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 III. Office of the Attorney General Chapter 61. Crime Victims Compensation 1 TAC sec.sec.61.2, 61.7, 61.10, 61.20, 61.23, 61.25, 61.31, 61. 33, 61.35 The Office of the Attorney General adopts amendments to sec.sec.61.2, 61.7, 61.10, 61.20, 61.23, 61.25, 61.31, and 61.35; and new sec.61.33, concerning crime victims' compensation. Sections 61.10, 61.20, and 61.31 are adopted with changes to the proposed text as published in the January 2, 1996, issue of the Texas Register (21 TexReg 15). Amendments to sec.sec.61.2, 61.7, 61.23, 61. 25, and 61.35; and new sec.61.33 are adopted without changes and will not be republished. The amendments and new section are necessary to clarify administrative procedures regarding new and old benefits, and in order to maintain consistency with the Crime Victims' Compensation Act. The public will benefit from having increased awards made on their behalf to providers of services. Section 61.2 will function to clarify that certain damaged property constitutes a pecuniary loss under the Act. Section 61.7 establishes which medical professionals will be responsible for certifying disability for the payment of lost wages. Section 61.10 deletes limits on transportation rates. Section 61.20 contains no substantive change and functions to clarify the definition of cooperation. Section 61.23 changes the time limit for providing information to be consistent with the Act. Section 61.25 adds a condition upon which a claim may be closed. Section 61.31 deletes the pay discrepancy among providers. Section 61.33 functions to enable the fund to compensate more fully those victims who have medical insurance. Section 61.35 functions to clarify the hearing process. The Office of the Attorney General suggested changing the formats of sec.61. 10 and sec.61.20 to include (a) and (b) subsections in order to clarify the meaning of the rules. The only substantive comment received regarding the proposed rules was submitted by the Coalition for Nurses in Advanced Practice. They noted that the proposed amendment to sec.61.31 deleted language which resulted in the exclusion of clinical nurse specialists from the category of compensable providers. They suggested that we add language to include these professionals. The agency agrees with this comment and adopts the rule with changes so as to include the clinical nurse specialists in the list of professionals who may be compensated in this manner. The amendments and new section are adopted under the Crime Victims' Compensation Act, Texas Code of Criminal Procedure, Article 56.33, which provides the Office of the Attorney General with the authority to promulgate and adopt rules relating to the method of filing claims and the proof of entitlement to compensation and the review of health care services subject to compensation under this chapter. sec.61.10. Limits on Compensation. (a) In addition to the rates established under the Act, the following limits for compensation are deemed to be an amount reasonably incurred under the Act, Article 56.32(9): (1) funeral and burial expenses are limited to $4,500; (2) loss of earnings and loss of support to a dependent are limited to $400 per week; (3) care of dependents or minor children is limited to $100 per week per dependent or child; (4) costs of crime scene cleanup are limited to $750 in the aggregate; and (5) costs for the replacement of clothing, bedding or other property is limited to $750 in the aggregate. (b) Under unusual fact and circumstance, the Chief may authorize awards in excess of the limits contained in this rule. sec.61.20. Cooperation with Law Enforcement Agencies. (a) When determining whether a crime victim has cooperated with the reasonable requests of the law enforcement agency investigating the criminally injurious conduct, the Chief shall consider the following factors: (1)-(3) (No change.) (4) whether the victim cooperated with the investigating law enforcement agency within a reasonable period of time after the crime, but not later than 30 days after the victim receives a request from the law enforcement agency, so as to enable the law enforcement agency to identify and apprehend the offender or conduct a complete investigation of the crime. (b) The Chief may waive the provisions of this rule upon good cause shown by the victim or claimant. sec.61.31. Mental Health Counseling Expenses. Counseling expenses are limited to 40 sessions or an amount not to exceed $3,000 for psychiatrists, psychologists, clinical nurse specialists (CNS in psychiatric care), licensed professional counselors, marriage and family therapists and certified social workers-advanced clinical practitioners. Fees and billing procedures per session are to be determined as established by the Office of the Attorney General. Under unusual facts and circumstances, additional sessions may be allowed, but limited to those which are pre-authorized and approved in accordance with general standards of utilization review. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601873 Suzanne Marshall Special Assistant Attorney General Office of the Attorney General Effective date: March 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 465-4291 TITLE 7. BANKING AND SECURITIES Part I. Finance Commission of Texas Chapter 3. Banking Section Subchapter B. General 7 TAC sec.3.25 The Finance Commission of Texas (the commission) adopts the repeal of sec.3.25, concerning accounting for other real estate owned by a state bank, without changes to the proposed text as published in the December 22, 1995, issue of the Texas Register (20 TexReg 10933). A new sec.12.91 in this title is adopted in this issue of the Texas Register to address other real estate owned. The repeal is necessary because of changes in law made regarding other real estate owned by state banks as a result of the recent enactment of Texas Civil Statutes, Articles 342-1.001 et seq (Texas Banking Act, sec.sec.1.001 et seq) (the Act), particularly by the Act, sec.5.002. Required amendments are sufficiently extensive to warrant repeal and replacement of sec.3.25 by a new section. No comments were received regarding repeal of this section. The repeal of this section is 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-9601919 Everette D. Jobe General Counsel Texas Department of Banking Effective date: March 1, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 475-1300 Subchapter F. Access to Information 7 TAC sec.3.111 The Finance Commission of Texas (the commission) adopts new sec.sec.3.111, concerning confidentiality of certain information relating to the financial condition or business affairs of a financial institution or a present, former, or prospective shareholder, participant, officer, director, manager, affiliate, or service provider of a financial institution, with changes to the proposed text as published in the December 22, 1995, issue of the Texas Register (20 TexReg 10933). New sec.3.111 is the initial section in new Subchapter F, entitled Access to Information. New sec.3.111 prohibits the Banking Commissioner of Texas or an employee or agent of the Texas Department of Banking (the department) from disclosing confidential information, as that term is defined in the section, and prohibits a financial institution, its service provider or affiliate, or a governmental agency that has received confidential information from the department from disclosing it, subject to stated exceptions. In addition, the section establishes procedures for discovery of confidential information, filing notices of compulsory process related to confidential information and requesting records or testimony containing confidential information, and releasing or withholding confidential information. The department received three sets of written comments, none of which opposed adoption of the section as a whole. Four comments were received, none opposed to adoption. The Independent Bankers Association of Texas (IBAT), the Texas Bankers Association (TBA), and two other persons suggested that sec.3.111(c) be modified. All four have requested that an attorney other than an employee of the financial institution (i.e., an in-house attorney) be permitted access to confidential information without a board resolution designating such person as "officially connected" to the institution and without executing a confidentiality agreement. Noting that the Act, sec.2.104, specifically provides that the recipient of confidential information may disclose it to its attorney, auditor or independent auditor, IBAT requested that access also be extended to the auditor and the independent auditor without requiring board resolution. Furthermore, TBA and one of the persons have requested the deletion of that portion of subsection (e)(2) of the section requiring a written confidentiality agreement between outside counsel and the financial institution before the release of confidential information to the attorney. After examining these comments, the Department concurs that the statute does not impose these requirements and has changed the text of the proposed new section to delete the requirement of board designation in order for outside counsel, auditors, or independent auditors to receive confidential information. Moreover, under the adopted section, such persons are not required to enter into a confidentiality agreement with a financial institution in order to receive confidential information. As required by the Act, sec.1.012(b), in proposing this section, 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. The department made additional changes for clarification. The new section is adopted pursuant to various rulemaking authority under Texas Civil Statutes, Articles 342-1.001 et seq (Act, sec.1.001 et seq). The Act, sec.2.104, provides that a financial institution, affiliate or service provider that receives confidential information from the department may not disclose that information to anyone who is not officially connected to the recipient, except as authorized by rules adopted under the Act. The Act, sec.2. 105 provides that discovery of confidential information pursuant to subpoena from a person subject to the Act, Chapter 2, Subchapter B, must comply with rules adopted under the Act. The Act, sec.2.105 also provides that the rules may restrict release to confidential information that is directly relevant to the legal dispute at issue and that the rules may require a court-issued protective order, in form and under circumstances the rules specify, prior to release. The Act, sec.1.012(a), provides that the commission may adopt rules "to accomplish the purposes of this Act," including rules that "implement and clarify" it or "preserve or protect the safety and soundness of banks." Texas Civil Statutes, Article 342-1106(b), provides that the commission may adopt rules to accomplish the purposes of trust company regulation. Texas Civil Statutes, Article 342-1103, sec.5, renders the confidentiality provisions of the Act, sec. sec.2.101-2.108, applicable to trust companies. Finally, the Act, sec.9.002(b) provides that the finance commission may adopt rules specifically applicable to foreign bank agencies. The Act, sec.9.002(a) provides that a foreign bank agency is subject to the Act and, consequently, to the confidentiality provisions of the Act, sec.sec.2.101-2.108, as if it were a state bank. sec.3.111. Confidential Information. (a) Policy. The Texas Department of Banking (the department) is committed to the concept of open state government. As a regulator of financial institutions, however, the department recognizes the mandate of the legislature to balance the competing interests of the need of financial institutions for confidentiality regarding their financial condition and business affairs with the general public's need for information. The legislature has determined that confidential information, with limited exceptions, should not be disclosed. See Texas Civil Statutes, Articles 342-2. 101 et seq (the Act, sec.sec.2.101 et seq). Inappropriate disclosures can result in substantial harm to financial institutions and to those persons and entities (including other financial institutions) that have relationships with them. In accordance with the historical availability of records of financial institutions and the sound public policy that generally protects them, non-disclosure under this section protects the stability of such institutions by preventing disclosures that could adversely impact financial institutions. For example, the department may criticize a bank in an examination report for a financial weakness that does not currently threaten the solvency of the bank. If improperly disclosed, the criticism can lead to adverse impacts such as the possibility of bank "runs," short-term liquidity problems, and volatility in costs of funds, which in turn can exacerbate the problem and cause the failure of the bank. Bank failures lead to reduced access to credit and greater risk to depositors. Further, specific loans may be criticized in an examination report, and confidentiality of the information protects the financial privacy of customers. Finally, protecting confidential information from disclosure facilitates the free exchange of information between the financial institution and the regulator, encourages candor, and promotes regulatory responsiveness and effectiveness. Information that does not fall within the meaning of confidential information as defined in this section may be confidential under other definitions and controlled by other laws, and is not subject to this section. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Act-The Texas Banking Act, Texas Civil Statutes, Articles 342-1.001 et seq (the Texas Banking Act, sec.1.001 et seq). (2) Affiliate-A company that directly or indirectly controls, is controlled by, or is under common control with a bank or other company. (3) Confidential information-Written and oral information obtained directly or indirectly by the department relative to the financial condition or business affairs of a financial institution, or a present, former, or prospective shareholder, participant, officer, director, manager, affiliate, or service provider of a financial institution, whether obtained through application, examination, or otherwise, and all related files and records of the department, regardless of the form of the information when obtained or as held by the department or when the department first obtained it, and whether or not the information is part of the department's official files or records. The term does not include the public portions of call reports and profit and loss statements. (4) Financial institution-As defined in the Act, sec.1.002(a)(25). For purposes of this section only, the term includes a trust company incorporated under Texas Civil Statutes, Articles 342-1101 et seq, and a foreign bank agency licensed under the Act, sec.sec.9.001 et seq. (5) Governmental agency-Another department of this state, another state, the United States, a foreign sovereign state, or any related agency or instrumentality. (6) Court-A court of law or equity or other adjudicatory tribunal with jurisdiction to issue a subpoena or other legal process for the production of documents, including a government agency exercising adjudicatory functions and an alternative dispute resolution mechanism, voluntary or required, under which a party may compel the production of documents. (c) Authority to receive, hold or disclose confidential information. Authority to disclose confidential information to an individual, business, or governmental agency under this section constitutes authority to disclose it to the appropriate person officially connected to such individual, business, or governmental agency that has a need to know the information in connection with the discharge of official responsibilities and authority for the person who is officially connected to such individual, business, or governmental agency to receive such information. A person officially connected to a financial institution includes its holding company, officer, director, manager, attorney, auditor, independent auditor, employee, and a person reasonably designated as officially connected with the financial institution by resolution duly adopted by the board of directors of the financial institution. A financial institution or its service provider, or affiliate may disclose confidential information, other than as specifically mentioned, to a non-employee, such as its agent, bonding company, or a prospective acquirer, only pursuant to board resolution designating the person or entity as officially connected with the financial institution, affiliate, or service provider. The financial institution, affiliate, or service provider may not disclose confidential information to a shareholder or participant that is specifically denied to such person under the Act, sec.2.108. Only a person to whom confidential information has been released pursuant to lawful authority may disclose that information to another, and all such further disclosures must be in accordance with the Act and this section. (d) Disclosure prohibited. (1) Pursuant to the Act, sec.2.101, and Stewart v. McCain, 575 S.W.2d 509 (Tex. 1978), the department possesses an absolute privilege against disclosure of confidential information held by the department. Except as provided by the Act and rules adopted under the Act, the finance commission, a member of the finance commission, the banking commissioner, or an employee or agent of the department may not directly or indirectly disclose confidential information, whether voluntarily or pursuant to subpoena or other legal process. Confidential information is discoverable from the department under this section only pursuant to a protective order under subsection (f) of this section in a case in which the department is a party other than as intervenor under this section. Pursuant to the Act, sec.2. 106, and notwithstanding any other provision of this section authorizing the release of confidential information, the banking commissioner may refuse to release information or records in the custody of the department if, in the opinion of the banking commissioner, release of the information or records might jeopardize an ongoing investigation by the department or other governmental agency of potentially unlawful activities. (2) Except as provided by the Act and this section, a financial institution, its service provider, or its affiliate may not disclose confidential information received from the department. Confidential information includes an examination report of, correspondence with, and formal and informal actions of the department taken against the financial institution, service provider, or affiliate. (e) Exceptions to non-disclosure. (1) Disclosures by the department. Confidential information disclosed by the department pursuant to an exception to disclosure remains the confidential property of the department. The department may: (A) disclose confidential information to the finance commission and other governmental agencies as provided by the Act, sec.2.102 and sec.2.103; (B) publish final removal, prohibition, and cease-and-desist orders and information regarding the existence of a cease-and-desist order as provided by the Act, sec.6.012; (C) release employment information as provided by the Act, sec.2.107; (D) provide a copy of the regular report of examination and an order, opinion, or other confidential information to the financial institution, its service provider, or affiliate for which it was prepared and to which it relates and correspond with that financial institution, service provider, or affiliate regarding such information; (E) provide a copy of the regular report of examination of a service provider and an order, opinion, or other confidential information relating to the service provider to the financial institution or institutions it services; and (F) forward to a court of proper jurisdiction, subject to any existing administrative protective order, the record of an administrative hearing under appeal that contains confidential information. In the event an administrative protective order does not exist, the department or another party shall file a motion with the court for a protective order consistent with the terms of subsection (f)(4) of this section prior to filing the administrative record. Discretion of the banking commissioner or finance commission to vacate an administrative protective order entered under sec.9.22 of this title (relating to In Camera Materials) ceases at the time the appeal is filed. (2) Further disclosure by a governmental agency, financial institution, service provider or affiliate. Except for disclosures pursuant to subsection (f) of this section, confidential information released to a financial institution, its service provider, or affiliate may be disclosed by the recipient only to a person officially connected to the recipient as provided by subsection (c) of this section and, if authorized under the terms of a confidentiality agreement between the department and another governmental agency, to that governmental agency in the discharge of its official duties. Disclosures to a person designated by board resolution as officially connected to the financial institution, service provider, or affiliate must be made pursuant to a confidentiality agreement between the financial institution, service provider, or affiliate and the recipient. Confidential information released to a governmental agency may be disclosed by the agency only to a person officially connected to the agency as provided by subsection (c) of this section or to another governmental agency to the extent authorized by this section or other law, and must be in accordance with the terms of this section and a confidentiality agreement with or letter of instructions from the department. (3) Disclosures of certain information. (A) Statistical data. Confidential information consisting solely of statistical data may be disclosed, providing its release does not directly or indirectly disclose the identity of an individual or financial institution related to the data. (B) Records of a failed financial institution. Subject to an appropriate finding of the banking commissioner under this subparagraph, the department may release confidential information in or related to the records of a failed financial institution. Release may not occur under this subparagraph earlier than three years after the date such financial institution failed. Information subject to release must pertain only to the condition of the financial institution and cannot include confidential customer information, absent customer consent, or information made confidential by laws other than the Act or this section. Confidential information, as limited herein, may be released if the banking commissioner, in the exercise of discretion, finds that: (i) production of records is neither overly burdensome nor contrary to the public interest; (ii) the need for the information clearly outweighs the need to maintain the confidentiality of the information; or (iii) a compelling need exists for release of the records. (C) Records of another governmental agency. Information the department has obtained from a federal or state governmental agency that is confidential under federal or state law or by agreement with the other agency is not considered part of the department's records. The department may not release such information unless the request for release is submitted with a certification from the appropriate state or federal authority that the information is subject to release under the laws of that jurisdiction. (f) Discovery of confidential information from a governmental agency, financial institution, service provider, or affiliate. (1) General rule. A governmental agency, financial institution, service provider, or affiliate that receives a subpoena or other legal process in any proceeding for the release of confidential information shall promptly notify the department of the request, provide the department with a copy of the process and of the requested documents or information, and object by written motion or other means available under applicable rules of procedure. Notice and documents should be sent to the Texas Department of Banking at 2601 North Lamar Boulevard, Austin, Texas, 78705-4294, to the attention of the General Counsel, and should be labeled "Request for Release of Confidential Information under 7 TAC sec.3.111." Prior to the release of confidential information, such government agency, financial institution, service provider, or affiliate also must file and obtain a ruling on a motion for a protective order and in camera inspection in accordance with this subsection. Confidential information may be released only pursuant to a protective order in a form consistent with that set out in this section and only if a court with jurisdiction has found that: (A) the party seeking the information has a substantial need for the information; (B) the information is directly relevant to the legal dispute in issue; and (C) the party seeking the information is unable without undue hardship to obtain its substantial equivalent by other means. (2) Discretionary filings by department. On receipt of notice under subsection (f)(1) of this section, the department may take action as may be appropriate to protect confidential information. The department has standing to intervene in a suit or administrative hearing for the purpose of filing a motion for protective order and in camera inspection in accordance with this subsection. (3) Motion for protective order and in camera inspection. The movant shall ask the court to enter a protective order in accordance with this subsection regarding the release of confidential information. If necessary to resolve a dispute regarding the confidential status or direct relevance of any information sought to be released, the party seeking the protective order shall move for in camera inspection of the pertinent information. Until subject to a protective order, confidential information may not be released, and the party seeking a protective order shall request the court officer to deny discovery of such confidential information. The party seeking the protective order must comply with the court's applicable rules of procedure. (4) Protective order. A protective order obtained pursuant to the terms of this subsection must: (A) specifically bind each party to the litigation, including one who becomes a party to the suit after the protective order is entered, each attorney of record, and each person who becomes privy to the confidential information as a result of its disclosure under the terms of the protective order; (B) describe in general terms the confidential information to be produced; (C) state substantially the following in the body of the protective order: (i) absent court order to the contrary, only the court reporter and attorneys of record in the cause may copy confidential information produced under the protective order in whole or part; (ii) the attorneys of record are custodians responsible for all originals and copies of confidential information produced under the protective order and must insure that disclosure is limited to those persons specified in the protective order; (iii) confidential information subject to the protective order and all information derived therefrom may be used only for the purpose of the trial, appeal, or other proceedings in the case in which it is produced; (iv) confidential information to be filed or included in a filing in the case must be filed with the clerk separately in a sealed envelope bearing suitable identification, and is available only to the court and to those persons authorized by the order to receive confidential information, and all originals and copies made of such documents and records must be kept under seal and disclosed only in accordance with the terms of the protective order; (v) confidential information produced under to the protective order may be disclosed only to the following persons and only after counsel has explained the terms of the order to the person who will receive the information and provided that person with a copy of the order: (I) to a party and to an officer, employee, or representative of a party, to a party's attorneys (including other members and associates of the respective law firms and contract attorneys in connection with work on the case) and, to the extent an attorney of record in good faith determines disclosure is necessary or appropriate for the conduct of the litigation, legal assistants, office clerks and secretaries working under that attorney's supervision; (II) to a witness or potential witness in the case; (III) to an outside expert retained for consultation or for testimony, provided the expert agrees to be bound by the terms of the protective order and the party employing the expert agrees to be responsible for the compliance of its expert with this confidentiality obligation; and (IV) to the court or to an appellate officer or body with jurisdiction of an appeal in the case; (vi) at the request of the department or a party, only the court, the parties and their attorneys, and other persons the court reasonably determines should be present may attend the live testimony of a witness or discussions or oral arguments before the court that may include confidential information or relate to such confidential information. The parties shall request the court to instruct all persons present at such testimony, discussions, or arguments that release of confidential information is strictly forbidden; (vii) a transcript, including a deposition transcript, that may include confidential information subject to non-disclosure is subject to the protective order. The party requesting the testimony of a current or former department officer, employee, or agent shall, at its expense, furnish the department a copy of the transcript of the testimony once it has been transcribed. (viii) upon ultimate conclusion of the case by final judgment and the expiration of time to appeal, or by settlement or otherwise, counsel for each party shall return to the party that produced the confidential information all copies of every document subject to the protective order and for which the counsel is custodian; and (ix) production of documents subject to the protective order does not waive a claim of privilege or right to withhold the documents from a person not subject to the protective order. (D) Clauses (i), (ii), and (v)-(vii) of subsection (f)(4)(C) of this section are subject to modification by the court for good cause before the conclusion of the proceeding, upon notice and opportunity to appear to the department. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 15, 1995. TRD-9601920 Everette D. Jobe General Counsel Texas Department of Banking Effective date: March 1, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 475-1300 Part II. Texas Department of Banking Chapter 12. Loans and Investments Subchapter A. Lending Limits 7 TAC sec.sec.12.1-12.7 The Finance Commission of Texas (the commission) adopts the repeal of the entirety of Chapter 12 of Title 7, specifically 7 TAC sec.sec.12.1-12.7, concerning lending limits applicable to state banks, without changes to the proposal as published in the November 14, 1995, issue of the Texas Register (20 TexReg 9335). New sec.sec.12.1-12.11 are adopted in this issue of the Texas Register . The repealed sections were last revised in 1988, and amendments in law made by the Texas Banking Act (the Act), sec.5.201, as enacted by Act of May 18, 1995, 74th Legislature, Chapter 914, sec.1, 1995 Texas Session Law Service 4451, 4494- 4496, required the existing sections to be rewritten. Revisions were sufficiently extensive to require repeal and replacement by new sections. No comments were received regarding the adoption of the repeals. The repeals are adopted under the Act, sec.1.012(a), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Act, preserve or protect the safety and soundness of state banks, and grant the same rights and privileges to state banks that are or may be granted to national banks domiciled in this state. 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. The repeals are adopted under the Act, sec.1.012(a), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Act, preserve or protect the safety and soundness of state banks, and grant the same rights and privileges to state banks that are or may be granted to national banks domiciled in this state. 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-9601904 Everette D. Jobe General Counsel Texas Department of Banking Effective date: March 1, 1996 Proposal publication date: November 14, 1995 For further information, please call: (512) 475-1300 7 TAC sec.sec.12.1-12.11 The Finance Commission of Texas (the commission) adopts new sec.sec.12.1-12. 11, to constitute all of Chapter 12, Subchapter A, regarding legal lending limits applicable to state banks and trust companies, with changes to the proposed text as published in the December 22, 1995, issue of the Texas Register (20 TexReg 10936). Chapter 12 is retitled "Loans and Investments" and Subchapter A is titled "Lending Limits." All previously existing sections of Chapter 12 are repealed in this issue of the Texas Register. The adopted sections do not substantially change the existing law established by the existing sections of Chapter 12 as reorganized and modified to account for changes in law made by Texas Civil Statutes, Articles 342-1.001 et seq (the Texas Banking Act, sec.sec.1.001 et seq) (the Act), particularly the Act, sec.5.201, and for existing regulatory determinations and other changes in law made since the legal lending limit rules were last revised in 1988. The sections articulate and expand upon exceptions to the statutory legal lending limit and create several exceptions not addressed by the Act or repealed sections of Chapter 12, both to improve clarity and answer frequently asked questions. The sections as adopted also implement parity with national banks in several respects, and the staff of the department of banking closely compared the sections to the national bank lending limits adopted by the Office of the Comptroller of the Currency (OCC) on February 15, 1995, published in the Federal Register at 60 Federal Regulation 8526, and codified at 12 Code of Federal Regulations (CFR), sec.sec.32.1-32.6, while attempting to preserve the lending limit scheme set forth in the Act. Percentage limits imposed by the OCC have been adjusted upward in appropriate circumstances to create parity in light of the smaller calculation base under the Act. The Texas Bankers Association (TBA), Independent Bankers Association of Texas (IBAT), Consumers Union, and nine other persons submitted comments. No commenter opposed adoption of the sections as a whole, five commenters were in favor of adoption, and eight commenters wrote to suggest both stylistic and substantive revisions regarding specific issues. The agency's responses to comments appear in the discussion of specific provisions of the sections in the remainder of this preamble. Section sec.12.1 restates the public policy underlying legal lending limits and addresses the scope of the subchapter. References are specifically made to federal law that creates additional restrictions on state banks. The reader is specifically cautioned that legal lending limits are designed to limit the bank's exposure to one borrower or source of repayment and to encourage diversification in the bank's loan portfolio, and do not address the application of prudent lending standards and safe and sound banking practices. The obligation to engage in prudent lending is the overriding standard. Consumers Union commented that one purpose of the legal lending limit, as stated in former sec.12.1(b), is "to safeguard the bank depositors by spreading the loans among a relatively large number of persons engaged in different lines of business." Consumers Union believes that the stated purpose in the proposal of promoting "diversification of loans to reduce portfolio and credit risk" is not synonymous with the public policy of spreading loans throughout a community, and the latter should also be stated. The agency disagrees that sec.12.1(a) (relating to Purpose) should be modified as requested. The purpose of the legal lending limit is to require diversification of loans to reduce portfolio and credit risk. One effect of legal lending limits is a larger number of smaller loans in the portfolio of the lending bank, and thus supports the bank in its effort to reinvest in the community and avoid discrimination in lending. This beneficial effect notwithstanding, state law at present does not require a bank to ensure that loans are spread fairly and equitably among members of the community; indeed, no state law requires a bank to lend its funds at all. At present, fair lending and community reinvestment requirements are imposed solely by federal law, see, e.g., 12 United States Code (USC), sec.2901 et seq, and 15 USC, sec.1691 et seq. TBA pointed to the inclusion of the term "affiliates" in sec.12.1(b)(2) (relating to Scope) as inconsistent with sec.12.1(b)(1), arguing that loans to affiliates are exempt from state legal lending limits under the statute and affiliates should therefore not be mentioned. The agency responds by noting that loans to affiliates are exempt only if bank deposits are federally insured, thereby subjecting the bank to regulation under 12 USC, sec.371c. Loans to affiliates of uninsured banks are still subject to state legal lending limit provisions. The agency has rephrased the provision slightly to eliminate the perceived inconsistency. Section 12.2 sets forth definitions of "Act", "borrower", and "Federal funds sold" to be applicable to the entire subchapter. The definition of "Federal funds sold was inadvertently omitted from the proposal and is now included. Section 12.3 extensively analyzes the term "loans or extensions of credit" as used in the Act, setting forth specific inclusions in the term as well as specific exclusions. Section 12.3(a)(1) includes overdrafts in loans and extensions of credit. One commenter asked whether interbank overdrafts caused by cash letter difficulties or the failure of a securities transaction cause the selling or lending bank to incur a legal lending limit violation. The agency responds by noting that the provision is primarily aimed at retail deposit accounts and that the Act, sec.5.201(a)(5), expressly exempts interbank borrowings with settlement period of less than one week. Section 12.3(a)(4) includes the purchase of third party paper as a loan or extension of credit. TBA requests clarification that such inclusion does not invalidate the exemption for purchase of consumer installment paper provided by the Act, sec.5.201(a)(11). Clarification has been added. Section 12.3(a)(5) includes as a loan or extension of credit the sale of Federal funds with a maturity of more than one business day, but not Federal funds sold with a maturity of one day or less or Federal funds sold under a continuing contract. Two commenters questioned whether the provision denied exemption to a series of transactions under a continuing contract that provided for weekly settlement. The agency added clarification to this subsection and sec.12.3(b)(5) that contracts that provide for weekly or other periodic settlement are exempt if the parties have the right to obtain their funds at maturity. In any event, interbank borrowings with settlement periods of less than one week are exempt from the legal lending limit, see the Act, sec.5.201(a)(5). The stricter definition of "Fed funds" is heavily influenced by federal law and call report instructions. Section 12.3(a)(6) regarding treatment of charged off loans has been minimally reworded for more clarity in response to a suggestion by TBA. Section 12.3(b)(1) permits a bank to advance funds to protect its collateral without such advance being considered a loan or extension of credit, provided that any such advances must be considered as outstanding indebtedness in evaluating whether the bank can fund a new loan or extension of credit to the same borrower. Examples include advances for taxes, insurance, utilities, security, and maintenance expenses, but only if necessary to preserve the value of the real property or other collateral security and consistent with safe and sound banking practices. Under federal law, the OCC has also included advances for operating expenses within the exception, see 12 CFR, sec.32.2(j)(2)(I). The agency feels strongly that advances for operating expenses should be considered a new loan or extension of credit and is not reasonably related to preservation of collateral. The lending bank is expected to maintain adequate documentation demonstrating that the additional advance is necessary to preserve the value of the real property or other collateral security. TBA requested a stylistic change that the agency accepts. Another commenter expressed concern that emergency loans for feed rations during adverse climate conditions could be considered operating expenses. The agency believes such advances would be maintenance rather than operating expenses, necessary to preserve the value of the livestock collateral. Accordingly, no textual changes are made. As is the case under prior law, accrued and discounted interest is excluded from loans and extensions of credit under sec.12.3(b)(2). The OCC further excluded interest that has been capitalized from prior notes and interest that has been advanced under a loan agreement, under 12 CFR, sec.32.2(j)(2)(ii). The OCC states that such an addition assists primarily large banks with loans to foreign governments and also grants more flexibility to banks in working out troubled loans. TBA has again urged the commission to adopt the OCC position. Another commenter believes the flexibility under proposed sec.12.8(a), which permits the banking commissioner, on application, to grant exceptions to the lending limit on a case by case basis, should be available for capitalized interest situations. The adopted section does not include capitalized interest as a general exclusion from loans or extensions of credit. The agency believes inclusion of the provision on capitalized and advanced interest is contrary to safe and sound banking practices for most state banks. The adopted section therefore does not include capitalized interest as a general exclusion from loans or extensions of credit. The possibility exists that sec.12.8(a) may be utilized for the purpose of excluding capitalized and advanced interest in a proper case. Section 12.3(b)(3) provides that valid loan participations are excludable from the loans and extensions of credit of the originating bank. Two commenters pointed out that the provision does not contemplate the sale of participations in existing loans and does not address commonly used weekly settlements involving participated loans with a high volume of daily transactions. The agency accepts the comments, and new sec.12.3(b)(3)(C) and (D) address these concerns. One commenter expressed concern that sec.12.3(b)(3)(A) was not clearly expressed and the provision is rephrased for clarity. New sec.12.3(b)(6) is an added cross-reference to sec.12.10(b). TBA suggested the subject matter of sec.12.10(b) may more appropriately fit under sec.12.3, citing to the manner in which the subject is handled under federal law, 12 CFR, sec.32.2(j)(2)(iv). The agency disagrees with relocation but has added the cross-reference for clarity. Adopted sec.12.4(a) elaborates on the subject of loan commitments, a source of considerable confusion in prior years. In the view of the agency, no change in law or policy is made by sec.12.4(a). TBA expressed concern that the requirement of a concurrently executed participation (which may be deducted for purposes of measuring outstanding loans) may be construed too narrowly, and suggested including prior executed commitments. The agency concurs, and has amended the subsection to refer to participation agreement executed before or concurrently with the bank's commitment. Section 12.4(b) implements an increased lending limit for additional advances to complete project financing, under the commission's authority to add exceptions by rule. The section is intended to permit a bank to renew a loan commitment for purposes of completing the original intended funding under the commitment, to enable a project to be finished rather than force the unfinished property into foreclosure, if certain conditions are met. The intent of the subsection is to allow renewal of an expiring commitment in those circumstances in which the new commitment would result in a legal lending limit violation, provided the specified conditions are met. As stated in sec.12.4(a), advances may be made under a binding commitment to lend even if the advances would exceed the bank's lending limit on the date of funding, provided the aggregate commitment was within the bank's lending limit at the time of origination. A cross-reference to this provision is also added to sec.12.10(b)(1). Adopted sec.12.5(a) sets out the general standard for legal lending limits, and clarifies that the sum of capital and certified surplus, as a measurement device, must be reduced in the event undivided profits is sufficiently negative to cause equity capital of a bank to be less than capital and certified surplus. In the view of the agency, no change in prior law or policy is made by sec.12.5(a). TBA notes that sec.12.5(a) seems to go beyond the Act, sec.5.201, in using equity capital as a measurement device when less than capital and certified surplus, but TBA also states that it understands the reasons for doing so. If the comment is construed as suggesting that capital and certified surplus should be the measurement device in all cases, the agency disagrees. The agency believes the intent of the Act, sec.5.201, is best satisfied by taking negative retained earnings (undivided profits) into account and that it has authority to impose this alteration pursuant to the Act, sec.5.201(b)(1). The remainder of sec.12.5 sets out in detail the circumstances under which the general limit of sec.12.5(a) can be exceeded, although banks are reminded that prudent lending standards are always applicable. The increased lending limits generally are cumulative; i.e., each limit expressed is in addition to the general 25% limit and any other special limit applicable to a transaction with the same borrower except as otherwise specifically provided. Section 12. 5(b)- (d) implement and clarify statutory exceptions. Section 12.5(e)-(g) creates several new exceptions on the basis of parity with national banks. One commenter questioned the use of the term "immediate" in sec.12.5(b)(2). Section 12.5(b) governs loans to one borrower secured by a bill of lading, bonded warehouse receipt, or similar document transferring or securing title to readily marketable goods. In sec.12.5(b)(2), the holder of the bonded warehouse receipts, order bills of lading, documents of title, or other similar documents must have control and be able to obtain "immediate" possession of the goods so that the bank is able to sell the underlying goods and promptly transfer title to the buyer if default were to occur on a loan secured by such documents. The agency does not see a need for clarification. The thrust of sec.12.5(b)(2) is to require the bank to be in such a position that no obstacle exists to prompt presentation of documents sufficient to gain legal title to the collateral. A commenter expressed concern that sec.12.5(c)(1) would limit the duration of an "annual" line of credit for grain elevators to a maximum period of 10 months. The duration provision is directed more at individual transactions under a credit facility and is related to ensuring that agricultural product collateral does not become unmarketable through age and spoilage. Clarification is added. The agency will interpret this provision in the same manner as the OCC, see 12 CFR, sec.32.3(b)(1)(iii). IBAT and another commenter urge a new exception for transactions with third party providers of cashier's check services. Under a conventional program, funds derived from sale of cashier's checks are provided to and cashier's checks are processed through the third party provider's account, yet the bank remains contractually liable on the instrument since the third part provider disclaims direct liability. IBAT suggests handling this kind of transaction similar to the manner in which "due from" accounts with correspondent banks are handled, see 12 CFR, sec.210.1 et seq, but recognizes that the service provider is not a bank. The other commenter, a third party provider of such services, suggests that the exception impose a net worth test on the third party provider, specifying a net worth that coincidentally is met by the commenter but not all of its competitors. The agency declines to create a new exception at this stage of the rulemaking process on the grounds that the suggestion is outside the scope of the contemplated action, but will continue to study how best to support and protect banks utilizing such services. Section 12.6 clarifies certain exemptions under the Act, sec.5.201, for which no limits are specified, without significant change from prior law and regulatory interpretations. Adopted sec.12.6(c) and (e) will exempt a loan to a governmental entity of this state or to a federal agency that would constitute a purchase of an investment security under the Act, sec.5.101(d)(1), if the obligation were marketable. Section 12.6(f) exempts government guaranteed loans. TBA commented that the term "legally created" should more properly be phrased as "valid and enforceable" to ensure that the requirements for a legal opinion meet established opinion standards in the legal community. The agency concurs in this comment and the subsection is so modified. The specialized area of lease financing is addressed by sec.12.7, which defines the structure of a financed lease sufficient to allow the bank to look to the lessee and not the lessor as borrower. Section 12.8 specifies the process of obtaining an exemption upon application as well as obtaining emergency relief from the banking commissioner in the situation of a legal lending limit that has become too low to allow a bank to adequately serve its community. The agency believes the ability to obtain an exemption on the facts of a particular case provides a significant advantage for state banks over national banks. Aggregation and attribution of loans, the process of determining the consolidated risk or exposure of the lending bank to a single source of repayment, is addressed in sec.12.9 and, with two exceptions, is substantially unchanged from existing law although reorganized for clarity. TBA, IBAT, and two other commenters urged the agency to either delete sec.12. 9(a)(4), which asserts banking commissioner discretion to attribute loans to another person, or establish objective standards for how this discretion will be utilized, although none of the commenters suggested what these standards might be. The agency declines the request. Discretion to deal with creative evasion of the legal lending limits must remain unfettered. Deletion of sec.12. 9(a)(4) would not affect this discretion since it is merely repetitious of the Act, sec.5.201(c), which itself carries forward the provision from the repealed Texas Banking Code, Article 342-507(d). Further, national banks are subject to the same discretionary authority granted to the OCC, see 12 USC, sec.84(d)(2). Historically, this authority has been invoked by commissioners and examiners sparingly and only in clear cases of abuse. One commenter urged creation of a review board to add more objectivity to the process of sec.12.9(a)(4), and another commenter argued that the application of this provision would be unconstitutional as violative of due process rights since a legal lending limit violation is subject to penal sanctions. The agency disagrees. First, unlike the repealed Texas Banking Code, the Act does not impose criminal penalties for a legal lending limit violation. Second, a violation cited in an examination report is not subject to civil money penalties. The bank must first ignore or defy the examination finding, the agency must issue a cease and desist order (which is appealable to and reviewable by the commission, and ultimately may be appealed to the courts), and the bank must violate a final and nonappealable cease and desist order before penalties may be imposed, and a penalty order itself is appealable. For the same reasons, the agency declines to create a review board. Under sec.12.9(c), the common enterprise test for aggregation and attribution is stated in one instance regarding affiliated borrowers as the existence of "substantial financial interdependence ... between or among the borrowers." Section 12.9(c)(2) states that substantial financial interdependence exists if 50% or more of one borrower's annual gross receipts or gross expenditures derive from transactions with the other, affiliated borrower, and further creates a rebuttable presumption of substantial financial interdependence exists if 25% or more of one borrower's annual gross receipts or gross expenditures derive from transactions with the affiliated borrower. The 50% irrebuttable presumption is the same as the OCC has imposed on national banks, see 12 CFR, sec.32.5(c)(2)(ii). TBA urges deletion of the 25% rebuttable presumption, arguing that the provision will make it harder for banks to make loans to businesses at a time when they are under constant criticism for failing to meet the credit needs of their communities. The agency is sympathetic to the argument raised, but declines to delete the provision. The presumption that substantial financial interdependence exists if 50% or more of one borrower's annual gross receipts or gross expenditures derive from transactions with the other, affiliated borrower does not mean that substantial financial interdependence does not exist at 49%. A business that is dependent for a quarter to a half of its revenues or raw materials on an affiliate could reasonably be characterized as financially interdependent with the affiliate, depending on other factors such as alternative suppliers and customers. One commenter argues strenuously that sec.12.9(c)(1)(A) will result in aggregation of loans between parties that contract with one another if the consideration is material to the overall revenues and expenses of one party. The agency intends the section to apply the financial interdependence test only to affiliated businesses, and the provision is amended for clarification to refer directly to "affiliated borrowers." The term is defined in sec.12.9(c) (2) in a manner consistent with the Act, sec.1.002(a)(1). TBA suggests additional clarification of sec.12.9(d) with respect to treatment of wages and salaries of employees, pointing to comparable federal law in 12 CFR, sec.32.5(c)(1). The agency cannot identify any ambiguity and therefore declines to make the requested modification. Under federal regulations, the source of repayment test (sec.32.5(c)(1)) is a subset of the common enterprise test (sec.32.5(c)), therefore, the federal provisions must qualify the exception for wages and salary with reference to other formulations of the common enterprise test. Under the adopted sections, the source of repayment test (sec.12.9(d)) is independent of the common enterprise test (sec.12.9(c)). Therefore, the exception of employee wages and salaries from the source of repayment test does not need to be qualified by reference to the common enterprise test. The OCC has imposed a separate limit on loans to corporate groups (generally defined as a group of business entities under common control, including forms of business entities other than corporations) in 12 CFR, sec.32. 