annual basis. One comment was received by the Department of Banking that was generally supportive of adoption of the section. Additional suggestions made by the commenter were rejected as explained in the previous paragraphs. The new section is adopted under Texas Banking Act, sec.1.013, House Bill 1543, Acts, 74th Legislature, Regular Session, which provides the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516408 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: January 5, 1996 Proposal publication date: November 3, 1995 For further information, please call: (512) 475-1350 Chapter 77. Loans, Investments, Savings and Deposits Savings and Deposits 7 TAC sec.77.115 The Finance Commission of Texas adopts new sec.77.115, concerning user safety at unmanned teller machines, sometimes referred to as automated teller machines (ATMs), or remote service units, without changes to the proposed text as published in the November 3, 1995, issue of the Texas Register (20 TexReg 9109). Texas Civil Statutes, Article 342-903d (referred to as the ATM User Safety Act), as enacted by Act of May 27, 1995, 74th Legislature, Chapter 647, 1995 Texas Session Law Service 3528, governs user safety at unmanned teller machines. Provisions in the ATM User Safety Act purport to cross-reference to other provisions of the Texas Bank Code, Texas Civil Statutes, Articles 342-101 et seq, for definitional purposes, but the Texas Banking Code was in large part repealed by Act of May 18, 1995, 74th Legislature, Chapter 914, sec.26, 1995 Texas Session Law Service 4451, 4551, in connection with the adoption of the Texas Banking Act. Section 77.115(a) therefore contains definitions designed to facilitate understanding of these cross-references to repealed statutes. The commission is aware that physical security of customers, employees, and property is of great concern to financial institutions and has been federally regulated by the Bank Protection Act of 1968 (12 United States Code, sec.1882) and Regulation P (12 Code of Federal Regulations, sec.sec.216.1 et seq). The ATM User Safety Act expands these requirements by specifying detailed requirements for unmanned teller machine security procedures, and further requires the commission to adopt rules to implement it. Accordingly, the proposed section provides additional clarification in those areas in which the ATM User Safety Act is not already explicit or is otherwise ambiguous. Safety procedures at ATMs must be in place no later than September 1, 1996, and required notices to customers must occur no later than January 1, 1996 and annually thereafter. In developing this section, the commission was mindful of trends relating to the Bank Protection Act. That federal statute was implemented by extremely detailed regulations with specifications relating to security cameras and specific requirements for all manner of equipment and procedures. Over a period of time, the regulation became outdated on a more and more frequent basis so that the requirements of the regulation did not keep pace adequately with changes in the security field. As a result, in 1991 the regulatory scheme was amended to provide a broad framework with each financial institution expected to implement the security requirements as fit the institution, its community, changes in technology, and other relevant factors. In developing this section, the commission expects the same sort of procedure to be used by affected institutions. In other words, only a broad framework is established by this section. Section 77.115(b) clarifies that candle foot power of lighting is to be measured under normal conditions, i.e., without complicating factors such as fog, rain, snow, sand or duststorm. One commenter to the Department of Banking suggested that the standard for lighting be expressed in terms of wattage. This suggestion is rejected. Wattage is a measure of power consumption, not light. Further, the statutory standard is expressed in terms of candle foot power, and candle foot power is readily measurable by a conventional light meter. Special procedures for addressing noncompliance by landlords or owners of leased property on which ATMs are located is addressed by sec.77.115(c). Annual safety evaluations are required in sec.77.115(d). Financial institutions should notify landlords who fail to follow recommendations to improve the safety of an access area. The requirement of ATM User Safety Act, sec.5, that customers be notified of basic safety precautions, is set forth in sec.77.115(e), including required timing and recommended content of the notice. The commenter to the Department of Banking suggested permitting the notice to be printed on the back of the customer's monthly statement as a method of simplifying the disclosure, pointing out that the disclosure would thus be available year round rather than once annually. After careful consideration, the agency rejected the suggestion on the basis that a special disclosure will more likely attract the attention of the customer and be read. However, the section will not prohibit printing the disclosures on the back of the statement as an additional step if an institution is so inclined. The ATM User Safety Act, sec.7(b)(1), grants authority to the commission to require video surveillance equipment at ATM sites. The commission has determined that video surveillance equipment at ATM sites has limited utility and practicality, and may in fact lead a customer into a false sense of security. Accordingly, the commission declines to require video surveillance equipment at all ATM sites. Whether video surveillance equipment, alarm systems, or security officers are appropriate at a particular ATM site will depend on the safety evaluation of the owner or operator of the ATM that is required under the ATM User Safety Act, sec.4. The owner or operator may determine that unconnected or fake video surveillance equipment is appropriate. If the owner or operator determines that working video surveillance equipment is appropriate, the owner or operator must provide for selecting, testing, operating, and maintaining appropriate equipment. Section 77.115(g) indicates that the ATM User Safety Act applies to ATMs located in a savings bank vestibule if there is 24 hour access from outside the building. Section 77.115(h) requires that the security officer of a financial institution certify compliance with the ATM User Safety Act and this subchapter on an annual basis. One comment was received by the Department of Banking that was generally supportive of adoption of the section. Additional suggestions made by the commenter were rejected as explained further in the previous paragraphs. The new section is adopted under Texas Banking Act, sec.1.013, House Bill 1543, Acts, 74th Legislature, Regular Session, which provides the Finance Commission of Texas with the authority to promulgate general rules and regulations not inconsistent with the constitution and statutes of the state and, from time to time, to amend same. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516409 James L. Pledger Commissioner Texas Savings and Loan Department Effective date: January 5, 1996 Proposal publication date: November 3, 1995 For further information, please call: (512) 475-1350 TITLE 16. ECONOMIC REGULATION Part VIII. Texas Racing Commission Chapter 305. Licenses for Pari-mutuel Racing Subchapter B. Individual Licenses General Provisions 16 TAC sec.305.35 The Texas Racing Commission adopts an amendment to sec.305.35, concerning license fees, without changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 TexReg 7912). The amendment is adopted to ensure that occupational licensees will be licensed in the appropriate category and the commission's licensing function will be self-sufficient in terms of cost. The amendment adds licensing categories and annual fees for chart writers, training facility employees, and training facility general managers. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.5.01, which authorizes the commission to prescribe reasonable license fees for each category of license issued; and sec.7.05, which authorizes the commission to adopt a rule that sets a fee schedule for occupational licenses. 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 December 11, 1995. TRD-9516271 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 16 TAC sec.305.37 The Texas Racing Commission adopts an amendment to sec.305.37, concerning restrictions on licensing, without changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 TexReg 7913). The amendment is adopted to ensure that the commission's licensing function will operate efficiently and effectively. The amendment permits a racing official to be licensed in another capacity, subject to the approval of the stewards or racing judges. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.3.07, which authorizes the commission to specify the authority and duties of each racing official; and sec.7.02, which authorizes the commission to specify the qualifications and experience required for each category of license. 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 December 11, 1995. TRD-9516272 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 Subchapter D. Suspension and Revocation of Licenses 16 TAC sec.305.241 The Texas Racing Commission adopts an amendment to sec.305.241, concerning the applicability of the commission's rules regarding suspending and revoking licenses, without changes to the proposed text published in the November 7, 1995, issue of the Texas Register (20 TexReg 9240). The amendment is adopted to ensure that pari-mutuel racing will be of the highest integrity. The amendment clarifies that if one occupational license held by a person is suspended, all other occupational licenses issued by the commission to that person are considered suspended. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.6.06, which authorizes the commission to revoke and suspend racetrack licenses; and sec.7.04, which authorizes the commission to revoke and suspend occupational licenses. 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 December 11, 1995. TRD-9516273 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 794-8461 Chapter 307. Practice and Procedure Subchapter C. Proceedings by Stewards and Racing Judges Appeals to Commission 16 TAC sec.307.262 The Texas Racing Commission adopts an amendment to sec.307.262, concerning the hearing procedure for appeals from stewards' and judges' rulings, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9240). The amendment is adopted to ensure that the commission's administrative procedures will be efficient and effective. The amendment clarifies the burden of proof in appeals from stewards' and judges' rulings. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.3.08, which requires appeals from stewards' and judges' decision to be appealable under the Administrative Procedure Act; and Texas Government Code, sec.2001.004, which requires the commission to adopt rules of practice for all available formal and informal procedures. 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 December 11, 1995. TRD-9516274 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 794-8461 Chapter 309. Operation of Racetracks Subchapter A. General Provisions Facilities and Equipment 16 TAC sec.309.14 The Texas Racing Commission adopts an amendment to sec.309.14, concerning accessibility of racetrack facilities by disabled persons, without changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 TexReg 7914). The amendment is adopted to ensure that pari-mutuel racetracks will be safe and accessible to all patrons. The amendment requires each pari-mutuel racetrack to have a plan for accommodating the wagering and entertainment needs of its disabled patrons. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; and sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 11, 1995. TRD-9516275 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 Subchapter B. Horse Racetracks Operations 16 TAC sec.309.199 The Texas Racing Commission adopts an amendment to sec.309.199, concerning the horsemen's bookkeeper, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9241). The amendment is adopted to ensure that pari-mutuel racing is conducted in accordance with applicable law. The amendment clarifies the documentation that a pari-mutuel horse racetrack may use to evidence authorization to deduct a portion of a horse owner's winnings for payment to an organization of the horse owner's choice. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.6.06, which authorizes the commission to adopt rules relating to all matters relating to the planning, construction, and operation of racetracks; and sec.6.08, which prohibits a racetrack from deducting any portion from a horse owner's account for payment to an organization except to an organization of the owner's choice. 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 December 11, 1995. TRD-9516276 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 794-8461 Subchapter C. Greyhound Racetracks Operations 16 TAC sec.309.357 The Texas Racing Commission adopts an amendment to sec.309.357, concerning schooling, without changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 TexReg 7914). The amendment is adopted to ensure that the commission's rules will avoid duplication and be internally consistent. The amendment deletes a reference to schooling requirements for greyhounds, to avoid duplication with another commission rules. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; and sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 11, 1995. TRD-9516277 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 Chapter 313. Officials and Rules of Horse Racing Subchapter A. Officials Duties of Other Officials 16 TAC sec.313.56 The Texas Racing Commission adopts an amendment to sec.313.56, concerning the duties of the stable superintendent, without changes to the proposed text published in the September 29, 1995, issue of the Texas Register (20 TexReg 7915). The amendment is adopted to ensure that the commission's rules will avoid duplication and be internally consistent. The amendment deletes the requirement that the stable superintendent collect health certificates on horses arriving in the stable area. Although a current health certificate is required for a horse to enter the grounds of a pari-mutuel racetrack, the commission no longer requires the certificate to be filed in the racing office. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act and sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 11, 1995. TRD-9516278 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 Subchapter E. Training Facilities 16 TAC sec.313.504 The Texas Racing Commission adopts an amendment to sec.313.504, concerning the operational requirements of licensed training facilities, without changes to the proposed text published in the September 29, 1995, issue of the Texas Register (20 TexReg 7915). The amendment is adopted to ensure that patrons will have accurate information regarding the experience and fitness of race horses running at pari-mutuel racetracks. The amendment prohibits a training facility licensee from conducting a race at its facility or permitting its facility to be used to conduct a race. Nonpari- mutuel races which are not regulated by the commission permit a horse to participate in competition before participating in a pari-mutuel race. As such, a horse may have much more experience and talent than that which would be reflected in the officially reported past performance information for publication in the program. Therefore, the patrons would not receive the most accurate and complete information regarding a horse's abilities which is necessary for handicapping purposes. Prohibiting a training facility licensee from conducting such races which have the potential to mislead pari-mutuel patrons will remove any impression that such races are sanctioned by the Texas Racing Commission. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.3.021, which authorizes the commission to adopt rules regulating races and workouts at racetracks that do not offer pari-mutuel wagering; and sec.14.03, which authorizes the commission to adopt rules prohibiting the illegal influencing of the outcome of a race. 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 December 11, 1995. TRD-9516279 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 Chapter 315. Officials and Rules for Greyhound Racing Subchapter B. Entries and Pre-Race Procedures 16 TAC sec.315.101 The Texas Racing Commission adopts an amendment to sec.315.101, concerning registration of greyhounds, without changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 TexReg 7915). The amendment is adopted to ensure that the pari-mutuel greyhound racing program will operate efficiently and effectively. The amendment eliminates the requirement that greyhound leases be record the lease with the National Greyhound Association. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; and sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 11, 1995. TRD-9516280 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 16 TAC sec.315.111 The Texas Racing Commission adopts an amendment to sec.315.111, concerning schooling requirements for greyhounds, without changes to the proposed text published in the September 29, 1995, issue of the Texas Register (20 TexReg 7916). The amendment is adopted to ensure that pari-mutuel greyhound racing will be of the highest caliber, will be conducted with the utmost integrity, and will be safe for the racing greyhounds. The amendment clarifies the time frame for requiring a greyhound to school. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; and sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on December 11, 1995. TRD-9516281 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 Chapter 319. Veterinary Practices and Drug Testing Subchapter A. General Provisions 16 TAC sec.319.7 The Texas Racing Commission adopts an amendment to sec.319.7, concerning the medication labeling requirements, without changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 TexReg 7916). The amendment is adopted to ensure that pari-mutuel racing will be of the highest caliber, will be conducted with the utmost integrity, and will be safe for the racing animals. The amendment requires all medications possessed on the grounds of a pari- mutuel racetrack to include on its label the manufacturer, the active ingredients, and the expiration date. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari- mutuel racetracks; and sec.14.03, which authorizes the commission to adopt rules prohibiting the illegal influencing of the outcome of a race. 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 December 11, 1995. TRD-9516282 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 16 TAC sec.319.14 The Texas Racing Commission adopts an amendment to sec.319.14, concerning possession of controlled substances, without changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 TexReg 7917). The amendment is adopted to ensure that pari-mutuel racing will be of the highest caliber, will be conducted with the utmost integrity, and will be safe for the racing animals. The amendment adds legend drugs to the list of substances that may not be prescribed or administered solely for racing or training purposes. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari- mutuel racetracks; and sec.14.03, which authorizes the commission to adopt rules prohibiting the illegal influencing of the outcome of a race. 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 December 11, 1995. TRD-9516283 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 16 TAC sec.319.15 The Texas Racing Commission adopts new sec.319.15, concerning storage of certain medications, without changes to the proposed text published in the September 29, 1995, issue of the Texas Register (20 TexReg 7917). The new section is adopted to ensure that pari-mutuel racing will be of the highest caliber, will be conducted with the utmost integrity, and will be safe for the racing animals. The new section requires a person possessing a vaccine, antitoxin, or immune serum to ensure the product is kept in an appropriate container to preserve the product's potency and efficacy. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Civil Statutes, Article 179e, sec.3.02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks; and sec.14.03, which authorizes the commission to adopt rules prohibiting the illegal influencing of the outcome of a race. 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 December 11, 1995. TRD-9516284 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: September 29, 1995 For further information, please call: (512) 794-8461 Subchapter B. Treatment of Horses 16 TAC sec.319.111 The Texas Racing Commission adopts an amendment to sec.319.111, concerning the bleeders and furosemide (Lasix) program of the commission, without changes to the proposed text published in the November 7, 1995, issue of the Texas Register (20 TexReg 9241). The amendment is adopted to ensure that pari-mutuel racing will be of the highest caliber, will be conducted with the utmost integrity, and will be safe for the racing animals. The amendment eliminates the requirement that the commission verify certification criteria for a horse certified as a bleeder in another state before admitting the horse to the Texas bleeder program. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari- mutuel racetracks; and sec.14.03, which authorizes the commission to adopt rules prohibiting the illegal influencing of the outcome of a race. 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 December 11, 1995. TRD-9516285 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 794-8461 Chapter 321. Pari-mutuel Wagering Subchapter B. Distribution of Pari-mutuel Pools 16 TAC sec.sec.321.110, 321.116, 321.117 The Texas Racing Commission adopts amendments to sec. sec.321.110, 321.116, and 321.117, concerning the distribution of the trifecta, superfecta, and tri- superfecta pools. sec.321.116 is adopted with changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9242). Section 321.110 and sec.321.117 are adopted without changes and will not be republished. The amendments are adopted to ensure that pari-mutuel wagering will be of the highest caliber and will be conducted with the utmost integrity. The amendments modify the priority of distribution of the pools in the event no ticket is sold correctly selecting all the winning animals, clarify when coupled entries or mutuel fields may start in races with these wagers, and specify when the pool will be canceled because of a small running field. These amendments are proposed to make the rules of the commission regarding similar wagers consistent. The changes to the proposed text in sec.321.116 clarify that the minimum number of animals required for the superfecta pool applies only to horses. The change is necessary to make the superfecta rule consistent with the trifecta rule. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Civil Statutes, Article 179e, sec.3.02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks; and sec.11.01, which authorizes the commission to adopt rules regulating pari-mutuel wagering. sec.321.116. Superfecta. (a)-(h) (No change.) (i) A coupled entry or mutuel field may not start in a horse race with superfecta wagering unless the race is a stakes race with a purse of at least $100,000 and there are seven or more wagering interests. (j) If fewer than eight horses of different betting interests leave the paddock for a race in which there is superfecta wagering, the association shall cancel the superfecta wager for that race and refund the entire amount in the pool. 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 December 11, 1995. TRD-9516286 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: February 1, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 794-8461 Subchapter C. Simulcast Wagering General Provisions 16 TAC sec.sec.321.203-321.205 The Texas Racing Commission adopts amendments to sec. sec.321.203-321.205, concerning the procedure for approving applications for simulcasting, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9243). The amendments are adopted to ensure that pari-mutuel wagering on simulcast races will be conducted with the utmost integrity and in accordance with applicable law. The amendments modify the procedure for applying for and approving simulcasting. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Civil Statutes, Article 179e, sec.3.02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act; sec.6.06, which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks; sec.11.01, which authorizes the commission to adopt rules regulating pari-mutuel wagering; and sec.11.011, which authorizes the commission to adopt rules regulating pari-mutuel wagering on simulcast races. 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 December 11, 1995. TRD-9516287 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: January 3, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 794-8461 TITLE 19. EDUCATION Part II. Texas Education Agency Chapter 75. Curriculum Subchapter AA. Driver Education 19 TAC sec.75.1010 The Texas Education Agency (TEA) adopts new sec.75.1010, concerning the certificate of completion of an approved driver education course, with changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9362). The rule is necessary to provide an increase in accountability for driver education certificates and a decrease in unauthorized use of the certificates. The rule establishes the fee for a driver education certificate and requirements relating to issuing, completing, and maintaining the certificate. The changes to the rule, which occur throughout the text, delete any language allowing TEA to transfer a driver education certificate (DE-964E) to the Texas Department of Public Safety. The Driving School Association of Texas requested these changes. The new section is adopted under Senate Bill 964, sec.9A, which authorizes TEA to provide by rule for the design and distribution of the driver education certificate and to charge a fee for each certificate. sec.75.1010. Procedures for Student Certification. (a) The Texas Education Agency (TEA) shall be responsible for providing the driver education certificate (Form DE-964E) to public schools, education service centers (ESCs), and colleges or universities exempt from the Texas Driver and Traffic Safety Education Act. On this form, the driver education instructor and the chief school official, ESC director, or individuals designated by the chief school official or ESC director must certify that the driver education course was conducted according to TEA and DPS education standards for an approved course in driver education for Texas schools. (1) For schools exempt from the Texas Driver and Traffic Safety Education Act, the DE-964E certificate shall consist of five parts to be designated as follows: Texas Department of Public Safety Copies (Instruction Permit and Driver's License), Insurance Copy, Texas Education Agency Copy, and School Copy. The DE- 964E certificate is used to certify completion of an approved driver education course and is a government record. (2) The TEA shall charge a fee of $1.00 for each DE-964E certificate provided. (3) The DE-964E certificates shall be issued to the chief school official, ESC director, or individuals designated by the chief school official or ESC director to be responsible for managing the certificates. (4) Responsibilities of the chief school official, ESC director, or a designee. (A) The chief school official, ESC director, or a designee may request to receive serially numbered DE-964E certificates for exempt schools by submitting a completed order on the form provided by the commissioner of education stating the number of certificates to be purchased and including payment of all appropriate fees. (B) The chief school official, ESC director, or a designee shall be responsible for accounting for each DE-964E certificate he or she has been issued. All DE-964E certificates and records of certificates shall be maintained in an orderly fashion. (C) All DE-964E certificates and records of certificates must be provided to TEA or DPS upon request. The chief school official, ESC director, or a designee shall maintain the school copies of the certificates and submit the TEA copies of all issued certificates to TEA no later than February 15, June 15, and September 15 of each year. The chief school official, ESC director, or a designee shall return unissued DE-964E certificates to TEA within 30 days from the date the school discontinues the driver education program, unless otherwise notified. (D) Each chief school official, ESC director, or a designee shall ensure that the policies concerning DE-964E certificates are followed by all individuals who have responsibility for the certificates. (E) The chief school official, ESC director, or a designee shall maintain effective protective measures to ensure that unissued DE-964E certificates and records of certificates are secure. The chief school official, ESC director, or a designee shall report any incident of unaccounted DE-964E certificates to TEA immediately upon discovering the incident. If such an incident occurs, the chief school official, ESC director, or a designee shall conduct an investigation to determine the circumstances of the unaccounted certificates. A report of the findings of the investigation, including measures taken to prevent the incident from recurring, shall be submitted to TEA within 30 days of the discovery. (F) The right to receive DE-964E certificates may be immediately suspended for a period determined by TEA if: (i) a TEA investigation is in progress and TEA has reasonable cause to believe the certificates have been misused or abused or that adequate security was not provided; or (ii) the chief school official, ESC director, or a designee fails to provide information on records requested by TEA or DPS within the allotted time. (5) The DPS copy of a DE-964E certificate must contain the original signature of the certified instructor. The name of the chief school official, ESC director, or a designee may be written, stamped, or typed. (6) The chief school official, ESC director, or a designee may issue a duplicate DE-964E certificate to a student who completed a course under the responsibility of the chief school official, ESC director, or a designee. The duplicate shall indicate the control number of the original DE-964E certificate. (b) A student may take the examination for an instruction permit when the DE- 964E certificate showing completion of class instruction or of specified lessons in concurrent programs is presented to any driver's license office. (c) The instruction permit restricts a student to driving "accompanied by a licensed driver, age 18 or over, in the front seat." An examination to remove this restriction cannot be given until the licensee is 18 or presents the DE- 964E certificate showing that he or she completed an approved driver education program, including the laboratory phase, after reaching the age of 16. (d) An authorized DPS employee shall accept a DE-964E certificate when a certified driver education instructor certifies that the driver education program was completed according to the standards for an approved course and that the student has achieved the competencies specified in the curriculum guide. The school official shall make a copy of the teacher's certificate for driver education available to authorized DPS representatives when requested. (e) When a student completes a driver education course under more than one certified driver education instructor, each instructor shall complete a separate DE-964E certificate for the part of the course he or she taught, attach to it a statement of the hours taught, and number the certificate in the order in which the student received instruction. However, the chief school official or ESC director may designate one certified driver education teacher to sign the DE- 964E certificate. In a concurrent program, only one teacher shall be required to sign a DE-964E certificate, but each teacher giving instruction in the concurrent program must be a fully certified driver education teacher or state- approved teaching assistant. In each case, the teacher signing the DE-964E certificate must compile all records and verify the student's successful completion. (f) When a student changes schools before completing the classroom or laboratory instruction, he or she shall receive credit for the hours completed, provided the student enrolls within 90 days and completes courses at least comparable to those in which the student was first enrolled. The teacher of the course in which the student was originally enrolled shall prepare a DE-964E certificate, attaching to it a statement showing the number of hours completed and the titles of the lessons in the state-approved curriculum guide completed for each phase of the program, and mail the form to the chief official of the school to which the student is transferring. When the student completes the course, the second teacher shall issue a second DE-964E certifying the student's instruction in the manner explained in subsection (e) of this section. (g) When more than one certificate is necessary to show completion of a course, each certificate must be presented to the driver's license office when the student applies for a Texas instruction permit or for removal of restrictions. However, the chief school official or ESC director may designate one teacher to compile all records, verify the student's successful completion, and issue only one DE-964E. (h) When it is impossible or inconvenient for the certified driver education instructor to sign a driver education certificate (because of transfer, illness, or death, etc.), the superintendent, ESC director, or chief school official or individuals designated by the chief school official or ESC director may, by completing the driver education affidavit form on the reverse side of the DE- 964E certificate, certify that official records show a particular student completed an approved driver education course. (i) Each record must be included as part of the student's record when it is necessary to compile records to verify that a student successfully completed a driver education course. (j) A student may receive credit for course hours completed before a teacher's endorsement was suspended provided the suspension was not for an infraction that would conclusively establish the course as inadequate. (k) The DPS shall accept DE-964E certificates marked "innovative program" only when the program has been approved in advance by TEA and DPS. When an innovative program has been approved, DPS shall be notified. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516419 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 463-9701 Chapter 176. Driver Training Schools The Texas Education Agency (TEA) adopts new sec.sec.176.1001-176.1003, 176. 1101, and 176.1102, concerning Texas driver education and driving safety schools, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9363). The new rules are necessary to increase awareness of traffic safety and move toward reducing the toll in human suffering and property loss inflicted by vehicle crashes. The rules establish minimum requirements for teenage and adult driver education courses; the circumstances under which course approval may be revoked or denied; and responsibilities concerning issuance of the certificate of completion of an approved driver education course and the uniform certificate of completion for driving safety. No comments were received regarding adoption of the new sections. Subchapter AA. Commissioner's Rules on Minimum Standards for Operation of Licensed Texas Driver Education Schools 19 TAC sec.sec.176.1001-176.1003 The new sections are adopted under Texas Civil Statutes, Article 4413(29c) , sec.6(b), which authorize the commissioner of education to establish by rule the curriculum and designate the textbooks that must be used in a driver education course; Texas Civil Statutes, Article 4413(29c), sec.9A, which authorize TEA to provide by rule for the design and distribution of the certificate of completion of an approved driver education course; and Texas Civil Statutes, Article 6701d, sec.143A(f), which authorize TEA to provide by rule for the design and distribution of the uniform certificate of course completion. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516420 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 463-9701 Subchapter BB. Commissioner's Rules on Minimum Standards for Operation of Texas Driving Safety Schools and Course Providers 19 TAC sec.176.1101, sec.176.1102 The new sections are adopted under Texas Civil Statutes, Article 4413(29c) , sec.6(b), which authorize the commissioner of education to establish by rule the curriculum and designate the textbooks that must be used in a driver education course; Texas Civil Statutes, Article 4413(29c), sec.9A, which authorize TEA to provide by rule for the design and distribution of the certificate of completion of an approved driver education course; and Texas Civil Statutes, Article 6701d, sec.143A(f), which authorize TEA to provide by rule for the design and distribution of the uniform certificate of course completion. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516421 Criss Cloudt Associate Commissioner, Policy Planning and Research Texas Education Agency Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 463-9701 TITLE 22. EXAMINING BOARDS Part XXIII. Texas Real Estate Commission Chapter 537. Professional Agreements and Standard Contracts 22 TAC sec.sec.537.11, 537.43, 537.44 (Editor's note: The following adopted sections were published in the December 19, 1995 issue of the Texas Register (20 TexReg 10898). The adopted sections contained the proposed preamble from the October 10, 1995 issue of the Texas Register. These sections are being republished in this issue for clarification.) The Texas Real Estate Commission adopts an amendment to sec.537.11, new sec.537.43, and new sec.537.44, concerning standard contract forms. Section 537. 