5(d). Section 12.9(e) imposes the same requirement in recognition of the inherent risk in loans to a controlled group of business entities and to simplify application of the attribution rules in that context. TBA suggests that the concluding clause of sec.12.9(f)(1) be deleted as redundant. Section 12.9(f)(1) specifies circumstances under which a loan to a partnership is not considered a loan to a partner. The agency declines to delete the language "and that have not agreed to guarantee or be personally liable on the loan or extension of credit" in that it is descriptive and potentially useful to the reader. Section 12.9(g) clarifies the applicability of aggregation to guarantors and other accommodation parties. Generally, the derivative obligation of a drawer, endorser, or guarantor of a loan or extension of credit, including a contingent obligation to purchase collateral that secures a loan, is not aggregated with direct loans or extensions of credit to such drawer, endorser, or guarantor if the lending bank is relying primarily on the creditworthiness of the primary obligor and neither the direct benefit, common enterprise, nor source of repayment test is met. Nonconforming loans are loans made on or after September 1, 1995, that were within a bank's legal lending limit when made but no longer comply because of specified reasons, and are governed by sec.12.10. Such loans will be cited as nonconforming loans but not as violations of the legal lending limit if they are nonconforming by reason of a decline in the bank's capital and certified surplus or equity capital, subsequent merger or affiliation of borrowers in such a way as to invoke aggregation of previously separate loans, subsequent changes in lending limit or capital definitions or standards after the effective date of Chapter 12, or a decline in value of collateral securing a loan or extension of credit that causes noncompliance with a special lending limit or exception. In the last case, a bank must take action to restore collateral value within 30 days after the nonconformity is discovered. In other cases of nonconformity, the bank is obligated to use reasonable efforts to bring the credit into compliance, and in some circumstances may renew or restructure the loan. The requirement that a bank exercise "reasonable" efforts is changed from the proposal, which required "best efforts," in response to a comment by TBA noting that 12.10(b) seemed more narrowly drafted than the comparable federal provision, 12 CFR, sec.32.2(j)(2)(iv). Section 12.10(b) generally provides that a bank must exercise reasonable efforts to bring certain nonconforming loans or extensions of credit into conformity with the legal lending limit, "consistent with safe and sound banking practices." TBA suggests that the clause "consistent with safe and sound banking practices" be modified to state "unless to do so would be inconsistent with safe and sound banking practices." The agency declines the suggestion, noting that it would create a loophole capable of abuse. Section 12.11 addresses transition from the Texas Banking Code to the Texas Banking Act regarding treatment of loans in existence on the effective date of the Act, primarily by providing an exemption based on specified standards, including standards for renewing and restructuring a loan if necessary. Subject to satisfaction of the specified standards, loans subject to sec.12.11 will not be cited as violations of lending limits or as nonconforming loans. The new sections are adopted under the Act, sec.5.201(d), which authorizes the commission to adopt rules to administer and carry out the Act, sec.5.201, regarding legal lending limits, including rules to define or further define terms used in the statute, or establish limits, requirements, or exemptions other than specified by the statute for particular classes or categories of loans or extensions of credit. The sections are also adopted under the Act, sec.1.012(a), which authorizes the commission to adopt rules necessary or reasonable to implement and clarify the Act, preserve or protect the safety and soundness of state banks, and grant the same rights and privileges to state banks that are or may be granted to national banks domiciled in this state. As required by the Act, sec.1.012(b), in adopting 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.12.1. Purpose and Scope. (a) Purpose. The purpose of this subchapter is to administer and carry out the objectives of Texas Civil Statutes, Articles 342-1.001 et seq (the Texas Banking Act, sec.sec.1.001 et seq) (the Act), particularly the Act, sec.5.201, to protect the safety and soundness of state-chartered banks by preventing excessive loans to one person or a relatively small group of persons who are financially interdependent, and to promote diversification of loans to reduce portfolio and credit risk. Notwithstanding the provisions of the Act, sec.5.201, and this subchapter, loans and extensions of credit by state banks and their operating subsidiaries remain subject to the exercise of prudent lending standards and safe and sound banking practices. (b) Scope. (1) This subchapter applies to all loans and extensions of credit made by a state bank and its operating subsidiaries on or after September 1, 1995. This subchapter does not apply to loans made by an insured state bank and its domestic operating subsidiaries to the bank's "affiliates," as that term is defined in 12 United States Code (USC), sec.371c(b)(1), pursuant to the Act, sec.5.201(a) (13), or to loans made by a state bank to the bank's operating subsidiaries, pursuant to the Act, sec.5.201(a)(14). Except as otherwise provided, this subchapter does not apply to other loans specifically exempted from the lending limit pursuant to the Act, sec.5.201(a). (2) Loans and extensions of credit to affiliates, executive officers, directors, and principal shareholders of state banks, and their related interests, are subject to the limits prescribed by 12 USC, sec.sec.371c, 371c-1, 375a, and 375b, Regulation O (12 Code of Federal Regulations (CFR), sec.215.1 et seq), and 12 CFR, sec.337.3, in addition to the lending limits established by the Act, sec.5.201, and this subchapter, where applicable. (3) The lending limits in this subchapter are separate and apart from the investment limits set forth in the Act, sec.5.101, and regulations adopted to govern investment limits. A state bank may make loans or extensions of credit to one borrower up to the full amount permitted by this subchapter and also purchase and hold eligible investment securities issued by the same obligor up to the full amount permitted under the Act, sec.5.101. sec.12.2. General Definitions. Words and terms used in this subchapter that are defined in the Act, sec.1.002, have the same meanings as defined in the Act. The following words and terms when used in this subchapter shall have the following meanings, unless the context clearly indicates otherwise. Act-Texas Civil Statutes, Articles 342-1.001 et seq (the Texas Banking Act, sec.sec.1.001 et seq). Borrower-A person who is named as a borrower, obligor, or debtor in a loan or extension of credit, or any other person, including but not limited to a drawer, endorser, or guarantor who is considered to be a borrower under the direct benefit, source of repayment, or common enterprise tests set forth in sec.12.9 of this title (relating to Aggregation and Attribution). Federal funds sold-A transaction between depository institutions involving the transfer of immediately available funds resulting from credits to deposit balances at Federal Reserve Banks, or from credits to new or existing deposit balances due from a correspondent depository institution. sec.12.3. Loans and Extensions of Credit. (a) Loans or extensions of credit for purposes of the Act, sec.5.201, and this subchapter include: (1) an overdraft, regardless of whether such overdraft was pre-arranged, other than an overdraft for which payment or deposit is received by the bank before the time at which the bank closes its accounting records for the business day on which the funds were advanced; (2) a contractual obligation to advance funds to or on behalf of a person, including a bank's obligation to: (A) make payment, directly or indirectly, to a third party contingent upon default by a customer of the bank in performing an obligation owed to the third party or upon another stated condition; (B) guarantee or act as surety for the benefit of a person; (C) advance funds under a legally binding commitment to lend; or (D) advance funds under a standby letter of credit, a put, or other similar arrangement, however named or described, that represents an obligation to the beneficiary on the part of the issuing bank to repay money borrowed by or advanced to or for the account of the account party (the customer or applicant in a letter of credit transaction), make payment on account of any indebtedness undertaken by the account party, or make payment on account of a default by the account party in the performance of an obligation, but not including a bank's obligation under a commercial letter of credit or similar instrument if the issuing bank reasonably expects the beneficiary to draw on the issuer and the instrument neither guarantees payment nor provides for payment in the event of a default by a third party; (3) a maker or endorser's obligation arising from the discount of commercial paper; (4) third-party paper purchased to the extent it is subject to an agreement that the seller will repurchase the paper, including an obligation to repurchase the paper upon default or at the end of a stated period, less any applicable dealer reserves held by the bank as collateral security, unless such transaction is exempt under other provisions of the Act or this subchapter; (5) the sale of Federal funds with a maturity of more than one business day, but not Federal funds sold with a maturity of one day or less or Federal funds sold under a continuing contract, including contracts that provide for weekly settlement if the parties have the contractual right to obtain their funds at maturity of each transaction; (6) loans or extensions of credit that have been charged off on the books of the bank, in whole or part, unless the loan or extension of credit s no longer legally enforceable by reason of: (A) discharge in bankruptcy; (B) expiration of the statute of limitations or judicial decision; or (C) another reason, provided the bank maintains sufficient records to demonstrate that the loan is unenforceable; (7) lease financing transactions made pursuant to the Act, sec.5.203, unless otherwise exempt under sec.12.7 of this title (relating to Lease Financing); and (8) nonrecourse or limited recourse loans or extensions of credit. (b) Loans or extensions of credit for purposes of the Act, sec.5.201, and this subchapter do not include: (1) funds advanced to or for the benefit of a borrower by a bank for taxes or insurance associated with collateral security for a loan or extension of credit, as well as funds advanced for utilities, security, and maintenance expenses associated with real property securing a loan or extension of credit, but only if necessary to preserve the value of the real property or other collateral security and consistent with safe and sound banking practices, provided the bank maintains sufficient records to demonstrate the necessity of the advance, and such advances are included in loans and extensions of credit thereafter until repaid for the purpose of determining whether additional loans or extensions of credit to the same borrower may be made within applicable lending limits; (2) accrued and discounted interest on an existing loan or extension of credit; (3) that portion of a loan or extension of credit sold as a participation by a bank on a nonrecourse basis, provided the participation results in a pro rata sharing of credit risk proportionate to respective interests of the originating and participating lenders, except that: (A) if the participation agreement provides that repayment must be applied first to the portions sold, a pro rata sharing will be considered to exist only if, in the event of default or comparable event provided in the agreement, the participants share in all subsequent repayments and collections in proportion to their actual percentage participation at the time of the occurrence of the event; (B) if the originating bank funds the entire loan, the participants must be contractually obligated to remit their portion to the bank before the close of business (the time at which the bank closes its accounting records for the business day) on the next business day of the originating bank or its portion funded by the originating bank will be considered a loan by the originating bank to the borrower; (C) in the case of a participation sold in an existing loan, the amount of the participation may not be subtracted from the outstanding loans and extensions of credit of the originating bank until the proceeds of sale are in the possession of the originating bank; and (D) a loan participation agreement that provides for weekly settlement of amounts due to and from the participants meets the requirements of this paragraph if the outstanding balance to the borrower from the originating bank does not at any time exceed the bank's legal lending limit; (4) an advance against uncollected funds in the normal course of collection pursuant to the bank's availability schedule issued in compliance with Regulation CC (12 CFR, sec.229.1 et seq), including the amount of an item that must be credited to the customer under the bank's availability schedule but remains uncollected and unreturned because of a delay or defect in the collection system; (5) the sale of Federal funds with a maturity of one day or less, or Federal funds sold under a continuing contract, including contracts that provide for weekly settlement if the parties have the contractual right to obtain their funds at maturity of each transaction; or (6) a renewal or restructuring of a nonconforming loan as a new loan or extension of credit, subject to compliance with sec.12.10(b) of this title (relating to Nonconforming Loans). sec.12.4. Loan Commitments. (a) A commitment to lend, when combined with all other loans or extensions of credit to a borrower, must be within the bank's legal lending limit at the time the commitment becomes binding, and advances may be made under a binding commitment to lend even if the advances would exceed the bank's lending limit on the date of funding. In determining whether a commitment to lend is within a bank's lending limit when made, the bank may deduct from the amount of the commitment the amount of each legally binding loan participation agreement executed before or concurrently with the bank's commitment that would be excluded from a loan or extension of credit under sec.12.3(b)(3) of this title (relating to Loans and Extensions of Credit). (b) Pursuant to the Act, sec.5.201(b)(2), a state bank may renew a commitment to lend and complete funding under that commitment to one borrower in circumstances where the renewed commitment would exceed the bank's current, general lending limit if: (1) the completion of funding is consistent with safe and sound banking practices and is made to protect the position of the bank; (2) the completion of funding will enable the borrower to complete the project for which the original, expiring commitment to lend was made; and (3) the amount of the additional funding does not exceed the unfunded portion of the bank's original, expiring commitment to lend. sec.12.5. Percentage Lending Limits. (a) General lending limit. Generally, a bank's total outstanding loans and extensions of credit to one borrower, as provided in the Act, sec.5.201, may not exceed 25% of the lesser of the bank's capital and certified surplus or the bank's total equity capital. However, certain loans or extensions of credit are subject to special lending limits as set forth in this section. These special lending limits are cumulative of one another and of the general lending limit under this subsection except as otherwise provided. (b) Loans secured by title to readily marketable goods. (1) Pursuant to the Act, sec.5.201(a)(3), loans to one borrower secured by a bill of lading, bonded warehouse receipt, or similar document transferring or securing title to readily marketable goods may not exceed 50% of the lesser of the bank's capital and certified surplus or the bank's total equity capital, in addition to the amount for that borrower allowed under the bank's general lending limit for loans and extensions of credit other than as provided by this subsection, provided the bank's interest in the collateral is adequately insured against loss if it is customary to do so. The market value of the goods securing the loan must at all times equal at least 115% of the amount of the outstanding loan that exceeds the general lending limit. The duration of the loan or extension of credit may not exceed six months if secured by goods that are refrigerated or frozen, or ten months if secured by nonperishable goods. (2) The holder of the bonded warehouse receipts, order bills of lading, documents of title (as defined under the Business and Commerce Code), or other similar documents must have control and be able to obtain immediate possession of the goods so that the bank is able to sell the underlying goods and promptly transfer title to the buyer if default were to occur on a loan secured by such documents. The requirement under applicable law for a brief notice period or other similar procedural condition prior to disposal of the goods will not affect the eligibility of the instruments for this special lending limit. (3) For purposes of this subsection, readily marketable goods are articles of commerce or industry in the form of fungible units that are easy to sell in a market with sufficiently frequent price quotations, and includes basic metals, such as tin, copper, or lead, consumer goods, and packaged processed foods, including refrigerated or frozen foods. The exact price must be easy to determine and the article itself must be easy to sell at any time at a price that would not be considerably less than the amount at which it is valued as collateral. Whether an article qualifies as readily marketable goods is determined on the basis of the conditions existing at the time the loan or extension of credit secured by the article is made. Whether goods are nonperishable must be determined on a case-by-case basis because of the differences in types of goods and differences in the shipping, handling, and storing of goods. (c) Loans secured by liens on stored agricultural products. (1) Pursuant to the Act, sec.5.201(a)(4), loans to one borrower secured by liens on agricultural products in secure and properly documented storage in bonded warehouses or elevators may not exceed 50% of the lesser of the bank's capital and certified surplus or the bank's total equity capital, in addition to the amount for that borrower allowed under the bank's general lending limit for loans and extensions of credit other than as provided by this subsection, provided the bank's interest in the collateral is adequately insured against loss. The market value of the agricultural products securing the loan must at all times equal at least 125% of the amount of the outstanding loan. The duration of the loan or extension of credit arising from a single transaction or the same agricultural products may not exceed six months if secured by agricultural products that are refrigerated or frozen, or exceed ten months if secured by nonperishable agricultural products. (2) The bank must have control and be able to obtain immediate possession of the agricultural products so that the bank is able to sell the underlying products and promptly transfer title to the buyer if default were to occur on a loan secured by such products. The requirement under applicable law for a brief notice period or other similar procedural condition prior to disposal of the products will not affect the eligibility of the products for this special lending limit. (3) Field warehouse receipts are an acceptable form of collateral when issued by a duly bonded and licensed grain elevator or warehouse having exclusive possession and control of the agricultural products even though the grain elevator or warehouse is maintained on the premises of the owner of the products. Warehouse receipts issued by the borrower-owner that is a grain elevator or warehouse company, duly bonded and licensed and regularly inspected by state or federal authorities, may be considered eligible collateral under this provision only when the receipts are registered with an independent registrar whose consent is required before the products may be withdrawn from the warehouse. (4) Agricultural products are any product of agriculture, excluding livestock but not the products of livestock, and includes wheat and other grains, cotton, wool, flowers, eggs, and milk. Whether agricultural products are nonperishable must be determined on a case-by-case basis because of the differences in types of agricultural products and differences in the shipping, handling, and storing of agricultural products. (d) Loans secured by readily marketable collateral. (1) Pursuant to the Act, sec.5.201(a)(12), loans or extensions of credit to one borrower may exceed the bank's general lending limit by an additional 15% of the lesser of the bank's capital and certified surplus or the bank's total equity capital if the amount that exceeds the bank's general lending limit is fully secured by readily marketable collateral. The bank must properly perfect its security interest in the collateral to qualify for this added special lending limit and the collateral at all times must have a market value of at least 100% of the amount of the loan or extension of credit that exceeds the bank's general lending limit. (2) For purposes of this subsection, readily marketable collateral must be financial instruments or bullion that can be promptly sold under ordinary market conditions at a fair market value determined by reliable and continuously available price quotations, based upon actual transactions on an auction or similarly available daily bid and ask price market. Financial instruments are stocks, bonds, notes, and debentures traded on a national securities exchange, over-the-counter margin stocks as defined in Regulation U (12 CFR, sec.sec.221.1 et seq), commercial paper, negotiable certificates of deposit, bankers' acceptances, and shares in a money market mutual fund of the type that issues shares in which banks may perfect a security interest, but not including individual mortgages. Financial instruments may be denominated in foreign currencies that are freely convertible into United States dollars. (e) Loans secured by documents covering livestock. (1) Pursuant to the Act, sec.5.201(b)(2), loans or extensions of credit to one borrower secured by shipping documents or instruments that transfer or secure title to or grant a first lien security interest in livestock may not exceed 15% of the lesser of the bank's capital and certified surplus or the bank's total equity capital, in addition to the amount allowed under the bank's general lending limit. The market value of the livestock securing the loan must at all times equal at least 115% of the amount of the outstanding loan that exceeds the general lending limit. (2) The bank must maintain in its files an inspection and valuation for the livestock pledged that is reasonably current, taking into account the nature and frequency of turnover of the livestock to which the documents relate, but in no event more than 12 months old. (3) For purposes of this subsection, livestock includes dairy and beef cattle, hogs, sheep, goats, poultry, and fish, whether or not held for resale. (f) Loans secured by dairy cattle paper. Pursuant to the Act, sec.5.201(b)(2), loans and extensions of credit to one borrower arising from the discount by dealers in dairy cattle of paper given in payment for the cattle may not exceed 15% of the lesser of the bank's capital and certified surplus or the bank's total equity capital, in addition to the amount allowed under the bank's general lending limit. To qualify, the paper must carry the full recourse endorsement or unconditional guarantee of the seller and must be secured by the cattle sold, pursuant to liens that allow the bank to maintain a perfected security interest in the cattle under applicable law. sec.12.6. Loans Not Subject to Lending Limits. (a) Loans arising from the discount of commercial or business paper. (1) Pursuant to the Act, sec.5.201(a)(1), loans or extensions of credit arising from the discount of negotiable commercial or business paper that evidences an obligation to the person negotiating the paper are not subject to the lending limits of the Act, sec.5.201, or this subchapter, provided that: (A) the paper is given in payment of the purchase price of commodities purchased for resale, fabrication of a product, or another business purpose that may reasonably be expected to provide funds for payment of the paper; and (B) the paper bears the full recourse endorsement of the owner of the paper, except that paper discounted in connection with export transactions may be transferred without recourse or with limited recourse if supported by an assignment of appropriate insurance, acceptable to the banking commissioner, covering the political, credit, and transfer risks applicable to the paper, such as insurance provided by the Export-Import Bank. (2) A default in the payment of principal or interest on commercial or business paper when due does not disqualify the exception under this subsection or result in a loan or extension of credit to the maker or endorser of the paper that is subject to lending limits, provided that the amount of such defaulted paper must be included in loans and extensions of credit thereafter until the default is remedied for the purpose of determining whether additional loans or extensions of credit to the same borrower may be made within applicable lending limits. (b) Bankers' acceptances. Pursuant to the Act, sec.5.201(a)(2), acceptance of drafts eligible for rediscount under 12 USC, sec.372 and sec.373, or a bank's purchase of acceptances created by other banks that are eligible for rediscount under those sections, is not subject to the limits of the Act, sec.5.201, or this subchapter. Bankers' acceptances within this exception do not include: (1) acceptance of drafts ineligible for rediscount, thereby resulting in a loan from the bank to the customer for whom the acceptance was made, in the amount of the draft; (2) purchase of ineligible acceptances created by other banks, thereby resulting in a loan from the purchasing bank to the accepting bank, in the amount of the purchase price; or (3) a bank's purchase of its own acceptances, thereby resulting in a loan to the bank's customer for whom the acceptance was made, in the amount of the purchase price. (c) Obligations of state or local government. Pursuant to the Act, sec.5.201(b)(2), a loan or extension of credit to this state or an agency or political subdivision of this state, including a county or municipality or an agency or political subdivision of a county or municipality, is not subject to the limitations of the Act, sec.5.201, or this subchapter to the extent the loan or extension of credit constitutes a legally created general obligation of the borrower, if the lending bank has obtained an opinion of counsel that the loan or extension of credit is a valid and enforceable general obligation of the borrower. (d) Loans secured by U.S. obligations. Pursuant to the Act, sec.5.201, a loan or extension of credit to a borrower is not subject to the limitations of the Act, sec.5.201, or this subchapter if the bank perfects a security interest in the collateral under applicable law and the bank is fully secured by the current market value of: (1) bonds, notes, certificates of indebtedness, or Treasury bills of the United States or by similar obligations fully and unconditionally guaranteed as to principal and interest by the United States; or (2) loans to the extent unconditionally guaranteed as to repayment of principal by the full faith and credit of the United States, as further described by subsection (f) of this section. (e) Loans to a federal agency. Pursuant to the Act, sec.5.201(b)(2), a loan or extension of credit to an agency or instrumentality of the United States including a department, agency, bureau, board, commission, or establishment of the United States, or any corporation wholly owned directly or indirectly by the United States, is not subject to the limitations of the Act, sec.5.201, or this subchapter. (f) Government guaranteed loans. Pursuant to the Act, sec.5.201(a)(8), a loan or extension of credit to a borrower is not subject to the limitations of the Act, sec.5.201, or this subchapter to the extent secured by unconditional takeout commitments, insurance, or guarantees of a governmental entity described in subsection (c) or (e) of this subsection, provided the commitment or guarantee is payable only in cash or its equivalent within 60 days after demand for payment is made. If the purchasing, insuring, or guaranteeing entity is described in subsection (c) of this section, the lending bank must obtain an opinion of counsel that the unconditional takeout commitment, insurance, or guarantee is a valid and enforceable general obligation of the purchasing, insuring, or guaranteeing entity. A takeout commitment, insurance, or guarantee is considered unconditional if the protection afforded the bank is not substantially diminished or impaired if loss should result from factors beyond the bank's control. Protection against loss is not materially diminished or impaired by procedural requirements such as an agreement to take over only in the event of default, including default over a specific period of time, a requirement that notification of default be given within a specific period after its occurrence, or a requirement of good faith on the part of the bank. (g) Loans secured by segregated deposit accounts. Pursuant to the Act, sec.5.201(a)(10), loans or extensions of credit are not subject to the limitations of the Act, sec.5.201, and this subchapter to the extent secured by a segregated deposit account in the lending bank, provided that: (1) the lending bank has perfected its security interest in the deposit under applicable law; (2) if the deposit is eligible for withdrawal before the secured loan matures, the bank establishes internal procedures to prevent release of the security without the lending bank's prior consent; (3) if the deposit is denominated and payable in a currency other than that of the loan or extension of credit that it secures, the deposit currency is freely convertible to U.S. dollars, except that only that portion of the loan or extension of credit that is fully secured by the U.S. dollar value of the deposit qualifies for exception and only if the lending bank establishes procedures to periodically revalue foreign currency deposits to ensure that the loan or extension of credit remains fully secured at all times. (h) Discount of installment consumer paper. (1) Loans and extensions of credit to one borrower arising from the discount of negotiable or nonnegotiable installment consumer paper that carries a full recourse endorsement or unconditional guarantee of payment by the person transferring the paper to the bank is considered a loan or extension of credit to the transferor, as well as the maker, and subject to the general lending limit, except that the loan or extension of credit will not be considered made to the transferor to the extent the bank has met the requirements of the Act, sec.5.201(a)(11), and this subsection. If the transferor of the paper offers only partial recourse to the bank, the exception provided by the Act, sec.5.201(a)(11), and this subsection is available only to the extent of the total amount of paper the transferor may be obligated to repurchase or has guaranteed. An unconditional guarantee may be in the form of a repurchase agreement, separate guarantee agreement, or other agreement having the same effect. A condition reasonably within the power or control of the bank to perform will not render conditional an otherwise unconditional guarantee. (2) In order to claim the installment consumer paper exception under the Act, sec.5.201(a)(11), and this subsection, the bank must demonstrate its reliance on the maker of the paper by maintaining records supporting the bank's independent credit analysis of the maker's ability to repay the loan or extension of credit, maintained by the bank or a third party that is contractually obligated to make those records available for examination purposes, and a written certification by an officer of the bank, specifically designated by the board of the bank for this purpose, that the bank is relying primarily on the maker for repayment of the loan or extension of credit and not on a full recourse endorsement or unconditional guarantee by the transferor. If installment consumer paper is purchased in substantial quantities, the required records, evaluation, and certification must be in a form appropriate for the class and quantity of paper involved. The bank may use sampling techniques, or other appropriate methods, to independently verify the reliability of the credit information supplied by the seller. (3) As used in this subsection, a consumer is the end user of a product, commodity, good, or service, whether leased or purchased, but not a person who purchases products or commodities for the purpose of resale or fabrication into goods for sale. Consumer paper includes paper relating to the lease or purchase of automobiles, mobile homes, residences, office equipment, household items, tuition fees, insurance premiums, and other consumer items. Consumer paper also includes paper relating to the lease or purchase of equipment for use in manufacturing, farming, construction, or excavation, if the bank is neither the lessor nor owner of the property. (4) A bank may purchase and temporarily hold mortgages for sale to investors in the secondary market, and consider the purchases as loans to individual mortgagors rather than a mortgage warehouse facility, by purchasing without recourse to the transferor or, if purchased with recourse, by complying with this subsection. Whether an actual purchase is considered to occur depends on both the nature of the relationship established between the bank and other parties to the contractual arrangements and on assessment of the economic substance of the transaction. Failure to meet any one of the criteria applied by the department does not necessarily result in characterization of an ostensible purchase transaction as a mortgage warehouse facility to the originator. In determining whether the economic substance of a transaction constitutes a purchase, the department will consider whether: (A) provisions of the contractual arrangements governing the mortgage transfers consistently reflect a relationship of buyer and seller between the bank and the transferor, and whether the bank in fact acts as the owner of the mortgages; (B) the bank obtains possession or control of the bearer instruments conveying ownership, including the original note, deed of trust, assignment from the transferor, and a power of attorney from the transferor for instruments endorsed in blank, provided that possession or control may also be established through safekeeping or custodial arrangements between the bank and a third party agent or bailee; (C) the bank takes possession or control of underlying underwriting documents, provided that possession or control of the underwriting documents by the investor is not inconsistent with characterization of the bank as a purchaser and owner of the mortgages; (D) the bank receives and controls the sales proceeds when remitted from the investor; (E) the bank demonstrates reliance on the maker by reviewing the credit quality and documentation underlying a mortgage prior to committing to make the purchase, provided that a bank purchasing mortgages in significant quantities may use sampling techniques or other appropriate methods to independently verify the reliability of the credit information supplied by the transferor; (F) recourse and repurchase obligations of the transferor are subject to conditions outside the control of the transferor, such as a commitment to repurchase the mortgage if rejected by the investor for reasons other than fraud or underwriting deficiency; and (G) the bank earns interest on the mortgages according to the interest rate on the face of each note rather than at a rate separately negotiated with the transferor. sec.12.7. Lease Financing. (a) Loans to industrial development authorities. Pursuant to the Act, sec.5.201(b)(2), a loan or extension of credit to an industrial development authority or similar public entity created to construct and lease a plant facility, including a health care facility, to an industrial occupant is considered a loan to the lessee, provided that: (1) the bank documents the basis for its reliance on the industrial occupant as the primary source of repayment before the loan is extended to the authority; (2) the authority's liability on the loan is limited solely to whatever interest it has in the particular facility; (3) the authority's interest is assigned to the bank as security for the loan or the industrial occupant issues a promissory note to the bank that provides a higher order of security than the assignment of a lease; and (4) the industrial occupant's lease rentals are assigned and paid directly to the bank. (b) Loans to leasing companies. Pursuant to the Act, sec.5. 201(b)(2), a loan or extension of credit to a leasing company for the purpose of purchasing equipment for lease is considered a loan to the lessee, provided that: (1) the bank documents the basis for its reliance on the lessee as the primary source of repayment before the loan is extended to the leasing corporation; (2) the loan is without recourse to the leasing corporation; (3) the bank receives a security interest in the equipment and, in the event of default, may proceed directly against the equipment and the lessee for any deficiency resulting from the sale of the equipment; (4) the leasing corporation assigns all of its rights under the lease to the bank; (5) the lessee's lease payments are assigned and paid to the bank directly by the lessee; and (6) the lease terms are subject to the same limitations that would apply to a state bank acting as a lessor under the Act, sec.5.203. sec.12.8. Other Exceptions. (a) By application. The banking commissioner in the exercise of discretion may grant an exception to any legal lending limit in the Act, sec.5.201, or this subchapter, based on extenuating facts and circumstances. A decision to deny a requested exception is not appealable. In deciding whether to grant an exception under this subsection, the banking commissioner will consider: (1) the proposed transaction for which the exception is sought; (2) how the requested exception would affect the capital adequacy and safety and soundness of the requesting bank if the exception is not granted or, if the exception is granted, if the proposed borrower should ultimately default; (3) how the requested exception would affect the loan portfolio diversification of the requesting bank; (4) the competency of management to handle the proposed transaction and any resulting safety and soundness issues; (5) the marketability and value of the proposed collateral; and (6) the extenuating facts and circumstances that warrant an exception in light of the purpose of legal lending limits as set forth in sec.12.1 of this title (relating to Purpose and Scope). (b) Emergency lending limits. In the event that a bank's capital and certified surplus or total equity capital declines sufficiently to seriously impair the bank's ability to effectively operate in its marketplace or serve the needs of its customers or the community in which it is located, the banking commissioner may, upon written application, grant the bank temporary permission to fund loans or extensions of credit in excess of the bank's legal lending limit. The banking commissioner in the exercise of discretion may limit emergency lending authority under this section to particular types or classes of loans or extensions of credit. sec.12.9. Aggregation and Attribution. (a) General rule. A loan or extension of credit to one borrower is attributed to another person, and each person will be considered a borrower, if: (1) proceeds of the loan or extension of credit are to be used for the direct benefit of the other person, to the extent of the proceeds so used, as provided by subsection (b) of this section; (2) a common enterprise is deemed to exist between the persons as provided by subsection (c) of this section; or (3) the expected source of repayment for each loan or extension of credit is the same for each person as provided by subsection (d) of this section; or (4) notwithstanding another provision of this section, the banking commissioner determines that a loan should be attributed to another person pursuant to the Act, sec.5.201(c). (b) Direct benefit. The proceeds of a loan or extension of credit to a borrower is considered used for the direct benefit of another person and attributed to the other person if the proceeds, or assets purchased with the proceeds, are transferred in any manner to or for the benefit of the other person, other than in a bona fide arm's length transaction where the proceeds are used to acquire property, goods, or services. (c) Common enterprise. (1) A common enterprise is considered to exist and loans to separate borrowers will be aggregated in the case of: (A) loans or extensions of credit made to affiliated borrowers if substantial financial interdependence exists between or among the borrowers; or (B) loans made to separate persons for the purpose of acquiring more than 50% of the voting securities or voting interests of a business enterprise, in which case the acquisition loans are aggregated and attributed to the business enterprise. (2) For purposes of paragraph (1)(A) of this subsection, borrowers are affiliated if one borrower directly or indirectly controls, is controlled by, or is under common control with another borrower. Substantial financial interdependence exists if 50% or more of one borrower's gross receipts or gross expenditures (on an annual basis) are derived from transactions with the other borrower and is presumed to exist, subject to rebuttal, if 25% or more of one borrower's gross receipts or gross expenditures (on an annual basis) are derived from transactions with the other borrower. Gross receipts and expenditures include gross revenues and expenses, intercompany loans, dividends, capital contributions, and similar receipts or payments. (d) Source of repayment. The expected source of repayment for each loan or extension of credit is considered the same if the primary source of repayment is the same for each borrower. An employer will not be considered a primary source of repayment under this subsection solely because of wages and salaries paid to an employee. (e) Loans to a corporate group. Pursuant to the Act, sec.5.201(b)(c), loans or extensions of credit by a bank to a corporate group may not exceed 75% of the lesser of the bank's capital and certified surplus or the bank's total equity capital. This limitation applies only to loans subject to the general lending limit. For purposes of this subsection, a corporate group is comprised of a person and all of its subsidiaries, and a corporation or other entity is a subsidiary of a person if the person owns or beneficially owns directly or indirectly more than 50% of the voting securities or voting interests of the corporation or other entity. Subject to the special limit of this subsection, loans or extensions of credit to a person and its subsidiary, or to different subsidiaries of a person, are not aggregated or attributed to other members of the corporate group unless either the direct benefit, common enterprise, or source of repayment test is met. (f) Loans to partnerships or partners. (1) A loan or extension of credit to a partnership, joint venture, or association is considered to be a loan or extension of credit to each member of the partnership, joint venture, or association other than those partners or members that, by the terms of the partnership or membership agreement, are not held generally liable for the debts or actions of the partnership, joint venture, or association, provided those provisions are valid against third parties under applicable law, and that have not otherwise agreed to guarantee or be personally liable on the loan or extension of credit. (2) A loan or extension of credit to a member of a partnership, joint venture, or association is generally not attributed to the partnership, joint venture, or association, or to other members of the partnership, joint venture, or association, except as otherwise required by subsections (b)-(d) of this section, provided that a loan or extension of credit made to a member of a partnership, joint venture or association for the purpose of purchasing an interest in the partnership, joint venture or association, is attributed to the partnership, joint venture or association. (g) Guarantors and accommodation parties. The derivative obligation of a drawer, endorser, or guarantor of a loan or extension of credit, including a contingent obligation to purchase collateral that secures a loan, is not aggregated with direct loans or extensions of credit to such drawer, endorser, or guarantor if the lending bank is relying primarily on the creditworthiness of the primary obligor and none of the tests set forth in this section are satisfied. The reliance of the lending bank on the primary obligor must be evidenced by the certification of an officer of the bank that the bank is, on stated facts, relying primarily on the responsibility and financial condition of the primary obligor for payment of the loan or extension of credit and not on the guarantee, or commitment in whatever form, of the guarantor, drawer, or endorser. In the event that the loan or extension of credit to the primary obligor, considered by the bank to be of sufficient credit quality at its inception, experiences subsequent deterioration to the point that the primary obligor is no longer performing in accordance with the terms of the initial loan agreement, such event will not result in a lending limit violation on behalf of the guarantor by virtue of the primary obligator's nonperformance. However, the total amount of the deteriorated loans guaranteed by such accommodating person must be combined with all other obligations of such guarantor in determining whether the guarantor may obtain additional loans or extensions of credit from the bank. sec.12.10. Nonconforming Loans. (a) A loan or extension of credit, within a bank's legal lending limit when made, will not be considered a violation of the applicable lending limit but will be cited as nonconforming if the loan no longer complies with the bank's legal lending limit because: (1) the bank's capital and certified surplus or total equity capital, if less, has declined; (2) borrowers have merged or otherwise become affiliated in such a way as to invoke aggregation under sec.12.9 of this title (relating to Aggregation and Attribution); (3) the lending limit or capital definitions or standards have changed after the effective date of this subchapter; or (4) collateral securing the loan or extension of credit to satisfy the requirements of a special lending limit or lending limit exception has declined in value. (b) A bank must exercise reasonable efforts to bring a loan or extension of credit that is nonconforming as a result of circumstances described in subsection (a)(1) -(3) of this section into conformity with the legal lending limit, consistent with safe and sound banking practices. As a last resort, a bank may renew or restructure an existing, nonconforming loan or extension of credit as a new, nonconforming loan or extension of credit without violating the Act or this subchapter, unless: (1) additional funds are advanced by the bank to the borrower, except as permitted by sec.12.4(b) of this title (relating to Loan Commitments); (2) the original borrower is replaced by a new borrower; or (3) the banking commissioner determines that the renewal or restructuring of the loan or extension of credit is designed to evade the bank's lending limit. (c) A bank must bring a loan or extension of credit that is nonconforming as a result of the circumstance described in subsection (a)(4) of this section into conformity with the legal lending limit on or before the 31st day after the nonconformity is discovered unless judicial proceedings, regulatory action, or other extraordinary circumstances beyond the bank's control prevent the bank from taking action. sec.12.11. Transition Rules. (a) This subchapter applies to loans or extensions of credit made on or after September 1, 1995. A loan or extension of credit existing prior to September 1, 1995, that was within a bank's legal lending limit when made, is not a violation of the Act, sec.5.201, and this subchapter, and is considered a conforming loan. (b) A bank may renew, extend the maturity of, or restructure an existing loan or extension of credit that is exempt under this section if the bank makes a reasonable effort, consistent with safe and sound banking principles, to bring the credit into conformance with the Act, sec.5.201, and this subchapter, unless: (1) additional funds are advanced by the bank to the borrower except as permitted by sec.12.5(e) of this title (relating to Percentage Lending Limits); (2) a new borrower replaces the original borrower; or (3) the banking commissioner determines that the renewal, extension, or restructuring of the loan or extension of credit is designed to evade the bank's lending limit. (c) An extension, if any, of the maturity of the loan or extension of credit, in the aggregate, may not exceed the lesser of the original term of the loan or one year. 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-9601905 Everette D. Jobe General Counsel Texas Department of Banking Effective date: March 1, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 475-1300 TITLE 10. COMMUNITY DEVELOPMENT Part I. Texas Department of Housing and Community Affairs Chapter 1. Administration Subchapter A. General Policies and Procedures 10 TAC sec.1.3 The Texas Department of Housing and Community Affairs (Department) adopts new sec.1.3, concerning general eligibility for the Department's programs, without changes to the proposed text as published in the December 19, 1995, issue of the Texas Register (20 TexReg 10873). The adoption of the section will provide procedures for holding certain applicants ineligible to receive funds from the Department if a required audit report is past due or if there are unresolved audit issues. The Department did not receive any public comment in opposition to the adoption of this rule. The new section is adopted under sec.2306.053(b)(4), the Texas Government, which provides the Department with the authority to adopt rules governing the administration of the Department and its programs. The Texas Government Code, Chapter 2306 is affected by this new section. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on February 7, 1996. TRD-9601792 Larry Paul Manley Executive Director Texas Department of Housing and Community Affairs Effective date: February 29, 1996 Proposal publication date: December 19, 1995 For further information, please call (512) 475-3916 TITLE 16. ECONOMIC REGULATION Part II. Public Utility Commission of Texas Chapter 22. Practice and Procedure The Public Utility Commission of Texas (Commission) adopts amendments to sec.22.52(a), concerning notice in electric licensing proceedings, and sec.22. 104(d), concerning late intervention in such proceedings, with changes to the proposed text as published in the October 6, 1995, issue of the Texas Register (20 TexReg 8109). The proposed changes address concerns raised by the commissioners, the commission staff, and parties to various commission proceedings about the type and content of notice provided to landowners and the public in proceedings issuing or amending certificates of convenience and necessity (CCN) for electric utility transmission lines. The amendments specify in greater detail the format and content of notice to be provided to owners of land directly affected by a proposed transmission line. The amendments also provide a procedure for providing supplemental notice to directly affected landowners who initially do not receive notice, including a specific provision for late intervention. Finally, the amendments mandate that electric utilities hold a public meeting concerning a proposed transmission line prior to filing the CCN application if 25 or more landowners would be directly affected by the line. The commission received written comments on the proposed rule from Entergy, Central and South West Corporation (CSW), Houston Lighting and Power Company (HL&P), South Texas Electric Cooperative, Inc. (STEC), the Terra Group, Texas Utilities Electric Company (TUEC), El Paso Electric Company (EPEC), the Lower Colorado River Authority (LCRA), and East Texas Electric Cooperative, Inc. (ETEC). A public hearing on the proposed rule was held November 1, 1995 and oral comments were received from Entergy and Central and South West. All of the oral and written comments were reviewed and taken into consideration by the commission. All of the commenters were supportive of the commission's efforts to amend the rules. The rules currently provide that the utility shall determine who should receive direct notice of a CCN application by reviewing the current county tax rolls. The commission specifically requested comments on the appropriateness of requiring utilities to conduct a review of deed records to determine who should receive notice. Several commenters indicated that the failure to provide timely notice to all directly affected landowners is rare. All commenters who addressed the issue, with the exception of one, indicated that the additional expense associated with reviewing the deed records is significant and is not justified in light of the rarity of the problem, especially when one considers that such a search still would not guarantee 100% accuracy. The one exception proposed allowing utilities have the option to use the source that provides the most current and accurate information. Several commenters responded to this issue by presenting: (1) a quantification of the additional expense that a utility would incur by conducting a review of deed records rather than the tax rolls to prepare direct notice of a CCN application; and (2) a cost\benefit analysis of the use of deed records to prepare direct notice of a CCN application. CSW estimated that the additional cost to review deed records rather than tax rolls would vary from $500 to $5,000 per mile of transmission line depending on the location of the line and the number of landowners. Another commenter indicated that a deed search to determine ownership would cost approximately $100 per parcel of land. Moreover, LCRA noted that a deed search on 50 tracts of land would require approximately two months versus about one week for a search of the tax rolls. The commission agrees with these comments. Given that utilities rarely fail to provide timely notice to all directly affected landowners and the additional time and cost associated with reviewing deed records, it is not appropriate to require utilities to make such a review. Moreover, requiring a utility to conduct a review of deed records to determine who should receive notice would be unduly costly and would not produce significant benefit. ETEC proposed relaxing the language in sec.22.52(a)(1) to allow a utility to describe the approximate location of all preferred and alternative routes in the notice. The commission disagrees with this proposal. The location of all preferred and alternative routes is the primary concern for many directly affected landowners. Moreover, allowing the notice to describe the location of the routes in approximate terms could lead to ineffective notice. The commission believes it necessary for affected parties to be informed of the location of all preferred and alternative routes to the extent they are known at the time notice is provided. Several commenters requested modifications to sec.22.52(a)(3)(D). This section requires a statement from utilities identifying whether the utility has had any contact with directly affected landowners other than the required notice letter. Each commenter expressed concern over the difficulty of meeting this requirement due to the numerous contacts that often occur between affected landowners and various utility employees and representatives. The commission agrees with these comments. As a result, the language in sec.22.52(a)(3)(D) has been modified to require that only formal contacts relating to notice of the proceeding between the utility and the landowner, other than the notice, be indicated on the statement. Many times there are disagreements over whether a directly affected landowner has been contacted by the utility. This information provides a useful record of such contacts. CSW suggested that utilities be allowed to obtain the consent of municipalities, county governments and neighboring utilities before the application is filed. The commission disagrees with this comment. Many times the preferred and alternate routes are modified prior to the filing of the application. Moreover, it should not be burdensome for the utility to wait until the application is filed before it obtains consent from of municipalities, county governments and neighboring utilities. CSW also suggested that municipalities, county governments and neighboring utilities who receive supplemental notice should be given a 20-day deadline for intervention deadline. This is consistent with the intervention deadline for directly affected landowners given supplemental notice found in sec.22.52(a) (3)(E). The commission agrees with this suggestion and has included appropriate language in sec.22.52(a)(2). Several commenters suggested that public meetings not be required unless 25 tracts of land, rather than 25 landowners, are directly affected. The commission disagrees with linking the requirement to hold a public meeting to the number of affected tracts rather than the number of landowners affected. Many tracts of land have multiple owners who are each entitled to notice and an opportunity to be heard. Furthermore, a mobile home park or apartment complex may have a single owner but many affected residents. In such instances, it is appropriate for the utility to hold a public meeting notwithstanding the number of tracts affected. HL&P suggested eliminating the requirement that directly affected landowners be informed of any modifications to the proposed route prior to it being adopted. The commission believes that newly affected landowners should be given notice and an opportunity to be heard prior to approval. Such a process will assist the commission in insuring that community values are adequately addressed and that Cans are granted on a nondiscriminatory basis. As a result, the commission rejects this proposal. Entergy proposed modifying the contents of the notice provided to those landowners residing along an alternate route. The proposed rule requires language which informs directly affected landowners that they may be affected if the commission approves the preferred route or one of the alternative routes. The commission believes that this language will alert landowners to the importance of the notice without causing undue concern. Therefore, the Commission declines to modify the notice language as proposed. Several commenters objected to having to notify landowners along the primary route after the final order has been entered approving the CCN. Specifically, there were concerns with being required to provide a copy of the commission's final order to landowners. The commission believes that providing directly affected landowners with a copy of the commission's final order reasonably balances of the landowner's right to information and the utilities burden with providing such information. Providing the final order is the most efficient means of avoiding the confusion of informally informing these individuals. The Terra Group proposed replacing language in the notice related to land valuation with a description of the purpose of the CCN process. The commission believes that the proposed language adequately informs affected landowners of the nature of the proceeding and provides them with important information on how to obtain additional information if they are interested. Therefore, the commission declines to replace the proposed language. The Terra Group also suggested the commission specify the minimum scale of the map to be included in the notice. The requirement that a map be included in the notice has existed for several years without incident. Consequently, the commission believes it is unnecessary to include such a requirement at this time. One commenter proposed including a last available day to file in sec.22. 