11 is adopted with changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8300). New sec.537.43 and sec.537.44 are adopted without changes and will not be republished. The amendment to sec.537.11 adds two forms to the list of standard contract forms promulgated by the commission. The forms were developed by the Texas Real Estate Broker-Lawyer Committee, a committee of six real the commission and six State Bar of Texas. The two new forms are TREC Number 36-0, Addendum for Property Subject to Mandatory Membership in an Owner's Association, and TREC Number 37-0, Resale Certificate for Property Subject to Mandatory Membership in an Owner's Association. On final adoption, a nonsubstantive change was made to the text of sec.537.11 to correct a misidentification of form TREC Number 11-2. New sec.537.43 adopts TREC Number 36-0 by reference. The form is an addendum for use with other TREC contract forms. The form would be used to specify whether the buyer requires the seller of the property to deliver a resale certificate or other documents to the buyer; if the resale certificate is required but is not timely delivered, the buyer may terminate the contract within three days after time for the certificate to have been delivered. If the resale certificate is required and is timely delivered, the buyer may terminate the contract upon reasonable objection to the resale certificate within 72 hours after the certificate is delivered. The buyer would waive the right of termination if it is not exercised within 72 hours after the certificate is delivered. The addendum also addresses repairs to the property which are the obligation of the owners' association. The addendum sets up a process for the buyer to obtain the assurance of the owners' association that required repairs to such property will be performed or the buyer may terminate the contract. Transfer fees and current assessments may also be disclosed to the buyer in the addendum. Form TREC Number 36-0 was revised at the suggestion of a member of the commission to include restrictive covenants among the documents that the buyer could require to be delivered, to specify to whom and at what address assessments are paid and to indicate the name and address of the manager of the association. Nonsubstantive changes were also made to rearrange the text for ease of reading and to clarify the choices for the persons using the form. New sec.537.44 adopts TREC Form Number 37-0 by reference. The form is a resale certificate to be completed by or on the behalf of the owners' association. The form would be used to provide the buyer with information concerning rights of first refusal held by the association, assessments, unpaid obligations of the seller, capital expenditures, reserves, pending law suits, insurance coverage, violations of by-laws, rules of the association or material physical defects in the property, violations of health of building codes, transfer fees and leasehold estates affecting the property. At the suggestion of a member of the commission, restrictive covenants were added to the list of documents that would be provided along with the resale certificate. No comments were received regarding adoption of the amendment and new sections. The amendment and new sections are adopted under Texas Civil Statutes, Article 6573a, sec.16(e), which authorize the Texas Real Estate Commission to adopt rules requiring real estate brokers and salesmen to use contract forms which have been prepared by the Texas Real Estate Broker-Lawyer Committee and promulgated by the Texas Real Estate Commission. sec.537.11. Use of Standard Contract Forms. (a) Standard Contract Form TREC No. 2-4 is promulgated for use as an addendum only to another promulgated standard contract form. Standard Contract Form TREC No. 9-2 is promulgated for use in the sale of unimproved property where intended use is for one to four family residences. Standard Contract Form TREC No. 10-2 is promulgated for use as an addendum concerning sale of other property by a buyer to be attached to promulgated forms of contracts. Standard Contract Form TREC No. 11-2 is promulgated for use as an addendum to be attached to promulgated forms of contracts which are second or "back-up" contracts. Standard Contract Form TREC No. 12-1 is promulgated for use as an addendum to be attached to promulgated forms of contracts where there is a Veterans Administration release of liability or restoration entitlement. Standard Contract Form TREC No. 13-1 is promulgated for use as an addendum concerning new home insulation to be attached to promulgated forms of contracts. Standard Contract Form TREC No. 15-2 is promulgated for use as a residential lease when a seller temporarily occupies property after closing. Standard Contract Form TREC No. 16-2 is promulgated for use as a residential lease when a buyer temporarily occupies property prior to closing. Standard Contract Form 20-2 is promulgated for use in the resale of residential real estate where there is all cash or owner financing, an assumption of an existing loan, or a conventional loan. Standard Contract Form TREC No. 21-2 is promulgated for use in the resale of residential real estate where there is a Veterans Administration guaranteed loan or a Federal Housing Administration insured loan. Standard Contract Form TREC No. 23-1 is promulgated for use in the sale of a new home where construction is incomplete. Standard Contract Form TREC No. 24-1 is promulgated for use in the sale of a new home where construction is completed. Standard Contract Form TREC No. 25-1 is promulgated for use in the sale of a farm or ranch. Standard Contract Form TREC No. 26-2 is promulgated for use as an addendum concerning seller financing. Standard Contract Form TREC No. 27-0 is promulgated for use as an addendum to be attached to promulgated forms of contracts where there is an inspection with a right to terminate. Standard Contract Form TREC No. 28-0 is promulgated for use as an addendum to be attached to promulgated forms of contracts where reports are to be obtained relating to environmental assessments, threatened or endangered species, or wetlands. Standard Contract Form TREC No. 29-0 is promulgated for use as an addendum to be attached to promulgated forms of contracts where an abstract of title is to be furnished. Standard Contract Form TREC No. 30-0 is promulgated for use in the resale of a residential condominium unit where there is all cash or seller financing, an assumption of an existing loan, or a conventional loan. Standard Contract Form TREC No. 31-0 is promulgated for use in the resale of a residential condominium unit where there is a Veterans Administration guaranteed loan or a Federal Housing Administration insured loan. Standard Contract Form TREC No. 32-0 is promulgated for use as a condominium resale certificate. Standard Contract Form TREC No. 33-0 is promulgated for use as an addendum to be added to promulgated forms of contracts in the sale of property adjoining and sharing a common boundary with the tidally influenced submerged lands of the state. Standard Contract Form TREC Form No. 34-0 is promulgated for use as an addendum to be added to promulgated forms of contracts in the sale of property located seaward of the Gulf Intracoastal Waterway. Standard Contract Form No. 35-0 is promulgated for use as an addendum to be added to promulgated forms of contracts as an agreement for mediation. Standard Contract Form TREC Form No. 36-0 is promulgated for use as an addendum to be added to promulgated forms in the sale of property subject to mandatory membership in an owners' association. Standard Contract Form TREC Form No. 37-0 is promulgated for use as a resale certificate when the property is subject to mandatory membership in an owners' association. (b)-(h) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 12, 1995. TRD-9516257 Mark A. Moseley General Counsel Texas Real Estate Commission Effective date: January 3, 1996 Proposal publication date: October 10, 1995 For further information, please call: (512) 465-3900 TITLE 25. HEALTH SERVICES Part II. Texas Department of Mental Health and Mental Retardation Chapter 406. ICF/MR Programs Subchapter H. Dental Program 25 TAC sec.406.351, sec.406.352 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the repeal of sec.406.351 and sec.406.352, governing the dental program in the Intermediate Care Facilities for the Mentally Retarded (ICF/MR) program in Texas. The repeal is adopted contemporaneously with the adoption of new sections of Chapter 406, Subchapter H, in this issue of the Texas Register. The repeals would allow for the adoption of new sections which would transfer the state operating agency functions for the ICF/MR Dental Program from TDHS to TDMHMR. There were no written public comments received during the pubic comment period. The repeals are adopted under the Health and Safety Code, sec.532.015(a), which provides the Texas Department Mental Health and Mental Retardation Board with broad rulemaking authority; and under the provisions of Texas Civil Statutes, Article 4413(502), sec.16, which provide the Texas 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 legal authority. Issued in Austin, Texas, on December 13, 1995. TRD-9516269 Ann Utley Chairman Texas Department of Mental Health and Mental Retardation Effective date: January 3, 1996 Proposal publication date: October 3, 1995 For further information, please call: (512) 206-4516 25 TAC sec.sec.406.351-406.381 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new sec.sec.406.351-406.381 of Chapter 406, Subchapter H, governing the dental program in the Intermediate Care Facilities for the Mentally Retarded (ICF/MR) program in Texas. Sections 406.351, 406.354, 406.357, 406.363, 406. 366, 406.367, 406.369, 406.371, 406.378, 406.380 and 409.381 are adopted with changes to the proposed text as published in the October 3, 1995, issue of the Texas Register (20 TexReg 8064). Sections 406.352, 406.353, 406.355, 406.356, 406.358-406.362, 406.364, 406.365, 406.368, 406.370, 406.372-406.377 and 406.379 are adopted without changes to the proposed text. The repeal of sec.sec.406.351- 406.352 of existing Chapter 406, Subchapter H, governing the dental program, is published contemporaneously in this issue of the Texas Register. TDMHMR adopts new sec.sec.406.351-406.381 of Chapter 406, Subchapter H governing the dental program in the Intermediate Care Facilities for the Mentally Retarded (ICF/MR) program in Texas as part of the transfer of ICF/MR state operating agency functions from the Texas Department of Human Service (TDHS) to TDMHMR. The adoption will allow TDMHMR to assume policymaking responsibility for the ICF/MR dental program. These rules will be updated at a later date to reflect the current operating policy in the Early Periodic Screening, Diagnosis, and Treatment (EPSDT) Dental Program. This transfer is enacted under the authority of the Health and Human Services Commission as the Medicaid single state agency. Language in sec.sec.406.351, 406.354, 406.357, 406.363, 406.366, 406.367, 406. 369, 406.378, 406.380 and 409.381 was changed to reference TDMHMR rather than TDHS. Language in sec.406.351(b) was changed to state that rates are derived from the state's EPSDT dental fee schedule. Language in sec.406.352(a)(1) was changed to state that information contained in the individual's record may be provided only to legally authorized persons. Language in sec.406.367(a)(2) was changed to further clarify the definition of maximum fee. Language in sec.406.371 was changed to state that claims must be received by the National Heritage Insurance Corporation (NHIC) within 95 days rather than 90 days, and to delete text regarding a five-day allowance for mail time. Language in sec.406.381(b) was changed to reference the administrative rules of TDMHMR rather than TDHS. There were no written public comments received during the pubic comment period. The new sections are adopted under the Health and Safety Code, sec.532.015(a) , which provides the Texas Department Mental Health and Mental Retardation Board with broad rulemaking authority; and under the provisions of Texas Civil Statutes, Article 4413(502), sec.16, which provide the Texas Health and Human Services Commission with the authority to administer federal medical assistance funds. sec.406.351. Program Basis. (a) For the purpose of this subchapter, the term "department" means the Texas Department of Mental Health and Mental Retardation. (b) Intermediate Care Facilities for the Mentally Retarded (ICF/MR) must ensure that individuals receiving Medicaid services in their facilities receive comprehensive dental services, as specified in 42 Code of Federal Regulations (CFR) sec.483.460. The Texas Department of Mental Health and Mental Retardation reimburses participating dental providers for services to individuals who are 21 years old or older and who are covered by the ICF/MR Medicaid program through the department's ICF/MR dental program. The rates are derived from the state's Early Periodic Screening, Diagnosis, and Treatment (EPSDT) dental fee schedule. Services to persons under age 21 who are receiving ICF/MR services are reimbursed through the EPSDT Dental Program. sec.406.354. Freedom of Choice. (a) Individuals receiving ICF/MR dental program services have the right to choose from participating providers of dental treatment services. (b) The facility must furnish complete information about available services, advice about how to obtain these services, and a full explanation of the individual's right to freely choose service providers as specified in subsection (a) of this section. (c) The facility must advise the individual of the right to request a hearing conducted by TDMHMR if the individual believes that the right to freely choose providers has been abridged without due process. sec.406.355. Allowable Services and Limitations. The ICF/MR dental program pays only for medically necessary covered and allowable services as specified by the department. sec.406.356. Dental Examination and Treatment. The ICF/MR dental program provides emergency, preventive, therapeutic, and orthodontic dental services. sec.406.357. Emergency Services. (a) Emergency dental services are those procedures necessary to control bleeding, relieve pain, and eliminate acute infection; operative procedures that are required to prevent the imminent loss of teeth; and treatment of injuries to the teeth or supporting structures. Prior authorization is not required for emergency dental services. Emergency claims exceeding $80 are subject to review and reduction of payment if the nature of the emergency is not clearly documented. Only one emergency claim a day may be submitted for each individual. (b) Based on the definition of emergency services approved by the Council of Dental Health of the American Dental Association, routine restorative procedures are not considered emergency procedures. (c) The Texas Department of Mental Health and Mental Retardation may increase the maximum fee by publishing a new maximum in the Texas Register. sec.406.363. Requirements for Participation. (a) Requirements for participation are stated in the provider agreement signed between the provider and TDMHMR. (b) Providers must render services in accordance with the reimbursement policies and operational instructions established by the department, and in compliance with the "Rules and Regulations Relating to the Practice of Dentistry" set forth by TSBDE. (c) Participation in the program is voluntary. (d) The provider agreement is not transferable or assignable. (e) Each provider must notify TDMHMR or NHIC of all changes in the provider's telephone number(s) or office mailing address(es). (f) If the TSBDE revokes or suspends a dental provider's license, the provider must notify TDMHMR and NHIC and stop providing ICF/MR dental services. A provider placed on probation by TSBDE may continue to participate in the ICF/MR dental program during the probationary period except when: (1) the conduct for which the provider has been placed on probation is related to fraud or abuse of Medicaid or other federally funded state health programs, or (2) the provider's conduct or practice has caused or could cause harm to ICF/MR dental program Medicaid recipients or other patients. sec.406.366. Termination of a Provider Agreement. The agreement between the provider and TDMHMR for provision of ICF/MR dental services may be terminated in the following circumstances. (1) The agreement may be terminated voluntarily by either party by giving 30 days notice in writing to the other party. (2) If the provider is suspended or has his license revoked by the TSBDE, the agreement is void on the date of the state board's action. (3) The department terminates the agreement if a provider is convicted for fraud in the program. (4) The agreement may be terminated by either party for breach of the agreement. A termination for breach of the agreement is effective when the other party receives written notice of the termination or on a later date specified in the notice. (5) The department and the provider may end the agreement if federal or state laws or other requirements are amended or judicially interpreted in a way that would make it unfeasible or impossible for either party to fulfill the agreement, or if either party is unable to agree on changes necessary for the substantial continuation of the agreement. Any respective accrued interests up to the date of termination must be settled equitably. sec.406.367. Maximum Payment. (a) The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Usual fee-The fee a provider usually charges private-pay individuals for a service. (2) Maximum fee-The highest fee that the NHIC pays for an allowable procedure, derived from the state's EPSDT dental fee schedule. NHIC shall advise participating providers in writing of the maximum fee schedule when the provider is enrolled in the program and whenever maximum fees change. (3) Adjusted fee-The fee derived when the NHIC associate dental director adjusts the charge for a dental procedure that has a payment limitation as specified in the chart of allowable services, procedure codes, and limitations included in the EPSDT dental services section of NHIC's Provider Procedures Manual. The NHIC associate dental director adjusts payment for a specific dental procedure below the maximum fee for the procedure when TDMHMR has partially paid for service on the same tooth or when the degree of difficulty, as determined by a review of the x-rays or itemized laboratory statement, does not justify the maximum fee. (b) Payments for dental services rendered in the ICF/MR dental program are the lowest of: (1) the provider's usual fee, (2) the maximum fee listed on the fee schedule, or (3) the adjusted authorized fee. sec.406.369. Payment of Claims. (a) Under the agreement with TDMHMR, the provider must accept payment as payment in full for services. (b) TDMHMR reimburses providers for services properly rendered in accordance with applicable laws, regulations, operational instructions, and the provider agreement. TDMHMR may withhold or suspend payment for services that are not properly rendered. (c) The ICF/MR dental program makes no payment for services that are available under any other Texas Medical Assistance Program. (d) In case of the provider's death, TDMHMR pays a completed claim only after the executor of the estate signs it. sec.406.371. Time Limits, Return, and Denial of Claims. (a) The ICF/MR dental program denies payment when the following time limits for submitting claims are not met. (1) Dental services claims must be received by the NHIC within 95 days of the service date. (2) If a service is billed to another insurance resource, the NHIC claim must be filed within 95 days of the disposition by the other resource. (3) If a service is billed to a third-party resource but the third party does not respond, the NHIC claim must be filed within 12 months of the service date. However, the claim must not be submitted to NHIC sooner than 110 days after the third-party billing. (b) If the services of a treatment plan cannot all be completed within the 95- day filing limit, the provider must complete a claim form for the completed services and request authorization for the uncompleted services. The provider submits the claim and the authorization request together to NHIC. As appropriate, NHIC pays for the completed services and authorizes the remaining services. (c) To reconsider a claim that has been denied because additional information is needed, NHIC must receive the needed information within 180 days of the date of NHIC's remittance and status report. (d) NHIC must receive all claims appeals and requests for adjustments within 180 days of the claim's disposition date. The disposition date is the date on the remittance and status report on which the claim appears. (e) NHIC denies claims for any of the following reasons: (1) the individual is not eligible for ICF/MR dental services; (2) the services billed are not allowable procedures in the ICF/MR dental program; (3) the claim is submitted after the 95-day time limit; (4) a duplicate claim has already been submitted, or the claim is for dental services already paid; (5) the services required, but did not receive, prior authorization; (6) services were provided by a nonparticipating or a suspended provider; (7) required information is missing from the claim; or (8) the lifetime limitations on certain procedures have been exhausted. sec.406.378. Report of Findings. ICF/MR dental program utilization review staff must notify the provider in writing of the review findings. The provider must also be notified of any administrative action to be taken by TDMHMR. The notification may occur after an action taken by another professional dental or governmental organization. sec.406.380. Restitution of Overpayments. If, during the review, exceptions are found which indicate overpayment for services rendered or payment for services not rendered, the department requires restitution. The provider must reimburse the TDMHMR for all amounts owed as a result of overpayments and payments for services not rendered. The amount of money to be repaid includes the dollar value of the discrepancies in the claims reviewed. The amount also includes a dollar value derived by applying the monetary discrepancy rate to all of the provider's other treatment claims paid during the period under review. sec.406.381. Administrative Actions. (a) If discrepancies or irregularities are found during the review, the TDMHMR may take one or more administrative actions. These actions include, but are not limited to, the following: (1) recoupment of funds; (2) referral to a professional dental advisory and review committee for review and recommendation; (3) probation; (4) referral to peer review committee for review and recommendation; (5) termination of the provider agreement; (6) referral to the Texas State Board of Dental Examiners; and (7) referral to the Texas Attorney General's Medicaid Fraud Control Unit. (b) If TDMHMR takes adverse action against a provider, the provider has a right to a formal hearing as specified in rules of TDMHMR sec.sec.409.031- 409.035. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 13, 1995. TRD-9516270 Ann Utley Chairman Texas Department of Mental Health and Mental Retardation Effective date: January 3, 1996 Proposal publication date: October 3, 1995 For further information, please call: (512) 206-4516 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 101. General Rules 30 TAC sec.101.2 The Texas Natural Resource Conservation Commission (TNRCC) adopts an amendment to sec.101.2, concerning Multiple Air Contaminant Sources or Properties, with changes to the proposed text as published in the August 22, 1995, issue of the Texas Register (20 TexReg 6391). The amendment is in response to a petition filed by a corporation. The Multiple Air Contaminant Sources or Properties rule allowed two or more property holders in counties with populations less than 50,000 to petition the TNRCC to have their properties designated as a single property for the purpose of controlling air emissions. The rule could have been applied to properties which were contiguous except for intervening roads, railroads, rights-of-way, canals, and watercourses considered to be part of the area for purposes of this provision. The amendment eliminates the 50,000 population limitation and limits the use of the provision to property under the control of a single entity which has been or will be divided and placed under the control of separate entities, creating a new property line configuration and/or for those properties operated or intended to be operated as an integrated plant or plants where individual facilities are owned by separate entities, but all facilities are under the control of a single entity. The amendment will further restrict contiguous properties to those separated only by roads, railroads, and rights-of-way which are a part of the property. Properties separated by a public right-of-way will not be considered contiguous. A public hearing was held on September 21, 1995. Five commenters submitted testimony during the public comment period which closed on September 22, 1995. The commenters were: Lone Star Chapter of the Sierra Club (Sierra Club); the United States Environmental Protection Agency (EPA); Jones & Neuse; Kelly, Hart & Hallman; and Exxon Company, USA. The Sierra Club commented that the rule revision does not appear to allow for any change in air quality protection; however, it could be made more clear that facilities petitioning must clearly demonstrate that there are no adverse impacts and that the citizens in the area are not or have not complained about air pollution as to reflect a potential condition for air pollution in violation of the Texas Clean Air Act (TCAA). The Sierra Club also commented that the rule should require a thorough case-by-case review, such as modeling to support that there will be no adverse impacts to public health. All petitions will be reviewed on a case-by-case basis to ensure compliance with the rule language. The rule only affords the regulated community the availability of a petition for continued treatment as a single property and does not provide any exemption from current TNRCC regulations. The single property designation does not relieve any party from compliance with state and federal regulations or existing permit conditions. The petition must include information on how compliance with regulations will be administered and controlled. The Sierra Club commented that the TNRCC may no longer be able to issue violations for excessive air pollution measured off-site and also that the rule change may impede violations or enforcement based on samples taken by the TNRCC in public rights-of-way. The Sierra Club suggested adding language indicating that if the air pollution potentially impacting a nearby community is measured or confirmed in a public right-of-way, then the agency maintains the jurisdiction to determine if corrective action is required of the source. This rule change will not interfere with the agency's ability to enforce any regulations or the TCAA. The rule requires the petitioning parties to name the party or parties accepting responsibility for off-property impacts and detail in writing the mechanism of control exercised on both properties. The rule language also allows the agency to place such conditions on the approval as it deems necessary to avoid a condition of air pollution or ensure compliance with state and federal regulations. Additionally, the rule language in subsection (b)(1) is intended to exclude properties separated by a public right-of-way from being considered contiguous. To clarify this point, the language has been revised to make clear that properties separated by public rights-of-way will not be considered contiguous. The Sierra Club commented that a concern is environmental justice through disparate treatment. The commenter questioned whether the proposed rule change will create, perpetuate, and promote disparate treatment of racial minorities so as to discriminate, even unintentionally, in violation of Title VI. The proposed rule change will not promote, perpetuate, or create disparate treatment of racial minorities in any fashion. The EPA had no adverse comments regarding the proposed rule change, provided that each transaction be accompanied by a positive statement indicating ownership, control, and any requirements which shall apply upon completion of the transaction. The proposed language addresses the issues raised by the EPA and will ensure that there is a clear understanding between the petitioners and the agency as to ownership, control, off-property impacts responsibility, and that the single property designation does not exempt the property and/or properties from compliance with any applicable state and federal regulations. Jones & Neuse commented that the language is vague regarding multiple changes in ownership of a subdivided property. In other words, if Company A sells a portion of its property to Company B and Company B then sells to Company C, is the single property designation available to Companies A and C? The rule language allows for successive changes in ownership of a property designated a single property. However, this would apply only in the case of change of ownership with no changes to the responsibility for off-property impacts or the mechanism of control exercised over the properties. Changes in the executed written agreement would require the companies to submit a new petition. Jones & Neuse commented that it would appear that by deleting the existing language, any existing single property designations would be negated. It is the TNRCC's intent that the deletion of the existing language not be construed as altering any existing air pollution control zones established under the old rule. Properties designated as such are allowed to operate under the single property designation. Kelly, Hart & Hallman expressed concern that the new language not be construed to alter any existing air pollution control zones. The commenter mentioned that the rule change likely would not have that effect, but requested clarification of this point. The TNRCC agrees with the commenter that the intent of the rule change and deletion of the existing language will have no effect on any existing air pollution control zones or on any existing single property designations. Exxon supported the proposed rule change, stating that the adoption of the rule will allow more flexibility to the regulated community in achieving the state's air quality goals. The TNRCC agrees with the commenter that the rule change will add flexibility while maintaining progress toward the state's air quality goals. sec.101.2. Multiple Air Contaminant Sources or Properties. (a) (No change.) (b) Two or more property owners/operators may petition the commission to have their properties designated a single property for purposes of demonstrating compliance with TNRCC regulations and the control of air emissions. The petition shall be subject to the following criteria. (1) The properties must be contiguous except for intervening roads, railroads, and/or rights-of-way, which are a part of the property. Properties separated by a public right-of-way will not be considered contiguous. (2) The use of this section is intended for a property under the control of a single entity that has been or will be divided and placed under the control of separate entities, creating a new property line configuration or for properties operated or intended to be operated as an integrated plant or plants where individual facilities are owned by separate entities, but all facilities are under the control of a single entity. (3) The petition shall describe generally the manner in which the control of emissions and demonstration of compliance with TNRCC regulations will be administered and controlled. The petition shall name the party or parties accepting responsibility for off-property impacts. The petition shall be accompanied by a copy of an executed written agreement between the property holders who consent to having their properties so designated and shall also be accompanied by a United States Geological Survey map or equivalent indicating geographical features such as roads, watercourses, and prominent landmarks, the boundaries of the petitioners' properties, the area to be included in the single property designation, and present land uses in the areas surrounding the area to be included. The written agreement must detail the mechanisms of control exercised on both properties. The commission may place such conditions on the approval of the petition as it may deem appropriate to avoid a condition of air pollution or ensure compliance with state and federal regulations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 13, 1995. TRD-9516455 Kevin McCalla Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: January 8, 1996 Proposal publication date: August 22, 1995 For further information, please call: (512) 239-1966 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter L. Motor Fuels Tax 34 TAC sec.3.171 The Comptroller of Public Accounts adopts an amendment to sec.3.171, concerning records required; information required, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8410). The State of Texas became a member of a multistate fuel tax agreement on July 1, 1995. Liquefied gas interstate truckers are required to maintain mileage records and fuel purchase invoices. Permitted liquefied gas dealers are required to maintain records of taxable deliveries. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 14, 1995. TRD-9516337 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: January 4, 1996 Proposal publication date: October 17, 1995 For further information, please call: (512) 463-4062 34 TAC sec.3.175 The Comptroller of Public Accounts adopts an amendment to sec.3.175, concerning liquefied gas tax decal, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8411). The amendment reflects a legislative change concerning when the tax on liquefied gas used in interstate motor vehicles registered in the State of Texas and operating under a multistate tax agreement shall be paid. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.153.302. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 14, 1995. TRD-9516338 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: January 4, 1996 Proposal publication date: October 17, 1995 For further information, please call: (512) 463-4062 34 TAC sec.3.177 The Comptroller of Public Accounts adopts new sec.3.177, concerning separate liquefied gas tax permits required, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8411). The State of Texas became a member of a multistate fuels tax agreement on July 1, 1995. Interstate truckers registered under the multistate tax agreement and that deliver liquefied gas into the fuel supply tanks of certain motor vehicles from their own bulk storage must secure a liquefied gas dealer's permit. A liquefied gas dealer's permit is required when making taxable deliveries of liquefied gas. A permitted liquefied gas dealer operating certain motor vehicles interstate must secure a separate interstate trucker's permit. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.153.302. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 14, 1995. TRD-9516339 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: January 4, 1996 Proposal publication date: October 17, 1995 For further information, please call: (512) 463-4062 34 TAC sec.3.179 The Comptroller of Public Accounts adopts the repeal of sec.3.179, concerning liquefied gas dealers operating as interstate truckers, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8412). The State of Texas became a member of a multistate fuels tax agreement on July 1, 1995. This agreement will require permitted liquefied gas dealers to secure a separate liquefied gas interstate trucker permit for certain motor vehicles. The separate permit requirement is included in new sec.3.177 concerning Separate Liquefied Gas Permits Required. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 14, 1995. TRD-9516340 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: January 4, 1996 Proposal publication date: October 17, 1995 For further information, please call: (512) 463-4062 34 TAC sec.3.196 The Comptroller of Public Accounts adopts an amendment to sec.3.196, concerning reports, due dates, bonding requirements, and qualifications for annual filers, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8412). The State of Texas became a member of a multistate fuels tax agreement on July 1, 1995. Interstate truckers registered under the multistate tax agreement are required to file reports based on different criteria than interstate truckers not registered under the multistate tax agreement. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The amendment implements the Tax Code, sec.153.302. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 14, 1995. TRD-9516341 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: January 4, 1996 Proposal publication date: October 17, 1995 For further information, please call: (512) 463-4062 Subchapter O. State Sales and Use Tax 34 TAC sec.3.323 The Comptroller of Public Accounts adopts an amendment to sec.3.323, concerning imports and exports, without changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8597). The Tax Code, sec.151.006 and sec.151.152, was amended effective September 1, 1995, to exempt sales for resale to Mexico. The amendment provides a reference to sec.3.285 concerning the acceptance of valid and properly completed resale certificates from Mexican retailers. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 13, 1995. TRD-9516305 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: January 3, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 463-4028 Subchapter V. Franchise Tax 34 TAC sec.3.559 The Comptroller of Public Accounts adopts an amendment to sec.3.559, concerning earned surplus: temporary credit, without changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8599). Subsection (d)(4) was amended to correct an improper rule reference. Subsection (f) was amended to reflect a change in policy. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 14, 1995. TRD-9516342 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: January 4, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 463-3725 Part IV. Employees Retirement System of Texas Chapter 73. Benefits 34 TAC sec.73.11 The Employees Retirement System of Texas adopts an amendment to sec.73.11, concerning the supplemental retirement program, without changes to the proposed text as published in the October 24, 1995, issue of the Texas Register (20 TexReg 8783). The amendment will implement legislation passed by the 74th Legislature regarding an increase of the disability payment for certain retirees who are occupationally disabled. Requirements for an increase in the occupational disability annuity will now be clarified for retirees. The amendment is adopted under the Government Code, sec.815.102, which provides the Employees Retirement System of Texas with the authority to adopt rules for the administration of the funds of the retirement system and the transaction of any other business of the board. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516364 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: January 5, 1996 Proposal publication date: October 24, 1995 For further information, please call: (512) 867-3336 Chapter 87. Deferred Compensation 34 TAC sec.sec.87.1, 87.3, 87.5, 87.9, 87.13, 87.15, 87.17, 87.19, 87.21 The Employees Retirement System of Texas adopts amendments to sec.sec.87.1, 87.3, 87.5, 87.9, 87.13, 87.15, 87.17, 87.19, and 87.21, concerning the deferred compensation program, with changes to the proposed text as published in the October 27, 1995, issue of the Texas Register (20 TexReg 8898). Changes made were typographical only in subparagraphs (N) and (O) of sec.87.3(b) (3). These amendments clarify that agency coordinators have the responsibility to ensure that the participant does not exceed the plan's annual deferral limits or the catch-up limits and provide that vendors will promptly process emergency withdrawals. These changes will allow the plan administrator to more effectively administer the state deferred compensation plan and to better serve plan participants. The amendments are adopted under the Government Code, Title 6, Subtitle A, Chapter 609, sec.609.508, which provides authorization for the board to adopt rules, regulations, plans, and procedures to carry out the purposes of this Act. sec.87.