104(d)(4). This would prevent directly affected landowners from delaying a proceeding for many months. Another commenter expressed similar concerns over a utility's application being adversely delayed by intervenors who are not provided with timely notice. The commission disagrees with these suggestions. In fairness to directly affected landowners who were not properly noticed, the commission believes that it would be inappropriate to establish a last available day to file Otherwise, there could be an incentive for a utility to delay sending notice to individuals in order to prevent their participation. Accordingly, the administrative law judge retains discretion pursuant to the proposed rule, to determine how much time is sufficient to allow the landowner to participate in the proceeding under the circumstances. CSW suggested clarification of the term sufficient time in sec.22.104(d)(4). As noted, the commission believes that the administrative law judge should retain the discretion to determine a sufficient time for late intervenors to prepare for and participate in the proceeding on a case-by-case basis. Subchapter D. Notice 16 TAC sec.22.52 The amendment is adopted under the Public Utility Regulatory Act of 1995, Senate Bill 319, 1.101, 74th Legislature, Regular Session 1995, as amended by Senate Bill 378 and House Bill 2128 (PURA), which provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. The following statute is affected by these rule amendments: the Public Utility Regulatory Act of 1995, sec.1.101. sec.22.52. Notice in Licensing Proceedings. (a) Notice in Electric Licensing Proceedings. In all electric licensing proceedings except minor boundary changes and notice of intent and certification proceedings for new electric generating plants, the applicant shall give notice in the following ways: (1) Applicant shall publish notice of the applicant's intent to secure a certificate of convenience and necessity in a newspaper having general circulation in the county or counties where a certificate of convenience and necessity is being requested, once each week for two consecutive weeks beginning with the week after the application is filed with the commission. This notice shall identify in general terms the type of facility if applicable, and the estimated expense associated with the project. (A) The notice shall also include the following statement in the first paragraph: "Persons with questions about this project should contact (name of utility contact) at (utility contact telephone number). Persons who wish to intervene in the proceeding or comment upon action sought, should contact the Public Utility Commission of Texas, at 7800 Shoal Creek Boulevard, Austin, Texas 78757, or call the Public Utility Commission Public Information Office at (512) 458-0256 or (512) 458-0221 for the text telephone. The deadline for intervention in the proceeding is (date 70 days after the date the application was filed with the commission), and a letter requesting intervention should be received by the commission by that date." (B) The notice shall further describe in clear, precise language the geographic area for which the certificate is being requested and the location of all preferred and alternative routes of the proposed facility. This description shall refer to area landmarks, including but not limited to geographic landmarks, municipal and county boundary lines, streets, roads, highways, railroad tracks, and any other readily identifiable points of reference, unless no such references exist for the geographic area. (C) The notice shall state a location where a map may be reviewed and from whom a copy of the map may be obtained. The map shall clearly and conspicuously illustrate the location of the area for which the certificate is being requested including the preferred location and any alternative locations of the proposed facility, and shall reflect area landmarks, including but not limited to geographic landmarks, municipal and county boundary lines, streets, roads, highways, railroad tracks, and any other readily identifiable points of reference, unless no such references exist for the geographic area. (D) Proof of publication of notice shall be in the form of a publisher's affidavit which shall specify the newspaper(s) in which the notice was published, the county or counties in which the newspaper(s) is or are of general circulation the dates upon which the notice was published, and a copy of the notice as published. Proof of publication shall be submitted to the commission as soon as available. (2) Applicant shall, upon filing an application, also mail notice of its application to municipalities within five miles of the requested territory or facility, neighboring utilities providing the same utility service within five miles of the requested territory or facility, and the county government(s) of all counties in which any portion of the proposed facility or requested territory is located. The notice shall contain the information as set out in paragraph (1) of this subsection and a map as described in paragraph (1) of this subsection. An affidavit attesting to the provision of notice to municipalities, utilities, and counties shall specify the dates of the provision of notice and the identity of the individual municipalities, utilities, and counties to which such notice was provided. Before final approval of any modification in the applicant's proposed route(s), applicant shall provide notice as required under this paragraph to municipalities, utilities and counties affected by the modification which have not previously received notice. The notice of modification shall state such entities will have 20 days to intervene. (3) Applicant shall, upon filing an application, mail notice of its application to the owners of land, as stated on the current county tax roll(s), who would be directly affected by the requested certificate, including the preferred location and any alternative location of the proposed facility. For purposes of this paragraph, land is directly affected if an easement would be obtained over all or any portion of it, or if it contains a habitable structure that would be within 200 feet of the proposed facility. (A) The notice must contain all information required in paragraph (1) of this subsection and contain the following statement in the first paragraph of the notice printed in bold-face type: Your land may be directly affected in this proceeding. If the preferred route or one of the alternative routes requested under the certificate is approved by the Public Utility Commission of Texas, the utility will have the right to build a facility which may directly affect your land. This proceeding will not determine the value of your land or the value of an easement if one is needed by the utility to build the facility. If you have questions about this project, you should contact (name of utility contact) at (utility contact telephone number). If you wish to participate in this proceeding by becoming a party or to comment upon action sought, you should contact the Public Utility Commission of Texas, at 7800 Shoal Creek Boulevard, Austin, Texas 78757, or call the Public Utility Commission Public Information Office at (512) 458-0256 or (512) 458-0221 for the text telephone. If you wish to participate in this proceeding by becoming a party, the deadline for intervention in the proceeding is (date 70 days after the date the application was filed with the commission), and you must send a letter requesting intervention to the commission which is received by that date." (B) The notice must include a map as described in paragraph (1) of this subsection. Applicants may provide either a map of the entire proposed and alternative routes or maps for each county. (C) Before final approval of any modification in the applicant's proposed route(s), applicant shall provide notice as required under paragraphs (A) and (B) of this paragraph to all directly affected landowners who have not already received such notice. (D) Proof of notice may be established by an affidavit affirming that the applicant sent notice by first-class mail to each of the persons listed as an owner of directly affected land on the current county tax roll(s). The proof of notice shall include a list of all landowners to whom notice was sent and a statement of whether any formal contact related to the proceeding between the utility and the landowner other than the notice has occurred. (E) Upon the filing of proof of notice as described in subparagraph (D) of this paragraph, the lack of actual notice to any individual landowner will not in and of itself support a finding that the requirements of this paragraph have not been satisfied. If, however, the utility finds that an owner of directly affected land has not received notice, it shall immediately provide notice in the same form described in subparagraphs (A) and (B) of this paragraph, except that the notice shall state that the person has 20 days to intervene. The utility shall immediately notify the commission that such supplemental notice has been provided. (4) The utility shall hold at least one public meeting prior to the filing of its licensing application if 25 or more persons would be entitled to receive direct mail notice of the application. (5) Failure to provide notice in accordance with this section shall be cause for day-for-day extension of deadlines for intervention and for commission action on the application. (6) Upon entry of a final, appealable order by the commission approving an application, the utility shall provide notice to all owners of land who previously received direct notice. Proof of notice under this subsection shall be provided to the commission's general counsel. (A) If the owner's land is directly affected by the approved route, the notice shall consist of a copy of the final order. (B) If the owner's land is not directly affected by the approved route, the notice shall consist of a brief statement that the land is no longer the subject of a pending proceeding and will not be directly affected by the facility. (b) -(c) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9501884 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: March 1, 1996 Proposal publication date: October 6, 1995 For further information, please call: (512) 458-0100 Subchapter F. Parties 16 TAC sec.22.104 The amendment is adopted under the Public Utility Regulatory Act of 1995, Senate Bill 319, 1.101, 74th Legislature, Regular Session 1995, as amended by Senate Bill 378 and House Bill 2128 (PURA), which provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. sec.22.104. Motions to Intervene. (a)-(c) (No change.) (d) Late Intervention. (1) A motion to intervene that was not timely filed may be granted. In acting on a late filed motion to intervene, the presiding officer shall consider: (A) any objections that are filed; (B) whether the movant had good cause for failing to file the motion within the time prescribed; (C) whether any prejudice to, or additional burdens upon, the existing parties might result from permitting the late intervention; (D) whether any disruption of the proceeding might result from permitting late intervention; and (E) whether the public interest is likely to be served by allowing the intervention. (2) The presiding officer may impose limitations on the participation of an intervenor to avoid delay and prejudice to the other parties. (3) Except as otherwise ordered, an intervenor shall accept the procedural schedule and the record of the proceeding as it existed at the time of filing the motion to intervene. (4) In an electric licensing proceeding in which a utility did not provide direct notice to an owner of land directly affected by the requested certificate, late intervention shall be granted as a matter of right to such a person, provided that the person files a motion to intervene within 20 days of actually receiving the notice. Such a person should be afforded sufficient time to prepare for and participate in the proceeding. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9501885 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: March 1, 1996 Proposal publication date: October 6, 1995 For further information, please call: (512) 458-0100 Chapter 23. Substantive Rules Records and Reports 16 TAC sec.23.12 The Public Utility Commission of Texas adopts an amendment to sec.23.12, with changes to the proposed text as published in the September 22, 1995, issue of the Texas Register (20 TexReg 7571). Section 23.12, as amended, exempts incumbent local exchange companies electing under Subtitle H, Title III of the Public Utility Regulatory Act of 1995, COAs and SPCOAs from the PURA sec.1.251 sale, transfer and merger reporting requirements. The amendment also requires the commission to complete an investigation under sec.1.251 of non-exempt telecommunication utilities within 180 days. The purpose of the amendment is to bring sec.23.12 into compliance with PURA sec.3.053. The public benefit anticipated as a result of enforcing the amendment includes removing regulatory uncertainties for some telecommunications utilities. No parties submitted comments in response to the September 22, 1995, Texas Register publication. Following the publication of the proposed rule, the Commission conducted a public hearing on October 5, 1995, at which three parties were in attendance. None of the three chose to make any comments. Following the public hearing Texas Telephone Association (TTA) and Texas Statewide Telephone Cooperative, Inc. (TSTCI) filed written comments. Both supported the proposed amendment. In addition, TSTCI recommended that the phrase "within 30 days after closing" be used in place of "within 30 days of the transaction" so that a utility would be better able to determine when a transaction has occurred. The commission agrees that clarification is needed and has adopted TSTCI's recommendation. TSTCI also recommended that a paragraph (3) be added to subsection (d) that contains language intended to satisfy the requirements of the Federal Communications Commission (FCC) regarding the commission's statutory position on sale, transfer and merger proceedings in FCC study area waiver applications. Although such an amendment may be appropriate, the commission believes it is beyond the scope of the project which was noticed only for purposes of bringing sec.23.12 into compliance with PURA sec.3.053. Therefore, the commission declines to adopt TSTCI's recommendation. All comments, including those not specifically referenced herein, were fully considered by the commission. The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.101, 74th Legislature, Regular Session 1995, as amended by House Bill 2128, which provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. Cross Index to Statutes: Article 1446c-O (Vernon Supp. 1995) sec.23.12. Financial Records and Reports. (a)-(b) (No change.) (c) Reports on sale of property and mergers. (1) Except for a local exchange company exempted in paragraph (5) of this subsection, an electric utility or dominant carrier shall not sell, acquire, lease or rent any plant as an operating unit or system in the State of Texas for a total consideration in excess of $100,000 unless the public utility reports such transaction to the commission while pending or within 30 days after closing. (2) Except for a local exchange company exempted in paragraph (5) of this subsection, an electric utility or dominant carrier shall not merge or consolidate with another public utility operating in the State of Texas unless the public utility reports such transaction to the commission while pending or within 30 days after closing. (3) Electric utilities and dominant carriers shall not purchase voting stock in another public utility doing business in the State of Texas, unless the utility reports such purchase to the commission while pending or within 30 days after closing. (4) Electric utilities and dominant carriers shall not loan money, stocks, bonds, notes or other evidences of indebtedness to any corporation or person owning or holding directly or indirectly any stock of the public utility unless the public utility reports such transaction to the commission while pending or within 30 days after closing. A properly filed tariff change with respect to energy conservation loans available to customers, who may or may not be shareholders as described in this paragraph, will be considered adequate reporting to the commission. (5) Incumbent local exchange companies electing under Subtitle H, Title III of the Public Utility Regulatory Act of 1995, COAs, and SPCOAs are exempt from the requirements of paragraphs (1) and (2) of this subsection. (6) For dominant carriers, investigations by the commission, with or without public hearing, of the transactions described in paragraphs (1) and (2) of this subsection must be completed within 180 days after the date of notification by the dominant carrier. If an order is not entered within that time, the utility's action is considered consistent with the public interest. (d) Reports on sale of 50% or more of stock. All transactions involving the sale of 50% or more of the stock of an electric utility or dominant carrier except a local exchange company exempted in paragraph (1) of this subsection, shall be reported to the commission while pending or within 30 days after closing. (1) Incumbent local exchange companies electing under subtitle H, Title III of the Public Utility Regulatory Act of 1995, COAs and SPCOAs are exempt from the requirements of this subsection. (2) For dominant carriers, investigations by the commission, with or without public hearing, of the transactions described in this subsection must be completed within 180 days after the date of notification by the dominant carrier. If an order is not entered within that time, the utility's action is considered consistent with the public interest. (e) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 8, 1996. TRD-9601871 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: March 1, 1996 Proposal publication date: September 22, 1995 For further information, please call: (512) 458-0100 The Public Utility Commission of Texas adopts an amendment to sec.23.66, the repeal of sec.23.67, and new sec.23.67, relating to transmission service for electric utilities. New sec.23.67 is adopted with changes to the proposed text, as published in the November 17, 1995, issue of the Texas Register (20 TexReg 9520). Section 23.66 and the repeal of sec.23.67 is adopted without changes and will not be republished. The amendment, repeal and new section are being adopted pursuant to new legislation that directs the Public Utility Commission to adopt rules relating to wholesale transmission service no later than February 28, 1996. These amendments are also the product of the commission's own independent inquiry into the rates, terms, and conditions of wholesale transmission service, which was initiated in April 1995, prior to the passage of PURA 95 provisions which direct the commission to adopt rules concerning wholesale transmission service. Among other PURA provisions, this inquiry was initiated under the commission's general authority to regulate electric utilities, and its specific authority to prevent anti-competitive conduct. The commission held workshops on transmission issues relating to electric utilities on June 16, July 14 and 18, and August 13 and 17, 1995. The commission also conducted an additional workshop on transmission pricing and the role of an ERCOT independent system operator on December 15, 1995. The commission held substantive discussions on wholesale transmission issues during numerous commission open meetings between June 1995 and February 1996. At an open meeting on November 9, the commission voted to publish a proposed rule for comment in the Texas Register . In addition to the workshops and the November 9 open meeting, the commission staff has convened meetings of interested parties and established working groups of interested parties to attempt to resolve issues that have arisen, and the commission has held discussions of transmission issues at several open meetings after the publication of the rule. The commission held a public meeting to permit interested persons to make oral comments on December 12. All of these meetings represent an unprecedented industry-wide and commissioner-led effort to discuss relevant issues in an attempt to reach the broadest possible industry consensus on the implementation of open access comparable wholesale transmission service. In PURA 95, the Texas Legislature adopted a significant revision to its statement of legislative policy regarding the electric utility industry. This revised policy statement concluded that wholesale competition among utilities and certain nonutilities is in the public interest. In order to effectuate this policy, the Legislature directed the commission to adopt rules regarding wholesale transmission service which require utilities to provide such service at rates, terms, and conditions which are comparable to the rates, terms, and conditions under which the utility uses its own transmission system. This rulemaking is vital to the accomplishment of the Legislature's policy objective of achieving wholesale competition, because the transmission system which is used to deliver wholesale power is also owned by certain competitors in the wholesale market. Wholesale competition in the electric utility industry is occurring in the generation sector. However, the provision of wholesale transmission service remains a natural monopoly. Wholesale competition can produce the Legislature's expected benefits of lower electricity prices and higher quality service only when the market allows participation by a maximum number of buyers and sellers of generation services. Without a requirement for comparable use of the State's transmission system by all wholesale market participants, the Legislature's stated goal of promoting wholesale competition will be frustrated. The legislation enacted by the Texas legislature requires that the rules adopted by the commission be consistent with the rules adopted by the Federal Energy Regulatory Commission relating to open-access, comparable transmission service. Because the FERC has not completed its rulemaking, the commission will undoubtedly have to review this rule for consistency with the FERC rule, after the FERC rule is adopted. Modifications to the commission's rule may be required at that time. The commission is adopting a requirement that electric utilities that own transmission facilities provide open-access transmission service to other utilities, exempt wholesale generators, power marketers, and qualifying facilities. The amendments also require certain utilities to provide ancillary services related to the provision of transmission service, prescribe pricing rules for transmission service, and require that utilities separate their transmission and wholesale power purchase and sale operations. The purpose of the amendments is to enhance competition in the wholesale market for electric generation. In adopting new transmission rules, the commission is repealing the existing rules concerning wheeling service in sec.23.66(d) and sec.23.67. Section 23.67(c) of the proposed rule would require utilities to provide wholesale transmission service to other utilities, exempt wholesale generators, qualifying facilities, and power marketers. The rule requires utilities to provide such service, whether it involves only facilities that are regarded as transmission facilities or both transmission and distribution facilities. Section 23.67(g) of the rule establishes a pricing mechanism for transmission service. A number of interested persons commented on the appropriate pricing mechanism, and this issue is discussed in detail, as follows. Section 23.67(o) of the rule also requires that utilities separate their generation, transmission, and distribution costs and rates. Section 23. 67(p) requires the development of an ERCOT independent system operator and an electronic information system that will afford interested parties access to information about the availability of transmission capacity. Subsection 23. 67(s) establishes standards for an alternative dispute resolution process and requires parties to employ this dispute resolution process if disputes arise concerning transmission service. These provisions of the rule are discussed in greater detail, as follows, in the context of the comments filed by interested persons. The following parties filed comments in this proceeding: State Senator Ken Armbrister, Associated Power Services, Inc. (APSI), the City of Austin (Austin) , Brazos Electric Power Cooperative, Inc. (Brazos), the Public Utilities Board of the City of Brownsville (Brownsville), the City of Bryan (Bryan), Cities Served by Texas Utilities Electric Company (TU Cities), Cap Rock Electric Cooperative (Cap Rock), the Center for Energy and Economic Development, Central and South West Corporation (CSW), Consumers Union (CU), the City of Denton (Denton), Destec Energy, Inc. (Destec), Northeast Texas Electric Cooperative, Inc., Sam Rayburn G&T Cooperative, and Tex-La Electric Cooperative of Texas, Inc. (collectively, the East Texas G&Ts), the Electric Reliability Council of Texas (ERCOT), El Paso Electric Company (EPEC), Entergy, the Environmental Defense Fund (EDF), the City of Garland (Garland), the City of Greenville (Greenville), Guadalupe Valley Electric Cooperative (GVEC), Gulf Coast Power Connect, Inc. (GCPC), Houston Lighting & Power Company (HL&P), Mr. Will C. Jones, the Lower Colorado River Authority (LCRA), Lubbock Power & Light (LP&L), Magic Valley Electric Cooperative (Magic Valley), Medina Electric Cooperative, Inc. (Medina), Nucor Steel (Nucor), Enron Capital & Trade Resources, Electric Clearinghouse, Inc., Mesquite Energy Services, and Gulf Coast Power Association (collectively referred to as Power Marketers), Public Counsel, Rayburn Country Electric Cooperative, Inc., (Rayburn Country), City Public Service Board of the City of San Antonio (CPSB), South Texas Electric Cooperative (STEC), Southwestern Public Service Company (SPS), Tenaska, Inc., Texas Electric Cooperatives, Inc. (TEC), Texas Industrial Energy Consumers (TIEC), Texas-New Mexico Power Company (TNP), Texas Public Power Association (TPPA), Texas Ratepayers Organization to Save Energy (Texas ROSE), Texas Retailers Association (TRA), Texas Utilities Electric Company (TU Electric), and the City of Weatherford (Weatherford). In addition, Elizabeth Moler, the Chair of the Federal Energy Regulatory Commission (FERC) filed a letter comparing the proposed rule with the rule proposed by the FERC relating to open-access, comparable wholesale transmission service. No comments were filed concerning the proposal to amend sec.23.66. In the preamble, the commission posed the following questions: Should existing transmission contracts (both stand alone wheeling contracts and the transmission component of bundled wholesale contracts) be modified in light of the changes being effected in the rule? How should the rule affect existing contracts for transmission service? APSI commented that existing contracts should remain in effect, but that utilities taking bundled wholesale service should have the option of converting all or a portion of their existing service to transmission-only service. Denton, Garland, and Weatherford questioned whether the commission has the authority to require the modification of existing contracts. TU Electric asserted that the commission does not have the authority to unilaterally reform existing contracts. It also pointed out that the FERC has not proposed the modification of existing contracts and argued that modification of existing contracts is not necessary for the introduction of wholesale competition. STEC urged the commission not to abrogate existing contracts. Brazos commented that the commission does not have the authority to abrogate contracts, particularly where a contract is a part of the security for the repayment of government-subsidized loans from the Rural Utilities Service. Brownsville commented that the commission has the authority to review existing transmission contracts and should do so, in order to facilitate the expeditious introduction of wholesale competition in the State. Destec commented that existing bundled power contracts should have the rates fully unbundled, so that wholesale customers know what they are paying for various utility services. GVEC commented that the benefits of competition need to be passed on to all captive wholesale customers, by unbundling the transmission charges in existing bundled rates and limiting the transmission element of bundled rates to the new statewide transmission costs. GCPC commented that wholesale power contracts are subject to commission approval and that existing contracts (except those subject to the jurisdiction of the FERC) that have not been approved by the commission are subject to its review, regardless of how long they have been in effect. Cap Rock took a similar position: the commission should review existing power supply contracts to preclude the enforcement of noncompetitive prices, terms and conditions. Cap Rock also argued that transmission-dependent customers should have the right to renegotiate existing contracts when this rule is adopted. The East Texas G&Ts commented that customers under existing transmission contracts should be permitted to convert to transmission service under this rule unless the contract explicitly prohibits such a conversion or establishes terms for conversion that the customer has not met. The question of re-opening existing power sales contracts involves difficult legal issues. Both at the Federal and state level, the courts have promulgated rules that limit the ability of regulatory commissions to reform existing contracts for utility service, in recognition of the costs that parties to the contracts may have incurred in reliance on the contracts. In Texas, PURA defines the term "rate" very broadly, and any contract between utilities that affects the price that one utility pays another for electric service or affects the kind or quality of that service would be regarded as a rate that is subject to commission review. On the other hand, the commission has typically not reviewed the contracts between utilities for the sale of power or transmission services. The courts' decisions concerning the review of existing contracts appear to require that the circumstances of each contract be considered, if the regulatory agency proposes to reform it. Permitting the reopening of contracts also involves difficult policy issues that may need to be assessed on a case-by-case basis. Many of the power sales agreements that are in effect today were presumably shaped by the market power that large vertically-integrated utilities exercised. On the other hand, the commission has had rules in effect since the mid-1980's that required utilities to provide transmission service for qualifying facilities and contemplated that utilities would provide transmission service for other utilities. The commission's fundamental concern, however, is applying the new legislative mandate in PURA. The commission concludes that the mandates of the statute that transmission service be comparable, non-discriminatory and (for third-party contracts) not subsidized by native load customers apply to all transmission service within the state. The commission concludes that it is unlikely that existing contracts meet those requirements, as they have been defined within this rulemaking. The commission is committed to phasing out existing transmission arrangements that are not consistent with the rule that it is adopting. The commission reaches the conclusion that contracts entered into prior to the effective date of PURA 95 are subject to reformation under the statute and the resulting rules. The commission believes that such contract reformation is in the public interest, because it would best effectuate the legislative directive of implementing full transmission service comparability as rapidly as possible. The commission determines that the parties to the contracts are initially in the best position to the reform the contracts to conform to the statute and rule. Some of the contracts may have involved non-monetary considerations or other factors that should be taken into account in reaching a fair reformation of the terms of the contracts. It is the commission's intent that as many contracts as possible should be reformed without the direct intervention of the commission and directs that parties to such contracts inform the commission upon reaching agreement to convert to transmission service under this rule. The commission has the ability to conduct proceedings to reform contracts as necessary on a case-by-case or generic basis. Accordingly, the commission is not including a specific provision on the modification of existing contracts. Parties that believe they have grounds for reforming their existing contracts for the sale of power or transmission service may seek such reformation through negotiation with the other parties. As is discussed as follows, the commission intends to review the status of any existing contracts for transmission service if the parties are unable to reach agreement with the other parties to conform the contracts to the new arrangements in this rule. In its review of the contracts, the commission would be able to permit reformation of the contract, if the contract itself permits or if reformation is necessary to meet the comparability standards in the statute and this rule. LP&L, SPS, and the TPPA requested that the commission clarify which provisions of the rule apply to utilities that are not in ERCOT, particularly in view of the jurisdiction of the FERC over the wholesale sales of such utilities. SPS expressed the view that a number of the provisions of the rule, if they apply to utilities that are outside of ERCOT, would conflict with the regulatory authority of the FERC. In particular, SPS noted apparent conflicts in the concept of comparability, the treatment of ancillary services, the provisions concerning alternative dispute resolution, the construction of new facilities, functional unbundling, and commission review of power sales contracts. SPS recommended that the commission amend the rule to exempt non-ERCOT utilities from its coverage. The commission's central concern in this proceeding has been requiring that the utilities in ERCOT provide open-access comparable transmission service on equitable terms. The FERC has proposed a rule that would require most of the utilities outside of ERCOT to provide such transmission service. In important respects, the rule being considered by the FERC is different from the rule that the commission is adopting. Requiring that non-ERCOT utilities comply with this rule immediately may result in inconsistent requirements and is certain to engender confusion among the utilities that are required to comply with new regulatory requirements imposed by the commission and the FERC. This commission is also investigating broader competitive issues in its Project Number 15000. This project may result in the adoption of requirements that utilities unbundle their rates and separately state in rates any costs related to the provision of electric service that exceed current market costs. By the time Project Number 15000 is completed, it is likely to be clearer whether the commission could impose the requirements of this rule on non-ERCOT utilities, without creating a conflict with the FERC's rules. For these reasons, the commission is modifying the rule to make it clear that it does not apply to non- ERCOT utilities, but it may reconsider this issue after the FERC adopts a final transmission rule and after the commission concludes Project Number 15000. The commission notes that the requirements of PURA sec.2. 057 apply to all public utilities under the commission's jurisdiction, including utilities which operate outside of ERCOT. The commission's view is that the non-ERCOT utilities under its jurisdiction will be in compliance with PURA sec.2.057 at such time as they receive approval of a wholesale transmission open access comparability tariff from the Federal Energy Regulatory Commission. Power Marketers urged the commission to adopt a provision on scheduling that would permit a transmission customer to change the schedule of a resource with the same degree of freedom as a utility that is providing transmission service. The working group on operational issues also recommended that the rule be modified to deal with scheduling. This group recommended that control area utilities schedule a transmission customer's resources and accommodate changes to such schedules with as little advanced notice as possible and upon the same terms and in the same timeframe that the control area utility applies in scheduling resources to meet their native load customers. The commission has developed and is publishing a separate rule dealing with the terms and conditions for transmission services, sec.23.70. Matters relating to scheduling transmission service are addressed in detail in sec.23.70. The commission is also adopting a new subsection sec.23.67(q), in response to these comments, that will require transmission owning utilities to provide scheduling services to their transmission customers on a non-discriminatory basis. GVEC, TNP, and the East Texas G&Ts proposed that a definition of transmission service be added to the rule. Brazos also proposed additional definitions: transmission provider, transmission customer, wholesale electric energy, control area, control area utility, transmission facilities, wholesale transmission service, ancillary services, energy provider, and ERCOT utility. The working group on operational issues recommended that definitions be provided for the following terms: interconnection agreement and transmission losses. The commission agrees that it is desirable to add some of the definitions that have been suggested, either in this rule or in sec.23.70. The commission is adding to this rule definitions for ancillary services, interconnection agreement, planned service, transmission service, transmission losses, and unplanned service. In addition, transmission facilities are described in sec.23. 67(g), and a list of required ancillary services is provided in sec.23.67(d). The commission concludes that definitions of the other terms are not necessary. Power Marketers commented that the requirement in sec.23.37(c) that utilities take transmission service for their own purposes in accordance with their transmission tariffs is particularly important, but that the commission needs to elaborate on this requirement. In particular, these parties were concerned about the treatment of the transmission component of revenue from bundled utility service. GVEC recommended that the obligations of a transmission owner be clarified, where the facilities are operated by an entity other than the owner. The LCRA commented that the rule needs to be revised to make it clear that wholesale purchasers that take service at less than 60 kilovolts are entitled to transmission service under the rule. Brazos commented that the obligation to provide comparable transmission service under the proposed rule is inconsistent with the letter or the intent of the Rural Electrification Act. This Federal statute was enacted to encourage the provision of electric service in rural areas; it facilitated the construction of electric facilities in rural areas through government-subsidized loans. According to Brazos, the provision of the rule that requires a transmission- owning utility to provide service to transmission customers on the same terms that it provides service to its native-load customers is inconsistent with the terms of the loans to cooperatives under the RE Act and might imperil the financial strength of RE Act beneficiaries. Brazos proposed that the rule be amended to give RE Act beneficiaries first priority to service from facilities that have been financed with subsidized loans under this Act. The preamble to the proposed rule made it clear that the rule would require transmission-owning utilities to provide service even if the service would require the use of facilities that are classified as distribution facilities. A number of parties urged the commission to incorporate this requirement in the rule. CSW did not take issue with this requirement but suggested that it be limited to existing facilities, and that the provision of transmission service would not require the transmission service provider to construct new local distribution facilities to provide the requested service or to meet a transmission customer's load growth. The commission concludes that the concerns of the power marketers are adequately addressed, particularly in view of the direct costs that utilities will bear for transmission service and the unbundling of rates that is required by the rule. The matter raised by GVEC warrants clarification, and the rule has been modified to permit the owner of transmission facilities to delegate any responsibilities that it has related to the operation of transmission facilities to another entity that has operational control of the facilities. The commission concludes that the service priority requested by Brazos for RE Act beneficiaries is inconsistent with the comparable service requirement in sec.2.057 of PURA. Failure to provide such a priority is not inconsistent with the RE Act. The provision of the RE Act that Brazos referred to in its comments is intended to insure that utilities that borrow funds from the Rural Utility Service are operated in such a way that they will be able to repay these loans. The commission concludes that the introduction of comparable transmission service and the requirement that RE Act beneficiaries provide such service will not imperil the repayment of these loans. This rule may result in higher costs for utilities and may pose greater market risks for utilities, but the rule also creates opportunities for utilities to buy power on attractive terms in a broader generation market. RE Act borrowers are probably better protected from market risks than other utilities, because of the involvement of the Rural Utilities Service in approving their financings and power sales contracts. Based on the comments that were filed the commission concludes that it is appropriate to modify sec.23.67(c) to explicitly state that a utility is required to provide comparable transmission service to a wholesale customer, even if the utility is connected to the customer at the distribution level. Where applicable, the commission is also adopting a requirement that utilities file wholesale open access comparability tariffs which apply to the use of their distribution facilities to engage in wholesale transactions. With respect to the issue that CSW raises concerning the construction of additional facilities at the distribution level, the rule on terms and conditions, sec.23. 70, will deal with these issues relating to planning, construction, and interconnection in more detail. The commission believes that the transmission owner should be required to construct additional distribution facilities where the expansion of distribution facilities owned by the transmission provider is more cost effective than the customer building new distribution facilities. In these circumstances, it would be appropriate to have the transmission owner build the new facilities, with the customer bearing the cost, to the extent that the customer exclusively benefits from the construction of these facilities. The commission concludes that it is not necessary to amend sec.23. 