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Non-filer-A qualified vendor which does not ensure that the plan administrator receives a quarterly report by the due date specified in sec.87.19(d)(1) of this title (relating to Reporting and Record Keeping by Qualified Vendors). sec.87.3. Administrative and Miscellaneous Provisions. (a) (No change.) (b) Participation by state agencies in the plan. (1) -(2) (No change.) (3) Agency Coordinators. An agency coordinator is responsible for: (A)-(D) (No change.) (E) monitoring the annual deferral limits for each plan participant to ensure the maximum annual deferral limit of the lesser of $7,500 or 25% of the participant's gross income is not exceeded; (F) calculating and monitoring catch-up limits and furnishing the plan administrator with the applicable catch-up forms; (G) ensuring that all forms and other paperwork are properly completed and forwarded to the appropriate party; (H) balancing participant records and reconciling those records with the data provided by qualified vendors and the plan administrator; (I) informing employees and participants about the plan, including the necessity to file distribution agreements in accordance with sec.87.17 concerning Distributions; (J) acting as a buffer between employees and participants on the one hand and qualified vendors on the other, although an agency coordinator is not required to provide investment advice; (K) attempting to locate missing participants and beneficiaries in accordance with sec.87.17(q) concerning Distributions; (L) assisting a participant who has retired or left state employment if the participant's last position in state government was with that particular agency that employs the agency coordinator; (M) continuing to assist a participant with all deferred compensation matters if a participant transfers from a participating state agency to a non- participating state agency until the participant returns to a different participating agency; (N) assisting the beneficiary of a participant whose last position in state government was with that particular state agency that employs the agency coordinator; (O) notifying the plan administrator when a participant dies or separates from service; and (P) performing any other duties specified in the sections in this chapter. (c) Miscellaneous provisions. (1)-(4) (No change.) (5) The participation of an employee in the plan does not give the employee a legal or equitable right against the participant's employing state agency, the plan administrator, or the State of Texas except as provided in the sections in this chapter. The plan does not affect the terms of employment between a participant and the participant's employing state agency. (6)-(7) (No change.) sec.87.5. Participation by Employees. (a)-(e) (No change.) (f) Normal maximum amount of deferrals. (1)-(3) (No change.) (4) The participant's employing agency will monitor the annual deferral limits for each plan participant to ensure the maximum annual deferral limit of the lesser of $7,500 or 25% of a participant's gross income is not exceeded. If a participant makes deferrals in excess of the normal maximum annual deferral limit and is not participating under the catch-up provision, the following actions will be taken. (A) Upon notification by the participant's agency, the vendor will return to the participant's agency the amount of deferrals in excess of the normal plan limits, that is, the lesser of $7,500 or 25% of the participant's gross income without any reduction for fees or other charges. (B) Upon receipt of the funds, the participant's agency will reimburse the participant through its payroll system. (g) Catch-up exception to the normal maximum amount of deferrals. (1)-(5) (No change.) (6) The participant's employing agency will calculate and monitor all catch-up limits and furnish the plan administrator with the applicable catch-up forms. If a participant makes deferrals in excess of the participant's catch-up limit, the following actions will be taken. (A) Upon notification by the participant's agency, the vendor will return to the participant's agency, the amount of deferrals in excess of the catch-up limit without any reduction for fees or other charges. (B) Upon receipt of the funds, the participant's agency will reimburse the participant through its payroll system. (7) This subsection applies only if the participant has not previously used the catch-up exception with respect to a different normal retirement age under the plan or another deferred compensation plan governed by the Internal Revenue Code of 1986, sec.457. (8) No participant shall be permitted to participate in any catch-up provision during or after the calendar year in which the participant reaches normal retirement age. If a participant makes deferrals in excess of the normal plan limits under the catch-up provision during or after the calendar year in which the participant reaches normal retirement age, the following actions will be taken. (A) Upon notification by the participant's state agency, the vendor will return to the participant's state agency, the amount of deferrals in excess of the normal plan limits, that is, the lesser of $7,500 or 33 1/3% of includible compensation without any reduction for fees or other charges. (B) Upon receipt of the funds, the participant's state agency will reimburse the participant through its payroll system. (h)-(n) (No change.) sec.87.9. Investment Products. (a)-(b) (No change.) (c) Eligibility of investment products. The investment products that are eligible for approval as qualified investment products are: (1)-(3) (No change.) (4) money market accounts, certificates of deposit, share certificates or passbook savings accounts offered by a bank, savings and loan association, or credit union. (d)-(e) (No change.) (f) Withdrawal of a qualified investment product from the plan. (1)-(5) (No change.) (6) When a qualified vendor that is an insurance company with existing life policies in the plan withdraws a life insurance product from the plan, this paragraph applies in addition to the preceding paragraphs of this subsection. (A) (No change.) (B) A participant whose deferrals and investment income have been invested in a withdrawn life insurance product may continue life insurance coverage with the insurance company offering the product. (C)-(D) (No change.) (E) If a participant continues life insurance coverage in a life insurance product that is not a qualified investment product, the participant must pay the premiums for the coverage directly to the insurance company. The premiums may not be paid with deferrals or investment income. (F) A participant may exercise the participant's right to continue life insurance coverage only if the participant mails to the insurance company written notice of intention to continue the coverage. The written notice must be postmarked no later than the 60th day after the effective date of the withdrawal of the life insurance product from the plan. However, an insurance company may increase the 60-day time limit for a participant or for all participants. (G) When a participant elects to continue life insurance coverage, the insurance company with which the coverage is continuing may not: (i) -(viii) (No change.) (H) (No change.) (I) a vendor does not comply with subparagraph (H) of this paragraph, then a participant may exercise the participant's right to continue insurance up to the 120th day after the vendor actually mails written notice to the participant containing a full explanation of the participant's rights. sec.87.13. Disclosure. (a) Approval of a disclosure form. (1)-(2) (No change.) (3) Upon receipt, the plan administrator shall review a disclosure form to determine whether it complies with the requirements of this section in addition to any other applicable state or federal regulatory requirements. The plan administrator must approve the disclosure form if it complies. Otherwise, the plan administrator shall disapprove the disclosure form. (4)-(5) (No change.) (b) Contents of disclosure forms. (1) A qualified vendor must uniformly state on all its disclosure forms basic information common to all qualified investment products offered by the vendor and also disclose any other state or federal regulatory information required. (2)-(6) (No change.) (c)-(d) (No change.) sec.87.15. Transfers. (a)-(g) (No change.) (h) Telephone transfers within qualified vendors. (1) (No change.) (2) When a participant is in distribution, the telephone transfer option may be used; however, it must be used in accordance with sec.87.17(i)(6) (C) of this title (relating to Transfers). (3) (No change.) sec.87.17. Distributions. (a)-(b) (No change.) (c) Content of a distribution agreement. (1) (No change.) (2) The person filing the distribution agreement must attach a properly executed Form W-4 to the agreement. (3) (No change.) (d) (No change.) (e) Filing of distribution agreements by participants. (1)-(6) (No change.) (7) Nowithstanding anything to the contrary in this subsection, a participant who has not separated from service and who has reached age 70.5 must file a distribution agreement only if the participant wants distributions to begin. The distribution agreement must be filed with the participant's agency coordinator. The agency coordinator shall review and forward the distribution agreement in accordance with paragraphs (4) and (5) of this subsection. A participation agreement to stop deferrals effective no later than the distribution begin date must also be filed with the participant's agency coordinator. (8) (No change.) (f)-(h) (No change.) (i) Amendments of distribution agreements. (1) -(5) (No change.) (6) Transfers after a distribution has begun. (A)-(B) (No change.) (C) Unless previously approved by the plan administrator in accordance with subparagraph (D) of this paragraph, deferrals and investment income may not be transferred from one qualified investment product to two or more qualified investment products. In other words, deferrals and investment income that have been invested in a single qualified investment product may not be separated into two or more qualified investment products. (D) A participant may apply for approval from the plan administrator to transfer funds from one qualified investment product to two or more qualified investment products prior to the transfer. Upon approval, the participant and the vendor must follow all instructions and procedures prescribed by the plan administrator. The plan administrator may not grant such approval unless distributions continue in essentially the same manner as prior to the transfer and in accordance with subsections (g), (h), and (i) of this section and with federal regulations relating to distributions. (7)-(8) (No change.) (j) (No change.) (k) Emergency withdrawals. (1) (No change.) (2) The participant must request the emergency withdrawal by filing a completed emergency withdrawal application with the plan administrator. An emergency withdrawal application: (A) (No change.) (B) must be accompanied by two copies of a Form W-4 specifically tailored to the withdrawal. (3)-(10) (No change.) (l)-(q) (No change.) (r) Processing of distributions and emergency withdrawals. A qualified vendor shall process distributions and emergency withdrawals and resolve administrative problems with the plan administrator within a reasonable length of time, not to exceed the 30th day after receiving a letter of authorization for distributions and not to exceed the 15th day after receiving a letter of authorization for emergency withdrawals. (s) (No change.) (t) Federal withholding and reporting requirements. (1)-(3) (No change.) (4) Federal tax withholding is mandatory for distributions to participants. A qualified vendor shall accurately determine any amounts to be withheld for federal taxes based on a Form W-4 submitted by the participant at the time of a distribution. If no Form W-4 is provided, the participant must be considered single with no dependents. The Tax Equity and Fiscal Responsibility Act does not apply to a deferred compensation plan governed by the Internal Revenue Code of 1986, sec.457. (5)-(6) (No change.) sec.87.19. Reporting and Recordkeeping by Qualified Vendors. (a) (No change.) (b) Reports to participants or beneficiaries. (1) Generally. (A) A qualified vendor shall issue a report after the end of each calendar quarter to each participant or beneficiary whose deferrals and investment income are invested in a qualified investment product offered by the vendor, except if the investment is in a product that is annuitized. (B) (No change.) (C) A qualified vendor shall ensure that the participant or beneficiary receives the report no later than the 45th day after the end of each calendar quarter. (D) The report must show for each qualified investment product: (i) amount of the participant's or beneficiary's deferrals and investment income in the product, including transfers; (ii)-(iii) (No change.) (iv) current market value of the participant's or beneficiary's deferrals and investment income. (2) (No change.) (3) Final reports. If a participant or beneficiary receives a lump-sum distribution, the qualified vendor from whom the lump-sum distribution is made shall issue a final report to the participant or beneficiary containing the information required in paragraph (1) of this subsection. The report must accompany the lump-sum distribution. (c) (No change.) (d) Quarterly reports to the plan administrator. (1) Frequency and coverage of quarterly reports. Every vendor that has participant or beneficiary deferrals, investment income, and/or annuitized accounts must ensure that the plan administrator receives a report no later than the 35th day after the end of each calendar quarter. The report must be in the format specified in this subsection and must cover all transactions during the calendar quarter. (2) Intent of quarterly reports. For each participant or beneficiary whose deferrals and investment income are invested in a qualified investment product offered by the vendor, the report required by this subsection must contain but is not limited to: (A) participant's or beneficiary's name, agency code and social security number(s); (B) list of the qualified investment products in which the participant's or beneficiary's deferrals and investment income have been invested even if the investment is in a product that is annuitized; (C)-(E) (No change.) (F) current market value of each participant's or beneficiary's deferrals and investment income in each qualified investment product, including annuitized accounts and, including, if appropriate, the number of shares and per share market value; (G)-(I) (No change.) (J) the amount of each separate net distribution to the participant or beneficiary. (3) Format of quarterly reports. (A)-(C) (No change.) (D) The product types must be defined and coded as prescribed by the plan administrator and as in the DCP quarterly reporting specifications. (E) If a participant or beneficiary has invested deferrals and investment income in two or more qualified investment products offered by the same qualified vendor and the products are of the same type, then the vendor must report a cumulative total of those deferrals and investment income. (F) Failure to submit a quarterly report with an authorized signature will result in a formal reprimand. After three formal reprimands, a vendor is subject to suspension or expulsion from the plan. (4) (No change.) (e) (No change.) (f) Quarterly reconciliation. In accordance with sec.87.3(b)(3)(H) of this title (relating to Participation by State Agencies), an agency coordinator is responsible for balancing participant and beneficiary records and reconciling those records with the data provided by qualified vendors and the plan administrator. Vendors shall assist the plan administrator and state agencies with correcting and explaining any discrepancies. Failure to assist the plan administrator and state agencies with this reconciliation will be considered a rules violation, and the plan administrator may take appropriate action under sec.87.21 of this title (relating to Remedies). sec.87.21. Remedies. (a)-(b) (No change.) (c) Continuation of life insurance coverage. (1)-(2) (No change.) (3) A participant whose deferrals and investment income were invested in a terminated life insurance product may continue life insurance coverage with the insurance company offering the terminated life insurance product. (4)-(5) (No change.) (6) If a participant continues life insurance coverage in a life insurance product that is not a qualified investment product, the participant must pay the premiums for the product directly to the insurance company. The premiums may not be paid with deferrals or investment income. (7) A participant may exercise the participant's right to continue life insurance coverage only if the participant mails to the qualified vendor written notice of intention to continue the coverage. The written notice must be postmarked no later than the 60th day after the effective date of the termination of participation in the plan. However, an insurance company may increase the 60-day time limit for a participant or for all participants. (8) When a participant elects to continue life insurance coverage, the life insurance company offering the product via which the participant is continuing coverage may not: (A)-(G) (No change.) (9) An insurance company must ensure that each participant entitled to continue life insurance coverage under this subsection receives written notice of the participant's right by no later than the 30th day after the plan administrator mails notice to the company of a termination described in paragraph (1) of this subsection. (10) an insurance company does not comply with paragraph (9) of this subsection, then a participant may exercise the participant's right to continue life insurance coverage up to the 60th day after the insurance company actually mails written notice to the participant containing a full explanation of the participant's rights. (d)-(h) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516362 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: January 5, 1996 Proposal publication date: October 27, 1995 For further information, please call: (512) 867-3336 Part III. Texas Youth Commission Chapter 85. Admission and Placement Placement Planning 37 TAC sec.sec.85.21, 85.23, 85.25, 85.27, 85.29, 85.30, 85.33, 85.35, 85.37, 85.47 The Texas Youth Commission (TYC) adopts amendments to sec. sec.85.21, 85.23, 85.25, 85.27, 85.29, 85.30, 85.33, 85.35, and 85.37, concerning the program assignment system, classification, minimum length of stay, program restriction levels, program completion and movement, involvement of victims, parole of undocumented nationals, sentenced offender disposition, discharge; and new sec.85.47, concerning sex offender registration. Sections 85.21, 85.23, 85.25, 85.27, 85.29, 85.35, and 85.37 are adopted with changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9384). Sections 85.30, 85.33, and 85.47 are adopted without