67(c), to accommodate CSW's concerns. The working group on ancillary services prepared a report that introduced the concept of a default provider (or provider of last resort) in connection with the obligation to provide ancillary services. Each customer would be assigned a default provider to which it could turn for ancillary services. Under this concept, the default provider for an ancillary service would be the utility currently providing that ancillary service. In the event the customer is either not purchasing an ancillary service from a utility or is obtaining such service from a non-utility, the default provider would be either the utility that is providing control area services for the generation that is to be transmitted to the wholesale customer or the utility that is providing control area services for the wholesale customer's load. The report referred to these control area utilities as the supply host and the load host. The working group on ancillary services proposed the concept of a default provider of such services and also proposed market-based rates (or pricing flexibility) for ancillary services. The commission recognizes the difficulty in pricing ancillary services and concludes that flexible pricing for such services may be appropriate. The commission is concerned, however, about market power and the limited number of entities that have the capability of providing ancillary services. The commission concludes that the concept of the default provider is inconsistent with flexible pricing, because it would permit the market to be limited to one provider of ancillary services for each purchaser. Flexible pricing of ancillary services can function to the benefit of the consumer only when there are multiple service providers in the market. Accordingly, the commission is not adopting the recommendation of the working group on this issue. The working group's report also recommended that language be inserted in the rule requiring that the same offer of ancillary services be available to all interested parties in a particular transaction. The report also recommended that the rule make it clear that the obligation to provide ancillary services would also include the obligation to construct additional facilities, provide upgrades and modifications, and procure services. The commission concludes that these recommendations are appropriate and is modifying the rule to include them. The requirement that the same offer of ancillary services be available to all interested parties in a particular transaction is included in subsection (f). The provision concerning additional facilities is being added to sec.23.67(n) and will be subject to requirements that the customer for which the new facilities are constructed will, in some circumstances, bear some of the risk associated with their construction. LCRA and TU Electric urged the commission to recognize the efforts of the working group by adopting the unanimous consensus language as the starting point for the development of the rule. TU Electric also noted that the proposed rule does not include some necessary ancillary services and does not clearly recognize that transmission business units will not be able to provide generation-related ancillary services, because they do not own generation. It is more logical to have the customer procure its own generation-related ancillary services from the source it chooses-either the utility of which the transmission is part, or from some other source. The commission appreciates the efforts of the parties to resolve difficult issues in the working groups and has adopted some of the groups' recommendations. To some degree, the commission has met the concern expressed by TU Electric by limiting the definition of ancillary services to generation- related services and requiring that the services be provided by utilities that own 100 Mw or more of generation. The commission does not believe that there is a need to amend the rule to differentiate between an integrated utility and the transmission business unit that is a part of such a utility. As long as the transmission business unit is still a part of the utility, there is a likelihood that it will not operate independently of the utility. Section 23.70 deals with some of the issues relating to ancillary services in more detail and requires planning coordination between a customer and utilities providing transmission and ancillary services. Destec and Cap Rock commented that all transmission-owning utilities should be required to provide ancillary services on an unbundled, comparable basis. The East Texas G&Ts recommended that until there is an established competitive market, every transmission provider that can supply ancillary services to itself should be obligated to supply such services to transmission customers on a comparable basis. According to these cooperatives, sec.23.67 is not precise on this point; there is some overlap in the proposed rule between obligations of a utility and of the independent system operator. GVEC recommended that, for distribution cooperatives, the rule should be clarified so as not to place a burden on a utility to provide services to others that it does not provide to itself. Subsection (d) of the rule as proposed would have required that ancillary services be offered on an unbundled, comparable basis, and the commission is including this requirement in the rule it is adopting. The commission believes that the concerns expressed by the East Texas G&Ts have been met in the broad requirement that utilities that own 100 MW or more of generation provide ancillary services. The commission concludes, however, that the definitions of ancillary services and obligation to provide them need to be clarified. The commission is modifying the description of the ancillary services so that most of them are related to generation. Subsection (c) has been modified to provide that var support will be included in transmission service, rather than as an ancillary service. Any utility that owns transmission facilities will be required to provide var support, but under subsection (d), utilities that do not own generation facilities will not be required to provide generation-related ancillary services. These changes should address GVEC's concerns. Questions about the responsibilities of the ISO are addressed as follows. APSI recommended that the rule be modified to provide that where a utility requests limitations on its obligation to provide ancillary services, the limitations would also apply equally to the utility's own wholesale and retail operations. In view of the broad requirement that utilities provide ancillary services, the commission concludes that such a modification is not needed. It seems likely that some of the limitations that utilities will seek relating to the provision of ancillary services will be based on their current facilities for generating power, following load, and monitoring loads. Utilities have installed such equipment to meet the needs of their native load customers but have the capability of providing ancillary services from the same facilities. The degree to which they should be required to provide service that is equal to the service they provide to native load is a matter that should be explored in detail in the context of any application for limitations on the obligation to serve. The commission also notes that the rule includes a broad obligation to provide ancillary services and a prohibition against discrimination. Brazos commented that there is an apparent conflict between the requirement in the first part of proposed subsection (d), wherein the obligation to provide ancillary services is imposed upon an electric utility in ERCOT that either operates a control area or owns transmission facilities, and the latter part of that subsection that requires only electric utilities that operate a control area to file a tariff for ancillary services and take such services for their own wholesale and retail operations. Brazos also commented that to require all transmission owning utilities and control area utilities to provide ancillary services and to impose upon the small utilities the burden of requesting and proving the need for limitations on this obligation is inappropriate. The commission should identify those transmission owning and control area utilities capable of providing such services, and require such utilities to provide such services, subject to the request for limitation proposed in the rule. In most instance, control area utilities have provided ancillary services in the past and should be the provider of last resort. However, appropriate good cause limitations on this duty should be available for small control area utilities. The commission concludes that in restating the obligations of utilities to provide transmission service and ancillary services in the rule that it is adopting, it has addressed the concerns expressed by Brazos. The commission has also concluded that certain small utilities should not be required to provide ancillary services. This issue is discussed as follows. The ancillary services report recommended that the commission prescribe 11 ancillary services that are listed and defined in the report. They are responsive reserve, spinning reserve, static scheduling, dynamic scheduling, load following, load regulation, generation-schedule imbalance, load-schedule imbalance, scheduled backup, automatic backup, and emergency energy services. The list did not include planning reserves, voltage support, inadvertent energy, or losses as ancillary services. STEC recommended that planning reserve, voltage support, inadvertent energy, and losses not be classified as ancillary services. The commission has decided to adopt, in subsection (d), the list of ancillary services proposed by the working group. As noted previously, var support would not be an ancillary service but would be a part of transmission service, and the rule would prescribe the treatment of transmission losses, which would not be treated as an ancillary service. Destec and Cap Rock commented that a rigid listing of ancillary services in the rule is not appropriate before the market evolves. Any number of different entities (utilities, non-utilities, control areas) can provide, and should be allowed to provide, the services described in the proposed rule. The East Texas G&Ts commented that the list of seven unbundled services in the proposed rule is workable. They recommended, however, that voltage and var support not be unbundled from the provision of transmission service. The cooperatives asserted that the proliferation of ancillary services would erect a barrier to transmission access and result in multiple, overlapping recovery of costs. Ancillary services should be standardized and utilities should not be allowed to unbundle additional ancillary services with non-standard terms and conditions. As is noted previously, the obligation to provide transmission service includes the obligation to provide var support. The commission agrees with the comments of Destec and Cap Rock and does not agree with the comments of the East Texas G&Ts concerning additional services. The rule would permit utilities to offer new services if a customer wants them. The rule also permits a non-utility to offer ancillary services. It is the commission's expectation that the standardization of ancillary services will create opportunities for a non- utility power seller to put together packages of its own services with ancillary services offered by a utility, to meet the needs of its customers. The cooperatives commented that the confusion over ancillary services comes from a misleading focus on what to call various ancillary services and how to describe them, instead of a more relevant focus on who can and should provide these services and how they should be priced. The cooperatives asserted that a significant market for unbundled ancillary services is unlikely to develop and is perhaps undesirable. These cooperatives urged the commission to create a maximum role for the independent system operator to operate ERCOT as a single control area, in that the ISO can and must supply all of the services that any control area within the region can supply. The ISO can only supply information about the generation related ancillary services. An ISO operating ERCOT as a single control area can assure that control area utilities do not favor their own operations through restrictive and discriminatory terms and conditions for ancillary services. These cooperatives recommend a rule that starts with a minimum role for an ISO and lays out a path that ISO to evolve to a maximum role. Questions about the responsibilities of the ISO are addressed as follows. CSW suggested that the requirement that utilities take ancillary services for their native load customers in accordance with the terms of its tariff for ancillary services is premature. According to CSW, a further subdivision of the native load customer's bill into a basic generation charge and an ancillary service charge would be a distinction without a difference and would serve no useful purpose. TNP recommended that wholesale market participants that purchase ancillary services be afforded the same rights as ERCOT control areas, in order to allow participants who pay for the ancillary services to have the same rights to emergency energy as the ERCOT control areas. TNP urged the commission to require ancillary services to be unbundled and require that the ancillary services be the responsibility of the transmission organization within an integrated utility. Upon a showing of good cause, small utilities such as TNP should be exempt from this requirement. The commission concludes that the requirement to take service under the tariff has broader implications than suggested by CSW. In particular, this requirement is meant to ensure that the quality of service provided to transmission customers is the same as that provided to native load customers. In the commission's judgment, this is an essential element of providing comparable transmission service. The commission agrees with CSW that the unbundled elements of electric service need not be shown on retail customers' bills. To the extent that utilities provide each other emergency energy, which is one of the ancillary services, the rule will require them to do so on a non-discriminatory basis. It is the commission's view that this requirement addresses TNP's concern. In the preamble, the commission posed the following questions: What is the appropriate pricing method for transmission service. Are there methods other than load-ratio share that would be more appropriate in pricing transmission service? Many of the parties devoted a significant part of their comments to the issue of the appropriate pricing method and to other issues related to pricing transmission service. The following parties commented in support of a statewide postage stamp rate, based on the transmission customer's share of the total megawatt load in ERCOT: the East Texas G&Ts, TNP, Magic Valley, Destec, STEC, Brownsville, APSI, GVEC, and Rayburn Country Electric Cooperative. These parties commented that the commission has been presented with a large number of diverse transmission pricing methodologies, each claiming to be superior to all others. According to these parties, the commission must not lose sight of the real objectives in this process: the development of a competitive bulk power market. To the ratepayers throughout ERCOT, having the most precise and accurate transmission pricing is a poor substitute for the benefits that a truly competitive bulk power market can provide. The standard for evaluating transmission pricing methodologies should be the extent to which each methodology enhances a competitive bulk power market. These parties commented that the simple pricing scheme both works well and fairly compensates transmission owning utilities. Many of these parties also evaluated the competing pricing proposals in terms of the objectives that the commission staff had identified during the workshops on transmission issues and concluded that the postage stamp method meets these objectives better than the megawatt-mile methods. A number of other parties commented in favor of a pricing method that is "distance sensitive" and supported megawatt-mile methodologies as a means of determining the impact of a transmission event on the transmission network. CPSB and HL&P recommended a pricing method that is based entirely on megawatt-mile impacts. They commented that the commission's proposed statewide postage stamp rate violates PURA by reapportioning the historical transmission costs such that some customers benefit at others' expense. HL&P in particular emphasized the significant cost-shifting that the postage stamp method would entail and asserted that this reapportionment of transmission costs constitutes a regulatory taking. HL&P's preferred pricing method would require transmission- owning utilities to bear their own transmission costs and require transmission- dependent utilities to pay the transmission rates of the utility that provides them a connection to the statewide grid, but it proposed a megawatt-mile method as an alternative. The LCRA, TIEC, Brazos, Public Counsel, Denton, and Weatherford supported a pricing mechanism that included an allocation of system costs, in part, on the basis of megawatt-mile impacts and, in part, on the basis of load ratio share. Some of these parties commented that under the statewide postage stamp proposal, ratepayers of compact systems would be expected to pay an increased transmission rate to compensate for other systems that are dependent on transmission lines spread over great distances. They also asserted that the postage stamp rate distorts the cost of providing transmission service and creates cross- subsidization between rural and urban customers. They recommended that, at the very least, any pricing methodology involving a postage stamp approach should also have a distance sensitive component. Other commenters, including Bryan and Greenville, recommended either distance sensitive rates or rates that were based on local transmission costs. These parties asserted that because the proposed postage stamp method is not distance sensitive, it does not measure the impacts of actual transactions on transmission systems, and, consequently, it will neither apportion costs fairly for the users nor reimburse those who incur costs of providing transmission service. They also asserted that the postage stamp method is too costly to a tight municipal system that does not use the state-wide grid, and is too cheap for a remote generator that wants to sell loads across the state A number of parties expressed their willingness to support a hybrid pricing method, either as their primary recommendation or as a secondary recommendation that they could support. For example, TU Electric supported a hybrid pricing method: 70% utility specific megawatt-mile and 30% postage stamp. The Public Counsel, Denton, Garland, and Weatherford supported the compromise that was offered during the commission workshops by the LCRA: 45% megawatt-mile and 55% statewide postage stamp. The City of Austin and Tenaska supported a hybrid method based on 30% megawatt-mile and 70% statewide postage stamp. Brownsville and the Environmental Defense Fund supported a hybrid method based on 10% megawatt-mile and 90% statewide postage stamp. One of the parties supporting a hybrid methodology, TIEC, commented on the benefits of such a compromise. First, it is less extreme than a method based solely on either a megawatt-load methodology or a megawatt-mile method. Second, this compromise approach would subject the two methods to ongoing review and scrutiny based on actual practice and implementation rather than judging their merits based only on a debate in this rulemaking forum. CSW developed a pricing proposal referred to as Efficient Access Pricing. CSW commented that it would be advantageous to all interested parties to continue the evaluation of EAP and other pricing methods in a process directed by the commission staff, so that the commission can determine whether a better pricing method can be developed before March 1, 1996. As a secondary recommendation, the CSW Companies suggested that the commission could achieve a reasonable result by a 50/50 blending of the postage stamp method and the local vector absolute method. Consumers Union did not recommend a particular pricing methodology but commented that any methodology adopted by the commission must adhere to the requirements of the Public Utility Regulatory Act, which prohibits a utility's native load customers from subsidizing wholesale transmission. In the preamble, the commission posed the following question: What is the financial impact of the rule on utilities and the rate impact on their customers and is there a need for and operation of mechanisms to ease the cost impacts of the rule? The City of Bryan commented on the financial impact of the rule on municipally- owned utilities, concluding that the rule will result in a loss in revenue for such utilities, resulting in a need to increase the rates for residential and small commercial customers. A number of other commenters raised similar issues, both in connection with the pricing method and the costs that would be required for small utilities to carry out the unbundling requirements in the proposed rule. Destec commented that the appropriate mechanism for rate impact mitigation should be based on the financial circumstances of each affected utility, which should be determined on a case-by-case basis. According to Destec, rate impact mitigation plans are not appropriate, if the commission intends to provide benefits to the broadest range of utility customers. Several parties objected to transition plans, asserting that they merely delay the adverse impact of the adoption of a pricing mechanism. For example, HL&P and Austin commented that employing a transition plan to moderate the impact of increased costs over time does not remedy the cross-subsidization that can be created by a pricing mechanism. However, the City indicated that it would be willing to accept a rate moderation method where a customer's payment for transmission service under the rule would not exceed the current payment by more than five percent, and any increase in a subsequent year would not exceed five percent. The LCRA proposed a similar transition mechanism: a transmission provider's increase in transmission costs would be limited to four percent in any year. The Public Counsel expressed the view that a proposal which seeks to phase in cost increases or revenues decreases for some utilities should be avoided, because sooner or later the utilities that are the losers will naturally attempt to pass any revenue shortfalls along to captive customers. Public Counsel stated that it would prefer the adoption of a transmission pricing mechanism that does not create significant losses among utilities. Brazos commented that a transitional mechanism is necessary to ease the cost impacts of the rule. Brazos proposed that the pricing mechanism that the commission adopts be phased in as utility loads begin taking transmission service under the rule. In other words, a utility that purchases its power requirements from another utility would continue paying for its service in accordance with the contract, but it would begin paying for transmission service under the rule when its power sales contract expires and it has the opportunity to access other suppliers. GVEC proposed several mechanisms to ease the cost impact of the rule. One possible way would be to allow the captive, native-load wholesale customers to include in the statewide transmission pool their costs from their wholesale suppliers in excess of the statewide rate as a transmission cost and that the excessive amount be recovered from the statewide pool. A second way that the captive, native-load wholesale customers can be made whole so that they only pay the approved ERCOT-wide postage stamp rate would be to adopt a Transmission Cost Recovery Factor (TCRF). Any windfall to the supplier as a result of the postage stamp rate would be flowed back to the end-use customers of the captive, native- load wholesale customers through the TCRF. Several utilities, including HL&P, TU Electric and CSW, argued in favor of a transmission cost-recovery factor that would permit them to recover from their customers, without filing a rate case, any increased costs associated with the transmission rates under this rule. Several customer groups, including the Public Counsel and TIEC, opposed such a factor. The commission has considered all of the diverse comments on pricing and has concluded that a hybrid pricing scheme should be adopted, with 70% of the transmission rate based on the regional postage stamp method and 30% based on a megawatt-mile impact method (namely, the vector-absolute megawatt-mile method). As the parties' comments indicate, there are a number of criteria that are important in fixing a pricing method, and the commission concludes that this hybrid method fairly balances these criteria. The commission specifically finds that the hybrid method meets the requirements of sec.2.057(c) of PURA. Under the statute, the commission has the responsibility to set rates that will recover "all reasonable costs incurred by the utility." The ERCOT-wide postage stamp portion of the rate reflects the fact that ERCOT is an interconnected grid, and that electrons move throughout the grid without regard to the ownership of the transmission lines on a virtually instantaneous basis. The vector-absolute megawatt mile method measures all changes in the use of the transmission lines; it is more stable than the other variants of the megawatt-mile methodology; it will aid in accurate transmission planning; and it sends appropriate price signals to generators and loads. Thus, the combination of the postage stamp and the VAMM method reflects the usage of the system by both the utility for its native customers and third parties (transmission customers). It will allow the utility to capture "all reasonable costs incurred by the utility." The reasons for the adoption of this hybrid pricing method are explained in more detail as follows. The commission has also decided that a rate-moderation mechanism should be applied. This mechanism would phase in the transition to transmission rates under the new rule over a three year period, with the annual change in any utility's transmission cost of service during the transition period limited to ten percent of the total change in transmission cost of service that the utility would otherwise experience were it to immediately implement the transmission rates prescribed by this rule. The purpose of this transition mechanism is to give any transmission owning utilities who might suffer an adverse transmission cost impact under the rule adequate time to adjust to the new transmission pricing regime that is being implemented by the commission. The commission has decided not to adopt a cost-recovery mechanism that would permit a utility to pass increased transmission costs on to its native-load customers. Of course, if a utility files an application for new rates, the additional costs of transmission service would be included in the costs that the commission must consider in setting the utility's rates. The commission concludes that it does not need to reach the question of whether a special cost- recover factor is permitted under PURA, and is not convinced that such a factor is appropriate. The problem is the one that typically arises in connection with the setting of a rate to recover only a part of a utility's costs. Where some time has elapsed since the utility has changed its rates, it is possible that its current costs are lower or its revenues higher than during the period that was considered in setting its rates. Thus there is a risk that in prescribing a special cost-recovery factor, the commission will be authorizing aggregate rates that are more than necessary to permit the utility to recover its reasonable and necessary expenses and earn a reasonable rate of return. In the current circumstances, utilities are concerned about costs that are not fully covered in their existing rates, and customers are concerned about aggregate rates that would be excessive. The commission believes that the rate moderation plan it has adopted is sufficient to meet the parties' concerns in this regard. Some utilities whose revenues increase or costs decrease as a consequence of the adoption of this rule may wish to apply a flow-through mechanism to permit them to return the additional revenue to their customers. The commission does not express a position on whether such a mechanism would be appropriate. The Public Utility Regulatory Act includes general principles for pricing utility services that would also apply to pricing transmission service, broad principles that specifically apply to transmission service, and specific pricing principles for transmission service. The general pricing principles set out in PURA include the following: Section 2.202: Every rate shall be just and reasonable and may not be unreasonably preferential, prejudicial, or discriminatory, but shall be sufficient, equitable and consistent in application. Section 2.203: Revenues shall be fixed at a level which will permit a utility a reasonable opportunity to earn a reasonable return on its invested capital over and above its reasonable and necessary operating expenses. Section 2.206: Rates shall be based on the original cost of property as recorded on the books of the utility, less depreciation. The general principles applicable to transmission service are set out as follows: Section 2.056(a): The rules for transmission service shall not be contrary to an applicable decision, rule, or policy statement of a federal agency that has jurisdiction. Section 2.057(a): A utility that owns transmission facilities shall provide wholesale transmission service at rates, terms of access, and conditions that are comparable to the rates, terms of access, and conditions of the utility's use of its system. The commission's rules shall be consistent with this section, shall not be contrary to federal law, including any applicable policy statement, decision, or rule of a federal regulatory agency that has jurisdiction, and shall require transmission services that are not less than the transmission services the Federal Energy Regulatory Commission may require in similar circumstances. The specific transmission pricing rules in PURA are set out as follows: Section 2.057(a): The Commission's rules shall provide that all ancillary services shall be provided by the utility at the same prices and under the same terms and conditions as such services are provided by the utility and associated with its discounted wholesale sales. Section 2.057(c): The Commission shall ensure that the costs of transmission service are not borne by the utility's other customers by requiring the utility to recover from the entity for which the transmission is provided all reasonable costs incurred by the utility in providing transmission service. The FERC issued a Policy Statement in its Inquiry on Pricing for Transmission Services that established five pricing principles for transmission service. Under this Policy Statement, conforming transmission pricing proposals (1) must meet the traditional revenue requirement, (2) must reflect comparability, (3) should promote economic efficiency, (4) should promote fairness, and (5) should be practical. Considering the statutory provisions applicable to utility pricing in general and transmission services specifically, the commission concludes that the following pricing principles should be considered in adopting a pricing method for transmission service: Simplicity: the method is easily calculated, not involving many complex studies. Predictability: transmission customers will be able to predict prices easily and consistently over time. Accuracy of Price Signals: the method will send accurate price signals to transmission and/or generation owners. Consistent With Laws: the method will not contradict FERC rules or policies or PURA. Robustness: the method will easily adapt to many types of future changes. Administrative Feasibility: a low level of resources is required by the commission and other parties to calculate prices and monitor implementation. Low Gaming Potential: competitors will have little chance or incentive to "game the system". Promotes Competition: the method will increase the probability of a successful competitive wholesale market. Comparability: comparability can be achieved under the method. The commission has concluded that the principal pricing alternatives that parties have advocated are consistent with the law and meet, in varying degrees, the criteria set out previously. The three basic pricing methods that were proposed by interested parties in this rulemaking proceeding were (1) a local transmission rate, in which each utility that owns transmission would continue to pay for its own transmission system, and transmission-dependent utilities would pay the transmission rate of the utility through which they are connected to the state-wide network, (2) impact rates, in which the transmission rates would be based on calculations of the impact of generators and loads on the transmission network, and (3) postage- stamp rates, in which all transmission costs of all utilities would be allocated among utilities on an equitable basis, usually based on each utility's share of the total megawatts of load in ERCOT. The postage-stamp rates are obviously easy to calculate, are highly predictable, and encourage competition. With postage-stamp rates, competition is not limited by geography, at least within ERCOT. Any generator could be contracted to supply the load for a utility, and the transmission cost would not be affected by the location of the generator. The chief drawback of the postage- stamp rates relates to the criterion of economic efficiency. The commission concludes that distance between a generator and a load that it serves is an important factor in the cost of transmission; pure postage-stamp rates do not impose a cost on transmission customers related to the distance between the generator and load. The impact rates meet the efficiency criterion better, but are more difficult to calculate and predict. The local rate method also meets the criteria set out previously to varying degrees. Two of the chief objections to this method are that it might encourage uneconomic construction of additional transmission facilities and that it does not recognize the unitary nature of the ERCOT transmission network. With respect to the first point, a transmission-dependent utility that is connected to the statewide network through a high-cost utility might decide to build additional transmission facilities to connect to the network through a different, lower- cost transmission provider. Construction of the facilities would make sense in light of the prices for transmission service, but they would be unnecessary from an engineering standpoint, if the existing facilities were adequate to serve the customer's needs. Moreover, this pricing method does not compensate other utilities whose facilities are used in providing transmission service. It is the commission's view that in a competitive market, participants should compensate transmission owners for the use of their facilities. An additional factor that some of the parties focused on in their comments was the impact of a pricing method on a utility and its customers. HL&P argues, for example, that the postage stamp method would increase the transmission costs of utilities that are primarily urban and reduce the costs of utilities that are primarily rural. Under a statewide postage-stamp pricing method or a hybrid method that uses a statewide postage-stamp component, each utility that takes transmission service would pay a facilities charge that includes costs of other utilities' transmission operations. The commission concludes that such charges are reasonable, for two reasons: (1) utilities actually use the transmission facilities of other utilities, and (2) the open-access rules that the commission is adopting will greatly increase the ability of utilities to use the transmission systems of other utilities to buy from remote generating facilities or sell to remote utilities. Even today, utilities use the interconnected utility system to assist them in the delivery of power to their customers. The flow of electricity cannot be constrained to particular paths between a generator and the loads that the generator serves. Rather, power flows from generators to loads along the paths of least resistance. This means that while a utility such as HL&P may own transmission lines that connect all of its generators to its loads, the power produced by its generators may actually flow over both its own transmission lines and the transmission lines of neighboring utilities. There are other ways in which the transmission network functions as a unitary system, in which the boundaries between utilities are of minor importance. The transmission network and the interconnections between utilities are important factors in maintaining continuous, reliable service at reasonable cost. Failures of individual generating plants and transmission lines may take place without affecting customers' service, because the network of transmission lines and inter-utility connections permits additional sources or transmission paths to be used to supply power. Similarly, the network of inter-utility connections permits the exchange of power and special services (such as responsive reserves) among utilities where one utility has a cost advantage in providing the service. Under the transmission pricing rules that have been in effect, each utility has paid its own transmission costs, for the most part. Wheeling rates have been developed by the commission that require utilities to pay each other for the transmission service that they provide each other, but the system of inter- utility compensation is not comprehensive. Under current rules, for example, a utility does not pay other utilities for using their transmission systems in serving load from a generator within its service area. With the adoption of this rule the ERCOT transmission network will be opened to the transmission of power between utilities to a greater extent than ever before. Broader use of the transmission network in an expanding wholesale market supports the treatment of the transmission network, which is the highway for this trade, as a common facility for the use by all market participants. Virtually all consumers of electricity are transmission customers, and this rule will treat all customers alike for the purpose of pricing transmission service. A vertically-integrated utility's native retail load uses the transmission system in the ways that are described previously. This use is not limited by the boundaries of the control area. The rates for the native load customers and the customers who are taking transmission service only are determined in the same way, and the rule does not require native load customers to bear costs that should be borne by transmission customers. The rule works a change in pricing transmission service; under current rules, the transmission operations of one utility that affect another utility are, for the most part, ignored. Current practice is governed by a rule of reciprocity among control-area utilities, while utilities that do not operate a control area are required to pay for the impacts of their transmission transactions. One of the significant changes in the rule is the replacement of a reciprocity rule with explicit prices for these impacts. The use of an ERCOT-wide postage-stamp element in the transmission facilities charge is consistent with this recognition that utilities affect each other's transmission systems and benefit from each other's transmission systems. The ERCOT-wide postage stamp pricing element also recognizes the difficulty of assigning prices to these impacts and benefits. The commission concludes that the pricing method that it is adopting does not contravene the provisions of PURA that specifically relate to transmission service, for the reasons set forth previously. At the same time, the pricing method does not contravene the general ratemaking principles in PURA. The problem that utilities face with respect to the adoption of a rule on open- access transmission service and the hybrid pricing method that the commission is adopting is that a utility's transmission costs may increase or revenues may be reduced. This is the kind of event that affects utilities regularly, either as a consequence of regulatory changes or external events. Events other than the changes that result from this rule may also affect utilities' costs and revenues, and the increasingly competitive wholesale market may also affect their costs and revenues. Where a utility's revenues are inadequate to permit it to cover its reasonable costs and earn a reasonable return, the remedy permitted in the regulatory scheme under PURA is for the utility to file a rate case. The commission's decision to adopt a pricing method that has adverse consequences for some utilities is not a violation of the commission's duty to set just and reasonable rates. If as a result of this rule and the other events that affect a utility's revenues and cost of providing service, its current rates are inadequate to permit it to cover its reasonable expenses and earn a reasonable return, it has the option of filing a request for higher rates. The commission has also decided to implement a rate moderation mechanism which will mitigate the rate impacts of the new rule on a utility or its customers. Houston Lighting & Power has argued that the hybrid pricing method is inconsistent with PURA 95, sec.2.203. This section provides that a utility's revenues shall be fixed at a level which will permit it a reasonable opportunity to earn a reasonable return on its invested capital over and above its reasonable and necessary operating expenses. The argument that HL&P advances appears to be that the rates of a utility must be based solely on its own costs and may not take into account, as the ERCOT-wide postage stamp does, the costs of other utilities. It is the commission's view that this argument is not supported by the facts or the law. As is noted previously, the transmission systems of the utilities are interconnected and provide support to each other in several ways. Thus, as a factual matter, a utility like HL&P uses the transmission systems of other utilities and can be expected to pay for this use. HL&P also is advancing a reading of sec.2.203 that is inconsistent with its plain language. HL&P's rates, even with the adoption of this rule, will be based primarily on its own costs. The statute does not require that they be based solely on the utility's own costs. Finally, the commission will conduct rate proceedings in which the utilities that own transmission facilities will be required to provide information concerning the costs of these facilities, to permit the commission to set transmission rates. It is the commission's view that such rate proceedings will lead to the setting of rates that are consistent with sec.2.203. The commission has decided in this case how transmission service for all customers should be priced. The consequences of this pricing method for particular utilities cannot be judged until the commission sets transmission rates. At that point, affected utilities will have to assess whether the cost impacts of this rule and other events warrant the filing of a rate case. The commission's response to such a request is the appropriate forum for considering whether the rates of the utility are just and reasonable. A number of parties commented on the issue of whether radial transmission lines and other facilities should be included in the transmission cost of service. Some parties took the position that these facilities are not part of the network for transmission of bulk power among utilities but, rather, are essentially local distribution facilities. TIEC, for example, recommended that only "network" transmission facilities be included in the "eligible" cost to be recovered on an ERCOT-wide basis. According to TIEC, "network" facilities are limited to the specific facilities designed exclusively to accommodate bulk power transmission. "Non-network" facilities are those which serve either a production function such as a step-up substation at a power plant, or a distribution function. On the other hand, parties such as STEC commented that there are public policy reasons why radial lines, substation facilities on the high side of the transformer, and communication facilities related to transmission service should be included in the statewide costs: their inclusion will foster a competitive market by eliminating the need for multiple tariffs. STEC also asserted that including radial lines in the transmission cost of service will encourage utilities to contain costs by not unnecessarily looping lines. Cap Rock and the LCRA supported the inclusion of radial lines in the transmission cost of service. A similar issue was posed over the treatment of the costs of the high- voltage direct current interconnections between ERCOT and the Southwest Power Pool. On this issue, the owners of the DC ties argued in favor of including these cost in the transmission cost of service, and many of the other parties argued against including them. The commission has concluded that the facilities to be included in the transmission cost of service are all transmission facilities at a voltage of 60 kilovolts or higher, including radial lines, and substation facilities (in a substation where power is transformed to or from a voltage lower than 60kv) on the high side of the transformer. Again, this question involves the balancing of the competing interests identified by the parties, and the commission concludes that this decision achieves an appropriate balance. The commission has concluded that the ERCOT portion of the cost of the DC ties should be included in the cost of service, when the owners of the ties amend the FERC tariffs for the use of the ties to provide equal access to other utilities. When this is done the commission agrees that the cost of the ties should be included in the transmission cost of service, to the degree that they are used to import power into ERCOT. To the degree that they are used to export power, the costs should be borne by the owners or the parties actually using them for exports. These transmission facility costs will be included in the ERCOT-wide transmission cost of service because the commission believes that their inclusion will facilitate the Legislature's stated goal of promoting wholesale competition by bringing as many ERCOT transmission facilities as possible under one transmission pricing scheme and one set of regulations. The East Texas G&Ts commented that the rule needs clarification concerning the proper costs that are includable in the transmission cost of service. They asserted that the rule should deal with the costs of transmission, where power is imported into or exported from ERCOT. According to these cooperatives, costs incurred by a utility for transmission service outside of ERCOT, whether in connection with a purchase or sale of power, must be excluded from the cost of service. The commission agrees that the transmission service expenses paid by a utility for transmission service outside of ERCOT should not be included in the transmission cost of service under this rule, and subsection (g)(2) of the rule has been modified accordingly. The East Texas G&Ts, the LCRA, and Power Marketers commented that sec.23. 67(e)(2) appears to be intended to sever out from the calculation of the transmission cost of service the cost of providing transmission pursuant to existing contracts. According to these parties, the commission's intent is correct, but the rule contains an error. A utility should subtract from its transmission costs its receipts from contractual transmission service and add, not subtract, its payments for contractual transmission service. The LCRA also recommended that the rule be amended to make it clear that a utility that makes a contribution in aid of construction for transmission facilities pursuant to this rule may include the amount of the contribution in its costs of service. HL&P commented, on the other hand, that the treatment of costs and revenues of existing contracts that is proposed in the rule is correct, arguing that the LCRA proposal would dilute the rates in existing contracts. The commission agrees with the comments of HL&P that the appropriate treatment of the inter-utility payments for transmission service is in accordance with the text of the proposed rule. This treatment results in the inclusion in the cost of service of only direct transmission costs. Amounts paid by one utility to another are simply a reimbursement of a part of the direct costs by a utility that is receiving transmission service. These costs, and the transmission billing determinants associated with them, must be removed to avoid an inequity. The proposal advanced by a number of the parties, that contractual costs be added to the annual transmission cost of the utility that pays such costs, would result in a payment that offsets the contractual payments. The commission is concerned that such offsetting payments might be regarded as abrogating the contracts by rule, rather than on a case-by-case basis. The commission believes that existing transmission service that is being provided by contract should be converted to service under this rule, but it will not order that conversion in the rule. As transmission service is converted from contractual service to service under this rule, the costs of transmission service will be determined under the rule. Since the commission believes that the contracts will be converted in short order, it determines that it is not necessary to include the cost of such contracts in the initial cost of service. The commission will consider such contracts in determining the appropriate transition mechanisms. Some parties have argued that the adoption of the rule will affect the quality of service under existing transmission contracts, resulting in a reduction in the value of that service. These parties argue that the commission's alternatives are to permit the value of contractual service to be reduced or to establish a payment scheme that results in payments that offset the contractual payments for transmission service. According to these parties, the result in either case is an impairment of the value of the contract to either the service provider or the customer. The commission is not convinced that this argument is correct. The creation of new categories of transmission service does not necessarily impair existing service under contracts. Moreover, the new service categories are not directly tied to existing contracts, while the payment mechanism that results in an offset for contractual payments is directly tied to contractual payments. In any event, the commission believes that most of the existing contractual service can and should be converted to service under this rule in a swift and orderly fashion, without the commission mandating the conversion in the rule. Even if the adoption of this rule does in some manner affect the level of service that parties have contracted for, the commission considers that such a change is appropriate and necessary, to effectuate the commission's mandate under the statute. The statute directed the commission to adopt rules on open- access, comparable transmission service within 180 days of the effective date of the new statute. This statutory directive represents a policy determination by the legislature that existing arrangements must change. Nevertheless, the introduction of comparable transmission service in an environment in which there were numerous existing arrangements of different kinds by which transmission owners were providing transmission service to other utilities and qualifying facilities necessarily has raised difficult transition issues. The commission is committed to phasing out existing transmission arrangements that are not consistent with the rule that it is adopting, but it believes that it is appropriate to first give the parties to existing contracts an opportunity to modify their contracts to conform with the new rules. If there remain contracts for transmission service that are inconsistent with this rule, six months after its adoption, the commission intends to conduct an investigation into those contracts and determine the appropriate manner for modifying them to conform to this rule. The commission agrees with the LCRA that contributions in aid of construction should be included in the transmission cost of service, both as an asset or credit for the utility making the payment and as a liability or debit for the utility receiving the payment. The rule has been modified accordingly. In the preamble, the commission posed the following question: Are there means, other than subsection (e)(3), that would achieve the commission's objectives to set transmission rates that reflect current costs in an expeditious manner, such as generic rates of return? A number of parties commented on the method for determining rate of return or coverage. Austin and GVEC commented that different utilities have different capital requirements and borrowing sources, and that the use of a generic rate of return or coverage ratio is not appropriate. Austin also opposed any rate calculation that would result in an understatement of its actual capital cost, because this would result in its native-load customers subsidizing transmission customers. Brownsville also opposed generic coverage ratios for municipal utilities. TU Electric opposed generic rates of return, arguing that even under a postage-stamp pricing approach, utilities face different risks and costs associated with constructing and owning transmission facilities. Brazos recommended that the rate of return for a cooperative utility recognize that members of the cooperative make equity contributions to the cooperative, which has a cost. GVEC suggested that the transmission function has a different degree of risk associated with it than the overall operation of an integrated utility, and that in setting transmission rates, the commission should consider the rate of return that would be appropriate for a transmission utility. The commission has concluded that the transmission rates should be based on current costs. The preamble to the proposed rule suggested the use of a generic rate of return or generic coverage ratio to expedite the determination of transmission rates. The commission still believes that it is important to resolve these cases expeditiously. To this end, the participants in one of the working groups have developed a set of rate-filing requirements that would describe the cost information that a utility must file in connection with the determination of transmission rates. This rate-filing package includes other features that are intended to help expedite transmission rate proceedings, including allocation factors to allocate common costs among transmission and other functions and a generic formula for calculating a utility's rate of return from information concerning its actual debt costs. The commission is separately seeking comments from interested parties concerning the rate-filing package. In the preamble, the commission posed the following question: Are there other ways of determining the load-ratio shares, such as using non-coincident peak demands, that would be more appropriate? The East Texas G&Ts commented that the proposed rule correctly selects a load- based allocation of transmission costs based on the transmission customer's proportionate share of the ERCOT coincident peak load. However, according to these cooperatives, the use of a customer's historic peak load for current transmission billing is problematic. The rule should instead require that billing be based on a customer's anticipated load at the time of the ERCOT peak, with a true up for actual peak at the end of the year. Destec commented that the load ratio share for each utility within ERCOT should be determined by "dividing the utility's system demand at the time of the most recent ERCOT system coincident peak demand by the coincident peak demand of the ERCOT system." Destec sought a clarification of the rule concerning what is included in a utility's "load." According to Destec, industrial load that is primarily served by a "behind the fence" cogeneration unit should not be included as load for the interconnected utility and should not be included in any load ratio calculations. Cap Rock commented that basing load ratio share on a single, coincident peak demand is arbitrary. This party recommended using a blend of a single coincident peak demand and total energy. For example, the load ratio share could be based 50% on the system coincident peak and 50% on the system annual energy sales. Public Counsel, EDF, and the TU Electric Cities recommended that the rule not focus on utility demand at the time of the ERCOT peak. According to these parties, transmission costs are incurred in order to move energy throughout the year, and they recommended that the load-ratio share for a utility should be determined using 12 monthly peaks. The LCRA recommended that this subsection be amended to use the peak demand of the four summer months and to account for losses in determining a utility's peak demand. Brazos suggested that it may be more appropriate to use a non-coincident peak demand methodology to calculate the load-ratio share, to the extent that load-ratio shares are used in calculating transmission costs. Subsection (g)(4) of the rule provides that costs will be allocated among utilities on the basis of the most recent ERCOT peak. In assessing the utility's peak, load served by "behind the fence" cogeneration would be ignored, unless the utility is serving the load at the time of the peak. The commission in most of the recent rate cases has concluded that summer peak load conditions are a major factor that affects the configuration and costs of transmission facilities. In these cases, the commission has typically allocated transmission cost on the basis of demand in the summer months. The commission concludes that for the same reasons, an allocation factor based on the ERCOT coincident peak demand in the months of June, July, August, and September is the appropriate means of allocating transmission costs among utilities, for the postage stamp portion of the transmission rate. For the megawatt-mile portion of the rate, the transmission costs of each utility will be allocated to itself and other utilities on the basis of the megawatt-mile impacts. One of the major issues addressed by the parties was whether losses caused by the operations of a neighboring utility's operations within its own control area, should require compensation from the utility causing the losses. This dispute is highlighted in the report of the working group on operational issues. According to this report, the existing practice within ERCOT is for each control-area utility to make up the losses within its own control area, except that compensation is required for losses caused by wheeling power from a remote source. HL&P submitted a recommendation to the working group to continue this practice, and the CPSB, in its comments, proposed to continue the existing practice. The LCRA, on the other hand, proposed that a utility causing losses outside of its control area be required to compensate the affected utilities, even if the losses are caused by the use of resources in the utility's control area to meet its load. According to the LCRA, such a policy would represent consistent treatment of all loads, so that all users of transmission are faced with the same costs and responsibilities. CSW proposed a third alternative, the use of its efficient pricing proposal to assign losses to loads and resources. Another issue that parties have raised is whether losses should be calculated on an average or incremental basis. Brownsville recommended that if the commission allows incremental losses, the incremental loss methodology should be properly implemented by including credit for transactions that result in reduced losses. Power Marketers commented that to encourage a robust generation market, the commission should facilitate the development of "one stop shopping" for transmission services. To further this goal the commission should consider making compensation for losses an administrative responsibility of the independent system operator. Destec proposed that the commission ensure that distance sensitivity be adequately built in to the pricing system by means of the loss matrix. LP&L recommended that losses be determined separately for each voltage level, rather than by using system average losses. The proposed rule called for the development of a loss matrix that would provide clear and immediately available information on losses. It is the commission's belief that this satisfies the Power Marketers' concerns. The rule neither precludes nor requires differentiation of losses by voltage level. TU Electric expressed the view that the commission need not address the issue of losses, because the interested parties are likely to be able to reach a consensus on the mechanisms for loss compensation. The commission encourages the parties to attempt to develop an equitable method for dealing with losses. The commission is adopting a requirement that loss compensation matrices be developed. The treatment of losses is a matter that can be addressed in connection with the approval of transmission rates and tariffs. The East Texas G&Ts commented that sec.23.67(g) was ambiguous on the question of whether the division of the transmission revenues should be proportional to transmission costs before or after severing out the cost of transmission for existing contracts. According to the Cooperatives, for the rule to work properly, the revenue division must be on basis of transmission cost before severing out the costs of contractual transmission service. Brazos commented that the receipt of transmission revenue from utilities that are not its member- owners could be sufficient to require it to pay income taxes. Brazos pointed out that if a cooperative utility in any year receives more that 15% of its revenues from non-members, it loses its tax-exempt status for that year. Brazos asserted that non-member transmission customers of a cooperative should be responsible for income taxes, if it loses its tax-exempt status as a result of revenue from transmission service. The rule being adopted requires that revenue be allocated on the basis of transmission cost of service. There is not any ambiguity in this, because transmission costs, as set out in subsection (g), do not include contractual wheeling costs. The commission's reasons for this treatment are discussed previously, in connection with the issue of the treatment of contractual wheeling costs. The commission does not agree with the comments of Brazos. Brazos is the only party that has expressed a concern about this issue, and it appears that one of the reasons for its concern is that it receives revenue from non-members that are its wholesale customers. It seems likely that if the utility is required to pay taxes, the revenue it receives for transmission service will not be the only reason. Brazos also raised several questions about how the amounts paid by transmission customers for transmission service would be paid to the transmission-owning utilities. The cooperative was concerned that if a new entity is created to receive and disburse these revenues, a new administrative cost may be created, and transmission owners will lose the use of these revenues during the time that the disbursing agent holds the money. Brazos recommended that only the net amount owed to transmission-owning utilities be charged to the transmission users, and that the users pay this amount directly to the transmission owners on a monthly basis. The commission agrees that