changes and will not be republished. The amendments and new section are being adopted for compliance with legislation of the 74th legislative session and with legislative intent to better protect the public from destructive delinquent behavior. In order to simplify and reduce unnecessary procedural language, the adopted sections have been edited and language rearranged. More significant changes are detailed. The change in sec.85.21 elements the TYC classification violator of children in need of supervision (CINS) since commitment for this offense is no longer legal. Changes in sec.85.23 correct references to Penal Code offenses and their application listed under sentenced offender offenses and the offense of burglary was changed from the general offender classification to the type B violent offender classification to be more consistent with new sentenced offender laws. The section allowing staff to waive a classification has been eliminated. Changes to sec.85.25 clarify the intent of assigning a minimum length of stay for TYC youth and for time credited toward that assignment. Changes to sec.85.27 reflect an explanation of the security of a facility being provided by a high number staff rather than a physical means. Examples of programs which provide varying restriction levels have been made less specific to promote a broader understanding. Changes in sec.85.29 add for clarity, information on the types of due process required to return youth to facilities, though the same information could be found in other sections. Criteria set by law and or by TYC for transferring youth from TYC to the Department of Criminal Justice (TDCJ) has been specified and the paragraphs of this section rearranged. Detail has been added on population control release. Changes to sec.85.35 simplify procedures for transferring youth to TDCJ consistent with legislation of the 74th Legislature. A change was made to sec.85.37 to eliminate unnecessary language resulting when TYC management policy to discharged general offenders at age 18 was eliminated. The order of the information in this section has been rearranged. The amendments herein implement changes in TYC systems to provide for youth being held for longer periods of time in secure facilities and in requirements in the Family Code and Human Resources Code effective in 1996 for youth sentenced to commitment in TYC. No comments were received regarding adoption of the amendments and new section. The amendments and new section are adopted under the Human Resources Code, sec.61.075, which provides the Texas Youth Commission with the authority to determine placement and treatment, sec.61.079, which provides the Texas Youth Commission with the authority to refer youth for transfer to TDCJ, sec.61.081, which provides the Texas Youth Commission with the authority to release youth under supervision, and sec.61.084, which provides the Texas Youth Commission with the authority to terminate custody of youth. The proposed amendments and new section implement the Human Resource Code, sec.61.034. sec.85.21. Program Assignment System. (a) Policy. The Texas Youth Commission (TYC) utilizes an objective, equitable system of program assignment for each youth in TYC care. Based on each youth's offense(s), and risk level, TYC has predetermined the most appropriate level of restriction and minimum length of stay requirements for public protection and to promote rehabilitation. The assessment and placement process provides current information on individual youth needs. Youth in coeducational facilities have equal access to agency programs and activities. (b) Rules. (1) Placement System Factors. The program placement system incorporates the following factors. (A) Classification is determined by the classifying offense and a finding regarding extenuating circumstances. (B) The minimum length of stay is designated by the classification. See GOP.47.05, sec.85.25 of this title (relating to Minimum Length of Stay). (C) Risk is assessed and used as a guideline in designating restriction level. (D) Placements are made according to restriction and needs. (i) Initial placements are always to residential programs, except for some youth classified as violators of CINS probation. (ii) The youth's assessed service needs are considered in the selection of a placement within the required level of restriction. (2) System Description. The determining factors result in the following placement and length of stay determinations for all TYC youth on initial commitment, for youth recommitted for the commission of a felony or high risk offense, and for youth found at an administrative level I hearing to have committed a felony or high risk offense. (A) A sentenced offender is assigned a minimum length of stay set by the court and, regardless of risk level, is assigned to a program of high restriction with a fenced perimeter. (B) A type A violent offender is assigned a minimum length of stay of 24 months and with any risk level, is assigned to a program of high restriction with a fenced perimeter. (C) A type B violent offender is assigned a minimum length of stay of 12 months, and with any risk level, is assigned to a program of high restriction. (D) A chronic serious offender, controlled substances dealer, or firearms offender classified on or after January 1, 1996 is assigned a minimum length of stay of twelve months and with any risk level, is assigned to a program of high restriction. The minimum length of stay for these youth classified before January 1, 1996 is nine months. (E) A general offender classified: (i) on or after January 1, 1996 is assigned a minimum length of stay of nine months, and with a: (I) high risk level, is assigned to a program of high restriction; (II) low or medium risk level, is assigned to a program of medium restriction. (ii) before January 1, 1996 is assigned a minimum length of stay of six months, and with a: (I) high risk level, is assigned to a program of high restriction; (II) low or medium risk level, is assigned to a program of medium restriction. (3) Responsibility. The specific program placement selection for each youth is the responsibility of the centralized placement unit for all placements. (4) Waivers and Exceptions. Waivers and exceptions may be granted under special circumstances. (A) A restriction level designation, except that of sentenced offender or type A violent offender, may be waived by the assessment unit superintendent when a youth is qualified. A designated restriction may be waived in order to provide specialized treatment not available in the designated restriction when it is determined that a youth is physically/mentally handicapped, has a special medical condition, or is emotionally disturbed, if such condition would prevent the youth from functioning in the designated placement. (B) Any placement designation except those of sentenced offenders and type A violent offenders may be waived by the assessment unit superintendent when population is at or above established capacity. (C) For waiver of classification, see GOP. 47.03, sec.85.23 of this title (relating to Classification). (D) For movement for population control see GOP.47.09, 85.29 of this title (relating to Program Completion and Movement). (5) Parent Notification. Parents/guardians are notified of all placements. sec.85.23. Classification. (a) Policy. Classification is based on the youth's offense history, the classifying offense, and a finding regarding extenuating circumstances incident to the classifying offense. A youth who commits an offense while in TYC custody may be administratively reclassified through a Level I hearing. (b) Explanation of Terms Used. (1) Classifying Offense. The classifying offense is the most serious of the relevant offenses documented in the youth's record. Relevant offenses are: (A) on commitment, the committing offense and any offense(s) for which the youth was on probation at the time of the committing offense; or (B) following a level I hearing, the offense(s) found at the hearing. (2) Committing Offense. The committing offense is the most serious of the offenses found at the youth's most recent judicial proceeding. (3) Most Serious Offense. The most serious offense is determined according to the following hierarchy, with each subsequent factor being considered only if two or more relevant offenses yield the same result under the preceding factor. If two or more offenses yield the same results through all steps of the hierarchy, determination of the most serious offense is left to the discretion of the staff assigning classification. The most serious offense is: (A) an offense which carries determinate sentence; (B) the offense for which the designated minimum length of stay will produce the longest time in the physical custody of TYC; (C) the offense which requires the highest level of restriction in placement; (D) the offense which carries the most severe criminal penalty; and (E) the most recently adjudicated offense. (4) Federal Offenses. If a committing and/or classifying offense is a violation of a federal statute, the offense will be treated as a violation of a state statute which prohibits the same conduct as the relevant federal statute. Federal violations will be identified by the code number assigned to the corresponding substantive state statute preceded by an "F". (c) Rules. (1) Classifications. (A) Sentenced Offender. A sentenced offender is a youth committed to TYC pursuant to the Family Code, sec.54.04(d)(3) or sec.54.05(f) for offenses committed: (i) prior to January 1, 1996, for: (I) murder, 19.02, all (II) capital murder, 19.03, all (III) aggravated kidnapping, 20.04, all (IV) aggravated sexual assault, 22.021, all (V) deadly assault on a law enforcement officer, corrections officer, or court participant, 22.03 (VI) criminal attempt, 15.01, only if the offense attempted was Capital Murder (sec.19.03) (ii) on or after January 1, 1996, for an offense listed in clause (i) of this subparagraph or: (I) sexual assault, 22.011, all (II) aggravated assault, 22.02, all (III) aggravated robbery, 29.03, all (IV) injury to a child, elderly individual, or disabled individual, 22.04, first, second or third degree felony only (V) deadly conduct, 22.05, felony only (VI) aggravated or first degree controlled substances felony, Subchapter D, Chapter 481, Health and Safety Code, aggravated or first degree felony only (VII) criminal solicitation, 15.03, all (VIII) indecency with a child, 21.11, second degree felony only (IX) criminal solicitation of a minor, 15.031, all (X) criminal attempt, 15.01, only if offense attempted was a murder (sec.19.02), indecency with a child (sec.21.11(a)(1)), aggravated kidnapping (sec.20.04), sexual assault 22.011(a)(2) upon a child only, aggravated sexual assault (sec.22.021), aggravated robbery (sec.29.03), or repeat conviction under Health and Safety Code, sec.481.134(c), (d), (e), or (f). (XI) habitual felony conduct as defined in Juvenile Justice Code, 51. 031 (B) Type A-Violent Offender. A type A violent offender is a youth whose classifying offense is one of the offenses listed in this paragraph and who has not been sentenced to commitment in TYC. TYC adopts the Texas Penal Code definition (Title 5) for each offense in its entirety except where TYC policy limits the applicability to the specific subsections or under the conditions named. (i) murder 19.02 all (ii) capital murder 19.03 all (iii) criminal attempt, 15.01, only if the offense attempted was Capital Murder (sec.19.03) or murder (sec.19. 02) (C) Type B-Violent Offender. A type B violent offender is a youth whose classifying offense is the commission, attempted commission, conspiracy to commit, solicitation, or solicitation of a minor to commit one of the offenses listed in this paragraph and who has not been sentenced to commitment in TYC. TYC adopts the Texas Penal Code definition for each offense listed in clauses (i)-(xvii) of this subparagraph in its entirety except where TYC policy limits the applicability to specific subsections or under the conditions named. (i) murder, 19.02, conspiracy, solicitation, or solicitation of a minor only; (ii) capital murder, 19.03, conspiracy, solicitation, or solicitation of a minor only; (iii) manslaughter, 19.04, all; (iv) kidnapping, 20.03, all; (v) aggravated kidnapping, 20.04, all; (vi) indecency with a child, 21.11, second degree felony only; (vii) sexual assault, 22.011, all; (viii) aggravated assault, 22.02, all; (ix) aggravated sexual assault, 22.021, all; (x) injury to child, elderly or disabled individual 22.04, first, second or third degree felony only; (xi) deadly conduct, 22.05, felony only; (xii) aiding suicide, 22.08, felony only; (xiii) tampering with a consumer product, 22.09, first or second degree felony only; (xiv) arson, 28.02, all; (xv) aggravated robbery, 29.03, all; (xvi) burglary 30.02, only with intent to commit any other violent offense defined in this paragraph; (xvii) intoxication manslaughter, 49.08, all; (xviii) intentionally participating with six or more persons in conduct at a TYC facility that endangers persons or property and substantially obstructs the performance of facility operations; (xix) intentionally, knowingly, or recklessly causing bodily injury to a TYC: (I) employee; (II) contract program employee; or (III) volunteer. (D) Chronic Serious Offender. A chronic serious offender is a youth whose classifying offense is a felony and who has been found to have committed at least one felony in each of at least three separate and distinct due process hearings, where the second felony was committed after the disposition of the first felony and the third felony was committed after the disposition of the second felony. (E) Controlled Substances Dealer. A controlled substances dealer is a youth whose classifying offense is any felony grade offense defined as a manufacture or delivery offense under the Texas Controlled Substances Act, Chapter 481, Health and Safety Code. (F) Firearms Offender. A firearms offender is a youth whose classifying offense involved a finding by the court or TYC hearings examiner that the youth possessed a firearm during the offense. Classifying offenses for this classification are not limited to offenses specified in Chapter 46 of the Texas Penal Code. (G) Violator of CINS Probation (Commitments were allowed prior to January 1, 1996). A violator of CINS probation is a youth who: (i) is committed for violating terms of probation by an act which would not be punishable by imprisonment or confinement in jail if committed by an adult; and (ii) was on probation at the time of the probation revocation for no act more serious than Conduct Indicating a Need for Supervision (CINS) as defined in the Texas Family Code, Title 3. (H) General Offender. A general offender is a youth who is not eligible for any other classification. (2) Extenuating Circumstances. (A) A designated classification except sentenced offender may be waived and a less restrictive classification assigned by a TYC hearings examiner at a TYC Level I due process hearing when the hearings examiner finds extenuating circumstances. (B) Extenuating circumstances incident to a violent offense are those facts which indicate that the youth is not a significant danger to the physical or emotional well-being of another. Examples of such facts include, but are not limited to: (i) the youth was an indirect or passive participant in a violent act; (ii) the youth set fire to an abandoned vehicle; (iii) the youth engaged in consensual sexual intercourse with someone who was capable of appraising the nature of that act and of resisting it. (C) Extenuating circumstances incident to offenses other than violent offenses are those facts which explain a youth's conduct but do not constitute a legally recognized defense to the conduct. Examples of such facts include, but are not limited to acts in which: (i) the only property involved in the offense was of minimal value and was returned undamaged to its owner; (ii) the only bodily injury intended or inflicted by the youth consisted of brief or minor discomfort; (iii) the youth's conduct was an impulsive response to perceived provocation and posed no threat to persons or property; (iv) the youth was persuaded to participate in the offense by a parent or other authority figure. (D) When extenuating circumstances incident to the classifying offense are found, the designated classification may be waived. sec.85.25. Minimum Length of Stay. (a) Policy. The Texas Youth Commission (TYC) complies with orders of the committing court regarding sentences for youth sentenced to commitment to TYC. Except where specifically named, requirements herein do not apply to sentenced offenders. See GOP.47.15 sec.85.35 of this title (relating to Sentenced Offender Disposition), for additional information. For all other youth, TYC establishes by policy, the minimum period of time a youth will spend in residential placements under specific conditions. The maximum period of time a youth may spend in residential placement is the total time until he/she reaches age 21. Release from residential placement anytime prior to age 21 is based on the youth's successful completion of release criteria. TYC has established two types of minimum lengths of stay (MLOS) requirements for TYC youth, classification MLOS and assigned disciplinary MLOS. The classification MLOS is established on initial commitment, for youth recommitted for the commission of a felony or high-risk offense, and for youth found at an administrative level I hearing to have committed a felony or high-risk offense. Classification minimum lengths of stay of youth classified before January 1, 1996 may include creditable time prior to commitment. An assigned disciplinary MLOS may be levied in accordance with GOP.63.11, sec.91.11 of this title (relating to Disciplinary Transfer/Assigned Minimum Length of Stay Consequences) and is subject to provisions therein. Youth may be eligible for transition to medium restriction to complete the minimum length of stay requirement in accordance with GOP.47. 09, sec.85.29 of this title (relating to Program Completion and Movement). (b) Rules. (1) Classification Minimum Length of Stay. (A) Sentenced offenders serve the time assessed by the juvenile court. (B) Type A violent offenders must complete a minimum of 24 months. (C) Type B violent offenders must complete a minimum length of stay of 12 months. (D) Chronic serious offenders, controlled substances dealers, and firearms offenders must complete a minimum length of stay of twelve months if classified on or after January 1, 1996 or nine months if classified before that date. (E) General offenders must complete a minimum length of stay of nine months if classified on or after January 1, 1996, or six months if classified before that date. (2) Disciplinary Assigned Minimum Length of Stay. A disciplinary assigned length of stay of up to six months may be assigned in accordance with GOP.63.11, sec.91.11 of this title (relating to Disciplinary Transfer/Assigned Minimum Length of Stay Consequences). (3) Creditable Time. (A) On initial classification or recommitment classification, the minimum length of stay is counted from the first day a youth reaches any TYC operated or assigned facility. (B) On reclassification, if previous classification MLOS: (i) has been completed, the new classification minimum length of stay is counted from the date of the most recent due process hearing. (ii) has not yet been completed, the new classification minimum length of stay is counted from the completion of the previous MLOS. (C) All minimum lengths of stay will run consecutively except when a youth is recommitted, in which case, any incomplete MLOS at the time of recommitment is eliminated. (D) Classification MLOSs must be completed before any assigned disciplinary MLOS begins. (E) After the count begins, all time spent in program, on furlough or in detention or jail (except as a disposition in a criminal case) counts toward meeting a minimum length of stay requirement. (F) Time spent as an escapee from a TYC placement or time spent in jail or a court ordered placement in an adult correctional residential program as disposition in a criminal case does not count toward meeting the minimum length of stay requirement. (G) Sentenced offenders are credited with days detained in connection with the committing offense as assessed by the court. (4) Waivers and Reductions. (A) The classification minimum length of stay requirement may be reduced by the deputy executive director in extenuating circumstances when it is documented that the minimum length of stay is not justified because of the nature of the youth's classifying offense and offense history. (B) The disciplinary assigned MLOS may be reduced in accordance with GOP.63.11, sec.91.11 of this title (relating to Disciplinary Transfer/Assigned Minimum Length of Stay Consequences). sec.85.27. Program Restriction Levels. (a) Policy. To assist Texas Youth Commission (TYC) staff in placing youth in the least restrictive appropriate placement available, programs of like restriction are categorized. (b) Rules. (1) Explanation of Terms Used (A) Self-contained Program-a 24 hour supervision program in which the treatment, training and education program is conducted on the premises. A self- contained program is a program without routine unsupervised access to the community, unless otherwise stated. (B) Routine Unsupervised Access to the Community-a privilege offered by some programs whereby a youth may be absent from the program without staff supervision for 48 hours or more per month prior to the youth's last month in the program. (C) Staff secure-a staff to youth ratio appropriate to ensure security of high risk youth. (2) Levels. (A) High Restriction-a self-contained program which is staff secure or which is secured by a perimeter fence. For example: (i) TYC training schools; (ii) intermediate sanctions facilities; (iii) boot camps; (iv) Corsicana Residential Treatment Center; (v) self-contained residential contract placement designated by TYC as appropriate; (vi) state hospitals; (B) Medium Restriction-any residential program which provides routine unsupervised access to the community. For example: (i) TYC halfway houses; (ii) any residential contract program which is not self-contained, e.g., certain substance abuse programs, residential treatment centers, group homes, or organizational foster care; (C) Minimum Restriction-any non residential program which provides treatment or training at least eight hours per day five days a week. For example: (i) day treatment; (ii) independent living preparation in structured apartments; (D) Home-the home of the parent, other relative or individual acting in the role of parent, managing conservator, or guardian, or an independent living arrangement, in which there is treatment or training less than eight hours per day, five times a week. For example: (i) home or home substitute; (ii) independent living in any approved location. sec.85.29. Program Completion and Movement. (a) Policy. The Texas Youth Commission (TYC) uses specific objective criteria to determine when a youth has completed a program and is eligible to be moved to another program or released home. Progress toward successful completion of criteria is evaluated at specific regular intervals. When criteria are completed, a youth is eligible for movement to an equal or less restrictive placement. Parole status is earned or granted. Prior to a scheduled movement, a youth may request and in doing so will be granted a level II hearing except in a disciplinary movement in which case an appropriate hearing is required. TYC does not accept the presence of a detainer as an automatic bar to earned release. The agency releases a youth to authorities pursuant to a warrant. Additional procedures and restrictions are applied prior to transition or release on parole for all sentenced offender youth. See GOP.47.15, sec.85.35 of this title (relating to Sentenced Offender Disposition). Youth may be moved to a placement of equal or more restriction as a disciplinary consequence. Each of these and other types of placement changes are subject to policies in this chapter and in the Disciplinary Practices chapter, GOP.63. (b) Rules. (1) Program Completion Criteria and Movement. (A) Movement from high to medium restriction. (i) Youth in high restriction become eligible for transition to medium restriction when the following criteria are met: (I) completion of minimum length of stay except three months; (II) completion of required Individual Case Plan (ICP) objectives; (III) completion of phase three resocialization goals, (not applicable to youth in contract placements); and (IV) no major violation of rules of conduct within 30 days prior to the review. (ii) Youth who are transitioned under these criteria may be returned to high restriction through a level II due process hearing at any time prior to attaining parole status. If not returned prior to attaining parole, youth may be returned to high restriction only through a level I due process hearing to revoke parole status. (B) Movement from any residential program to minimum restriction or home/home substitute: (i) Youth in any residential program become eligible for residential program release to minimum restriction or home or home substitute when the following criteria are met: (I) completion of the minimum length of stay; (II) completion of required Individual Case Plan (ICP) objectives; (III) completion of phase four resocialization goals, (not applicable to youth in contract placements); and (IV) no major violations of rules of conduct within 30 days: (-a-) prior to the case review to determine eligibility for parole release; and (-b-) prior to the actual release. (ii) Youth who are released under these criteria are on parole status and thus may be returned to a high restriction program, only through a level I due process hearing to revoke parole status. (C) TYC program staff where the youth is assigned determine when criteria have been met. (D) Program completion criteria are explained to every youth during orientation to each placement. (2) Release Review and Movement. (A) Periodic reviews are held specifically to evaluate a youth's progress in meeting all program completion criteria. (B) If, at the release review, it is determined the youth has not completed criteria required for a transition movement, the youth continues in the current program. (C) If, at the release review, it is determined the youth has completed criteria required for transition, movement is considered. A transition placement is always to a placement of equal or less restriction than the youth's current placement. (3) Parole Status. (A) Parole status means that a youth, having parole status, shall not be moved into a placement of high restriction without a level I hearing. A youth either earns parole status or is granted parole status under specific conditions. (B) A youth earns parole status when he is deemed to have completed criteria for release. When a youth has earned parole status and release is pending, he attains parole status in the current program prior to the release, unless he is in a high restriction program, in which case, he attains parole status on leaving the facility. (C) If a youth has not previously earned parole status, he is granted parole status at completion of six consecutive months in medium restriction program(s) regardless of: (i) progress toward completing minimum length(s) of stay; (ii) progress toward completion of ICP objectives or phase requirements; (iii) the number of consecutive medium restriction placements (positive or negative); or (iv) whether the youth is in medium restriction following a transition movement or as an initial placement. (D) Release of Type A violent offenders must be approved by the deputy executive director. A release packet includes a program completion release review form with recommendations and justifications by either the institutional superintendent and director of institutions or the regional director and director of community services, the ICP, record of progress through the phase system, record of major rule violations, the home assessment, initial commitment psychological, and a current psychiatric and/or psychological report. The deputy executive director notifies the youth, superintendent and director of institutions or the regional director and director of community services in writing of the decision. If release is denied, the deputy executive director indicates a date for resubmitting the release packet. (E) When it is determined that a youth will be paroled out of state upon completion of the program, see GOP.47. 23, sec.85.43 of this title (relating to Interstate Compact for TYC Youth). Arrangements for out-of-state supervision requires a minimum of six to eight weeks to complete. (4) Disciplinary Movements. (A) A disciplinary movement is the movement of a youth, following appropriate due process, as a consequence of violation of rule(s). Disciplinary movements are always to placements of equal or more restriction than the current placement, as defined by GOP.47.07, sec.85.27 of this title (relating to Program Restriction Levels). (B) Disciplinary movements and/or assigned minimum lengths of stay must be justified through an appropriate due process hearing. See chapter on Disciplinary Practices. (C) Any disciplinary movement requires that an Individual Case Plan be developed in the new placement. (5) Six Month Justification. Retention of a youth in any community residential placement beyond six months must be justified to and approved by the regional director. Retention of a youth in order to complete a minimum length of stay is adequate justification. (6) Release Exceptions in Hardship Cases. Youth may be released and paroled home without meeting completion criteria in hardship cases upon the recommendation by community corrections staff. Release in hardship cases requires approval of the deputy executive director. (7) Release Exceptions to Control Population. When necessary to control population and/or manage available funds concerning youth in residential placement, the deputy executive director may approve one or more of following options. (A) Youth sentenced to commitment in TYC for offenses committed on or after January 1, 1996, except those sentenced for capital murder, may be considered for movement from high to medium restriction if the following criteria are met: (i) completion of a portion of the minimum period of confinement applicable to the youth's committing offense in high restriction: (I) first degree felony, complete 30 months; (II) second degree felony, complete 18 months; (III) third degree felony, complete all of the minimum period confinement applicable to the committing offense, e.g. 12 months; and (ii) completion of ICP objectives; and (iii) completion of resocialization goals and phases; and (iv) successful completion of a specialized treatment program; and (v) low risk to reoffend according to a recent psychological evaluation; and (vi) recommended by the superintendent or regional director; and (vii) cases individually approved by the deputy executive director. (B) Youth other than sentenced offenders may be: (i) moved into similar residential placements of equal restriction without meeting completion criteria when early release or movement to a less restrictive placement is not indicated, but movement is necessary to manage available funds; or (ii) released early without meeting completion criteria when population is at or above established capacity. Youth who have completed the minimum length of stay and are low risk as determined by a psychological are released first. In general, youth who are closest to completing criteria may be released next; however, type B violent, chronic serious, controlled substance dealer, firearms and general offenders with a minimum length of stay must meet the following criteria: (I) completion of a portion of the minimum length of stay: (-a-) if 12 months, complete nine months; (-b-) if nine months, complete seven months; (II) substantial completion of ICP objectives; (III) substantial completion of phase three resocialization; (IV) no major violations of rules of conduct within 30 days prior to consideration for waiver and prior to the actual release; and (V) approved by superintendent or regional director. (8) Sentenced Offenders. Due to the nature of determinate sentences, some rules governing the classification, placement, release, transition, parole status, and disciplinary movement of TYC youth must be applied differently to sentenced offenders. (A) Classification. A youth classified at commitment as a sentenced offender retains that classification as long as the youth remains in the custody of TYC as a result of that commitment. See GOP.47.03, sec.85.23 of this title (relating to Classification). (B) Initial Placement. All sentenced offenders are assigned to high restriction perimeter-secure facilities unless the deputy executive director waives such placement for a particular youth. (C) Youth who are sentenced to commitment in the Texas Youth Commission (TYC) for offenses committed on or after January 1, 1996 are subject to requirements in this subsection. (i) Requirements. (I) The minimum period of confinement is ten years for youth sentenced for capital murder; three years for youth sentenced for an aggravated controlled substance felony or a felony of the first degree; two years for a felony of the second degree; and one year for a felony of the third degree or completion of the sentence, whichever occurs first. (II) TYC custody is terminated and a sentenced offender is discharged when his/her sentence is complete. All movement and transfer options occur prior to completion of sentence. (III) Sentenced offenders serve the minimum period of confinement applicable to the youth's committing offense in a high restriction facility. (ii) Movement Between TYC Programs. (I) Following a sentenced offender's completion in high restriction, of the minimum period of confinement applicable to the youth's committing offense, the youth's eligibility for release on parole or transition to a medium restriction program shall be governed by the criteria and procedures for the classification the youth would have received if not a sentenced offender. (II) Prior to a sentenced offender's completion of the minimum period of confinement applicable to the youth's committing offense, a youth may be released on parole only with the approval of the juvenile court. Prior to that completion, TYC may request a hearing by the juvenile court to obtain approval for release on TYC parole for a youth: (-a-) who has participated and successfully completed a specialized treatment program as evidenced by completion of all ICP objectives and all resocialization goals; and (-1-) has not reached age 19; and (-2-) the superintendent or regional director recommends the release; and (-3-) the deputy executive director approves recommendation; and (-4-) court approves release. (-b-) who is sentenced for capital murder; and (-1-) has completed at least three years in a high restriction facility; and (-2-) has completed all ICP objectives and all resocialization goals; and (-3-) the superintendent or regional director recommends the release; and (-4-) the deputy executive director approves recommendation; and (-5-) court approves release. (iii) Transfer From TYC High Restriction To TDCJ, Institution. Transfer from a high restriction facility to the Texas Department of Criminal Justice, Institutional Division (TDCJ, ID) may occur as follows. (I) TYC may request a juvenile court hearing and the youth transferred if the following occurs: (-a-) youth is at least age 16; and (-b-) has met behavior criteria: (-1-) youth has committed a felony or Class A misdemeanor; or (-2-) youth has spent at least six months in a high restriction facility and has engaged in disruptive behavior and alternative interventions have been tried without success (for example: special treatment plans, disciplinary transfer, extended stay); and (-c-) the superintendent or regional director recommends transfer; and (-d-) the deputy executive director approves recommendation; and (-e-) court orders the transfer. (II) A transfer is automatic for a youth at age 21 who: (-a-) was sentenced for capital murder; and (-b-) has not completed the minimum period of confinement applicable to the youth's committing offense (ten years) or the sentence if less than ten years. (iv) Transfer From TYC High Restriction To TDCJ, Pardons and Parole. Transfer from a high restriction facility to the Texas Department of Criminal Justice, Pardons and Paroles (TDCJ, PP). A youth is automatically transferred: (I) at any time after age 19 that a youth has completed the minimum period of confinement applicable to the youth's committing offense and TYC releases the youth. (II) at age 21 if youth was sentenced for any offense other than capital murder and has not completed the sentence. (v) Transfer From TYC Home Parole To TDCJ, Pardons and Parole. Transfer from TYC under supervision (parole at home) to the Texas Department of Criminal Justice, Pardons and Paroles (TDCJ, PP) may occur. A youth is automatically transferred at age 21 if youth has not completed his sentence. (vi) Transfer From TYC Home Parole To TDCJ Institution. Transfer from TYC under supervision (parole at home) to the Texas Department of Criminal Justice, Institutional Division (TDCJ, ID) may occur. TYC may request a juvenile court hearing and the youth transferred if the following occurs: (I) youth is at least age 16; and (II) youth's conduct indicates that the welfare of the community requires transfer following a due process hearing where parole is revoked for: (-a-) felony, Class A misdemeanor, or reclassifiable violation: or (-b-) any other violation which resulted in placement in an intermediate sanction program at which the youth has failed to progress. (III) the superintendent or regional director recommends the transfer: and (IV) deputy executive director approves recommendation; and (V) the court orders the transfer. (D) For youth sentenced for offenses committed before January 1, 1996: (i) Movement and Parole. Sentenced offenders who meet program completion criteria for transition or parole may not be released without proper authorization: (I) Prior to a sentenced offender's 18th birthday, a youth may be transitioned to an appropriate placement if approved by the deputy executive director. The placement may be to any location other than home or home substitute. (II) When a juvenile court orders that a sentenced offender be released under supervision, the youth shall be transitioned or paroled, as appropriate to the youth's progress at the time of the court's order. (III) When the juvenile court orders that a sentenced offender be recommitted to TYC without a determinate sentence, the youth's eligibility for release on parole or transition shall be governed by the release criteria and procedures for the classification the youth would have received if not a sentenced offender. (ii) Disciplinary Movement. A sentenced offender may be assigned to any appropriate placement, including a high restriction facility, following a disciplinary hearing. The