it would not be desirable to require an entity such as the ISO to deal with this matter. For the bulk of the payments among utilities for transmission service, utilities should compensate each other directly. There may be some instances, such as short-term service to the DC ties that will involve an administrator to receive and redistribute transmission revenue. In the preamble, the commission posed the following question: How should costs for certain ancillary services be separated out and what form of cost allocation should be employed for this purpose? The report of the ancillary services working group recommended that utilities that provide ancillary services be allowed to price the services flexibly with a cap equal to the provider's embedded cost and a floor equal to the provider's marginal cost. The report also noted that, in some instances, such as new capacity additions, the marginal cost may exceed the embedded cost; therefore, in these instances the marginal cost would be the ceiling. The report also suggested that if multiple ancillary services are provided to a customer using a common block of generating capacity, the total capacity-related charges should not exceed the embedded cost cap nor should they be below the marginal cost floor. The LCRA supported the working group report. STEC and Destec agreed with the last point, concerning non-duplication of capacity-related charges. Destec also recommended that the services provided by the incumbent monopoly utility providers be capped at embedded cost. The members of the working group were not able to reach an agreement on what the embedded cost cap and marginal cost floor should be. Some parties suggested that the cost cap may be best represented as the utility's average cost of generation, while others suggested that the cap be determined by the state-wide weighted average cost of generation. The members of the working group could not agree on whether an ancillary service using existing rate-based capacity only (no energy involved) would have a floor of $0 or whether the provisions of PURA relating to flexible pricing would mandate a positive marginal cost. One of the issues that has been raised in connection with ancillary services is the treatment of inadvertent energy flows between control areas. The working group on operational issues proposed that a new subsection be added to the rule that would require that inadvertent energy be dealt with in accordance with the relevant ERCOT guides. STEC recommended that the revenues a utility receives from ancillary services be credited to the ratepayers, since they are currently paying for the cost of the services through their rates. STEC also commented that ERCOT utilities should be able obtain emergency service at the cost of production. Brazos commented that utilities should offer ancillary services at the embedded cost of such services, and the services should be unbundled, discretely priced, and provided on a non-discriminatory basis. TNP agreed that ancillary services must separately priced, to ensure the same prices are charged in all cases. HL&P commented that the standard for pricing ancillary services above the marginal costs is inconsistent with the pricing directives expressly set forth in PURA 2.001 and is antithetical with the principle that utilities should be afforded the opportunity to meaningfully participate in future competitive wholesale bulk power markets. TU Electric supported the idea of flexible pricing for ancillary services. The East Texas G&Ts did not support the report of the ancillary services working group concerning flexible pricing for services. They endorsed the principles for the pricing of ancillary services included in proposed sec.23.67: prices should be based on the average embedded costs and must not overlap with the cost of generation or transmission services. According to the cooperatives, the FERC pricing for ancillary services is worthy of consideration by the commission. As is noted previously the commission has concluded that utilities should be permitted to provide ancillary services at market-based rates. The commission agrees with the comments that recommended a floor and ceiling price. The floor and ceiling will protect native-load customers from subsidizing sales of ancillary services to other utilities and will prevent utilities from over- charging for a service for which there may be few sellers. The commission concludes that the price ceiling on generation-related ancillary services should be based on the average cost of the utility's generating capacity, and that the floor should be consistent with PURA 95, sec.2.001(c). The commission also agrees that the revenue from the sales of ancillary services should be fully credited to customers, because they are paying for the generating facilities that utilities will use to provide ancillary services. Energy costs and revenues will be accounted for in utilities' fuel accounting and the fuel reconciliation process, and capacity-related revenues will be reflected as base-rate revenue. The commission agrees with the comments of the LCRA, STEC and Destec that where multiple ancillary services are provided from the same generating capacity, the utility should not be permitted to charge multiple capacity-related fees. In each of these areas, the rule has been modified to reflect the commission's conclusions. The commission has adopted subsection (l) in response to the comments concerning inadvertent energy flows. This subsection provides that inadvertent energy flows will be dealt with in accordance with ERCOT procedures. In the preamble, the commission posed the following questions: Would the rule permit the development of a secondary market for transmission service and is it desirable to encourage the development of such a market? How should the rule be amended to encourage such a market? A number of parties, including Power Marketers, Cap Rock, TNP, and APSI commented that allowing the resale of transmission rights in a secondary market is a necessary part of this rule. Since transmission capacity will be purchased by loads on the basis of the annual ERCOT system peak, according to these parties, the load should have excess "planned" capacity in off-peak periods that would be available for sale in a secondary market. The ability for marketers or generators to purchase such capacity, especially to export power out of ERCOT, is important and should be retained in the rule as finally adopted. To the extent that a secondary market develops, STEC suggested that the commission invoke the "use it or lose it" doctrine to discourage entities from attempting to corner the market on transmission rights. A number of other parties concluded that a secondary market is either unnecessary or unworkable under the pricing mechanism proposed in the rule. According to Destec, Brownsville, and the LCRA, under a statewide postage stamp pricing mechanism, no need exists for active development of a secondary market for transmission service. Planned transactions will take place pursuant to load- ratio share allocations of the transmission network, and unplanned transactions will be allowed to the extent that the network can accommodate such transactions. TU Electric commented that the development of a secondary market will be a key element of increased competition in the wholesale market for transmission and sales of electric energy but noted that it is impossible to have a secondary market with the proposed statewide postage stamp methodology. Brazos also concluded that a secondary market is inconsistent with the postage stamp pricing method. CPSB commented that a secondary market for transmission access should not be permitted, because such a market is inconsistent with the concept of regulated transmission service. The commission concludes that there may be benefits from the development of a secondary market, but that these benefits are secondary in importance to the objectives of opening the transmission system to access by utilities and wholesale power sellers and to stimulating more competition at the wholesale level. A number of parties have expressed skepticism about the viability of a secondary market, where transmission pricing is based on load-ratio shares. The commission does not intend to obstruct the development of a secondary market, if conditions will permit it to develop. Accordingly, subsection (i) has not been modified. In the preamble, the commission posed the following question: What is the most appropriate method for allocating redispatch costs among transmission users? A number of parties, including the Public Counsel and the CPSB, commented that redispatch costs should be borne by the beneficiary of the redispatch. According to the CPSB, benefits can be determined only with pricing based on priority service elements. The CPSB also commented that it was confused by the use of the phrase "binding advance bids" in sec.23.67(j) of the proposed rule. HL&P argued that it is inappropriate and illegal to impose redispatch costs on parties that do not benefit from the redispatch. TU Electric commented that the costs of redispatch should be borne by the party that causes the redispatch to occur. According to TU Electric, constrained transmission capacity should be allocated on the basis of the load-ratio share of the affected utilities, if the constraint is the result of an unexpected event, such as an outage of a nearby transmission line. According to TU Electric, where the constraint is the result of increased usage of a transmission line over time, the capacity should be allocated on a first-come, first-served basis. The City of Austin recommended that the redispatch costs associated with a planned transaction should be allocated on the basis of the megawatt-mile use of the system under the revised dispatch and that the redispatch costs of unplanned transactions be borne by the parties requesting the redispatch. Brazos made a recommendation similar to Austin's. The working group on operational issues also made a similar recommendation: redispatch costs for planned transactions would be included in the transmission cost of service for the subsequent year and assessed to all transmission users, and redispatch costs for unplanned transactions would be borne by the parties to the unplanned transaction. Brownsville and Destec commented that the commission's proposal on redispatch costs should be adopted: redispatch costs should be borne by all utilities on a load-ratio share basis. According to Brownsville, assigning redispatch costs to the last user is arbitrary and fails to recognize that all users of the system create the constraint that requires redispatch. Destec recommended that the rule be modified to make it clear that in a redispatch situation, a utility is bound by the provisions of any contract for the purchase of power. GCPC commented that in assessing the costs of transmission upgrades to alleviate transmission constraints, competitive solicitations should be used to determine the reasonable cost of the facilities. The City of Weatherford commented that redispatch costs may produce an inefficient generation mix, and that redispatch should be regarded as a short- term solution to constraints to the transmission system. The City also commented that redispatch requirements should be monitored by the independent system operator, in order to identify transmission system enhancements that would eliminate constraints. The commission concludes that the recommendations in the report of the working group on operating issues have merit, but that other interested parties should have an opportunity to comment on the redispatch rules that the working group proposes. The main points of the group's recommendation are that the independent system operator supervise redispatch decisions, that the cost of redispatch for planned transactions be included in the transmission cost of service, which will result in the sharing of costs among all customers, and that the cost of redispatch for unplanned transactions be borne by the parties that benefit from the redispatch. One additional point that the commission seeks comment on is the need to report cost information to the ISO, in connection with a redispatch for a planned transaction. The commission believes that a redispatch must be made on a least-cost basis and, that in the absence of a standard such as least cost, there will not be a rule for deciding whether resources must be redispatched to permit a transmission transaction to take place. The commission is publishing a separate rule on transmission terms and conditions, sec.23.70, and has decided to republish proposed rules on redispatch in sec.23.70. This proposed rule includes the recommendations of the working group and the least-cost standard for redispatch in connection with planned transactions, and it would require the ISO to apply this standard. CPSB commented that ERCOT-wide uniformity in terms and conditions of service, which sec.23.67(k) of the proposed rule requires, is not necessary. According to the City, uniformity is necessary only within a utility system. The commission concludes that it is important that uniform rules apply to transmission service in ERCOT. One of the means by which transmission owners might obstruct transmission service is to establish separate and inconsistent requirements for the use of different utility transmission systems and to require the negotiation of individual contracts for service with each customer. The approach taken in the rule is to facilitate transactions by adopting a uniform pricing method, uniform terms and conditions, and a uniform definition of ancillary services. The commission concludes that this approach is essential to make transmission access in ERCOT a reality. The working group report on ancillary services recommended that if a new ancillary service is required by a customer, the utility should be permitted to supply that service, if feasible. The definition and price could be determined by negotiation between the service provider and the customer, and service should be permitted immediately upon the execution of a contract between the parties, subject to subsequent approval by the commission. Brazos commented that, for those ancillary services not prescribed in subsection 23. 67(d) and for which the parties have entered into an agreement, the agreement should be filed and a tariff should not be required. TU Electric commented that the commission should not impose a moratorium on offering new services. As is noted previously, the East Texas G&T Cooperatives opposed the provision that permitted additional ancillary services to be created. The commission concludes that customers' needs should shape the market for ancillary services. Accordingly, the commission has retained the provision that would permit additional services, but has modified it to make it clear that additional services are permitted where a customer requests the service. The East Texas G&Ts commented that the proposed rule correctly requires utilities to build new facilities at their expenses with the exception of facilities that would impair their tax exempt status or transmission facilities that should be directly assigned. According to these cooperatives, direct assignment of facilities should be an extraordinary event, since nearly all facilities benefit the grid. FERC, which has considered the issue in great detail, strongly favors the roll-in of transmission facilities. TNP and Weatherford recommended that where a utility makes a contribution in aid of construction for a new transmission facility, it would acquire an ownership interest in the new facility, to the extent of its contribution. Such a provision would permit the utility to recover its investment in the facility, through the statewide postage stamp rate. GCPC commented that the rule should require competitive requests for proposals for transmission construction, new interconnections or other alternative solutions to transmission constraints. Denton and Weatherford expressed their concern about the possibility of inconsistent interpretations of the criterion for direct assignment: whether a facility is "primarily for the benefit" of a transmission customer. In an effort to encourage, rather than discourage, necessary growth, they recommend that the normal load growth of a utility not be considered a matter that would require the direct assignment of a facility. They also recommend that the independent system operator review all direct assignment requests, to ensure consistency in the application of this provision. The CPSB commented that where the costs of transmission facilities are to be placed in a state-wide transmission cost pool that will be used as a basis for allocating costs throughout ERCOT, some mechanisms must be established to ensure that these costs are prudently and efficiently incurred, with opportunity for examination and testing of these costs by other ERCOT members who will share in bearing them. Brazos recommended that where a request is made to a utility that is an RE Act beneficiary to construct additional transmission facilities, the determination of whether the additional facilities are primarily for the benefit of the transmission customer should be made by the Rural Utilities Service. If the RUS declines to approve a loan for the project under the RE Act, the transmission customer would be required to make a contribution in aid of construction. The rule, as proposed, would require utilities to construct new transmission facilities but provided that in certain instances the utility that was building the new facilities could require a transmission customer to pay a contribution in aid of construction to finance the new facilities. The provision that several parties commented on was the provision that permitted a contribution where the new facility was primarily for the benefit of the transmission customer. The East Texas G&Ts, for example, asserted that the FERC has used rolled-in pricing, rather than direct assignment of costs to transmission customers. The commission's rule will require that all transmission costs be included in the ERCOT transmission cost of service, but the commission believes that it is appropriate to require a transmission customer to shoulder some of the risk of the construction of new facilities, where they are being built to serve the customer's needs. The use of a contribution in aid of construction will permit risks to be apportioned appropriately. The party whose growth or change in generation source requires a transmission upgrade should initially bear the costs of the upgrade. In many instances, where additional transmission facilities are needed, either the transmission provider or customer could build the new facilities. If the customer has a desire to own the facilities, it can plan them in accordance with the planning procedures prescribed in proposed sec.23.70 and then build and own them. In other instances, a new facility that is needed to eliminate a bottleneck may have to be built in the middle of another utility's transmission system. In these circumstances, the transmission provider should build and own the new facilities, but a contribution in aid of construction may be required from a transmission customer, if the customer's growth or decision concerning a source of generation results in the need for the new facility. The commission thus disagrees with TNP and Weatherford that the utility that pays a contribution should always have an option to own the new facility. The scope of subsection (n) has been expanded to cover ancillary services, in response to the comments of CSW. The determination of the RUS concerning the approval of a loan for a project to construct additional transmission facilities might be a factor that should be considered in determining whether a cooperative utility should be required to build additional facilities, but it is not appropriate that the determination of the RUS would be determinative. There may be other reasons for the denial of a loan by the RUS, such as limitations on its ability to fund a loan. In addition, the RUS is an interested party, because it provides financing to cooperatives. In the preamble, the commission posed the following question: Are additional unbundling requirements or competitive safeguards needed to foster competition in the wholesale market? A number of parties expressed the view that functional unbundling for a small utility is not workable and is unnecessary, including Bryan, Garland, and Weatherford. In addition, Garland commented that the proposed rule would decrease efficiency and create increased costs to ratepayers for small municipal systems. It recommended that small municipal systems be exempted from the requirement of functional unbundling. Greenville and EPEC also asserted that the unbundling requirement would increase costs. A number of parties suggested provisions for exempting small utilities from the requirement to establish separate operating units for the generation, transmission, and distribution functions. Weatherford suggested that municipal utilities with a peak demand less than 500 Mw be permitted to file for an exception from the requirements to unbundle functions and physically separate personnel upon showing that unnecessary costs and inefficiencies would be incurred and that the utility did not participate in sufficient wheeling to represent a potential impediment to competition. Weatherford also proposed that municipal utilities with a peak demand less than 100 Mw be exempt from the requirement to physically separate personnel. LP&L also proposed an exception to the operational unbundling and physical separation requirements for utilities of less than 500 megawatts. Brownsville and Medina also commented that physical unbundling will be expensive and will not yield corresponding benefits to their ratepayers. The commission's proposal would force utilities to hire new employees and purchase unnecessary and expensive capital equipment. Brownsville commented that requiring the allocation of costs to each function on a structured pro-rata share method would be a better alternative. Brazos and the TPPA expressed similar views and also asserted that the separation of functions required by the rule would impair the reliability of service. EPEC also suggested that the unbundling requirements would impair reliability. STEC favored exceptions to the unbundling requirements for small utilities, on a showing of good cause. Cap Rock and TPPA also commented that smaller cooperatives should be exempt from the unbundling requirement. Medina also suggested that small cooperatives that must comply with the cost-separation requirements should be given additional time to do so. Brazos commented that the prohibition against exchange of information is vague, overboard and unenforceable, urging the commission to be more precise in describing the type of information that can not be exchanged. The East Texas G&Ts commented that the requirement that "each utility functionally unbundle its operations by establishing separate organizational units with the utility to operate its generation, transmission, and distribution facilities" inadvertently bars voluntary corporate unbundling into independent corporations. The Cooperatives also recommended that utilities that are not in ERCOT and utilities that do not own transmission not be required to unbundle. The Texas Electric Cooperative Association urged the commission to exempt all transmission-owning utilities whose transmission facilities consist only of radial transmission lines from the unbundling requirement. Other small utilities should be permitted to request an exemption based upon a showing that the associated cost of compliance exceeds the expected benefit to the bulk power market. Medina recommended a similar provision: an exemption for utilities that do not operate a control area. TU Electric recommended that the commission delete the requirement for functional unbundling of generation and distribution operations, as it is irrelevant to this proceeding. TU Electric, HL&P, and EPEC questioned whether the commission has the authority under PURA to mandate the internal organizational structure of the utilities that it regulates. According to TU Electric, the proposed provisions relating to the exchange of information are both too prescriptive and too vague. The rule should better define what constitutes the information that cannot be shared between separate business organizations within the utility. In particular, the proposed provision relating to what data must be provided to all parties is too broad. HL&P shared these concerns. TU Electric submitted that the commission should adopt a three-part policy: (1) data that does not relate to transmission service operation should be excluded from the scope of the rule; (2) commercial information concerning the purchase, sale, or transmission of electricity, regardless of the source, should be kept confidential by the transmission business entity; (3) contemporaneous communication to all customers should be made of information relating to transmission capacity, pricing, and terms and conditions of service. According to HL&P, the commission should limit 23.67(n) to unbundling of transmission rates and services. EPEC made a broad argument, apparently directed at the unbundling requirements, taking issue with the speed at which it believes the commission is requiring changes in the operation of electric utilities. EPEC recommended that the commission adopt and promote a measured, incremental approach to competitive reform of the electric power industry. It concluded that the commission's proposed rule would affect utilities beyond ERCOT and require an unprecedented internal reorganization of utility functions that is neither necessary nor called for by PURA. The City of Austin commented that requiring functional unbundling to increase competition is not needed to the degree described in the proposed rule. Austin supports the functional unbundling of costs for the purpose of pricing transmission services and ancillary services and the full disclosure of market information. However, Austin believes that the commission's authority does not extend to ordering separate organizational units within the City to operate its generation, transmission, and distribution facilities and requiring that those organizations be physically separated. Entergy commented that it does not oppose functional unbundling in concept, but does not believe that this commission has authority to order it for non-ERCOT utilities. Entergy is concerned that a conflict might arise, if the PUCT imposed functional unbundling rules on utilities that the FERC requires to unbundle transmission from generation under a different set of rules. The PUCT should modify its proposed rule so as not to impose functional unbundling requirement on FERC-jurisdictional public utilities. SPS and EPEC raised a similar question. In particular, they commented that the FERC, in its proposed transmission access rule, has not required the separation of employees. SPS also commented that it is not clear whether subsection (n) applies only to wholesale rates or also to retail rates. EDF supported the proposed unbundling requirements, concluding that significant regulatory oversight will be required to ensure the fair treatment of competitors. According to EDF, competitive safeguards such as regular proceedings and audits are needed to assure compliance with the rules, and the commission should advocate legislation which would require structural/legal unbundling. The TRA also supported the proposed unbundling requirements. Destec supported the proposed requirement for functional unbundling and suggested that actual separation of the separate functions of the existing vertically integrated utility might be required to ensure fairness in the generation marketplace. Destec commented that the requirement of total unbundling of all transmission, distribution and related services at wholesale and at retail is necessary to eliminate undue discrimination. Only if such unbundling is required will there be assurances that the regulated utilities' customers do not subsidize the competitive business enterprises of the utility. Cap Rock also supported structural or corporate unbundling. CSW supported the concept of functional unbundling and offered a proposal on how functional unbundling should occur. The existing corporate structure of jurisdictional utilities would remains in place, but the components of the utility would be organized into separate business units or division that have most of the characteristics of separate affiliated corporations. These characteristics would include: (1) The utility would create separate generation, transmission, and distribution functions, and one or more support divisions. (2) Each division would provide services to the other divisions, or facilities for the use of the other divisions and charge those divisions for the services or facilities. (3) Separate financial accounting for the functional divisions would reflect the assets assigned to each division, the costs incurred by the division, and the internal cost assignment among the divisions. (4) The transmission division would operate a transmission dispatch center and maintain the SCADA system. (5) Control area operations would become part of the generation division, which would be responsible for the energy management system and the dynamic dispatch of native load and the provision of all data required by the regional information network. (6) A new entity, Energy Operations, would be established as part of the generation division at a separate location. It would be responsible for off-system marketing activities, scheduling transaction through control area operations like any other participant in the ERCOT bulk power market. (7) An independent entity should operate a regional information system which collects and conveys relevant information concerning the transmission system to all parties simultaneously. CSW recommended that the requirement in sec.23.67(n) that refers to the "physical separation of personnel" be deleted. Consumers Union commented that rules must be developed for ensuring that no unbundled service or function is cross-subsidized by captive retail customers or priced in a fashion that unfairly disadvantages competitors. According to CU, the unbundling of the vertically integrated electric system will require careful cost analysis, done in an objective manner, relying on sworn evidence, with the full participation of all interested parties. The commission must use a market power test, not agreement of parties, to determine which functions or services are suitable to be market priced. The commission concludes that the unbundling that is necessary to foster a vigorous wholesale market is the separation of the utilities' power marketing function and the operation of their transmission systems. The potential for anti-competitive conduct on the part of transmission owning utilities in the wholesale market exists in large part because the utility personnel who operate the transmission system and control access to it are typically located in close proximity and have frequent contact with the utility personnel that buy and sell wholesale power for the utility. Open access comparability in wholesale transmission service can only be achieved when the utility's transmission personnel interact with the utility's power marketing personnel in the same manner as they interact with any third-party competitor to the utility in the wholesale market. Accordingly, the functional unbundling requirement is being restated in terms of separating a utility's transmission operations and its wholesale power purchase and sale operations, rather than in terms of unbundling generation, transmission, and distribution. The FERC has proposed a similar separation of functions in its standards of conduct that were published for comment in December. Under PURA sec.2.057, the commission is required to implement a degree of comparability which is no less than the comparability that FERC might require under similar circumstances. Therefore, the commission's mandate under sec.2.057 requires it, at a minimum, to functionally separate these two aspects of utility operations. Under PURA sec.2.216, the commission is required to insure that utilities do not engage in anti-competitive conduct. In the commission's judgment, the functional separation requirements contained in this rule are the minimum requirements necessary to guard against anti-competitive conduct on the part of utilities in the wholesale power market. The commission concludes that there are a number of small utilities that would have been affected by the operational unbundling requirements in the proposed rule that are not significant market forces, because they do not control significant transmission or generation assets. While the commission believes that unbundling the rates of all ERCOT utilities is appropriate, it has concluded that there is little benefit to be gained by requiring small utilities to carry out the operational unbundling required by the rule. Accordingly, the commission has modified the rule to apply the operational unbundling requirement, which has been revised as described previously, only to utilities that own generating capacity in excess of 100 megawatts. The commission also agrees that the provisions of the proposed rule that would have limited the exchange of information between the operational units of a utility were overly vague. The commission concludes that standards of conduct are important to prevent anti-competitive behavior and notes that the FERC has recently proposed standards that would limit the flow of information, for this reason. The commission believes that the rules should be modified to conform closely to the proposed FERC standards of conduct. Because FERC published its proposed standards of conduct after this proposed rule was published, parties did not have an opportunity to consider the FERC standards of conduct in preparing their comments on this proposed rule. Accordingly, the commission is deleting the rules relating to the exchange of information from this rule and is proposing rules patterned on the FERC standards of conduct in sec.23.70, which the commission is publishing for comment. The commission does not agree with the commenters who argued that the commission does not have the authority to require utilities (or, particularly, municipal utilities) to unbundle their operations. The unbundling requirement is directly related to the commission's responsibilities to promulgate transmission rules, and is the minimum requirement necessary to insure compliance with PURA sec.2.057 and sec.2.216. Now that the FERC has proposed similar rules in its standards of conduct, the question of unbundling may be regarded as essential in ensuring that transmission service under this rule is no less than the transmission service that will be available under the FERC's rules, as required by PURA sec.2.057. With respect to the comments of Entergy, SPS, and EPEC, the commission has decided to defer the question of the application of the unbundling requirements to the non-ERCOT utilities to Project Number 15000. In the preamble, the commission posed the following question: What are the most appropriate structure, governance, and functions of an ISO? APSI, TRA, GCPC, Weatherford, and Denton supported the proposal to create an independent system administrator, with equal rights for all parties to participate in its formation and administration. The Cities insisted that equal participation must encompass sufficient voting power by transmission-dependent utilities, power marketers, and power producers. The ISO and ERCOT (if still in place) must be accountable to this commission. The commission should have staff on each committee of these organizations, and should conduct periodic audits of their operations, inviting comments from all market participants. STEC, Cap Rock, and Brownsville made similar recommendations. STEC and Cap Rock commented that they could support the ISO being a part of ERCOT, if ERCOT changes its governance rules so that all stakeholder groups have an equal voice. EDF supported the idea that the ISO have responsibility for some activity in local transmission and distribution operations and the ultimate authority over the initiation and curtailment of specific transactions. GCPC, on the other hand, expressed the view that the ISO must not actually dispatch resources but would coordinate desired transactions pursuant to operating and scheduling guidelines that apply to all parties. GCPC also commented that the ISO must not have an economic interest in the transactions it coordinates. TIEC agreed in concept that an ISO is essential to ensuring equal dispatch and equal access privileges to the transmission grid, but it concluded that issues related to the identity, structure and funding of the ISO must be resolved. TIEC also insisted that the interest of retail consumers and the public interest must be represented on the ISO to prevent the possibility of collusion by all suppliers of electricity. CSW commented that the ISO could perform some of the regional functions, including operating a regional information network, region-wide security centers, regional trading hubs, administering open access tariffs, acting as a dispute resolution forum, and coordinating more extensive regional coordination of transmission planning. It insisted, however, that the individual control areas in ERCOT must retain the responsibility to dynamically dispatch the generators under their control. The ISO would intervene in the dispatch only when the ERCOT transmission system is faced with constraints, emergencies, or curtailments, and when redispatch procedures may be appropriate. The ISO would determine how the dispatch would be accomplished, the cost, and who bears the redispatch cost responsibility. TU Electric and Brazos commented that an ERCOT ISO is not needed. What is needed is an independent regional security center, which is being evaluated by ERCOT. For such a security center, according to Brazos, all loads should pay a share of the costs on a load-ratio basis. Brazos strongly disagreed with the list of ISO responsibilities contained in sec.23.67(o). TU Electric and Brazos suggested that the regional security center have responsibilities similar to those proposed by CSW, except that TU did not support centralized system planning. Brazos also commented that the governance provision of the rule should require that the ISO's procedures be "fair and non-discriminatory" with "equitable" participation rather than "equal" participation by all wholesale participants. HL&P expressed the view that consensus in this area can be achieved. It commented, however, that the commission lacks authority to empower an ISO with authority to manage the generation portion of a utility's business. According to HL&P, the commission should adopt a policy statement encouraging interested parties to continue in their efforts to reform ERCOT into an ISO. The proposed rule regarding facilities charges, utility restructuring and an ISO are legally defective, because they should be adopted in a contested case rulemaking proceeding. Cap Rock commented that the ISO should be substantially in place at the time the rule goes into effect and suggested that the LCRA could perform the ISO functions until a permanent ISO is created. The East Texas G&Ts raised a number of issues about the administrative aspects of an ISO, including the question of who will pay to support the operation of the ISO and how real independence will be assured. The commission believes that the creation of an independent system operator is particularly important for ensuring access by non-utilities and transmission- dependent utilities to the transmission network and is pleased that some of the large integrated utilities have presented their ideas on how an ISO might work. The commission concludes that it has the authority to direct the utilities that participate in the wholesale market to develop an ISO, because the requirement is directly related to the commission's responsibilities to promulgate transmission rules and to ensure that such service are provided on a non- discriminatory basis. The commission notes that the FERC has begun discussion of an ISO in connection with its transmission access rules, and that the California PUC has proposed an ISO as a part of its effort to create a more competitive electric utility market in that state. Comparable service and non-discrimination are explicit requirements that the commission is to observe in its transmission service rules. Section 2. 057(a) of PURA directs utilities to provide service that is comparable to the utility's use of the transmission system, and directs the commission to ensure non- discriminatory access to transmission service. Section 2.216 reinforces these requirements. This section provides that a utility may not discriminate against competitors or engage in anti-competitive practices. If access to the transmission network is left in the hands of utilities, they have the potential to delay or deny access to their competitors. Competition has emerged in the generation market, but large vertically-integrated utilities have a tremendous customer base and financial resources, which give them significant advantages in competing with non-utility providers of generation. In order to foster competition in this market, it is essential that the terms of transmission access not be in doubt. Rather, non-utility service providers and transmission- dependent utilities need to have the assurance that a neutral third party controls the gateway to the transmission network. The comments that were filed on this subject should be helpful in developing a consensus on the structure, governance, and functions of the ISO. The proposed rule included broad guidelines for the development of an ISO. These guidelines have been modified somewhat in response to comments from the parties. Two of the issues that parties focused on were the functions of the ISO and whether ERCOT should have a role in the development or operation of the ISO. On the first issue, the commission does not believe that it is appropriate to create an ISO with direct responsibility for dispatching the generating resources of the utilities. It is the commission's view that the creation of an ISO is essential for reliable transmission service in a network setting. The parties to this proceeding have asserted that ERCOT is operated as a system, in which interconnections between utilities perform important functions in the provision of reliable cost-effective electric service. Continuing to operate in this manner, while assuring that transmission service is provided on an equitable basis to utilities that do not own substantial transmission systems and to nonutilities operating in the wholesale power market, as required by PURA, requires a neutral arbiter with the responsibility of ensuring that the open- access rules are carried out and maintaining the reliability of the network. In response to the comments it received, the commission has modified its list of ISO responsibilities to clarify that the ISO shall have the authority to direct the curtailment and redispatch of resources by control areas under specified circumstances, to ensure that ERCOT control areas instantaneously balance generation and load, and to serve as a single point of contact for the initiation of transmission transactions. The commission does not express an opinion on the role of ERCOT in an ISO. This issue is primarily one of gaining a consensus that the proposed organization of the ISO meets the standard in the rule: equal participation by all wholesale market participants. The commission concludes that the parties should continue discussing this matter, in order to propose an ISO within the time permitted in the rule. The commission also concludes that the policies and procedures of the ISO should be subject to commission review. The rules of governance are important in ensuring that all parties are heard with respect to matters that affect reliability or the open-access rules. At the same time, the commission has the ultimate responsibility for ensuring equitable transmission access and thus should review the ISO's policies and procedures. Brazos commented that rather than prohibiting the exchange of information, the rule should make the necessary information available to all market participants who request it, who can use their own engineering and their expertise to study the system for their own purposes. According to Brazos, the phrase "electronic transmission information network", instead of "electronic transmission information system" should be used in the rule. Information on the ETIN ought not to be in the same form as required by FERC, and only transmission information should be on the network, not generation-related information. In a competitive market, information on generation is often highly propriety, sensitive and confidential. TU Electric commented that the proposed rule is too specific and goes too far, requiring that the ETIN to provide information that does not exist and enormous amounts of data. The requirement to provide "available transmission capacity and total transmission capacity at all ERCOT transmission interfaces" is unclear, according to TU Electric. Proposed paragraph 23.67(o)(2) also would have required that this information be provided on a real time basis for all transmission lines in ERCOT. This is impractical and unnecessary and involves an enormous amount of data. TU Electric also commented that the commission must recognize that the real-time capacity data that will be provided will be estimates, and that the estimates made on a real-time basis will be different from the real time capacity data for the system that are calculated after the fact. The commission should modify the rule to delete the requirement of the provision of the supporting data on a real-time basis. The commission agrees that the information requirements in subsection (o) were somewhat broad and has revised them to track the information requirements that the FERC has proposed for the electronic information networks that it is considering. The commission considers that the electronic information network will be an important means of assuring that all wholesale market participants have equal access to transmission services. Without the creation of an electronic information network with the capability of providing non-utilities and transmission dependent utilities extensive information concerning the transmission system, transmission owning utilities would have a substantial advantage over non-utilities in this market. Brazos commented that customers that have paid for the transmission system should receive priority over other users of the system. The users that are non- ERCOT members should be required to comply with the ERCOT guides or they should not receive the same priority on the use of the system. Since capacity on the Brazos system was obtained with RUS funds, for the benefits of its member RE Act beneficiaries, such members should have a higher priority than other transmission customers who are not RE Act beneficiaries. The issue of priority of service for RE Act beneficiaries is addressed previously. In the preamble, the commission posed the following question: Is there another set of arbitration rules that would be more appropriate for resolving disputes? The working group on operational issues proposed a detailed provision on alternative dispute resolution that would replace the ADR provisions of the proposed rule. APSI and Power Marketers commented that alternative dispute resolution procedures should not be mandatory, because they can be a means for parties with greater resources to erect barriers to the expeditious resolution of disputes, particularly for new market entrants. The East Texas G&Ts also objected to mandatory ADR, for similar reasons. The Cooperatives were also concerned that ADR would undermine the commission's ability to regulate transmission service. APSI also urged the commission to permit the parties to a dispute to agree on the rules of procedure to govern any arbitration. Brownsville expressed several concerns about the alternative dispute resolution provisions of the rule. It suggested that mediation would be an appropriate ADR mechanism, and that if arbitration is used, the arbitrator's decision should be final, with limited exceptions. Brownsville was concerned about having to bear the costs of an arbitration proceeding and then a complaint case at the commission for the same dispute. Brownsville was also concerned that arbitration awards might deviate from the policies of the commission. Cap Rock commented that an alternative dispute resolution process is desirable, but that the right to appeal to the commission is essential. Mr. Will C. Jones commented that the commission should include legal counsel in the dispute resolution process, that structured mediation be required, that the parties to an arbitration be permitted to introduce in evidence in a commission complaint proceeding the results of the arbitration of the same dispute, and that the time for the issuance of an award by an arbitrator run from the date that parties submit legal memoranda or other documents that are permitted to be submitted to the arbitrator after the arbitration proceedings. TNP commented that the ADR provisions should be binding on the participants, and that arbitrators should be required to render an award within 60, rather than 90, days. The commission has adopted the arbitration procedure proposed by the working group, with several modifications. First, the procedure has been modified to make it clear that the parties may use either arbitration or mediation, but that if they use mediation, they must employ someone who has training or experience in mediation. Mr. Jones' recommendations concerning the admissibility of arbitration awards and computing the time for rendering an award were also incorporated in the rule. In addition, the time for rendering an award was changed to 30 calendar days. This appears to be a more practical requirement than the ten working days suggested by the working group. Senator Armbrister, Austin, Denton, Garland and Weatherford, the CPSB, and TPPA commented that the commission does not have the authority to review wholesale power contracts that a municipally-owned utility enters. Austin, Denton, Weatherford, and the CPSB suggested that the provision for review of contracts be amended to exclude contracts entered into by a municipally-owned utility. TNP commented that this provision should be revised to require commission review of contracts with a duration of two years or more, rather than one year or more, as proposed in the rule. TNP argues that such a modification would eliminate an inconsistency with the resource planning provisions of PURA. The LCRA commented that the requirement for the approval of power sales contracts is inconsistent with the development of a competitive market and would extend the commission's authority to matters over which it has no authority by statute, in particular the terms of the LCRA's sales to its customers. The East Texas G&Ts urged that the provision for review of power sales contracts be expanded to include commission review of transmission, interchange, and interconnection agreements and to require review of power sales agreements, whatever the term of an agreement. The working group on operational issues also recommended that the commission review interconnection agreements. LP&L commented that the provision concerning contract approval should be modified to exclude sales that are subject to the jurisdiction of the FERC. Brazos recommended that this provision be modified to exclude contracts that are subject to review by a federal agency that has jurisdiction to approve such contracts. Apparently, this modification is intended to preclude commission review of contracts that are subject to review by the Rural Utilities Service. The commission agrees with the recommendation that interconnection agreements be filed for commission review and approval, when one of the parties to the agreement requests such a review. The commission concludes that it has the power to require the filing of all existing and future interconnection agreements and agreements governing the purchase or sale of generation, transmission, or ancillary services at wholesale, pursuant to its authority to regulate transmission service. To facilitate the proper imputation of transmission revenues derived from existing bundled wholesale power contracts, the commission is also requiring that utilities file with the commission a statement of the unbundled generation and transmission rates which apply to each of their existing bundled wholesale power contracts. The commission is deferring the question of whether power sales contracts should be filed for its review and approval. Contracts that result from solicitations in the integrated resource planning process will be filed for commission review, and the commission will have the opportunity for considering whether other contracts should also be filed for its review, as a part of its deliberations in that project. Quality of Service 16 TAC 23.66 The amendment is adopted under the Public Utility Regulatory Act, 1995, sec.sec.1.101, 2.056, 2.057, and 2.216, Texas Civil Statutes, Article 1446c-0, sec.sec.1.101, 2.0572.216. Section 1.101 provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, sec.2.056 authorizes it to require utilities to provide transmission service, sec.2.057 directs it to adopt rules relating to transmission service, and sec.2.216 prohibits public utilities from engaging in anti-competitive conduct. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 12, 1996. TRD-9601999 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: March 4, 1996 Proposal publication date: November 17, 1995 For further information, please call: (512) 458-0100 The repeal is adopted under the Public Utility Regulatory Act, 1995, sec.sec.1.101, 2.056, 2.057, and 2.216, Texas Civil Statutes, Article 1446c-0, sec.sec.1.101, 2.0572.216. Section 1.101 provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, sec.2.056 authorizes it to require utilities to provide transmission service, sec.2.057 directs it to adopt rules relating to transmission service, and sec.2.216 prohibits public utilities from engaging in anti-competitive conduct. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 12, 1996. TRD-9602007 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: March 4, 1996 Proposal publication date: November 17, 1995 For further information, please call: (512) 458-0100 278>16 TAC 23.66 The new section is adopted under the Public Utility Regulatory Act, 1995, sec.sec.1.101, 2.056, 2.057, and 2.216, Texas Civil Statutes, Article 1446c-0, sec.sec.1.101, 2.0572.216. Section 1.101 provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction, sec.2.056 authorizes it to require utilities to provide transmission service, sec.2.057 directs it to adopt rules relating to transmission service, and sec.2.216 prohibits public utilities from engaging in anti-competitive conduct. sec.23.67. Open-access Comparable Transmission Service. (a) Purpose; application. The purpose of this section is to increase competition in the sale of electric energy at wholesale within the Texas intrastate utility network, to preserve the reliability of electric service, and to enhance economic efficiency in the production and consumption of electricity. Unless otherwise explicitly provided, this section applies to utilities in ERCOT. Non-ERCOT transmission owning utilities shall be deemed to be in compliance with the requirements of PURA sec.2.057 at such time as they receive approval from the Federal Energy Regulatory Commission of a tariff for open- access, comparable wholesale transmission service. Non-ERCOT utilities shall file such approved tariffs, and any approved modifications thereto, with the commission within thirty days of the approval of these tariffs or tariff amendments by the Federal Energy Regulatory Commission. (b) Definitions. As used in this section, the following terms have the following meanings: (1) Ancillary Services are those services necessary to support the transmission of energy from resources to loads while maintaining reliable operation of transmission providers' transmission systems in accordance with good utility practice. (2) ERCOT is the Electric Reliability Council of Texas and, in a geographic sense, refers to the area served by electric utilities that are not synchronously interconnected with electric utilities outside of the State of Texas. (3) Existing transmission contract means any contract for transmission or wheeling services that takes effect prior to the effective date of this rule. (4) Good Utility Practice means the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods and acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at the lowest reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method, or act, to the exclusion of all others, but rather to be practices, methods, or acts that are generally accepted in ERCOT and consistently adhered to by the transmission providers. Good Utility Practice shall not be used as a basis to unreasonably withhold access to transmission service. (5) An interconnection agreement is an agreement that sets forth requirements for physical connection between an eligible transmission customer and transmission providers. Transmission providers must have such an agreement with all transmission providers to whom they are physically interconnected. (6) Planned service is the use by a transmission customer of the transmission provider's transmission system for the delivery of power from planned resources to the customer's loads. The designation of resources as planned resources is governed by sec.23.70 of this title (relating to terms and conditions of comparable open-access transmission service). (7) Transmission losses are energy losses resulting from the transmission of power over the interconnected transmission network. Generators providing power to the network must generate sufficient energy to offset such losses on an instantaneous basis, and this rule prescribes the compensation for persons that generate the energy to offset such losses. (8) Transmission service is a service that allows a utility, qualifying facility, power marketer, or exempt wholesale generator to use the transmission and distribution facilities of other utilities to efficiently and economically utilize generation resources to reliably serve its loads and to deliver power to another utility, a qualifying facility, a power marketer, or an exempt wholesale generator. Transmission service provided pursuant to this section may include the use of the transmission systems of all of the utilities in ERCOT that own transmission facilities, including transmission to, from, and over the direct current interconnections between ERCOT and the Southwest Power Pool. (9) Unplanned service is the use by a transmission customer of the transmission provider's transmission system for the delivery of power from resources that the customer has not designated as planned resources to the customer's loads. (10) Utility is defined in accordance with the Act, sec.2.0011, except that it includes municipal corporations and river authorities that are not otherwise subject to the commission's ratesetting authority. (c) Obligation to provide transmission service. Each electric utility in ERCOT that owns transmission facilities shall provide wholesale transmission service to other electric utilities, power marketers, exempt wholesale generators, and qualifying facilities, in accordance with the provisions of this section. Each electric utility that owns transmission facilities shall file a tariff for such transmission service and shall take transmission service for all of its uses of its own transmission facilities in accordance with the terms of its tariff for transmission service. (1) Each utility that owns transmission facilities shall provide transmission service to other utilities, power marketers, exempt wholesale generators, and qualifying facilities on the same terms and conditions that it provides transmission service to itself. Where a utility has contracted for another person with which it is not affiliated to operate its transmission facilities, the person assigned to operate the facilities shall carry out the operating responsibilities of the utility under this section. (2) The obligation to provide comparable wholesale transmission service applies to a utility, even if the utility's interconnection with the customer is through distribution, rather than transmission facilities. In such cases, utilities that own facilities for the delivery of electricity to an electric utility purchasing electricity at wholesale using facilities rated at less than 60 kilovolts shall provide to other utilities, power marketers, exempt wholesale generators and qualifying facilities access to the delivery points of the purchasing utility on the same pricing, terms and conditions used by the transmission service provider in serving similar primary metered distribution level customers. If applicable, electric utilities shall file tariffs for such service for commission review and approval within 60 days of the adoption of this rule. (3) The obligation to provide transmission service includes the obligation to provide var support. (d) Obligation to provide ancillary services. Each electric utility in ERCOT that owns 100 megawatts or more of generation facilities shall provide ancillary services that are related to the provision of transmission service on a non- discriminatory and comparable basis. A utility that owns less than 100 megawatts of generation may file a tariff to provide ancillary services. A utility may request limitations on its obligation to provide such services, based on the size of the utility and the cost of acquiring the equipment necessary to provide a service, based on its use of tax-exempt financing instruments, or for other good cause. The utility has the burden of establishing that any such limitation is reasonable and shall include the limitation in its tariffs. Any generator may compete to provide ancillary services to transmission customers. Each electric utility that provides ancillary services shall file a tariff for such services and shall take such services for its own wholesale and retail operations, in accordance with the terms of its tariff for ancillary services. Ancillary services shall be discretely priced and separately provided on a non- discriminatory basis to all wholesale market participants. At a minimum, the following services shall be unbundled: (1) Responsive reserve consists of the daily operating reserves that are intended to help restore the frequency of the interconnected transmission system within the first few minutes of an event that causes a significant deviation from the standard frequency. Responsive reserves may be provided by unloaded generation facilities that are on line, interruptible load controlled by high set under-frequency relays, or from DC tie response that stops frequency decay. (2) Spinning reserve consists of the net generation capability on line that is not loaded, but could be loaded, and capability of a DC tie that can be utilized in a specified time. (3) Static scheduling is a service that establishes specific hourly schedules for the transmission of power, by coordinating the event among the affected control areas. (4) Dynamic scheduling is the provision of the remote load regulation for a load. (5) Load following service provides hour-to-hour changes in the output of generating unit to match changes in the load being served. (6) Load regulation service provides intra-hour changes in the output of generating units to match changes in the load being served. (7) Generation-schedule imbalance service compensates for energy mismatches between the scheduled and actual transmission of power between the seller of power and a provider of transmission service in the generation host's control area. (8) Load-schedule imbalance service compensates for energy mismatches between the scheduled and actual transmission of power between the seller of power and a provider of transmission service in the load host's control area. (9) Schedule backup service consists of scheduling services, capacity and energy required to replace a capacity resource on a planned or scheduled basis. (10) Automatic backup service consists of scheduling services, capacity and energy required to replace a capacity resource on an unscheduled basis. (11) Emergency energy service consists of scheduling services, capacity and energy required to replace a capacity resource in an emergency, where a customer makes prior arrangements for such services. (e) Additional ancillary services. If an ancillary service not listed in this section is required by a customer, the utility may supply the service, if feasible. The definition and price may be determined by negotiations between the service provider and the customer. The service may be provided immediately upon the execution of a contract between the parties, but the service will be subject to approval by the commission. A utility that provides an additional ancillary service not specified in its tariff shall file a modification to its tariff within thirty days that makes this service available to all wholesale market participants on a non-discriminatory basis. Any offer of a new ancillary service shall be posted on the ERCOT electronic transmission information network. (f) Charges for ancillary services. A utility may offer ancillary services at rates that are negotiated with the customer, subject to a price floor and ceiling and subject to the non-discrimination requirements in this section. For services that are related to the production of electricity, the price ceiling shall be based on the utility's average embedded cost of generating capacity, and the price floor will be calculated using the methodology prescribed in the Act, sec.2.001(c). Revenues from ancillary services shall be credited to native- load customers. Any ancillary service discounts must be made available to all wholesale market participants on a non-discriminatory basis; in particular, if a utility offers an ancillary service associated with a transaction, it must make that same offer of service available to all parties interested in that transaction on a non-discriminatory basis. A utility may not require the purchase of generation services from it as a condition for the provision of ancillary transmission services or for discounts on such services. A utility may not impose more than one capacity charge for capacity-related ancillary services associated with a single transaction, if the services may be provided by the same generating capacity. (g) Facilities charges for transmission service. Each electric utility in ERCOT shall pay a facilities charge for transmission services. Transmission customers shall specify the planned resources to serve their load and reserve requirements, in accordance with sec.23.70 of this title, and shall incur both facilities charges and loss compensation charges for planned service. Customers may use unplanned service and shall not incur any additional facilities charges for such service but shall incur loss compensation charges. (1) The facilities charge shall consist of an access fee and an impact fee. The costs included in the access fee will be seven-tenths of the annual cost of transmission service for transmission-owning utilities in ERCOT. Each utility will pay a share of these costs, based on its share of the total load in ERCOT. The costs included in the impact fee will be three-tenths of each transmission- owning utility's annual cost of transmission service. Each utility will pay an impact fee to the utilities that own transmission facilities, based on the impact of transmitting its resources to its loads, calculated using the vector- absolute megawatt-mile method and assessing impacts using each utility's transmission costs. Payments shall be made by means of monthly facilities charges, which shall be determined in transmission ratemaking proceedings conducted periodically, at such intervals as the commission determines is appropriate. (2) The annual cost of transmission service for each utility shall be based on the annual expenses in FERC expense accounts 560-573 (or accounts with similar contents) plus the depreciation, federal income tax, and other associated taxes, and the commission-allowed rate of return based on FERC plant accounts 350-359 (or accounts with similar contents), less accumulated depreciation and accumulated deferred Federal income taxes. To the extent that the FERC system of accounts does not establish a clear distinction between transmission and distribution facilities or between generation and transmission facilities, the following facilities are deemed to be transmission facilities: (A) power lines, substations, and associated facilities, operated at 60 kilovolts or above, including radial lines operated at or above 60 kilovolts; (B) substation facilities on the high side of the transformer, in a substation where power is transformed from a voltage higher than 60 kilovolts to a voltage lower than 60 kilovolts or is transformed from a voltage lower than 60 kilovolts to a voltage higher than 60 kilovolts; and (C) the cost of the DC interconnections with the Southwest Power Pool that the commission determines is properly allocable to ERCOT customers, to the extent that the rules or tariffs governing them permit non-discriminatory access by all wholesale market participants and to the extent that the DC interconnections are actually used to import power into ERCOT. (3) In determining the annual transmission cost under paragraph (1) of this subsection, the following expenses shall not be included: (A) expenses of a utility that are otherwise included in its annual transmission cost for service under any existing transmission contract (including the value of goods and services exchanged for transmission service); (B) transmission expenses paid to another utility in accordance with this section; and (C) expenses for transmission service outside of ERCOT. (4) For utilities whose rates are not otherwise subject to the commission's ratesetting authority, the rate of return shall be the utility's actual cost of capital plus a margin to provide a reasonable coverage ratio. In a transmission ratemaking proceeding, the commission may approve a current rate of return for a utility or a reasonable coverage ratio. (5) Each time ERCOT transmission rates are established by the commission, the load-ratio share for a utility shall be determined by dividing the utility's system demand at the time of the most recent ERCOT system coincident peak demand by the coincident peak demand of the ERCOT system. As used in this section, utility system demand is the average of the demand of the utility's retail and wholesale customers for hours that are coincident with the most recent ERCOT system coincident peak demand. In determining utility demand and ERCOT system coincident peak demand, the actual demand on utility systems shall be considered, and the ERCOT system coincident peak demand shall be an average of the highest aggregate demand in each of the months of June, July, August, and September of the relevant period. Actual utility demand shall be calculated based on the utility's net hourly generation, plus wholesale purchases, minus wholesale sales. (6) The megawatt-mile impact of transmitting resources to load shall be calculated using the loads and resources at the ERCOT peak and shall be calculated by the independent system operator or by an independent consultant. Megawatt-mile rates and impacts shall be calculated in the manner prescribed in sec.23.70 of this title. (7) The commission may adopt rate-filing requirements that provide additional details concerning the costs that may be included in the annual transmission cost and how such costs should be reported in a proceeding to establish transmission rates. (8) In adopting facilities charges under this section, the commission shall apply a transition mechanism for a period of three years to reduce the impact of the charges under this section on a utility or its customers. In applying this transition mechanism, the commission shall calculate the "unadjusted rate impact" for each utility, which shall be the difference between the facilities charge and the transmission revenues a utility would receive under this section, both calculated at the time rates are first determined under this section and without regard to any adjustment under this paragraph. An adjustment shall be made to the facilities charge, such that the difference between the facilities charge incurred by a utility and its annual transmission cost: (A) for the first twelve months that the facilities charge applies, does not exceed ten percent of the unadjusted rate impact; (B) for the next twelve months that the facilities charge applies, does not exceed 20% of the unadjusted rate impact; and (C) for the next twelve months that the facilities charge applies, does not exceed 30% of the unadjusted rate impact. (9) The commission may prescribe facilities charges that exceed the limitations in paragraph (8) of this subsection to account for any transmission revenues that a utility receives under an existing transmission contract. (h) Compensation for losses. In addition to the facilities charge prescribed in subsection (g) of this section, a utility, exempt wholesale generator, qualifying facility, or power marketer that uses transmission service to transmit power to its loads shall compensate affected control-area utilities for energy losses resulting from such transmission service. Losses shall be calculated by the independent system operator established under subsection (p) of this section under a method approved by the commission. (1) A matrix of losses for the transmission of power shall be developed and, upon approval by the commission, shall govern the calculation of losses for transmission service. Until the commission approves a loss matrix, ERCOT loss matrices may be used for determining the losses. Utilities relying on existing ERCOT loss matrices as an interim measure shall file copies of the matrices with the commission filing clerk. (2) Matters that require commission approval under this subsection shall be submitted for approval with the filing of a transmission cost of service, in accordance with subsection (m) of this section. (i) Inadvertent energy. The treatment of and compensation for inadvertent energy flows shall be in accordance with the relevant ERCOT guides. (j) Transmission revenue. The access-fee component of revenues from the transmission facilities charges prescribed in subsection (g) of this section shall be divided among the utilities that own transmission facilities on the basis of their transmission cost. (1) Each utility's share of the revenue shall be calculated by multiplying seven-tenths of the total transmission revenue by the ratio of the utility's annual transmission cost to the annual transmission cost for all of the utilities in ERCOT. (2) Transmission revenues from transmission of electric energy out of ERCOT over the DC ties shall, to the extent that the costs of the DC ties are included in the transmission costs prescribed in subsection (g) of this section, be credited to all utilities that have incurred a transmission facilities charge under this section for the period in which the service takes place. The revenues shall be allocated among these utilities in the manner prescribed above. (k) Resale of transmission rights. ERCOT utilities shall permit owners of transmission and ancillary transmission service rights to resell those rights to other wholesale market participants. (l) Redispatch. ERCOT utilities shall provide redispatch services in accordance with sec.23.70 of this title. (m) Procedures for establishing rates and terms and conditions. Not later than 60 days after the effective date of this rule, all utilities in ERCOT that are required to provide transmission service or ancillary services under this section shall file proposed tariffs for such services. The proposed tariffs shall comply with the provisions of this rule and sec.23.70 of this title. The commission may consolidate these proceedings to determine transmission rates and revenue allocations under subsections (g) and (j) of this section or to consider common issues of fact, law, or policy. Utilities that operate a control area shall also file information that will permit the commission to determine loss factors for transmission service. The filings under this subsection shall include supporting information showing the basis for the calculation of the floor and ceiling prices for ancillary services and proposed factors or methods for determining transmission losses. (1) Utilities shall file modifications to their tariffs for transmission service, if the commission makes substantial revisions in the rates or terms or conditions for transmission service. The commission may revise the transmission rates and revenue allocations under subsections (g) and (j) of this section, without reviewing the transmission cost of service, for events that affect only the allocation of costs and revenues among utilities, such as the conversion of a customer from bundled wholesale service to transmission service under this section. Transmission tariffs, transmission rates, and load ratio share allocations may be modified only upon issuance of an order by the commission. (2) A utility may request other modifications to its tariffs for transmission or ancillary services only after notifying affected persons of the proposed changes, soliciting their views, and attempting to resolve any disagreement over the changes through the informal dispute resolution process established under subsection (s) of this section. (n) Construction of new facilities. If additional transmission facilities or interconnections between utilities are needed to provide transmission service pursuant to a request for such service, the utility or utilities where the constraint exists shall acquire the facilities necessary to permit the transmission service to be provided, unless the utility can use redispatch or other more economical means of making transmission capacity available for the requested transmission service. If additional facilities are needed to provide ancillary services to a customer requesting such service, the utility shall acquire the facilities necessary to permit the ancillary service to be provided. (1) If, in order to provide ancillary services, a utility must construct new facilities, the ancillary services customer may be required to enter a long-term contract for ancillary service or make a contribution in aid of construction to cover all or a part of the cost of acquiring the new facilities, to the extent that the acquisition of the additional facilities is for the customer's benefit. (2) A utility, qualifying facility, exempt wholesale generator, or power marketer, that is requesting transmission service may be required to make a contribution in aid of construction to cover all or a part of the cost of acquiring the facilities, if: (A) the acquisition of the additional facilities would impair the tax- exempt status of obligations issued by the control-area utility, or (B) if the acquisition of the additional facilities is primarily for the benefit of the utility, qualifying facility, exempt wholesale generator, or power marketer requesting the transmission service. (o) Functional unbundling and cost separation. Within 60 days of the adoption of these amendments, each utility in ERCOT shall make a filing with the commission to separate its costs and rates, based on the costs associated with the utility's generation, transmission, and distribution operations. The cost and rate separation requirements prescribed in this section shall not require the statement of unbundled generation, transmission, and distribution rates on all customer bills. (1) Each utility subject to this rule that owns 100 megawatts or more of generating capacity shall functionally separate the operation of its transmission facilities and the operation of its wholesale power purchase and sale activities. Any information exchanges between these units and other utility personnel shall be governed by the information exchange standards contained in sec.23.70 of this title. (2) Utility personnel shall be physically separated to the maximum extent practicable and necessary to accomplish the purposes of this section. Each utility subject to this rule that owns 100 megawatts or more of generating capacity shall make a filing to implement the requirements of this subsection, including written procedures governing the exchange of information and physical separation of personnel among its functionally separated organizational units. This filing shall be submitted in accordance with the timeframe specified in sec.23.70 of this title. (3) Utilities may request limitations on the requirement to separate their personnel, based on a showing that complete physical separation would impair the reliability of electric service. The utility bears the burden of demonstrating that the separation of personnel requirements contained in this rule would impair system reliability. (p) ERCOT independent system operator and electronic transmission information network. As of the effective date of this rule, transmission owning utilities shall make available to potential transmission customers information in their control concerning the capability of transmission facilities to provide transmission service. Within 120 days after the adoption of this rule, the utilities in ERCOT, in collaboration with other wholesale market participants, shall make a joint filing with the commission to establish an ERCOT independent system operator and an integrated ERCOT electronic transmission information network. (1) The ERCOT independent system operator shall be formed and administered through procedures that allow equal participation by all wholesale market participants. The independent system operator's responsibilities shall include, but not be limited to the following: (A) the daily administration of the ERCOT transmission tariffs, including alternative dispute resolution procedures and implementation of the loss compensation mechanism approved by the commission; (B) ensuring that control areas perform the instantaneous balancing of ERCOT generation and load; (C) coordinating the scheduling of ERCOT generation and transmission transactions; (D) directing the curtailment and redispatch of ERCOT generation and transmission transactions on a non-discriminatory basis to preserve system reliability in emergencies, including determining how any curtailment or redispatch would be accomplished, the cost of the redispatch, and the assignment of redispatch cost responsibility, subject to the relevant provisions of this section and sec.23.70 of this title; (E) analyzing, coordinating, and directing the redispatch of ERCOT generation transactions on a non-discriminatory basis for economic purposes to free up transmission capacity, including determining how any curtailment or redispatch would be accomplished, the cost of the redispatch, and the assignment of redispatch cost responsibility, subject to the relevant provisions of this section and sec.23.70 of this title; (F) the administration of the ERCOT electronic transmission information network; (G) the administration of transaction accounting among market participants; and (H) serving as a single point of contact for the initiation of transmission transactions. (2) The ERCOT independent system operator shall not purchase or sell bulk electricity. The ERCOT independent system operator shall not dispatch generation facilities, but shall have full authority to direct the redispatch of generation facilities under the circumstances specified in this section. Parties shall not be required to disclose to the ERCOT independent system operator the prices for which they have agreed to buy or sell electricity. The ERCOT independent system operator shall have a fiduciary responsibility to maintain the confidentiality of the information with which it is entrusted. Any disputes regarding the administration, procedures, and conduct of the ERCOT independent system operator may be submitted to the commission for resolution after completion of the alternative dispute resolution procedures described in this section (3) To the extent that this section or sec.23.70 of this title assign a responsibility to another person or entity in conjunction with or in lieu of the ERCOT independent system operator, the independent system operator shall exclusively assume those specified responsibilities at such time as the formation of the independent system operator is approved by the commission. (4) The ERCOT electronic transmission information network shall permit utilities, qualifying facilities, power marketers, and exempt wholesale generators to have contemporaneous, real-time access to information concerning the availability of transmission service and the availability and cost of ancillary services on a non-discriminatory basis. Transmission owning utilities in ERCOT shall rely upon this information network to obtain contemporaneous access to information about the ERCOT transmission system, and shall not have access to any transmission information not available on the network. (5) The ERCOT electronic transmission information network will, at a minimum, provide all information required under any FERC regulations governing electronic transmission information networks which apply to utilities under FERC jurisdiction. Information that a utility is required to make available to market participants in accordance with subsection (o) of this section shall be posted on the information network. The information on the network shall include, but not be limited to: (A) total and available transfer capability for transmission of energy between ERCOT control areas and to, from, and over the DC interconnections with the Southwest Power Pool; (B) ERCOT transmission prices; (C) ancillary service prices, including any pricing discounts for such services; (D) requests and offers for transmission service and ancillary transmission services on the primary and secondary transmission markets; (E) transmission scheduling data; (F) transmission service curtailment and interruption data; and (G) information necessary to verify redispatch cost calculations. (6) The methodology used and data required to independently reproduce information related to the total and available transfer capability for the transmission of energy between ERCOT control areas and to, from, and over the DC ties shall be provided upon request to any transmission customer. (7) The electronic information system shall also be capable of accommodating generation bids and offers. (8) The use of the electronic information network is required for utilities for offering ancillary services, requesting transmission service, and responding to requests for transmission service. Market participants other than utilities may post offers to sell ancillary services on the information network. (q) Scheduling. Control area utilities shall schedule a transmission customer's resources and accommodate changes to schedules requested by transmission customers. Control area utilities shall implement requested schedules and changes to schedules for third party transmission customers upon the same terms and conditions and within the same time frames applied by control area utilities in scheduling resources to serve their native load customers. (r) Curtailment of service. In an emergency situation, control-area utilities may interrupt transmission service, if necessary, to preserve the stability of the transmission network and service to customers. Any interruption shall be based on operational factors and shall not accord a higher priority to the utility's retail and wholesale customers than to its customers taking transmission service. Priority shall be accorded to planned transmission events over unplanned events. Service to all customers shall be restored as quickly as possible. The control-area utility shall provide notice of any such interruption to affected wholesale and transmission customers and remote suppliers of generation. The control-area utility shall also report the interruption to the commission, together with a description of the events leading to the interruption, the services interrupted, the duration of the interruption, and the steps taken to restore service. (s) Alternative dispute resolution. In the event that a dispute arises over the provision of transmission service or ancillary services or the pricing or other terms or conditions of such services, the parties to the dispute shall engage in mediation or other alternative means for resolving the dispute, prior to filing a complaint with the commission. (1) Such disputes shall be referred for resolution to a designated senior representative of each of the parties to the dispute. Such representatives shall make a good faith effort to resolve the dispute on an informal basis as promptly as practicable. In the event parties are unable to resolve the dispute within a mutually agreeable time period, they shall either refer the matter to arbitration in accordance with the procedures in this subsection or shall engage in mediation with the assistance of a neutral third party of their choice who has training or experience in mediation. (A) The secretary of the commission shall administer the arbitration. The secretary shall maintain a commission-approved list of qualified persons available to serve on arbitration panels who are knowledgeable in electric utility matters, including electricity transmission and bulk power issues, to be selected from a list of persons proposed by owners and users of the transmission system wishing to participate in the development of the list. The commission shall select at least one name submitted by each stakeholder for the list. The secretary shall also maintain a separate list of attorneys experienced in arbitration who may be available to chair the arbitration panels. The commission shall approve the fee schedule to be charged by all panel members. (B) A party shall initiate arbitration by filing a letter with the secretary of the commission requesting that arbitration be scheduled. A copy of the letter shall be served upon the other party to the dispute at the same time the letter is filed with the secretary. The secretary shall make all necessary arrangements for arbitration to commence within ten working days of receipt of the letter. (C) Only parties to the dispute may participate in the arbitration. (2) Any arbitration initiated under this subsection shall be conducted before a three-member arbitration panel. Each party shall choose one arbitrator from the approved list of panel members. In the even there are more than two parties to the dispute, the parties shall jointly select the two arbitrators. The two arbitrators chosen by the parties shall choose the Chairman of the arbitration panel. If the two arbitrators chosen by the parties are unable to agree on the selection of a Chairman, they will be dismissed and the parties shall select two different arbitrators from the approved list. The arbitrators are not required to choose the Chairman from the names of persons on the commission's list so long as the person chosen is an attorney who is qualified as an arbitrator. Panel members chosen shall not have any current or past substantial business or financial relationships with any party to the arbitration (other than previous arbitration experience). (3) The arbitrators shall provide each of the parties an opportunity to be heard and, except as otherwise provided herein, shall generally conduct the arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and any applicable commission or Regional Transmission Group rules. The panel may request that the parties provide additional technical information relevant to the dispute. The Arbitration Panel shall render a decision within 30 calendar days from the closing of the evidentiary record of the Arbitration and shall notify the parties in writing of such decision and the reasons therefor. The decision shall not be considered precedent in any future proceeding. (4) The arbitrators shall be authorized only to interpret and apply the provisions of the commission's rules relating to transmission and ancillary services, the utility's transmission tariff, and any service agreement entered into under that tariff and shall have no power to modify or change any of the above in any manner. The arbitrators may agree with the positions of one or more of the parties, or may recommend a compromise position. The final decision of the Arbitration Panel shall be filed in Central Records and shall be considered by the Office of Policy Development in preparing the Preliminary Order, should either party ask that the complaint be docketed and referred to the State Office of Administrative Hearings. The decision may be admitted in evidence in any such complaint proceeding. (5) At such time as an ERCOT independent system operator is established and approved by the commission, the independent system operator shall be responsible for the administration of the dispute resolution procedures described in this subsection. (6) Each party shall be responsible for the following costs, if applicable: (A) its own costs incurred during the arbitration process; (B) its pro rata share of the costs of the three arbitrators, pooled and shared evenly among the parties. (7) The transaction which is the subject of the dispute shall be allowed to go forward pending the resolution of the dispute to the extent verifiable system reliability is not affected. (8) Nothing in this section shall restrict the rights of any party to file a complaint with the commission under relevant provisions of the Public Utility Regulatory Act of 1995 or with the Federal Energy Regulatory Commission under the Federal Power Act or the right of a utility to seek changes in the rates or terms for transmission or ancillary services, following the completion of the informal dispute resolution procedures in this subsection. In addition, use or application of the arbitration provisions in this subsection does not affect the jurisdiction of the commission over any matters arising under this rule. (t) Filing of contracts. Within 30 days of the effective date of this rule, utilities shall file with the commission all existing agreements, including interconnection agreements, governing the sale or purchase of generation, transmission, or ancillary services at wholesale. Utilities shall file all future interconnection agreements and agreements involving the sale or purchase of utility generation, transmission, or ancillary services at wholesale within 30 days of their execution. Within 60 days of the adoption of this rule, utilities shall file with the commission a statement of the unbundled generation and transmission rates which apply to each of their existing bundled wholesale power contracts. Upon a showing of good cause, appropriate portions of the filings required under this subsection may be subject to provisions of confidentiality to protect competitively sensitive information. Interconnection agreements are subject to commission review and approval upon request by any party to the agreement. (u) Summary of required filings. This rule prescribes the filings that are set out below. The applicability and deadline for each filing are detailed in the relevant subsections of the rule: (1) Tariff for wholesale transmission service, including ancillary transmission services, which complies with this rule and sec.23.70 of this title. (2) Tariff for distribution level wholesale transmission service. (3) Method for calculating the floor and ceiling prices for ancillary services. (4) Currently used ERCOT loss compensation matrices. (5) Proposed factors or methods for determining transmission losses. (6) Information that permits the commission to determine loss compensation factors. (7) Filing to separate costs and rates. (8) Functional unbundling filing, including written procedures governing the exchange of information and physical separation of personnel among functionally unbundled organizational units. (9) Filing to establish an ERCOT independent system operator. (10) Filing to establish an ERCOT electronic transmission information network. (11) Filing of all existing agreements, including interconnection agreements, governing the sale or purchase of generation, transmission, or ancillary services at wholesale. (12) Filing to unbundle the generation and transmission rates contained in existing bundled wholesale contracts. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 12, 1996. TRD-9602000 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: March 4, 1996 Proposal publication date: November 17, 1995 For further information, please call: (512) 458-0100 Telephone 16 TAC sec.23.92 The Public Utility Commission of Texas adopts an amendment to sec.23.92, concerning expanded interconnection, with changes to the proposed text as published in the October 6, 1995, issue of the Texas Register (20 TexReg 8130). The amendment concerns the provision of expanded interconnection between an incumbent local exchange carrier and another local exchange carrier and are added pursuant to the provisions of the Public Utility Regulatory Act of 1995, sec.3.456. The amendment requires an incumbent local exchange carrier to provide expanded interconnection to another local exchange carrier only if the second local exchange carrier agrees to provide expanded interconnection, in a like manner, to the incumbent local exchange carrier. The amendment establishes deadlines for filing tariff changes required by the rule. The public benefit anticipated from enforcing this section is enhanced competition in the special access, private line and local transport markets which should increase incentives for efficiency, foster rapid deployment of advanced technologies that facilitate new and innovative services, and bring prices of the affected services closer to costs. It also provides additional service choices to customers who value redundancy and route diversity. Initial comments on the proposed rule published in the Texas Register on October 6, 1995 were filed by AT&T Communications of the Southwest, Inc. (AT&T) and Southwestern Bell Telephone Company (SWBT). There were no reply comments on the proposed rule. None of the parties who attended the December 5, 1995 public hearing on the proposed rule offered any oral comments. AT&T and SWBT concurred with the proposed amendment with one exception. Both AT&T and SWBT objected to the use of the term "dominant certificated telecommunications utility" on the grounds that such a term has not been defined in PURA 1995 and therefore use of the term could create confusion and ambiguity in the application of the rule. AT&T proposed revisions to the language in the section on applicability such that, first, the term "each dominant certified telecommunications utility (DCTU)" would be replaced with the term "each incumbent local exchange carrier (ILEC)" and, second, language would be added to require the application of the section to any LEC declared to be a dominant carrier. AT&T also suggested deleting all remaining references to DCTU in the proposed amendments in favor of retaining the language in the existing rule on expanded interconnection. The Commission declines to adopt AT&T and SWBT's recommendation regarding the term "DCTU" and notes that in Project Number 14372 where the Commission adopted changes to substantive rules, the use of the term "DCTU" was considered appropriate. However, the term "DCTU" was used in Project Number 14372 to refer to dominant carriers providing local exchange telephone service. In recognition of the fact that special access and private line services are not considered part of local exchange telephone service according to PURA 1995, the Commission finds that it is preferable to use the term "dominant carrier" instead of the term "DCTU" since the term "dominant carrier" is broader and would include DCTUs as well as any other utility declared to be dominant by the Commission. All remaining references to DCTU in the rule have accordingly been replaced with the term "dominant carrier". All comments, including any not specifically referenced herein, were fully considered by the Commission. The amendment is adopted under Texas Civil Statutes, Article 1446c-0, sec.1. 101, which provide the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction; sec.3.051, which authorizes the Commission to adopt rules, policies and procedures to protect the public interest and to provide equal opportunity to all telecommunications utilities in a competitive marketplace; and sec.3.456, which directs the commission to adopt rules for expanded interconnection. Cross Index to Statutes: Texas Civil Statutes, Article 1446c-0. sec.23.92. Expanded Interconnection. (a) Applicability. Unless the context clearly indicates otherwise, the provisions relating to expanded interconnection for special access and/or private line services in this section apply to each carrier that is dominant with respect to special access services and that has interstate tariffs in effect that provide for expanded interconnection for special access services. Similarly, unless the context clearly indicates otherwise, the provisions relating to expanded interconnection for switched transport services in this section apply to each carrier that is dominant with respect to switched transport services and that has interstate tariffs in effect that provide for expanded interconnection for switched transport services. A carrier that is dominant with respect to local exchange telephone service is, by definition, also dominant with respect to switched transport services. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Central Office-The location of the central switching unit of a dominant carrier where customer lines and trunks terminate and are interconnected with the rest of the network. (2) Interconnection-The point in a network where a customer's transmission facilities interface with the dominant carrier's network under the provisions of this section. (3) Interconnector-A customer that interfaces with the dominant carrier's network under the provisions of this section. (4) Special Access-A transmission path connecting customer designated premises to each other either directly or through a hub or hubs where bridging, multiplexing or network reconfiguration service functions are performed and includes all exchange access not requiring switching performed by the dominant carrier's end office switches. (5) Switched Transport-Transmission between a dominant carrier's central office (including tandem-switching offices) and an interexchange carrier's point of presence. (c) Expanded Interconnection for Special Access and Private Line Services. (1) Expanded interconnection for DS1 and DS3 Special Access Services, and Special Access Services for which interstate expanded interconnection has been granted. Each dominant carrier that is subject to this section shall offer expanded interconnection as specified in this subsection for the services listed in subparagraphs (A)-(C) of this paragraph. The dominant carrier shall offer expanded interconnection for these services at the same locations, in the same manner, and, except for price, under the same terms and conditions as it offers expanded interconnection for interstate special access services, unless ordered otherwise by the commission. This paragraph applies to the following intrastate special access services: (A)-(C) (No change.) (2) Expanded interconnection for all Special Access and Private Line Services. Each dominant carrier that is subject to this section shall offer expanded interconnection as specified in this subsection for the services listed in subparagraphs (A)-(B) of this paragraph. The dominant carrier shall offer expanded interconnection for these services at the same locations, in the same manner, and, except for price, under the same terms and conditions as it offers expanded interconnection for interstate special access services, unless ordered otherwise by the commission. This paragraph applies to the following intrastate services: (A) all private line services, as that term is defined in sec.23.3 of this title (relating to Definitions); and (B) (No change.) (3) Tariff Provisions. (A) Each dominant carrier that is subject to this section shall file tariff revisions to unbundle each service for which expanded interconnection shall be offered and to remove any resale or sharing restrictions for each such service. As used in this subparagraph, to unbundle means to make available, on an unrestricted basis, the individual rate elements necessary to provide a special access service or a private line service. (B) Each dominant carrier that is subject to this section shall file tariffs to establish connection charges for the use of equipment and facilities that are associated with offerings of expanded interconnection under this subsection. Unless ordered otherwise by the commission, the definitions of such connection charges and the regulations governing their application shall be the same as those contained in the carrier's interstate expanded interconnection tariffs. The dominant carrier shall not impose a separate charge or rate element that is not included in its interstate tariffs for interconnection for special access services. The dominant carrier shall not impose a separate charge or rate element for interconnection for private line services that is not included in its tariffs for interconnection for special access services. (4) Implementation. All dominant carriers subject to this section shall file tariff amendments in compliance with paragraph (3) of this subsection. (A) Initial filing to implement paragraph (1) of this subsection. The dominant carrier shall file initial tariff amendments to implement the provisions of paragraph (1) of this subsection not later than 30 days after February 22, 1994, or within 60 days of being declared a dominant carrier. (B) Initial filing to implement paragraph (2) of this subsection. The dominant carrier shall file initial tariff amendments to implement the provisions of paragraph (2) of this subsection not later than March 1, 1995 to be effective not later than May 1, 1995, unless suspended, or within 60 days of being declared a dominant carrier. (C) Initial filings in compliance with this subsection shall be filed pursuant to sec.23.26 of this title (relating to New and Experimental Services). Initial tariff amendments filed in compliance with this subsection shall be filed pursuant to sec.23.26; provided, however, the provisions of sec.23.26(c)(6) shall not apply with respect to rates proposed in compliance with paragraph (3)(A) or (B) of this subsection if the dominant carrier proposes rates that are the same as the rates in effect for the carrier's interstate provision of the same, equivalent or substitutable service. Tariff revisions filed pursuant to this subsection shall not be combined in a single application with any other tariff revision. (D) Additional filings. A dominant carrier shall make, within 15 days of the effective date of an interstate tariff providing for expanded interconnection, such additional tariff filings as are required to remain in compliance with this subsection. The proposed effective date of such additional tariff filings shall be not later than 60 days after the filing date, unless suspended. (5) (No change.) (d) Expanded Interconnection for Switched Transport Services. (1) Expanded Interconnection for all Switched Transport Services. Each dominant carrier that is subject to this section shall offer expanded interconnection as specified in this subsection for all switched transport services at the same locations, in the same manner, and except for price, under the same terms and conditions as it offers expanded interconnection for interstate switched transport services, unless ordered otherwise by the commission. (2) Tariff Provisions and Implementation. Each dominant carrier that is subject to this section shall file tariffs to establish connection charges for the use of equipment and facilities that are associated with offerings of expanded interconnection under this subsection. (A) (No change.) (B) Absent additional costs, the dominant carrier shall impose a single charge when the same facilities are used to provide expanded interconnection for both special access and switched transport services. If additional facilities are used, the dominant carrier may assess additional cost-based connection charge subelements for the use of such additional facilities. (C) The dominant carrier shall not impose a separate charge or rate element that is not included in its interstate tariffs for interconnection for switched transport services. (D) A dominant carrier shall apply nonrecurring reconfiguration charges in a neutral manner to customers of either the interconnector or dominant carrier unless justified by specific identifiable cost differences. In addition, any differences between the charges applicable when a customer shifts to an interconnector's service and those applicable when a customer reconfigures its service with the dominant carrier must be cost-based. (E) The dominant carrier shall file initial tariffs to implement the provisions of this subsection not later than February 1, 1995, with tariffs becoming effective not later than April 1, 1995, unless suspended, or within 60 days of being declared a dominant carrier. (F) Initial tariff filings in compliance with this subsection shall be filed pursuant to the provisions of sec.23.26; provided, however the provisions of sec.23.26(c)(6) shall not apply with respect to rates proposed in compliance with subparagraph (A)-(E) of this paragraph if the dominant carrier proposes rates that are the same as the rates in effect for the carrier's interstate provision of the same, equivalent or substitutable service. Tariff revisions filed pursuant to this subsection shall not be combined in a single application with any other tariff revision. (G) A dominant carrier shall make, within 15 days of the effective date of an interstate tariff providing for expanded interconnection, such additional tariff filings as are required to remain in compliance with this subsection. The proposed effective date for such additional tariff filings shall be not later than 60 days after the filing date, unless suspended. (e) Waivers. A dominant carrier may seek a waiver from the requirements of subsections (c) and (d) of this section at a location where the opportunity for the application of an FCC waiver does not exist. The request shall be granted if the presiding officer of the commission finds that the dominant carrier has demonstrated that it is not feasible to provide interconnection at a specific location due to lack of space. (f) Voluntary Agreements. A dominant carrier and one or more interconnectors may agree to alternative interconnection arrangements at a specific location that are different from those required by subsections (c) and/or (d) of this section, provided such arrangements are tariffed and made generally available for that location. Any such agreement shall not modify the dominant carrier's obligations under subsections (c) and (d) with respect to any other interconnector that does not elect to subscribe to the voluntary arrangement. (g) Bona Fide Requests. If a dominant carrier would be required to provide expanded interconnection for interstate special access or switched transport services at a particular location upon receipt of a bona fide request for such interstate interconnection, the dominant carrier shall provide interconnection for intrastate services as required by subsections (c) and (d) of this section upon receipt of a bona fide request for such intrastate interconnection at any location not covered by its interstate tariffs, subject only to the same conditions and exceptions that would be applicable to a bona fide request for interconnection for interstate services. (h) Utilization of Collocation Space. A dominant carrier shall permit an interconnector to use the same collocation space for both interstate and intrastate interconnection services. (i) Utilization of Facilities. A dominant carrier shall permit an interconnector to use the same facilities for both interstate and intrastate switched access traffic. (j) Reciprocity. (1) Reciprocal Expanded Interconnection. An incumbent local exchange carrier is required to provide expanded interconnection to another local exchange carrier pursuant to the requirements of subsections (c) and (d) of this section only if the second local exchange carrier agrees to provide expanded interconnection, in a like manner, to the incumbent local exchange carrier. (2) Implementation. An incumbent LEC that is subject to this section shall file initial tariff amendments to implement the provision of paragraph (1) of this subsection not later than June 1, 1996 to be effective not later than August 1, 1996, unless suspended. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601925 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: March 1, 1996 Proposal publication date: October 6, 1995 For further information, please call: (512) 458-0100 TITLE 22. EXAMINING BOARDS Part V. State Board of Dental Examiners Chapter 101. Dental Licensure 22 TAC sec.101.7 The State Board of Dental Examiners adopts an amendment to sec.101.7, concerning obtaining a dental license by credentials, without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8296). The amended section is being adopted to increase the number of dentists available to perform dental work. The amended section is being adopted to provide procedures whereby dentists practicing in other states, territories, and the District of Columbia may obtain a dental license based on credentials from those jurisdictions. The rule tracks the language of the Texas Revised Civil Statutes, Article 4545a with regard to requirements for licensure by credentials and is designed to determine whether a dentist is reputable by addition of paragraph (8) of the rule. Further, substantial equivalency of licensing requirements set out in section a (1) of the statute is determined by the applicant having passed a national examination (see paragraph (7) of the rule). No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Government Code, sec. sec.2001.001 et seq; Texas Civil Statutes, Article 4543a, sec.2, and Article 4551d(a), which provides the State Board of Dental Examiners with the authority to promulgate rules consistent with the Dental Practice Act, and Article 4545(a), sec.1, which provide for licensing of dentists by credentials. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601896 Douglas A. Beran, Ph.D. Executive Director State Board of Dental Examiners Effective date: March 1, 1996 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-6400 Chapter 102. Fees 22 TAC sec.102.1 The State Board of Dental Examiners adopts an amendment to sec.102.1, concerning fees, without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8297). The amended section is being adopted to increase the number of dentists and dental hygienists available to perform dental and dental hygiene work. The amended section is being adopted to provide the licensing and examination fee schedule for anyone desiring to obtain by credentials a license to practice dentistry or dental hygiene in the State of Texas. The Dental Hygiene Advisory Committee was in favor of adopting amendments to sec.102.1. No other comments were received regarding adoption of the amendment. The amendment is adopted under Texas Government Code, sec. sec.2001.001 et seq; Texas Civil Statutes, Article 4544, sec.1; Article 4545a, sec.1; Article 4545a, sec.2; Article 4550a, sec.1; Article 4550a, sec.2; Article 4551; Article 4551e, sec.5; Article 4551fsec.6(a); Texas Health and Safety Code, sec.467.004; sec.467. 0041, which gives the State Board of Dental Examiners the authority to adopt and promulgate rules and regulations necessary to assure compliance with law related to the practice of dentistry. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601897 Douglas A. Beran, Ph.D. Executive Director State Board of Dental Examiners Effective date: March 1, 1996 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-6400 Chapter 103. Dental Hygiene Licensure 22 TAC sec.103.2 The State Board of Dental Examiners adopts new sec.103.2, concerning obtaining a dental hygiene license by credentials without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8297). The new section is being adopted to increase the number of dental hygienists available to perform dental hygiene work. The new section is being adopted to provide procedures whereby dental hygienists practicing in other states, territories, and the District of Columbia may obtain a dental hygienist's license based on credentials from those jurisdictions. The rule tracks the language of Texas Revised Civil Statutes, Article 4545a with regard to requirements for licensure by credentials and is designed to determine whether a dental hygienist is reputable by addition of sec.8 of the rule. Further substantial equivalency of licensing requirements set out in section a (1) of the statute is determined by the applicant having passed a national examination (see paragraph (7) of the rule). The term "immediately" is defined in paragraph (3)(A)(i), in two ways. The first is for applications received between the time the board was reconstituted and approximately 30 days after this rule was adopted on an emergency basis to meet the requirements of a Travis County District Court Order entered on January 7, 1994, in Cause Number 94-00275, styled John Allen Adair, Laura B. Blake, and Huma Noureen Bhatti, Individually and on Behalf of All Other Persons Similarly Situated VS. The State of Texas and The Texas Board of Dental Examiners, 345th Judicial District Court Travis County, Texas and the period of time after reconstitution when dental hygienists could not obtain licensure by credentials because rules were not in place. Further, for applicants applying after emergency rules were in place, a period of 120 days between the last date of practice and filing an application in Texas is allowed to provide hygienists time to relocate from other states. For example, career decisions for hygienists are often made in response to demands of a spouse's career and are not planned to the extent as are those of a dentist. Also, the rule allows a hygienist who has practiced for at least 26 weeks in each of the past five years to meet the five year previous practice requirement. This is designed to recognize the nature of the practice of many dental hygienist, in working on a less than full time basis due to demands of family. With 26 weeks practice in each of the preceding five years, a hygienist will have met the intent of the statute for licensure by credentials. The applicant will have the benefit of years of practice in another venue thereby assuring that only qualified hygienist are licensed in Texas. That level of practice in each of the years will provide the continuity of practice needed to maintain skills. The Dental Hygiene Advisory Committee was in favor of adopting the new sec.103.2. No other comments were received regarding adoption of the new section. The new section is adopted under Texas Government Code, sec.sec.2001.001 et seq; Texas Civil Statutes, Article 4543a, sec.2 and 4551d(a) which provides the State Board of Dental Examiners with the authority to adopt and promulgate rules and regulations necessary to assure compliance with law related to the practice of dentistry, and Article 4545(a), sec.1 which provide for licensing of dental hygienists by credentials. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601898 Douglas A. Beran, Ph.D. Executive Director State Board of Dental Examiners Effective date: March 1, 1996 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-6400 Chapter 104. Continuing Education Dentists and Dental Hygienist 22 TAC sec.sec.104.1-104.5 The State Board of Dental Examiners adopts new sec.sec.104.1-104.5, concerning minimum continuing education (CE) requirements for dentists and dental hygienists with changes to sec.104.2 and sec.104.5 as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8298). Sections 104.1, 104.3, and 104.4 are adopted without changes and will not be republished. The new sections are being adopted to comply with amendments to the Dental Practice Act enacted by the 74th Texas Legislative Session (Senate Bill 18). The new sections are adopted in order to meet the requirements set forth in the Dental Practice Act that continuing education programs be developed for dentists and dental hygienists. One set of rules has been adopted to address requirements for dentists and dental hygienists since the statutory language for both is identical. The three year reporting period established by statute is adjusted by the rule to cause license renewal periods to coincide with continuing education periods in order to effectuate the mandatory provisions of the programs. As a result, a licensee's first CE period will range between 2.5 years and 3.5 years depending on the date of licensure and renewal date, which is staggered pursuant to Article 4550a, sec.2(h). Thereafter, each CE period will be three years in length. The rule requires that all CE courses counting for credit be either technical or scientific as related to clinical care as the Board has determined that key factors leading to competent performance of professional duties are updated scientific and technical knowledge and training. The Board has approved a number of course providers as listed in the rule. Courses that are technical or scientific provided by any listed organization are approved. The board staff does not have the expertise to evaluate all courses that may be proposed and budgetary constraints preclude the likelihood that staff could acquire such expertise. Rather than selecting courses, the Board has chosen to select providers. The rule makes provisions for entities and individuals not listed to become approved by the Board. Further any entity or individual desiring approval for a CE course or courses may approach one or more of the listed providers to become approved by the providers. Under this approach, technological advances can be included timely in course offerings without the delay that would be occasioned by staff review and approval of individual courses. Budgetary constraints also preclude direct verification of the courses taken by each of the over 19,000 licensees affected by this rule. To assure that licensees comply, all are required to attest their compliance with the rule upon license renewal. A statistically valid sample of licensees will be audited each year beginning in 1999. The size of the sample is not defined in the rule as the percentage of licensees required to be audited from year to year to obtain a valid statistical sample may change as circumstances vary. The following persons and entities submitted written comments following publication of the proposed rule: Dr. John Eads, III, President, Texas Dental Association, Nancy Glick, R.D.H., Ph.D., Chair, Department of Dental Hygiene, Texas Women's University, Leslie Shaw, R.D.H., M.P.H./H.S.A., Jolene Jordan, R. D.H., Dana Dunlap-Reazin, R.D.H., Diana Teague, R.D.H., Becky Gamble, R.D.H., Karen Jones Burros, R.D.H., Tammie Morrell, R.D.H., Dana Russell-Dobbs, R.D.H., Cynthia Hernandez, R.D.H., Kathy Navarro, R.D.H., Phylllis Litteken, R.D.H., Cynthia Faulkner, R.D.H., Kristi Beaver, R.D.H., Brenda Lister, R.D.H., and Brenda Anderson, R.D.H. Public comment was accepted during a meeting of the Board held on January 12, 1996, and comments were made by the following persons: Dr. Glen Ruthven, Texas Dental Association, Dr. William Butler, UTHSC-Dental School, San Antonio, Ms. Ann Seals, Baylor College of Dentistry, Dr. Gustav Gates, Texas Academy of General Dentistry, Ms. Gloria Zacek, R.D.H., Chair, Dental Hygiene Advisory Committee, Cheryl Burke, R.D.H., Texas Dental Hygiene Association, and Dr. Jean Poskus, Associate Dental Director, UTMB-TDCJ Managed Health Care. Two representatives of a professional association proposed inclusion of the provisions of a resolution of the association that jurisprudence and ethics courses count toward CE credit. After considering the statutorily required key factors as described previously, the rule as approved provides that only scientific and technical courses as related to clinical care will count toward CE credit. Passing the Board's jurisprudence examination is an existing requirement for licensure for dentists and dental hygienists in Texas. Thus, acquaintance with ethical and jurisprudencial matters is a prerequisite for licensure thereby assuring that licensees are informed on those issues. The Board does not intend to invite any inference that licensees should not keep abreast of such new develpment in these or any other areas including scientific and technical and the Board commends to licensees additional CE courses in excess of those required by law. Rather, since the Board has identified technical and scientific knowledge and training as key factors in assuring competency of licensees, the focus of required courses is on those areas. Further, one representative of the association proposed that the rule make it clear that the association and its 26 component societies are providers under the rule. The association is a component of a listed provider and it and its component societies are thus included as approved providers under the terms of the rule as proposed and adopted. One commenter, an educator, objected to providing CE credit for technical or scientific courses only and proposed that credit be given for the following courses: that help one become a better teacher; that will help the professions retain hygienists and dentists; that are required for OSHA and infection control, that provide training as a researcher; that address business management; that are required for graduation from dental or dental hygiene schools; and that address ethics. With the exception of some of the courses required for graduation from dental and dental hygiene schools, none of the courses proposed by the commenter are scientific or technical as related to clinical care. Dental and dental hygiene schools and programs, if accredited, are included as approved providers. The final rule includes a requirement that all courses be scientific and technical on the basis of reasons set forth previously. Another commenter, also an educator, requested an exception to the requirement that all courses be scientific or technical for dental hygiene and dental educators by allowing up to eighteen hours in each reporting period for graduate level courses concerning research or educational methods, in an educator's area or areas of teaching responsibility, and in research and education methodology in dentistry. In addition to the reasons already stated for the technical and scientific requirement, there are also concerns with identifying dental hygiene and dental educators as a sub-group of licensees for purposes of monitoring compliance and each educator's area or areas of teaching responsibility would have to be identified. The Board is not staffed or funded at a level that can accommodate such tracking requirements for a relatively small percentage of licensees and the proposal is not adopted. Twelve commenters signed copies of a letter challenging the exclusion of CPR training, training to meet OSHA requirements, and self improvement courses from those counting toward CE requirements. The writers requested that an unspecified number of such hours be included. CPR certification currently is required by state statute for licensees and federal law requires training to meet requirements of OSHA. Counting such previously required training toward CE credit, even if it could be considered as scientific or technical, would significantly reduce the already minimal requirement for CE and would have the effect of reducing the likelihood that the purpose of requiring CE, enhanced professional competency of licensees, would be realized. Self improvement courses clearly are not scientific or technical and are not approved for the reasons set forth previously. One commenter at the Board meeting, as chair of the Dental Hygiene Advisory Committee, supported the rules as written. Another commenter suggested that sec.104.5(a) be changed to call for completion of courses rather than attendance. This proposal is well taken and the rule as published has been changed to provide that documentation shall confirm completion of courses. Another commenter also addressed sec.104.5 and proposed that (c) be amended to make it clear that course notes or materials were not required but could be provided in lieu of other records. This proposal is well taken and the rule as published has been changed to do so. Another commenter proposed that UTMB-TDCJ Managed Health Care be included in sec.104.2 as an approved provider. The organization is a part of UTMB and all courses would be approved by UTMB. The Board agreed that medical schools should be included as providers. Accordingly, they were added to the list of providers originally published. The three changes listed previously were made in response to public comment. They are non-substantive and republication of the rules in not required as no additional persons are affected by the rules. Medical schools are not required to approve courses; they may do so if they choose. Other comments from those attending the Board meeting addressed issues of the effect of the rules and were primarily for the purpose of obtaining answers to questions. The commenters generally supported the rules. The new sections are adopted under Texas Government Code, sec.sec.2001.001 et seq; Texas Civil Statutes, Article 4544, sec.5 and Article 4551e, sec.5A; Article 4543a, sec.2 and Article 4551d(a), which provides the State Board of Dental Examiners with the authority to promulgate rules consistent with the Dental Practice Act, and under Article 4544, sec.5 and Article 4551e, sec.5A which respectively require the Board to adopt a CE program for dentists and dental hygienists. sec.104.2. Providers. Continuing Education courses endorsed by the following providers will meet the criteria for acceptable continuing education hours if such hours are either technical or scientific as related to clinical care and in content as certified by the following providers. (1) American Dental Association-Continuing Education Recognition Program (CERP); (2) American Dental Association, its component, and its constituent organizations; (3) Academy of General Dentistry and its constituents and approved sponsors; (4) Dental/dental hygiene schools and programs accredited by the Commission on Dental Accreditation of the American Dental Association; (5) American Dental Association approved specialty organizations; (6) American Dental Hygienists' Association, its component, and its constituent organizations; (7) American Medical Association approved specialty organizations; (8) American Medical Association approved hospital courses; (9) National Dental Association, its constituent, and its component societies; (10) National Dental Hygienists' Association, its constituent, and its component societies; (11) Medical schools and programs accredited by the Standards of the Medical Specialties, the American Medical Association, the Advisory Board for Osteopathic Specialists and Boards of Certification or the American Osteopathic Association; (12) Other providers as approved by the Board. sec.104.5. Auditable Documentation. (a) Each licensee shall maintain in his/her possession auditable documentation of continuing education hours completed for a minimum of two time periods or six years. (b) Documentation shall confirm completion as evidenced by original certificates of attendance, contact hours certificates, academic transcripts, gradeslips, or other documents furnished by the course provider. (c) Documentation shall include records of courses taken, the dates and locations and number of hours for such courses, or course notes or materials. (d) Copies of documentation shall be submitted to the State Board of Dental Examiners upon audit. (e) State Board of Dental Examiners will begin auditing all licensees by statistically-valid random samples after the end of the first three-year period. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601899 Douglas A. Beran, Ph.D. Executive Director State Board of Dental Examiners Effective date: March 1, 1996 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-6400 Chapter 109. Conduct 22 TAC sec.109.2 The State Board of Dental Examiners adopts an amendment to sec.109.2, concerning redesignation of a dental practice specialty, without changes to the proposed text as published in the December 1, 1995, issue of the Texas Register (20 TexReg 10179). The amended section is being adopted to comply with Resolution 73 adopted by the American Dental Association at its 1994 annual meeting which changes the dental specialty currently designated as "orthodontics" to "orthodontics and dentofacial orthopedics." The amended section is being adopted to clarify to the general public that dentists who limit their practices to orthodontics may announce that they are "specialists in orthodontics and dentofacial orthopedics" or that their practices are "limited to orthodontics and dentofacial orthopedics." However, the dentist still may announce themselves as "orthodontists." No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Government Code, sec. sec.2001.001 et seq; Texas Civil Statutes, Article 4543a, sec.2, and Article 4551d, which provides the State Board of Dental Examiners the authority to adopt and prescribe rules and regulations in harmony with the provisions the Dental Practice Act, Article 4543 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 February 9, 1996. TRD-9601900 Douglas A. Beran, Ph.D. Executive Director State Board of Dental Examiners Effective date: March 1, 1996 Proposal publication date: December 1, 1995 For further information, please call: (512) 463-6400 22 TAC sec.109.107 The State Board of Dental Examiners adopts an amendment to sec.109.107, concerning redesignation of a dental practice specialty, with changes to the proposed text as published in the December 1, 1995, issue of the Texas Register (20 TexReg 10179). The amended section is being adopted to comply with Resolution 73 adopted by the American Dental Association at its 1994 annual meeting which changes the dental specialty currently designated as "orthodontics" to "orthodontics and dentofacial orthopedics." Changes from the published proposal are in subsection (a) where various specialty fields are listed. The previous rule listed names of specialists rather than specialty i.e., "periodontist" rather than "periodontics." As adopted, each of the specialty fields is listed as opposed to the listing of specialists. This change is non-substantive. The amended section is being adopted to clarify to the general public that orthodontists may advertise that they are "specialists in orthodontics and dentofacial orthopedics" or that their practice is "limited to orthodontics and dentofacial orthopedics" provided they are such a specialist as defined by the American Dental Association and to clarify the language. No comments were received regarding adoption of the amendment. The amendment is proposed under Texas Government Code, sec.sec.2001.001 et seq; Texas Civil Statutes, Article 4543a, sec.2 and Article 4551d, which provides the State Board of Dental Examiners with the authority to adopt and prescribe rules and regulations in harmony with the provisions of the Dental Practice Act, Article 4543 et seq. sec.109.107. Specialty Advertising or Listings-Limitation of Practice. (a) Dentists may advertise as being a specialist in or practice limited to a particular field of dentistry; i.e. orthodontics and dentofacial orthopedics, pediatric dentistry, periodontics, prosthodontics, endodontics, oral and maxillofacial surgery, oral pathology, or dental public health, provided he or she is a specialist as defined by the American Dental Association. (b)-(e) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601901 Douglas A. Beran, Ph.D. Executive Director State Board of Dental Examiners Effective date: March 1, 1996 Proposal publication date: December 1, 1995 For further information, please call: (512) 463-6400 Chapter 119. Special Areas of Dental Practice 22 TAC sec.119.5 The State Board of Dental Examiners adopts an amendment to sec.119.5, concerning redesignation of a dental practice specialty, without changes to the proposed text as published in the December 1, 1995, issue of the Texas Register (20 TexReg 10180). The amended section is being adopted to comply with Resolution 73 adopted by the American Dental Association at its 1994 annual meeting which changes the dental specialty currently designated as "orthodontics" to "orthodontics and dentofacial orthopedics." The amended section is being adopted to clarify terminology regarding the dental specialty "orthodontics and dentofacial orthopedics." No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Government Code, sec. sec.2001.001 et seq; Texas Civil Statutes, Article 4543a sec.2, and Article 4551d, which provides the State Board of Dental Examiners the authority to adopt and prescribe rules and regulations in harmony with the provisions of the Dental Practice Act, Article 4543 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 February 9, 1996. TRD-9601902 Douglas A. Beran, Ph.D. Executive Director State Board of Dental Examiners Effective date: March 1, 1996 Proposal publication date: December 1, 1995 For further information, please call: (512) 463-6400 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 335. Industrial Solid Waste and Municipal Hazardous Waste The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts amendments to sec.sec.335.1, 335.6, 335.9, 335.10, 335.18, 335.19, 335.24, 335.41, 335.164, 335.214, 335.221, 335.323, and 335.503, concerning clarifying the definition of solid waste, expanding and clarifying some federal exemptions, broadening the exemption of the smallest industrial generators from notification, eliminating the annual report requirement for some of the smallest industrial generators, broadening the scope of some variances from classification as solid waste, expanding the exemption from hazardous regulation for petroleum coke produced in a company facility off-site from where the oil bearing hazardous waste was generated, changing elementary neutralization unit\wastewater treatment unit requirements to call for precautions when diluting some ignitable and reactive wastes, adding land disposal restriction requirements to use in a manner that constitutes disposal, and providing an exemption from requirements on burners of hazardous waste in boilers and industrial furnaces for mercury recovery furnaces. Sections 335.1, 335.10, 335.24, and 335.221 are adopted with changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8583). Sections 335.6, 335.9, 335.18, 335.19, 335.41, 335.164, 335.214, 335.323, and 335.503 are adopted without changes and will not be republished. The comment period closed November 20, 1995 on the October 20, 1995 proposal and December 4, 1995 on the November 3, 1995 proposal. Comments were received from: Browning-Ferris Industries, Exxon Chemical Americas, Pennzoil, Texas Chemical Council, Texas Utilities Services, and TNRCC staff. Browning-Ferris Industries and Pennzoil supported the rule amendments as proposed. The commission has prepared a Takings Impact Assessment for these rule amendments pursuant to Texas Government Code Annotated sec.2007.043. The following is a summary of that assessment: The purpose of the rule amendments are to clarify the definition of solid waste, expand and clarify some federal exemptions, broaden the exemption of the smallest industrial generators from notification, eliminate the annual report requirement for some of the smallest industrial generators, broaden the scope of some of the allowed variances from classification as solid waste, expand the exemption from hazardous waste regulation for petroleum coke produced in a company-owned facility off-site from where the oil bearing hazardous waste feedstock was generated, add precautions for diluting some ignitable and reactive wastes, add land disposal restriction requirements to use in a manner that constitutes disposal, provide an exemption from requirements on burners of hazardous waste in boilers and industrial furnaces for mercury recovery furnaces, and make various other administrative corrections to 30 TAC Chapter 335. The rule amendments substantially advance the stated purpose by expanding exemptions to encourage recycling and making administrative corrections to clarify 30 TAC Chapter 335. The rule has no effect on private real property because the rules only apply to industrial and hazardous waste management activities that do not affect property values. Section 335.1(A)(iv) was amended to assure that all subparagraphs of 40 CFR sec.261.4 are included in this exclusion to the definition of solid waste, including the newly added sec.261.4(a)(12) on recovered oil (59 FedReg 38545, July 28, 1994). However, two commenters opposed the adoption of the amendments on the exemption of recovered crude oil from the definition of solid waste in sec.261.4(a)(12). These commenters requested that the TNRCC delay adoption of this exclusion until: a promised technical amendment had been issued by the United States Environmental Protection Agency (EPA) allowing insertion of recovered oil into additional points in the refinery process; the EPA had finalized a proposed refinery hazardous waste listing rule that would broaden the exemption to also cover hydrocarbons recovered from certain chemical plants; and resolution of disputes with the EPA over which refinery materials are solid wastes. Because adoption of this exemption by the state is optional, the TNRCC has decided to withdraw the recovered oil amendments until the remaining issues involving this exclusion are further resolved, as requested by the commenters. Incorporation of sec.261.4(a)(12) has been deleted from Solid Waste definition subparagraph (A)(iv). Section 335.1(D)(ii)(II) and Table 1 of the definition of "Solid Waste" were also proposed to be amended to clarify the reclaimed commercial chemical products exclusion from the definition of solid waste. On the sec.335.1 definition of "Solid Waste" subparagraph (D)(ii)(II), one commenter objected to using the descriptor "unused" with "commercial chemical products". The commenter stated: "Instances where a commercial chemical product is used in a particular manner but does not become spent or contaminated would be prohibited from use as a fuel even though the EPA exemption would allow such use. The legitimate use of used' commercial chemical products as fuels would be eliminated." The TNRCC notes EPA guidance (Inside the Hotline: A Compilation of 1992 Monthly Hotline Reports, EPA/53Q-R-92-014M, March 1993) that states: "The listings in sec.261.33 do not include chemical mixtures where the listed chemical is not the sole active ingredient, and do not apply to chemicals that have been used for their intended purpose (54 FedReg 31335; July 28, 1989)." The reference within this quote further states: "The U-list does not include chemical mixtures where the listed chemical is not the sole active ingredient, and does not apply to chemicals that have been used for their intended purpose." However, the TNRCC also notes that sec.335.17(1) and 40 CFR sec.261.1(c)(1) state: "A spent material' is any material that has been used and as a result of contamination can no longer serve the purpose for which it was produced without processing." Thus, a commercial chemical product that had been used but was not contaminated to the extent it requires processing before use as originally intended could still be a commercial chemical product rather than a spent material. Therefore, the "unused" descriptor of commercial chemical products has been deleted as suggested. The commenter also suggested that language describing "non-listed characteristically hazardous wastes" more closely follow the federal rule language. The TNRCC agrees with this suggestion, and this language has been revised accordingly. Another commenter noted a typographical error in the definition of Solid Waste subparagraph (D)(ii)(II) as it was proposed to be amended, but this comment is no longer applicable with the changes incorporated for the other commenter. Specifically with regard to the definition of Solid Waste's Table 1, the commenter further stated that: "Many commercial chemical products are neither specifically listed in 40 CFR 261.33 nor hazardous due to characteristic; however, they should not be considered solid wastes when reclaimed or speculatively accumulated or used as a fuel if they are themselves fuels." The TNRCC agrees that the same exemption from solid waste should apply to "nonhazardous" commercial chemical products that are reclaimed, and the table has been revised accordingly. The same commenter recommended adding definition of solid waste subparagraph references to the definition of solid waste's Table 1. This has been done at the top of the columns in Table 1. Other changes to Table 1 were made for consistency with these changes. With regard to sec.335.10(b)(5) and (b)(8), at the recommendation of TNRCC staff, additional amendments have been incorporated to discourage non-regulated Conditionally Exempt Small Quantity Generators (CESQGs) from obtaining and using specific TNRCC registration numbers instead of their own generic registration number code "CESQG." This will help to prevent TNRCC resources from being expended on non-regulated CESQGs and encourage wider acceptance of the "CESQG" generic registration number code. Section 335.24(c)(5)(renumbered sec.335.24(c)(4)) was proposed to be amended to add essentially the same language added to 40 CFR sec.261.6(a)(3)(iv) (59 FedReg 38545) as published July 28, 1994, stating that the exemption from regulation for fuels produced from the refining of oil-bearing hazardous waste does not apply to fuels produced from oil recovered from oil-bearing hazardous waste, where such recovered oil is already excluded from being a solid waste when inserted into a petroleum refining process. This proposed language has been deleted per our previously mentioned agreement to delay incorporation of the recovered oil exclusion from the definition of solid waste. Section 335. 24(c)(6) was proposed to be deleted because it was to be replaced by the exclusion from solid waste for recovered oil inserted into a petroleum refining process. However, per our previously mentioned agreement to delay incorporation of the recovered oil exclusion from the definition of solid waste, this provision will now not be deleted; it is renumbered as sec.335.24(c) (5). Section 335.24(c)(7) was also proposed to be deleted (as was 40 CFR sec.261.6(a)(3)(vii) per 56 FedReg 7207). This was the exclusion for coke and coal tar from the iron and steel industry that contains EPA Hazardous Waste No. K087 (decanter tank tar sludge from coking operations) hazardous waste from the iron and steel production process. Section 335.24(c)(7) will be deleted as proposed. The rest of the sec.335.24(c) paragraphs are renumbered to account for the deletions of sec.335.24(c)(3) and (7). The original sec.335.24(c)(9) was also amended as proposed to broaden the coke exemption so that it also applies to coke produced by a single petroleum refining entity, where the coker is located at a different facility from where the hazardous wastes are generated. Section 335.24(g) is amended to account for the renumbering due to the deletion of sec.335.24(c)(6). Section 335.221(a) was proposed to be amended to add the adoption by reference of changes to 40 CFR Part 266, sec.266.100(c)(1) and (3) and addition of Appendix XIII, Mercury Bearing Wastes That May Be Processed in Exempt Mercury Recovery Units (59 FedReg 48042-48043) as published September 19, 1994. These federal rule changes make mercury recovery furnaces that meet these requirements exempt from the Boiler and Industrial Furnace rule. Other changes to the federal regulations applicable to the burning of hazardous waste in boilers and industrial furnaces in 40 CFR Part 266 were proposed for adoption by reference by specifically including the following Federal Register citations under sec.335.221(a): (57 FedReg 27880), June 22, 1992; (57 FedReg 38558), August 25, 1992; and (57 FedReg 44999), September 30, 1992. These changes include: requirements applicable to the burning of hazardous waste in boilers and industrial furnaces, including requirements relating to applicability, namely the end of the Coke Oven Administrative Stay; various technical amendments and corrections, including those relating to interim status standards; limits on interim status operating conditions; standards to control organic emissions, metals emissions, hydrogen chloride, and chlorine gas; the small quantity on- site burner exemption; regulation of residues; limits on operating conditions; and various typographical corrections. However, one commenter recommended that the TNRCC consider adding these additional references: September 10, 1992 (57 FedReg 41612), July 20, 1993 (58 FedReg 38883), November 9, 1993 (58 FedReg 59598), July 28, 1994 (59 FedReg 38545), and June 29, 1995 (50 FedReg 33912). These federal rule changes to 40 CFR Part 266 include: changes to implement 40 CFR Part 279, Standards for the Management of Used Oil; changes related to dispersion modeling; nonmetal toxic constituent levels in residues; hazardous wastes that are exempt from regulation under 40 CFR Part 266; and addition of special requirements for hydrocarbon monitoring systems, respectively. These additional references will be incorporated into sec.335.221(a), as recommended by the commenter, in the next proposed revision to this section to provide an opportunity for outside comment prior to incorporation. Section 335.221(b)(2) is also amended after proposal to account for the renumbering due to the deletion of sec.335.24(c)(3) and (7). Subchapter A. Industrial Solid Waste and Municipal Hazardous Waste in General 30 TAC sec.sec.335.1, 335.6, 335.9, 335.10, 335.18, 335.19 The amendments are adopted under the Texas Water Code, sec.sec.5.103, 5.105, and 26.11, which provide the commission with authority to adopt any rules necessary to carry out its powers, duties, and policies and to protect water quality in the state; the Texas Solid Waste Disposal Act, Texas Health and Safety Code, sec.361.017 and sec.361.024, which provide the commission authority to regulate industrial solid wastes and hazardous municipal wastes and to adopt and promulgate rules consistent with the general intent and purposes of the Act; and Texas Health and Safety Code, Chapter 371, Texas Used Oil Collection, Management, and Recycling Act, which provides the commission the authority to regulate the management and recycling of used oil. sec.335.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly requires otherwise. Solid Waste- (A) Any garbage, refuse, sludge from a waste treatment plant, water supply treatment plant or air pollution control facility, and other discarded material, including solid, liquid, semisolid, or contained gaseous material resulting from industrial, municipal, commercial, mining, and agricultural operations, and from community and institutional activities, but does not include: (i) solid or dissolved material in domestic sewage, or solid or dissolved material in irrigation return flows, or industrial discharges subject to regulation by permit issued pursuant to the Texas Water Code, Chapter 26 (an exclusion applicable only to the that does not exclude industrial wastewaters while they are being collected, stored or processed before discharge, nor does it exclude sludges that are generated by industrial wastewater treatment); (ii) uncontaminated soil, dirt, rock, sand and other natural or man-made inert solid materials used to fill land if the object of the fill is to make the land suitable for the construction of surface improvements. The material serving as fill may also serve as a surface improvement such as a structure foundation, a road, soil erosion control, and flood protection. Man-made materials exempted under this provision shall only be deposited at sites where the construction is in progress or imminent such that rights to the land are secured and engineering, architectural, or other necessary planning have been initiated. Waste disposal shall be considered to have occurred on any land which has been filled with man-made inert materials under this provision if the land is sold, leased, or otherwise conveyed prior to the completion of construction of the surface improvement. Under such conditions, deed recordation shall be required. The deed recordation shall include the information required under sec.335.5(a) (relating to Deed Recordation), prior to sale or other conveyance of the property; (iii) (No change.) (iv) a material excluded by 40 Code of Federal Regulations sec.261. 4(a)(1)- (11) or by variance granted under sec.335.18 of this title (relating to Variances from Classification as a Solid Waste) and sec.335.19 of this title (relating to Standards and Criteria for Variances from Classification as a Solid Waste). (B)-(C) (No change.) (D) Materials are solid wastes if they are "recycled" or accumulated, stored, or processed before recycling as specified in this subparagraph. The chart referred to as Table 1 indicates only which materials are considered to be solid wastes when they are recycled and is not intended to supersede the definition of solid waste provided in subparagraph (A) of this paragraph. (i) (No change.) (ii) Burning for energy recovery. Materials noted with an asterisk in Column 2 of Table 1 are solid wastes when they are: (I) (No change.) (II) Used to produce a fuel or are otherwise contained in fuels (in which cases the fuel itself remains a solid waste). However, commercial chemical products, listed in 40 Code of Federal Regulations sec.261.33, and not listed in sec.261.33 but that exhibit one or more of the hazardous waste characteristics, are not solid wastes if they are fuels themselves. (iii) (No change.) (iv) Accumulated speculatively. Materials noted with an asterisk in Column 4 of Table 1 are solid wastes when accumulated speculatively. Figure 1: 30 TAC 335.1(D)(iv) (E) (No change.) (F) Materials are not solid wastes when they can be shown to be recycled by being: (i)-(ii) (No change.) (iii) Returned to the original process from which they were generated, without first being reclaimed or land disposed. The material must be returned as a substitute for feedstock materials. In cases where the original process to which the material is returned is a secondary process, the materials must be managed such that there is no placement on the land. (iv) (No change.) (G) The following materials are solid wastes, even if the recycling involves use, reuse, or return to the original process, as described in subparagraph (F) of this paragraph: (i)-(iii) (No change.) (iv) Materials deemed to be inherently waste-like by the administrator of the Environmental Protection Agency, as described in 40 Code of Federal Regulations sec.261.2(d)(1) sec.261.2(d)(2). (H)-(I) (No change.) sec.335.10. Shipping and Reporting Procedures Applicable to Generators of Hazardous Waste or Class 1 Waste and Primary Exporters of Hazardous Waste. (a) Except as provided in subsection (g) of this section, no generator of hazardous or Class 1 waste consigned to an off-site solid waste process, storage, or disposal facility within the United States or primary exporters of hazardous waste consigned to a foreign country shall cause, suffer, allow, or permit the shipment of hazardous waste or Class 1 waste unless: (1) for generators of industrial nonhazardous Class 1 waste in a quantity greater than 100 kilograms per month and/or generators of hazardous waste shipping hazardous waste which is part of a total quantity of hazardous waste generated in quantities greater than 100 kilograms in a calendar month, or quantities of acute hazardous waste in excess of quantities specified in sec.335.78(e) of this title (relating to Special Requirements for Hazardous Waste Generated by Conditionally Exempt Small Quantity Generators), who consign that waste to an off-site solid waste storage, processing, or disposal facility in Texas; a Texas Natural Resource Conservation Commission (TNRCC) manifest on Form TNRCC-0311, and, if necessary, TNRCC-0311B is prepared; (2) the generator is either an industrial generator that generates less than 100 kilograms of nonhazardous Class 1 waste per month and less than the quantity limits of hazardous waste specified in sec.335.78 of this title (relating to Special Requirements for Hazardous Waste Generated by Conditionally Exempt Small Quantity Generators) or a municipal generator that generates less than the quantity limit of hazardous waste specified in sec.335. 78 of this title; (3) for generators of hazardous waste or Class 1 waste generated in Texas for consignment to another state the consignment state's manifest, if provided, or a Texas state manifest if the consignment state does not provide a manifest, is prepared, unless the generator is identified in paragraph (2) of this section; (4)-(6) (No change.) (b) The manifest shall contain the following information. (1)-(4) (No change.) (5) The manifest shall contain the generator's Texas Natural Resource Conservation Commission (TNRCC) registration and/or permit number. Conditionally exempt small quantity generators (CESQGs) of hazardous waste or industrial generators of less than 100 kg per month of nonhazardous Class 1 waste and less than CESQG limits of hazardous waste that are exempt from manifesting may voluntarily choose to manifest their hazardous or Class 1 industrial nonhazardous waste. Such exempt generators may utilize the letters "CESQG" for their TNRCC generator registration number. (6)-(7) (No change.) (8) The manifest shall contain the first transporter's state registration number. Conditionally exempt small quantity generators who are not required to notify of their transportation activities as specified in sec.335.6(d) of this title (relating to Notification Requirements) may use the letters "CESQG" as the TNRCC transporter's registration number when transporting their own hazardous or Class 1 nonhazardous waste. (9)-(24) (No change.) (c)-(g) (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 February 9, 1996. TRD-9601966 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: March 1, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-6087 30 TAC sec.335.24 The amendment is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.11, which provides the Texas Natural Resource Conservation Commission (commission) with authority to adopt any rules necessary to carry out its powers, duties, and policies and to protect water quality in the state; and the Texas Solid Waste Disposal Act, Texas Health and Safety Code, sec.361.017 and sec.361.024, which provide the commission authority to regulate industrial solid wastes and hazardous municipal wastes and to adopt and promulgate rules consistent with the general intent and purposes of the Act. sec.335.24. Requirements For Recyclable Materials and Nonhazardous Recyclable Materials. (a) (No change.) (b) The following recyclable materials are not subject to the requirements of this section, except as provided in subsections (g) and (h) of this section, but are regulated under the applicable provisions of Subchapter H of this chapter (relating to Standards for the Management of Specific Wastes and Specific Types of Facilities) and all applicable provisions in Chapter 305 of this title (relating to Consolidated Permits) and Chapter 261 of this title (relating to Introductory Provisions); Chapter 263 of this title (relating to General Rules); Chapter 265 of this title (relating to Procedures Before Public Hearing); Chapter 267 of this title (relating to Procedures During Public Hearing); Chapter 269 of this title (relating to Procedures After Public Hearing Before an Examiner); Chapter 271 of this title (relating to Procedures After Public Hearing Before the Full Commission); and Chapter 273 of this title (relating to Procedures After Final Decision): (1)-(2) (No change.) (3) Recyclable materials from which precious metals are reclaimed. (4) Spent lead-acid batteries that are being reclaimed. (c) The following recyclable materials are not subject to regulation under Subchapters B-I and O of this chapter, (relating to Hazardous Waste Management- General Provisions; Standards Applicable to Generators of Hazardous Waste; Standards Applicable to Transporters of Hazardous Waste; Interim Standards for Owners and Operators of Hazardous Waste Storage, Processing, or Disposal Facilities; Location Standards for Hazardous Waste Storage, Processing or Disposal; Standards for the Management of Specific Wastes and Specific Types of Facilities; Prohibition on Open Dumps and Land Disposal Restrictions), respectively, or Chapters 261, 263, 265, 267, 269, 271, 273, and 305 of this title (relating to Introductory Provisions; General Rules; Procedures Before Public Hearing; Procedures During Public Hearing; Procedures After Public Hearing Before an Examiner; Procedures After Public Hearing Before the Full Commission; Procedures After Final decision; and Consolidated Permits), except as provided in subsections (g) and (h) of this section: (1)-(2) (No change.) (3) Scrap metal; (4) Fuels produced from the refining of oil-bearing hazardous wastes along with normal process streams at a petroleum refining facility if such wastes result from normal petroleum refining, production, and transportation practices; (5) Oil reclaimed from hazardous waste resulting from normal petroleum refining, production, and transportation practices, which oil is to be refined along with normal process streams at a petroleum refining facility; (6) The following hazardous waste fuels: (A) hazardous waste fuel produced from oil-bearing hazardous wastes from petroleum refining, production or transportation practices, or produced from oil reclaimed from such hazardous wastes where such hazardous wastes are reintroduced into a process that does not use distillation or does not produce products from crude oil so long as the resulting fuel meets the used oil specification under 40 Code of Federal Regulations sec.279.11 and so long as no other hazardous wastes are used to produce the hazardous waste fuel; (B) hazardous waste fuel produced from oil-bearing hazardous waste from petroleum refining production, and transportation practices, where such hazardous wastes are reintroduced into a refining process after a point at which contaminants are removed, so long as the fuel meets the used oil fuel specification under 40 Code of Federal Regulations sec.279.11; (C) oil reclaimed from oil-bearing hazardous wastes from petroleum refining, production, and transportation practices, which reclaimed oil is burned as fuel without reintroduction to a refining process, so long as the reclaimed oil meets the used oil fuel specification under 40 Code of Federal Regulations sec.279.11; and (7) Petroleum coke produced from petroleum refinery hazardous wastes containing oil by the same person who generated the waste, unless the resulting coke product exceeds one or more of the characteristics of hazardous waste in 40 Code of Federal Regulations Part 261, Subpart C. (d)-(f) (No change.) (g) Except as provided in subsection (h) of this section, recyclable materials (excluding those listed in subsection (c)(1) and (3)-(7) of this section), remain subject to the requirements of sec.sec.335.4, 335.6, and 335.9 335.15 of this title (relating to General Prohibitions; Notification requirements; Recordkeeping and Annual Reporting Procedures Applicable to Generators; Shipping and Reporting Procedures Applicable to Generators of Hazardous Waste or Class I Waste and Primary Exporters of Hazardous Waste; Shipping Requirements for Transporters of Hazardous Waste or Class I Waste; Shipping Requirements Applicable to Owners or Operators of Storage, Processing, or Disposal Facilities; Recordkeeping and Reporting Procedures Applicable to Generators Shipping Hazardous Waste or Class I Waste; Recordkeeping Requirements Applicable to Transporters of Hazardous Waste or Class I Waste; and Recordkeeping and Reporting Requirements Applicable to Owners or Operators of Storage, Processing, or Disposal Facilities; respectively), as applicable. (h) Industrial solid wastes that are nonhazardous recyclable materials; and recyclable materials listed in subsection (b)(4) and subsection (c)(2) and (3) of this section remain subject to the requirements of sec.335.4 of this title (relating to General Prohibitions) and sec.335.6 of this title (relating to Notification Requirements). Such wastes may also be subject to the requirements of sec.sec.335.10-335.15 of this title (relating to Shipping and Reporting Procedures Applicable to Generators of Hazardous Waste or Class I Waste and Primary Exporters of Hazardous Waste; Shipping Requirements for Transporters of Hazardous Waste or Class I Waste; Shipping Requirements Applicable to Owners or Operators of Storage, Processing, or Disposal Facilities; Record Keeping and Reporting Procedures Applicable to Generators Shipping Hazardous Waste or Class I Waste and Primary Exporters of Hazardous Waste; Recordkeeping Requirements Applicable to Transporters of Hazardous Waste or Class I Waste; and Record Keeping and Reporting Requirements Applicable to Owners or Operators of Storage, Processing, or Disposal Facilities; respectively), as applicable, if the executive director determines that such requirements are necessary to protect human health sec.335.11 of this title (relating to Shipping Requirements for Transporters of Hazardous Waste or Class I Waste), sec.335.12 of this title (relating to Shipping Requirements Applicable to Owners or Operators of Storage, Processing or Disposal Facilities), sec.335.13 of this title (relating to Record Keeping and Reporting Procedures Applicable to Generators Shipping Hazardous Waste or Class I Waste and Primary Exporters of Hazardous Waste), sec.335.14 of this title (relating to Recordkeeping Requirements Applicable to Transporters of Hazardous Waste or Class I Waste), and sec.335.15 of this title (relating to Record Keeping and Reporting Requirements Applicable to Owners or Operators of Storage, Processing, or Disposal Facilities), as applicable, if the executive director determines that such requirements are necessary to protect human health and the environment. In making the determination, the executive director shall consider the following criteria: (1)-(9) (No change.) (i) (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 February 9, 1996. TRD-9601967 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: March 1, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-6087 Subchapter B. Hazardous Waste Management General Provisions 30 TAC sec.335.41 The amendment is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.11, which provide the Texas Natural Resource Conservation Commission (commission) with authority to adopt any rules necessary to carry out its powers, duties, and policies and to protect water quality in the state; and the Texas Solid Waste Disposal Act, Texas Health and Safety Code, sec.361.017 and sec.361.024, which provide the commission authority to regulate industrial solid wastes and hazardous municipal wastes and to adopt and promulgate rules consistent with the general intent and purposes of the Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601968 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: March 1, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-6087 Subchapter F. Permitting Standards for Owners and Operations of Hazardous Waste Storage, Processing, or Disposal Facilities 30 TAC sec.335.164 The amendment is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.11, which provides the Texas Natural Resource Conservation Commission (commission) with authority to adopt any rules necessary to carry out its powers, duties, and policies and to protect water quality in the state; and the Texas Solid Waste Disposal Act, Texas Health and Safety Code, sec.361.017 and sec.361.024, which provide the commission authority to regulate industrial solid wastes and hazardous municipal wastes and to adopt and promulgate rules consistent with the general intent and purposes of the Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601969 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: March 1, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-6087 Subchapter H. Standards for the Management of Specific Waste A and Specific Wastes and Specific Types of Facilities 30 TAC sec.335.214 The amendment is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.11, which provides the Texas Natural Resource Conservation Commission (commission) with authority to adopt any rules necessary to carry out its powers, duties, and policies and to protect water quality in the state; and the Texas Solid Waste Disposal Act, Texas Health and Safety Code, sec.361.017 and sec.361.024, which provide the commission authority to regulate industrial solid wastes and hazardous municipal wastes and to adopt and promulgate rules consistent with the general intent and purposes of the Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601970 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: March 1, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-6087 Subchapter H. Hazardous Waste Burned for Energy Recovery 30 TAC sec.335.221 The amendment is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.11, which provides the Texas Natural Resource Conservation Commission (commission) with authority to adopt any rules necessary to carry out its powers, duties, and policies and to protect water quality in the state; the Texas Solid Waste Disposal Act, Texas Health and Safety Code, sec.361.017 and sec.361.024, which provide the commission authority to regulate industrial solid wastes and hazardous municipal wastes and to adopt and promulgate rules consistent with the general intent and purposes of the Act; and Texas Health and Safety Code, Chapter 371, Texas Used Oil Collection, Management, and Recycling Act, which provides the commission the authority to regulate the management and recycling of used oil. sec.335.221. Applicability and Standards. (a) The following regulations contained in 40 Code of Federal Regulations (CFR) Part 266 (including all appendices to Part 266) are adopted by reference, as amended and adopted in the Code of Federal Regulations through June 1, 1990 (see FedReg 22685) and as published and adopted in the February 21, 1991, July 17, 1991, August 27, 1991, September 5, 1991, June 22, 1992, August 25, 1992, September 30, 1992, and September 19, 1994 issues of the Federal Register (see 56 FedReg 7239, and 56 FedReg 32688, 56 FedReg 42504, 56 FedReg 43874, 57 FedReg 27880, 57 FedReg 28558, 57 FedReg 44999 and 59 FedReg 48042-48043): (1)-(23) (No change.) (b) The following hazardous wastes and facilities are not regulated under sec.sec.335.221-335.229 of this title (relating to Hazardous Waste Burned in Boilers and Industrial Furnaces): (1) (No change.) (2) hazardous wastes that are exempt from regulation under the provisions of 40 Code of Federal Regulations sec.261.4 and sec.335.24(c)(4)-(7) of this title (relating to Requirements for Recyclable Materials and Nonhazardous Recyclable Materials), and hazardous wastes that are subject to the special requirements for conditionally exempt small quantity generators under the provisions of sec.335.78 of this title (relating to Special Requirements for Hazardous Waste Generated by Conditionally Exempt Small Quantity Generators); (3)-(4) (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 February 9, 1996. TRD-9601971 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: March 1, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-6087 Subchapter J. Hazardous Waste Generation, Facility and Disposal Fee System 30 TAC sec.335.323 The amendment is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.11, which provides the Texas Natural Resource Conservation Commission (commission) with authority to adopt any rules necessary to carry out its powers, duties, and policies and to protect water quality in the state; and the Texas Solid Waste Disposal Act, Texas Health and Safety Code, sec.361.017 and sec.361.024, which provide the commission authority to regulate industrial solid wastes and hazardous municipal wastes and to adopt and promulgate rules consistent with the general intent and purposes of the Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601972 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: March 1, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-6087 Subchapter R. Waste Classification 30 TAC sec.335.503 The amendment is adopted under the Texas Water Code, sec. sec.5.103, 5.105, and 26.11, which provides the Texas Natural Resource Conservation Commission (commission) with authority to adopt any rules necessary to carry out its powers, duties, and policies and to protect water quality in the state; and the Texas Solid Waste Disposal Act, Texas Health and Safety Code, sec.361.017 and sec.361.024, which provide the commission authority to regulate industrial solid wastes and hazardous municipal wastes and to adopt and promulgate rules consistent with the general intent and purposes of the Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601973 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: March 1, 1996 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-6087 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter B. Natural Gas Production Tax 34 TAC sec.3.22 The Comptroller of Public Accounts adopts new sec.3.22, concerning exemption for hydrocarbons produced from a Texas Experimental Research and Recovery Activity well, without changes to the proposed text as published in the December 8, 1995, issue of the Texas Register (20 TexReg 10367). The exemption only applies to wells which have been accepted by the Texas Railroad Commission into the Texas Experimental Research and Recovery Activity. This section is being added pursuant to House Bill 2731, 74th Legislature, 1995, which calls for an exemption from the natural gas production tax for hydrocarbons produced from a well accepted by the Texas Railroad Commission into the Texas Experimental Research and Recovery Activity. 