appropriate placement is selected according to the totality of the circumstances, including the youth's age, sentencing offense, length of time and progress in TYC custody, and the nature of the misconduct for which the youth is being disciplined. (iii) Release Exceptions. Sentenced offenders will be considered for release under a hardship or for population control only if: (I) the youth is less than 18 years of age and the release is approved by the committing court; or (II) the youth is 18 years of age or older and meets the exception criteria for the classification the youth would have received if not a sentenced offender. (9) Notification. (A) Parents or guardians are notified of all movements. (B) Send original Notification to the Juvenile Court, CCF-181, to the committing juvenile judge and copies to the prosecuting attorney and community corrections officer no later than 15 days prior to the youth's: (i) release under supervision (release to youth's home or home substitute); (ii) authorization for an absence from custody (out-of-state placement); or (iii) discharge. (C) Send original Notification to Chief Juvenile Probation Officer, CCF-185 to the county chief juvenile probation officer in the county to which the youth is being moved (any placement other than into an institution) within ten days of the placement. sec.85.35. Sentenced Offender Disposition. (a) Youth who are sentenced to commitment in the Texas Youth Commission (TYC) for offenses committed on or after January 1, 1996 are subject to requirements in this subsection. (1) Movement Types. The following types of movements may occur under specific conditions addressed in GOP.47.09, sec.85.29 of this title (relating to Program Completion and Movement). The movements are either automatic or may be requested of the juvenile court: (A) Movement between the TYC programs; (B) Transfer from a TYC high restriction facility to the Texas Department of Criminal Justice, Institutional Division (TDCJ, ID); (C) Transfer from a TYC high restriction facility to the TDCJ, Pardons and Paroles (TDCJ, PP); (D) Transfer from TYC under supervision (parole at home) to the TDCJ, PP; (E) Transfer from TYC under supervision (parole at home) to the TDCJ, ID; (2) Transfers. (A) The TYC superintendent of the facility where the youth resides or the regional director in the region where youth previously resided (in the case of a revocation) requests a hearing by the court and directs TYC participation in the hearing. (B) When a transfer to TDCJ, ID is imminent, a male youth residing in any program other than a TYC operated high restriction facility at the time a transfer hearing is requested, will be moved to a TYC operated high restriction facility for the time remaining before the youth's transfer. Females may be moved to a contract high restriction facility or TYC operated high restriction facility depending on space available. If the transfer is not automatic, in accordance with law, a level I parole revocation hearing is required prior to returning the youth to the institution. (C) When transfers are automatic (court approval is not required) the superintendent or regional director for the youth's most recent permanent placement is responsible for notifying the committing court of the transfer in accordance with TYC policy. (b) Youth who are sentenced to commitment in the Texas Youth Commission (TYC) before January 1, 1996 are subject to requirements in this subsection. (1) Court Hearing Preparation. (A) During the sixth month before the month in which the youth will turn 18 years old prior to completing sentence, the TYC program administrator of the youth's placement sends the committing court "notice of transfer to TDCJ." (B) The committing court sets a date for a hearing on the notice of transfer and notifies all parties. (C) The superintendent or regional director appoints appropriate TYC staff to represent TYC at the hearing. (2) Youth Under 1987 Sentencing Law. (A) This section applies to youth committed to TYC under determinate sentences for conduct that occurred on or after September 1, 1987, and before September 1, 1991. (B) On conclusion of the transfer hearing, the court will order: (i) release under supervision; or (ii) transfer to TDCJ. (C) A youth residing in an any program other than a high restriction facility at the time of a court order directing the youth's transfer to TDCJ will be moved to a high restriction facility for the time remaining before the youth's transfer at age 18. (3) Youth Under 1991 Sentencing Law. (A) This section applies to youth committed to TYC under determinate sentences for conduct that occurred on or after September 1, 1991. (B) On conclusion of the hearing, the court will order: (i) recommitment to TYC without a determinate sentence; (ii) transfer to TDCJ; or (iii) final discharge. (C) On entry of an order that the youth be transferred to TDCJ, the youth is immediately transported and transferred to TDCJ. sec.85.37. Discharge. (a) Policy. All Texas Youth Commission youth are discharged by age 21. Youth may be recommended for early discharge when specific criteria have been met. (b) Rules. (1) Controlling Classification. Discharge criteria are applied according to classification or to special circumstance. Eligibility for discharge according to classification is controlled by the most serious offense for which the youth has ever been classified. (2) Discharge Criteria. (A) Classification. (i) Youth who are sentenced for an offense committed before January 1, 1996 are discharged when one of the following occurs: (I) expiration of the sentence imposed by the juvenile court, including the time spent in detention in connection with the offense plus time spent at TYC under the order of commitment; (II) the youth is transferred to the Texas Department of Criminal Justice (TDCJ) pursuant to an order issued by the juvenile court at a transfer hearing; (III) prior to age 18 if ordered by committing court; or (IV) age 21 is reached. (ii) Youth who are sentenced for an offense committed after January 1, 1996 are discharged when one of the following occurs: (I) expiration of the sentence imposed by the juvenile court; (II) the youth is transferred to the Texas Department of Criminal Justice, Institutional Division, pursuant to an order issued by the juvenile court at a transfer hearing; (III) the youth has been sentenced for the offense of capital murder, has not completed the ten-year minimum period of confinement and is transferred to the Texas Department of Criminal Justice, Institutional Division, at age 21 to serve the remainder of the sentence; or (IV) the youth has been released on parole, has reached the age of 21 (or younger, if the youth is released on parole after age 19) and is transferred to the Texas Department of Criminal Justice, Pardons and Paroles Division, to serve the remainder of the sentence. (iii) Youth ever classified as type A violent offenders are discharged when age 21 is reached. (iv) Youth ever classified as a type B violent offender, chronic serious offender, controlled substance dealer, or firearms offender are discharged when one of the following occurs: (I) age 21 is reached; or (II) completion of 12 consecutive months on parole status in the home or home substitute and the youth: (-a-) has had no delinquency adjudications or criminal convictions during the period; (-b-) has no pending delinquency petitions or criminal charges; (-c-) is on minimum supervision level; and (-d-) has had a positive parole adjustment, as defined in this policy. (v) General offenders and violators of CINS probation are discharged when one of the following occurs: (I) age 21 is reached; or (II) completion of nine consecutive months on parole status in the home or home substitute and the youth: (-a-) has had no delinquency adjudications or criminal convictions during the period; (-b-) has no pending delinquency petitions or criminal charges; (-c-) is on minimum supervision level; and (-d-) has had a positive parole adjustment as defined in this policy. (B) Special Circumstances. (i) Youth of any classification except sentenced offenders are discharged under the following circumstances: (I) Court ordered reversal of commitment. (II) The youth being sentenced to prison. (III) Commitment to Texas Department of Mental Health and Mental Retardation. (IV) Enlistment in the military. (V) Closing of records following a youth's death or recommitment. (VI) Discharge by the executive director or his designee for any other reason, such as an illness or injury which prevents return to active program participation. (VII) TYC youth placed out of state may be discharged when requested by the placement state for satisfactory adjustment or when court action is taken by the placement state in accordance with GOP.47.23, sec.85.43 of this title (relating to Interstate Compact for TYC Youth). (ii) Youth of any classification except sentenced offender and type A violent offender are discharged under the following circumstances: (I) Placement on adult probation while on parole in a non-residential placement. (II) Court ordered placement for a minimum of 12 months in an adult correctional residential program as part of the disposition of a criminal case. (III) Immediately on release from any residential placement, if the youth was placed on adult probation while in residential placement. (3) Positive Parole Adjustment. For purposes of discharge, positive parole adjustment shall be shown by documentation that a youth: (A) has completed ICP objectives including substantial completion of phase five of resocialization and community service requirements; and (B) has, for 90 consecutive days, been: (i) enrolled and participating in an appropriate educational or training program; or (ii) satisfactorily employed. (4) Approvals. Youth discharges are requested by the primary service worker and approved by the institutional superintendent or regional director as appropriate. A brief closing summary of the youth's adjustment while on parole supervision at home is included. Approvals ensure that discharge criteria have been met. Discharge of TYC youth placed out of state is requested by the deputy administrator of interstate compact and approved by the director of community services. Discharges for other special circumstances are approved by the executive director. (5) Waiver. Youth of any classification except sentenced offender and Type A violent offender who is age 18 or older may be discharged prior to completion of discharge criteria for the purpose of obtaining services that cannot be obtained for a juvenile. Such early discharge must be justified to and approved by the deputy executive director. (6) Notification. (A) Fifteen days prior to discharge the program to which the youth is assigned shall send Notification to Juvenile Court form, CCF-181, to the committing court and prosecuting attorney. (B) Immediately on a youth's discharge, the program to which the youth is assigned shall send a letter of discharge, LS-300, to the youth. The youth is informed of the procedure for sealing records, LS-301. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516366 Steve Robinson Executive Director Texas Youth Commission Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 483-5244 Chapter 89. Youth Rights and Remedies 37 TAC sec.sec.89.7, 89.9-89.11, 89.13, 89.15, 89.17, 89.19, 89. 21, 89.23 The Texas Youth Commission (TYC) adopts the repeal of sec. sec.89.7, 89.9-89. 11, 89.13, 89.15, 89.17, 89.19, 89.21, and 89.23, concerning youth complaint resolution system terms and rules, complaint resolution procedure for TYC operated facilities, probationary complaint program for TYC operated facilities, complaint resolution procedure for residential contract programs, complaint resolution procedure for youth at home, alleged mistreatment rules and definitions, alleged mistreatment procedure for TYC operated facilities, alleged mistreatment procedure for striking incidents, alleged mistreatment procedure for residential contract programs, and alleged mistreatment procedure for youth at home, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9396). The justification for the repeals is to remove sections that will be replaced by new sections. The repeals will allow new sections to be adopted that will streamline new procedures in the youth complaint system and the alleged mistreatment resolution system. No comments were received regarding adoption of the repeals. The repeals are adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. The proposed repeals implement the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516368 Steve Robinson Executive Director Texas Youth Commission Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 483-5244 37 TAC sec.89.7, sec.89.15 The Texas Youth Commission (TYC) adopts new sec.89.7 and sec.89.15, concerning youth complaint resolution system and alleged mistreatment system, without changes to the proposed text as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9397). The justification for the new sections is the streamlining of centralized requirements to promote more efficient use of resources. New sec.89.7 defines qualifications of the staff member having authority to resolve a youth's complaint, the procedures required for the resolution, and provides for appeals to the executive director. New sec.89.15 defines behaviors subject to alleged mistreatment procedures, establishes investigation and reporting requirements, and provides for appeals to the executive director. No comments were received regarding adoption of the new sections. The new sections are adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. The proposed new sections implement the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9516367 Steve Robinson Executive Director Texas Youth Commission Effective date: January 5, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 483-5244 TITLE 43. TRANSPORTATION Part I. Texas Department of Transportation Chapter 1. Management (Editor's note: The following adopted rules were originally adopted and published in December 12, 1995 issue of the Texas Register (20 TexReg 10621). However, the text to sec.1.38 which was adopted with changes, was inadvertently omitted from that publication. Both the repeal and new sections are being republished in this issue for clarification.) The Texas Department of Transportation adopts the repeal of existing sec.sec.1.21-1.63, concerning contested case procedure, and adopts new sec.sec.1.21-1. 61, concerning contested case procedure with changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7040). New sec.sec.1.32-1.33 and sec.1.38 are adopted with changes and sec.sec.1.21-1. 31, sec.sec.1.34-1.37, and sec. sec.1.39-1.61 are adopted without changes and will not be republished. The repeal and new sections are necessary to: update the applicable rules in accordance with revisions to Government Code, Chapter 2001, the Administrative Procedure Act (APA), and procedures established by the State Office of Administrative Hearings (SOAH); make the contested case procedure clearer and more concise; and provide an efficient process for default judgments that will expedite the resolution of a contested case against a respondent who fails to appear at an administrative hearing Existing sec.sec.1.21-1.63 described the department's procedures for contested cases. New sec.sec.1.21-1.61 provide updated procedures for contested cases in accordance with recent revisions to the Government Code, Chapter 2001 and the procedures established by SOAH. On September 8, 1995, the department conducted a public hearing on the proposed new sections and no oral or written comments were received. In order to provide an effective and efficient process the department has revised: sec.1.32 to require that a pleading be sent only to the attorney for a party instead of to the party and the party's attorney; sec.1.33 to allow a filing to be deemed filed when the pleading is received by SOAH or the executive director instead of upon receipt by the hearing officer or the executive director in accordance with SOAH's internal procedures; and sec.1.38 to remove the requirement for an affidavit in motions for postponement, continuance, withdrawal, or dismissal. Contested Case Procedure 43 TAC sec.sec.1.21-1.63 The repeals are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation and Government Code, Chapter 2001, the Administrative Procedure Act, which provides a minimum standard of uniform practice and procedure for state agencies. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515797 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630 43 TAC sec.sec.1.21-1.61 The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation and Government Code, Chapter 2001, the Administrative Procedure Act, which provides a minimum standard of uniform practice and procedure for state agencies. sec.1.32. Service. (a) A copy of all pleadings in any proceeding shall be sent by mail or otherwise delivered by the party filing the same to every other party of record, except that notice of a hearing will be made by hand delivery, via facsimile, or by certified mail, return receipt requested. If any party has appeared in the proceeding by attorney or other representative authorized under these sections to make appearances, service shall be made on such attorney or other representative. (b) A certificate signed by the person filing the pleading, showing the manner of service, stating that it has been served on the other parties, and identifying those parties shall be contained in or attached to all pleadings. The certificate is prima facie evidence of such service. (c) If a filing does not conform to the requirements of this section, the hearing officer may: (1) return the pleading to the filing party; (2) send a notice to all parties stating that the pleading will not be considered unless and until the office is notified that all parties have been served with the pleading; or (3) send a copy of the pleading to all parties. sec.1.33. Filing. All pleadings, affidavits, or other filings relating to any proceeding pending or to be instituted before the department shall be filed with the State Office of Administrative Hearings or the executive director. Filings shall be deemed filed only when actually received by the State Office of Administrative Hearings or the executive director, accompanied by the fee or deposit, if any, required by statute or department rules. sec.1.38. Motions for Postponement, Continuance, Withdrawal or Dismissal of Applications or Other Materials Before the Department. Motions for postponement or continuance of matters which have been duly set for hearing shall be in writing, shall be filed with the hearing officer, and shall be distributed to all parties not less than five days prior to the designated date that the matter is to be heard. Such motion shall set forth, the specific grounds upon which the moving party seeks such action and shall make reference to all prior motions of the same nature filed in the same proceeding. Failure to comply with the provisions of this section, except for good cause shown, may be construed as lack of diligence on the part of the moving party and, at the discretion of the hearing officer, shall be grounds for refusal of the motion. Once a cause has actually proceeded to a hearing, pursuant to the notice issued thereon, no postponement or continuance shall be granted by the hearing officer without the consent of all parties of record except for good cause shown. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515796 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630