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. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 8, 1996. TRD-9601832 Martin E. Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: February 29, 1996 Proposal publication date: December 8, 1995 For further information, please call: (512) 463-4062 Subchapter C. Crude Oil Production Tax 34 TAC sec.3.38 The Comptroller of Public Accounts adopts new sec.3.38, concerning exemption for hydrocarbons produced from a Texas Experimental Research and Recovery Activity well, without changes to the proposed text as published in the December 12, 1995, issue of the Texas Register (20 TexReg 10572). The exemption only applies to wells which have been accepted by the Texas Railroad Commission into the Texas Experimental Research and Recovery Activity. This section is being added pursuant to House Bill 2731, 74th Legislature, 1995, which calls for an exemption from the crude oil production tax for hydrocarbons produced from a well accepted by the Texas Railroad Commission into the Texas Experimental Research and Recovery Activity. 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.202.059. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 8, 1996. TRD-9601833 Martin E. Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: February 29, 1996 Proposal publication date: December 12, 1995 For further information, please call: (512) 463-4062 Subchapter L. Motor Fuels Tax 34 TAC sec.3.181 The Comptroller of Public Accounts adopts new sec.3.181, concerning tax-free purchase of diesel fuel not legally usable on public highways and roads, without changes to the proposed text as published in the October 31, 1995, issue of the Texas Register (20 TexReg 8987). The 74th Legislature, 1995, amended the Tax Code, Chapter 153, to allow a permitted supplier to make tax-free sales of diesel fuel that cannot legally be used in a motor vehicle on public highways with the use of a signed statement. Requirements for the use of this new signed statement are prescribed in this section. 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. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 8, 1996. TRD-9601830 Martin E. Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: February 29, 1996 Proposal publication date: October 31, 1995 For further information, please call: (512) 463-4062 34 TAC sec.3.185 The Comptroller of Public Accounts adopts an amendment to sec.3.185, concerning diesel tax prepaid user permit, without changes to the proposed text as published in the October 31, 1995, issue of the Texas Register (20 TexReg 8987). The 74th Legislature, 1995, amended the Tax Code, Chapter 153 to allow a nonrefundable credit of all or a portion of the prepaid cost of the permit when the actual taxable use of the permit holder during the permit year is less than the prepaid cost of the permit. The amendment prescribes procedures and records required to claim the credit. 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 February 8, 1996. TRD-9601831 Martin E. Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: February 29, 1996 Proposal publication date: October 31, 1995 For further information, please call: (512) 463-4062 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 13. Title IV-A Emergency Assistance Program Program Requirements 40 TAC sec.13.105, sec.13.110 The Texas Department of Human Services (DHS) adopts amendments to sec.13. 105 and sec.13.110 regarding eligibility and service provision in its Title IV-A Emergency Assistance Program rule chapter. The amendments are adopted without changes to the proposed text published in the January 2, 1996, issue of the Texas Register (21 TexReg 25). The justification for the amendments is to incorporate Services to Truants and Runaways (STAR) Program. This prevention program serves children and youths at risk who have run away from home, have been truant from school, have been involved in family conflict, or have allegedly committed offenses. This program was implemented January 1, 1996. The amendments will function by ensuring that the rules regarding the Title IV- A Emergency Assistance Program to families with children for both agencies will be consistent. No comments were received regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 34, which provides the department with the authority to administer public assistance and emergency relief programs. The amendments implement the Human Resources Code sec.22.002 and sec.34.001. This agency hereby certifies that the section as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 9, 1996. TRD-9601939 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: March 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 438-3765 Chapter 19. Nursing Facilities Requirements for Licensure and Medicaid Certification The Texas Department of Human Services (DHS) adopts new sec.19.1810, amendments to sec.sec.19.2308, 19.2312, 19.2314, 19.2322, and 19.2404, and new sec.19.2703 in its Nursing Facilities Requirements for Licensure and Medicaid Certification chapter, without changes to the proposed text published in the December 22, 1995, issue of the Texas Register (20 TexReg 10986). Justification for the sections is that vendor payments will not be made to Medicaid nursing facilities until financial irregularities have been resolved. The amendments and new sections will function by allowing DHS to hold vendor payments of facilities until financial irregularities are resolved. No comments were received regarding adoption of the new sections and amendments. Subchapter S. Reimbursement Methodology for Nursing Facilities 40 TAC sec.19.1810 The new section is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which authorizes the department to administer public and medical assistance programs, and under Texas Government Code sec.531.021, which provides the Health and Human Services Commission with the authority to administer federal medical assistance funds. The new section implements the Human Resources Code, sec. sec.22.001-22.024 and 32.001-32.040. This agency hereby certifies that the section as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 12, 1996. TRD-9601981 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: April 1, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 438-3765 Subchapter X. Requirements for Medicaid-Certified Facilities 40 TAC sec.sec.19.2308, 19.2312, 19.2314, 19.2322 The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which authorizes the department to administer public and medical assistance programs, and under Texas Government Code sec.531.021, which provides the Health and Human Services Commission with the authority to administer federal medical assistance funds. This agency hereby certifies that the section as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 12, 1996. TRD-9601983 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: April 1, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 438-3765 Subchapter Y. Medical Review and Re-evaluation 40 TAC sec.19.2404 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which authorizes the department to administer public and medical assistance programs, and under Texas Government Code sec.531.021, which provides the Health and Human Services Commission with the authority to administer federal medical assistance funds. This agency hereby certifies that the section as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 12, 1996. TRD-9601984 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: April 1, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 438-3765 Subchapter BB. Nursing Facility Program Cost Determination Process 40 TAC sec.19.2703 The new section is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which authorizes the department to administer public and medical assistance programs, and under Texas Government Code sec.531.021, which provides the Health and Human Services Commission with the authority to administer federal medical assistance funds. This agency hereby certifies that the section as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 12, 1996. TRD-9601985 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: April 1, 1996 Proposal publication date: December 22, 1995 For further information, please call: (512) 438-3765 Part III. Texas Commission on Alcohol and Drug Abuse Chapter 141. General Provisions 40 TAC sec.sec.141.1-141.7, 141.21-141.24, 141.31-141.34, 141. 41, 141.51, 141.61, 141.62, 141.71, 141.81 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.141.1-141.7, 141.21-141.24, 141.31-141.34, 141.41, 141.51, 141.61, 141. 62, 141.71, and 141.81, concerning composition, make-up and powers of the commission, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6302). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the repeals is Texas Health and Safety Code, Title 6, Subtitle B, sec.461.012(15). 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 February 7, 1996. TRD-9601717 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 40 TAC sec.sec.141.1-141.6, 141.8-141.14, 141.31, 141.33, 141.34, 141.41, 141.51, 141.61 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.141.1-141. 6, 141.8-141.14, 141.31, 141.33, 141.34, 141.41, 141.51, and 141.61, concerning the composition, functions, and powers of the commission. Sections 141.1-141.6, 141.8-141.14, 141.31, 141.33, 141.41, and 141.61 are adopted with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6302). Section 141.34 and sec.141.51 are adopted without changes and will not be republished. Section 141.7 and sec.141. 62 have been withdrawn from consideration. These rules conform with recent legislation and describe the powers vested in the commission; the structure and meetings of the board; meetings, minutes, and public comments; the advisory council; commissioner travel; signature authority; basic policies of the commission; and standards of conduct between employees and offices and private donors. The new rules provide for more efficient and effective commission operations, as well as bringing the rules into compliance with recent legislation. The commission received comments from: Jefferson County Council on Alcohol and Drug Abuse, the Office of the Attorney General, Sabine Valley Center, South East Texas Regional Planning Commission, Texas Alliance of Councils on Alcohol and Drug Abuse, Texas Council on Problem and Compulsive Gambling, Youth Advocacy, and the commission's Multicultural Affairs Advisory Council. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. All comments submitted were fully considered by the commission. Additional changes have been made in response to comments regarding wording and further review and discussion by staff, and the rules have also been edited to improve clarity and readability. A summary of comments, commission responses, and changes to the rules follows. The commission received the following comments regarding sec.141.2 (relating to Commission Composition and Officers): Comment: Regarding dual offices, "brief interim" is too vague; limit the time to two months. Response: No benefit would be gained by setting an arbitrary time period, and allowing some flexibility meets the intent of assuring an orderly transition under diverse circumstances. The commission received the following comments regarding sec.141.3 (relating to the Purpose of the Commission): Comment: Rules should be focused on commission-funded programs and activities. It was suggested to place a statement in Chapter 141 that clearly exempts programs not licensed or funded by the commission from the fiscal and programmatic regulations governing the commission-funded programs. Response: The various chapters of the commission's rules apply to different groups. A section on applicability will be added to a new Chapter 144. Funding Requirements (in a separate action) to specify that it applies only to funded programs. Comment: Delete the reference in sec.141.1 and sec.141.3 to compulsive gambling, or at least make it secondary. The commission exists only to provide services for chemical dependency. Response: The commission is also responsible for compulsive gambling services, as stated in Texas Health and Safety Code, sec.461.018. Wording has been revised to place chemical dependency in a more prominent position. Comment: Commenter was pleased with the high profile position the proposed rules placed on compulsive gambling. This same philosophy should be reflected throughout the rules. Response: Although compulsive gambling is an important issue, the commission's primary issue is chemical dependency. Furthermore, no funding is available to support the integration of compulsive gambling services into the statewide delivery system. Reference to compulsive gambling will be included when feasible and appropriate. Section 141.3 has also been revised to reflect the commission's additional responsibilities of research, education, and training. The commission received the following comments regarding sec.141.6 (relating to Relation to Other Agencies and Endorsements): Comment: Compulsive gambling should be included in this section. Response: The comment was declined. This rule is based on legislative mandate, and the law does not direct the commission to conduct these activities in relation to compulsive gambling as it does for chemical dependency. The commission, will, however, strive to include compulsive gambling in these functions when possible. The commission received the following comments regarding sec.141.7 (relating to Committees of the Commission): Comment: The commission cannot delegate its decision-making authority to the executive committee. Response: The comment was accepted and the section was withdrawn. Comment: Commenter asked what the awards committee is and how much does it cost. It was suggested that it be deleted. Response: The comment was declined. The awards committee is a group of commissioners who oversee the funding process and make funding recommendations to the full commission. It does not have costs above those of the commission itself. The commission received the following comments regarding sec.141.8 (relating to the Advisory Council): Comment: The Advisory Council has not been utilized properly; replace with regional liaison committees. Response: The section has been revised to reflect the commission's recent decision to implement Regional Advisory Consortia (RAC) in place of the state- wide advisory council. Comment: Members of the Multicultural Affairs Advisory Council (MAAC) requested that the commission recognize MAAC as a legitimate body by creating rules formally establishing the council. Response: A new subsection was added formally establishing the Multicultural Affairs Advisory Council. The commission received the following comments regarding sec.141.9 (relating to Commission Meetings): Comment: The commission should hold meetings in different regions of the state on a rotating basis. Response: The new board of commissioners will be free to consider this idea. The commission received the following comments regarding sec.141.10 (relating to Public Comment and Requests): Comment: With advance notice, a person could speak for an unlimited period of time; give the commission the discretion to limit all speakers. Response: The comment was accepted and the section was revised. The commission received the following comments regarding sec.141.11 (relating to Minutes and Recordings): Comment: A certified tape recording is not required when the subject of an executive session is advice of counsel authorized by the Open Meetings Law, sec.155.071. Response: The comment was accepted and the section was revised. The commission received the following comments regarding sec.141.13, (relating to Signature Authority): Comment: Too many people have authority to approve payment vouchers. Only the CFO and his/her designated staff should have this authority. The commission could appoint temporary authority to others in emergency situations. Response: Authority is limited to the agency's highest level of management. The commission feels that specifying those positions provides tighter fiscal controls than "designated staff", which can be defined at will. The commission's board should have the ability to designate other individuals to meet special circumstances, provided it is a formal, public action. Comment: The rules refer to titles that do not appear on the commission's most recent organizational chart. Response: The comment was accepted and the section was revised to reflect current titles. The commission received the following comments regarding sec.141.41 (relating to Definitions): Comment: Prevention and intervention have the same definition. Response: The comment was accepted and the definitions have been revised to distinguish between them. Comment: A definition for compulsive gambling should be included. Response: The comment was accepted and a definition was added. The rules are adopted under the Texas Health and Safety Code, sec.461.012(15) , which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the new rules is the Texas Health and Safety Code, Chapter 461. sec.141.1. Origin of the Commission. The Texas Commission on Alcohol and Drug Abuse was created through the Texas Alcohol and Drug Services Act, Texas Civil Statutes, Article 5561c-2, Acts of the 69th Legislature, Chapter 632, 1985, which continued, renamed, and expanded the duties of the former Texas Commission on Alcoholism, originally created in 1953. The commission exists in response to the need to provide services for chemical dependency and compulsive gambling prevention, intervention, treatment, and rehabilitation, and to educate all citizens about the problems of alcohol and drug abuse and compulsive gambling. The current enabling act for the commission is found in Texas Health and Safety Code, Chapter 461. sec.141.2. Commission Composition and Officers. (a) Officers. The governing board of the Texas Commission on Alcohol and Drug Abuse is composed of six members appointed by the governor with the advice and consent of the Senate. The chair of the board is appointed annually by the governor. The board shall elect a vice-chair. The board may elect a secretary or designate the executive director as secretary. (b) Election of officers. The vice-chair shall be elected annually. The secretary shall be elected or designated annually. A quorum of four members must be present for the election to be held. The elections shall be held prior to September of each year; the term of the office of the vice-chair and secretary shall expire on September 1 of each year. (c) Vacancies in offices. In the event of the resignation, death or incapacity of a commissioner serving as vice-chair or secretary, whose term has not expired, an election to fill that office shall be held at the next meeting following the vacancy. (d) Dual offices. A commissioner may not hold two offices concurrently, except as an officer-elect for a brief interim to allow for an orderly transfer of office. (e) Holdover service. Each officer of the board shall continue to serve until a successor is duly qualified and assumes the post. Upon the expiration of the term of appointment, a commissioner should continue to actively perform assigned duties until such time as public notification has been made of the appointment of a replacement. The vice-chair shall assume the duties of the chair in the event of the resignation, death, or incapacity of the chair until such time as the governor shall appoint a new chair. sec.141.3. Purpose of the Commission. The commission is the principal authority in the state on matters relating to chemical dependency and compulsive gambling prevention, intervention, treatment, and rehabilitation. The commission is the designated agency to receive and administer federal funds for chemical dependency services in Texas. The commission may provide services directly or through grants subject to the availability of state and federal funds. The commission licenses chemical dependency counselors and chemical dependency treatment facilities. The commission provides for the research and study of the problems of chemical dependency and compulsive gambling in this state, and for public information, education, and training related to these problems. The commission works cooperatively with interested and affected federal, state, and local agencies and organizations to plan, develop, coordinate, evaluate, and implement programs relating to chemical dependency services in Texas. sec.141.4. Authority to Accept Funds. The state constitutional authority for the acceptance by the commission of money from private or federal sources is the Texas Constitution, Article 16, sec.3. The state statutory authority for supervision of substance abuse programs by the commission is found in Texas Health and Safety Code, sec.461.012. In accordance with Texas Health and Safety Code, sec.461.012(2), the commission cooperates with the federal government in carrying out its charge to provide for the needs of chemically dependent persons through the administration of federal funds under state and federal law, adopting such methods of administration as are found to be necessary and not contrary to existing federal or state laws. The commission complies with necessary requirements to receive federal funds in the maximum amount and most advantageous proportion authorized. sec.141.5. Organization for Chemical Dependency Services. Under operational policies established by the commission, the executive director is responsible for administration, supervision, planning, licensing, funding preparation, and all other activities of the commission. The commission maintains an organizational chart which illustrates its functional organization. sec.141.6. Relation to Other Agencies and Endorsements. (a) Many state and federal agencies provide services that benefit the commission and those persons receiving benefits or privileges from the commission or its funded programs. The commission works cooperatively with these agencies to plan, develop, coordinate, implement, and evaluate programs for chemical dependency prevention, intervention, treatment, and rehabilitation. In addition, the commission works cooperatively with local governments, nonprofit and proprietary service providers, state planning regions, the criminal justice system, school districts, health organizations, and other groups and individuals. It provides technical assistance, funds, and consultation services for the development, enhancement, and coordination of community services. (b) The commission's cooperation or co-sponsorship with other agencies or groups, public or private, does not constitute the commission's endorsement of their programs. sec.141.8. Advisory Councils. (a) Regional Advisory Consortia. (1) Regional Advisory Consortia established. The commission establishes a Regional Advisory Consortium (RAC) in each Health and Human Services Commission (HHSC) region to provide the commission with viable data related to service needs from a local and regional perspective. Each RAC consists of no more than 24 members appointed by the commission. Members serve for three-year terms and include providers and other community representatives. (2) Commission role. The commission's governing board approves the criteria for membership and the RAC functions. The executive director appoints RAC members and officers. Each regional field representative serves as a liaison between the commission and the RAC, and coordinates and supports the RAC's activities. (3) Compensation. RAC members shall not receive compensation for their services or any other acts as members of the RAC. (4) Responsibilities. The purpose of the RAC is to communicate between the programs, agencies, individuals, and communities collecting and providing vital information related to its respective region. This information and communication is used by the commission in the funding decision process. (5) Rules of procedure. The Regional Advisory Consortia adopt bylaws and procedures appropriate to RAC functions and consistent with the statutes, rules, and policies of the commission. (b) Multicultural Affairs Advisory Council. (1) Multicultural Affairs Advisory Council established. The commission establishes a Multicultural Affairs Advisory Council (MAAC) to assist in finding solutions to the problems in establishing a barrier-free service delivery system for ethnics of color. The MAAC consists of 23 members appointed by the board who serve for three-year terms. Members are individuals who identify themselves as ethnics of color and/or minorities and include treatment providers, prevention providers, and other individuals knowledgeable of issues associated with substance abuse. (2) Commission role. The board approves nominations for membership and coordinates and supports the MAAC's activities. (3) Compensation. MAAC members may be reimbursed for travel expenses for attendance at council meetings, subject to the availability of funds. (4) Responsibilities. The purpose of the MAAC is to ensure that sensitivity to culture and ethnicity is universally recognized as a major contributor in developing and implementing services. The goal is to establish a barrier-free service delivery system for ethnics of color. (5) Rules of procedure. The Multicultural Affairs Advisory Council adopts bylaws and procedures appropriate to MAAC functions and consistent with the statutes, rules, and policies of the commission. sec.141.9. Commission Meetings. The board shall meet at least quarterly. Board meetings may be held anywhere within the State of Texas. Prior to each meeting, the chair, with the assistance of the executive director, shall prepare an agenda listing items to be considered and provide each member of the commission with a copy. Materials supplementing the agenda may be included. All meetings shall be held pursuant to public notice as required by law. The chair, or three or more members by written request, may call special meetings on dates and at such places and times as are determined by the executive director and the chair. sec.141.10. Public Comment and Requests. At its meetings, the board shall receive public comment from any person on any issue which is not otherwise provided for by rule or procedure. The board may limit public comment to five minutes per person. The commission shall maintain a list of visitors attending meetings. sec.141.11. Minutes and Recordings. At all open meetings, written minutes shall be taken and the meeting shall be recorded electronically. In addition, any person in attendance may make visual or auditory electronic recordings of open meetings, subject to the availability of space and technical limitations, by prearrangement with the executive director at least 24 hours in advance of the meeting. The chair shall certify the agenda of each executive session or direct that such session be recorded electronically unless the subject of the executive session is a private consultation permitted by Government Code, sec.551.071. sec.141.12. Commissioner Travel and Expense Reimbursement. (a) Official business. Commissioners may travel and incur expenses only when conducting official business. Meals and lodging, public and private transportation, fees, and other allowable expenses and compensatory per diem shall be in accordance with the guidelines as stated in the most current Appropriations Act and the Travel Allowance Guide published by the Comptroller of Public Accounts. (b) Commissioner duties. A commissioner may travel to perform official duties. A commissioner's duties may include but not be limited to speaking on behalf of the commission to groups with a direct interest in substance abuse related issues; receiving endowments, awards or commendations on behalf of the commission; giving presentations or testimony to the legislature or other official body; and visiting funded providers, licensed facilities, or other facilities and individuals regulated by the commission, including potential facility locations and/or persons directly associated with a facility. A commissioner shall be accompanied by a commission staff person when making site visits, as practical and appropriate. sec.141.13. Signature Authority. The board shall employ an executive director and the executive director shall hire other necessary employees. The executive director, the deputy executive director, the deputies, the assistant deputies, and any other person approved upon a duly adopted motion of the board shall have authority to enter into contracts or approve vouchers for payment from funds appropriated to the commission, provided that no contracts for consulting services may be entered into without prior approval by the board. sec.141.14. Historically Underutilized Business Programs (HUB). (a) HUB policy. The commission is committed to providing procurement and contracting opportunities for minority and women-owned businesses. It is the policy of the commission to create an environment that will enhance Historically Underutilized Business (HUB) participation in state procurements, purchases and contracts. (b) HUB definition. A Historically Underutilized Business is defined as a corporation, sole proprietorship, partnership, or joint venture formed for the purpose of making a profit in which at least 51% of all classes of the shares of stock or other equitable securities are owned by one or more persons who have been historically underutilized (socially disadvantaged) because of their identification as members of the following groups: African American, Hispanic American, Asian Pacific American, Native American, and Women. These individuals must have a proportionate interest and demonstrate active participation in the control, operation, and management of the business. (c) HUB procedure. In accordance with Texas Civil Statutes, Article 601b, the commission shall ensure that: (1) it makes a good faith effort to award at least 30% of the total value of all applicable procurements, purchases, and contracts to certified HUBs; (2) it requires prime contractors and subgrantees to make good faith efforts to award at least 30% of the total value of all applicable procurements, purchases, and contracts to certified HUBs; (3) it identifies minority-and women-owned businesses and provide them an equal opportunity to submit bids or proposals on applicable commission procurement projects, that is, materials, supplies, equipment, and services; (4) it undertakes special outreach efforts to identify non-certified HUB vendors currently used by the commission because assisting them in obtaining HUB certification will benefit the commission as well as other agencies utilizing the same HUB in the future; and (5) the executive director establishes written agency procedures to implement and monitor compliance with this policy, and to compile and prepare such necessary reports as required by law. sec.141.31. Approval of Budgets and Receipt of Funds. The board shall approve budget requests to be submitted to the legislature and the receipt of grant funds as recommended by the executive director, and shall approve the agency's budget of appropriated funds and funds from other sources. In addition, the board shall approve the acceptance of donations, set fees for licensure programs, for technical or administrative assistance, consultant services, and specialized services provided by the commission. sec.141.33. Policies of the Commission. Policies of general applicability of the commission are adopted as rules or as announced in a decision resulting from a contested case. An individual commission member's opinion does not necessarily represent the opinion or policy of the commission. sec.141.41. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Board-The members of the governing body of the commission. Chemical dependency -Abuse of, psychological or physical dependence on, or addiction to alcohol or a controlled substance. Commission-The Texas Commission on Alcohol and Drug Abuse. Compulsive gambling -A condition marked by continuous or periodic loss of control over gambling; a progression in frequency and amount wagered and in the preoccupation with gambling and with obtaining monies with which to gamble; irrational thinking; and a continuation of the behavior despite adverse consequences. Controlled substance -A toxic inhalant, or a substance designated as a controlled substance by Texas Controlled Substances Act, Chapter 481. Intervention-Programs that offer constructive methods designed to interrupt the onset or progression of substance abuse in the early stages. Prevention-A proactive, inclusive process which seeks the strengthening and empowerment of individuals, families, and communities to create conditions that promote health and well-being by enhancing resiliency and protective factors. This is accomplished through comprehensive, evaluative, culturally and linguistically competent strategies. Rehabilitation-A planned and organized program designed to reestablish the social and vocational life of a person after treatment. Substance-Alcohol, a controlled substance, or other chemical substance which has the potential for addiction or harm from abuse or misuse. Toxic inhalant -A gaseous substance that is inhaled by a person to produce a desired physical or psychological effect and that may cause personal injury or illness to the inhaler. Treatment-A planned and organized program of services designed to initiate and maintain a person's chemical-free status or to maintain a person free of illegal drugs. sec.141.61. General Authority to Accept Donations. The authority to accept donations for the commission is vested in the board. Employees of the commission may accept donations within the policies set by the board. The commission does not accept donations of real estate without the express permission and authorization of the legislature, but the commission may accept other donations from organizations and individuals in any amount and for restricted or unrestricted lawful purposes. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601795 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 142. Investigations and Hearings 40 TAC sec.sec.142.11, 142.21, 142.22, 142.31, 142.32 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.142.11, 142.21, 142.22, 142.31, and 142.32, concerning investigations and hearings, with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6303). Proposed sec.142.33 (relating to All Other Appeals) is being withdrawn. These rules are being adopted to provide rules for general investigations and investigations involving abuse or neglect of children, the elderly, and the disabled, and to describe hearing procedures for licensure sanctions appeals and administrative penalty appeals. The rules will provide consistent, orderly, and fair investigations and hearings for persons regulated by the commission. The commission received comments from the Jefferson County Council on Alcohol and Drug Abuse and Sabine Valley Center regarding sec.142.21 (relating to Complaints and Investigations). Comment: Time frames should be built into every step, especially reporting. Response: The timing and circumstances of a complaint are considered when a case is received. To place arbitrary time frames on receipt of complaints could result in legitimate issues being excluded from investigation. It is impractical to set strict timeframes on each step of the investigations process because the circumstances are so varied. The goal is for each case to be fully considered and resolved in a timely manner. Comment: The rules state the commission will investigate all complaints. Commenter asked if that means clients' rights officers will no longer have a role. Response: It is standard procedure for commission investigators to notify the facility of allegations and give them an opportunity to conduct an internal investigation and respond. Wording has been revised to clarify that complaints received by the commission may be investigated by commission investigators or by the facility. Further, a clients' rights function is necessary to handle grievances internally so that it is not necessary for the complaint to be directed to the commission. Comment: The commission should develop a tracking system for all investigations. Response: The commission has a tracking system for investigations. This is an internal procedure and is not reflected in the rules. Changes have been made to sec.142.22 (relating to Child Abuse or Neglect Investigations) in response to Senate Bill 1111, which was passed during the last legislative session. The section has been renamed Investigations of Abuse or Neglect of Children, the Elderly, or the Disabled, and specific provisions for the elderly and disabled have been included in the text. New definitions for these populations have also been added to sec.142.11 (relating to Definitions). Section 142.31 (relating to Procedure for Facility and Chemical Dependency Counselor Disciplinary Proceedings) has been revised to track applicable statutes more closely and distinguish the roles of the board and the executive director in counselor and facility licensure actions. Section 142.32 (relating to Administrative Penalties) has also been revised to provide a more precise description of the statutory process, which does not include an informal conference. This chapter has also been edited to improve clarity, consistency, and readability. The rules are adopted under the Texas Health and Safety Code, sec.461.012(15) , which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the new rules is the Texas Health and Safety Code, Chapter 461. sec.142.11. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Administrative hearing -An appeals hearing conducted by a State Office of Administrative Hearings administrative law judge on behalf of the commission. Board-The commissioners of the Texas Commission on Alcohol and Drug Abuse. Child-A person under the age of 18. Commission-The Texas Commission on Alcohol and Drug Abuse. Days-Calendar days, unless otherwise specified. Disabled person -A person with a mental, physical, or developmental disability that substantially impairs the person's ability to provide adequately for the person's care or protection and who is: (A) 18 years of age or older; or (B) under 18 years of age and who has had the disabilities of minority removed. Elderly person -A person 65 years of age or older. Executive director -The person acting as the chief administrative officer of the commission. Hearings officer -A person designated by the executive director to conduct an informal conference. Informal conference -A meeting conducted by a hearings officer. Notice of intent -A document in writing that expresses contemplated adverse action. Person-An individual, partnership, corporation, association, governmental subdivision or public or private organization that is not a state agency. Respondent-A person against whom the commission seeks adverse action. sec.142.21. Complaints and Investigations. (a) A person alleging that a provider or licensee has violated commission statute or rules may file a complaint with the commission. Complaints about licensed counselors must be submitted in writing. (b) The commission may also initiate an investigation or disciplinary action against a provider or licensee if it receives information that a violation has or may have occurred. (c) The commission documents, evaluates, and prioritizes complaints based on the seriousness of the alleged violation and the level of client risk. The commission uses the following categories. (1) Category I: Alleged violations that pose an immediate threat to the health or safety of clients receiving prevention, intervention, or treatment services from persons licensed or funded by the commission. (2) Category II: Alleged violations that pose a potential threat to the health or safety of clients receiving prevention, intervention, or treatment services from persons licensed or funded by the commission. (3) Category III: Alleged violations that do not pose a potential threat to the health or safety of clients receiving prevention, intervention, or treatment services from persons licensed or funded by the commission. (4) Category IV: Alleged violations that are not related to commission rules or funding requirements and are not within the jurisdiction of the commission. (d) All allegations of fraud, abuse, neglect, exploitation, and other violations of client rights within the commission's jurisdiction shall be investigated. (e) The commission will refer complaints outside its jurisdiction to the appropriate agency for action, as appropriate. (f) The commission shall inform the person of the exact nature of the complaint and may require a provider or facility to conduct its own internal investigation and submit findings for review. (g) The person shall provide commission staff access to all documents, evidence, and individuals related to the alleged violation and any internal investigations. (h) Until the case is resolved, the commission shall send quarterly written status reports to all parties. (i) The commission shall document its investigative findings and conclusions and inform the facility and the complainant of the results. If an investigation substantiates the allegation, the commission will require the facility to take corrective action and/or impose sanctions. sec.142.22. Investigations of Abuse or Neglect of Children, the Elderly, or the Disabled. (a) Reports. The commission accepts oral or written reports concerning acts of abuse or neglect of children, the elderly, or the disabled relating to persons funded or licensed by the commission. All reports from an identified person alleging such abuse or neglect are classified as Category I or Category II complaints, depending on the perceived level of threat to the person's health or safety. (b) Response. Category I investigations begin within 24 hours and Category II investigations begin within 48 hours, whenever possible. (1) If an investigation determines the abuse or neglect does not involve a person responsible for the care, custody, or welfare of the child, the elderly person, or the disabled person, the commission refers the report to a local law enforcement agency for further investigation. (2) If the complaint was anonymous, the commission conducts a preliminary investigation to determine if there is any evidence to substantiate the allegations. If the commission finds no evidence to substantiate the allegations, the case is closed without further action. (c) Coordination with other agencies. The commission coordinates investigations of abuse or neglect with other appropriate agencies. (1) When it receives a complaint of child abuse or neglect, the commission: (A) reports the incident to other known agencies which also license the person; (B) notifies the Texas Department of Protective and Regulatory Services; and (C) contacts local law enforcement agencies. (2) When it receives a complaint of abuse or neglect of an elderly or disabled person, the commission: (A) reports the incident to other known agencies which also license the person; and (B) contacts local law enforcement agencies. (3) When the commission reports the incident to other agencies, it includes the investigator's projected on-site arrival and a request for the name, telephone number, and position of a contact person to coordinate interagency communications. (4) When the investigation is complete, the commission submits a full report to others involved in the particular case. (d) Evidence. Commission investigators collect sworn statements and documentary evidence only. If the investigator determines a need for the collection and preservation of physical and photographic evidence, the investigator will contact local law enforcement agencies or, in the case of a report of child abuse, the Texas Department of Protective and Regulatory Services for assistance. (e) Reports. In abuse or neglect cases, the investigator submits a written report to the assistant deputy for program compliance within five days of initiating the investigation. The commission notifies all relevant parties of the investigative findings in writing. (f) Disciplinary Action. The commission may take appropriate disciplinary action, which may include but is not limited to revocation of a license and/or termination of an award. The commission may consider the following factors in determining appropriate disciplinary action: (1) seriousness of the violation; (2) history of previous violations; (3) action necessary to deter future violations; (4) efforts to correct the violation; and (5) any other matter that justice may require. (g) Complaints. If a person under investigation requests clarification of the status of the case or files a complaint regarding the conduct of the commission's investigator or the commission's policy, the commission will review the request or complaint. (1) The investigator's immediate supervisor shall conduct the informal review as soon as possible, but not later than the 14th day after the complaint has been received. (2) If the person disputes the finding of the informal review, the person may request an administrative review by a hearings officer. (A) The hearings officer shall be an administrative employee who was not involved in and did not directly supervise the investigation. (B) The administrative review shall substantiate, alter, or reverse the original investigative findings. (C) The administrative review shall take place as soon as possible, but not later than the 45th day after the date the commission receives the request. If court proceedings are pending, the commission may postpone the review until court proceedings are completed. sec.142.31. Procedure for Facility and Chemical Dependency Counselor Disciplinary Hearings. (a) The executive director, upon investigation and development of information indicating that grounds may exist to take disciplinary action, may issue a notice of intent notifying the respondent of the proposed action to be taken. (b) The respondent may request an informal conference no later than 20 days following the date the notice of intent was mailed. (c) If the commission receives a timely request for an informal conference, the conference will be scheduled before the executive director or the director's designee. At the conference the respondent will be given the opportunity to show compliance with all requirements of law and why the proposed action should not be taken. (d) At the conclusion of the informal conference, or in lieu of an informal conference, the executive director or the director's designee may offer the respondent an agreed final order. If the respondent accepts the proposed order the matter is concluded upon concurrence of the executive director (in the case of a facility) or board (in the case of a chemical dependency counselor). If the respondent does not accept the agreed final order, the case will be scheduled for administrative hearing. (e) The respondent is entitled to at least 15 days' notice of the date, time, and place of the administrative hearing. The administrative hearing shall be conducted by an administrative law judge employed by the State Office of Administrative Hearings. Administrative hearings shall comply with the requirements of Texas Government Code, Chapter 2001, Subchapter C and the State Office of Administrative Hearings' Rules of Procedure, 1 Texas Administrative Code, Chapter 155. (f) The parties to the hearing shall be allowed to present evidence, to examine witnesses, to cross examine adverse witnesses, to make argument, and to submit legal authority. Following the hearing, the administrative law judge shall issue a proposal for decision containing a statement of the reasons for the proposed decision and of each finding of fact and conclusion of law necessary to the proposed decision. (g) Exceptions to the proposal for decision, if filed, must be filed with the administrative law judge within 20 days after the date of mailing the proposal for decision. Replies to the exceptions, if any, must be filed with the administrative law judge within 30 days after the date of mailing the proposal for decision. (h) The board will consider the proposal for decision regarding a chemical dependency counselor at a public meeting and issue an order. (i) The executive director will consider the proposal for decision regarding a facility and issue an order. (j) A motion for rehearing, if filed, must be filed in accordance with the Texas Government Code, Chapter 2001, Subchapter F. (k) An order granting a rehearing vacates the preceding final order. When the board or the executive director renders a new final decision, a motion for rehearing directed to the new order is a prerequisite for appeal. (l) The respondent appealing a final order shall pay to the commission the cost of preparing the original or a certified copy of the record that is to be transmitted to the reviewing court at rates approved by the General Services Commission. sec.142.32. Administrative Penalties. (a) The commission may impose an administrative penalty against a facility licensed or regulated by the Texas Health and Safety Code, Chapter 464, for violating the commission's statute or rules. (b) Each day a violation continues is a separate violation. (c) The amount of the penalty may not exceed $25,000 per violation and will be based on: (1) the seriousness of the violation; (2) enforcement costs relating to the violation; (3) history of previous violations; (4) the amount necessary to deter future violations; (5) efforts to correct the violation; and (6) any other matter that justice may require. (d) The executive director, shall report the findings and recommendations to the board, including a recommended penalty. (e) The executive director shall give written notice to the facility adversely affected within 14 days of the date the report is issued. The notice will be by certified mail. The notice shall include: (1) a brief summary of the alleged violations; (2) a statement of the amount of the recommended penalty; and (3) a notification that the facility has a right to a hearing on the occurrence of the violation, the amount of the penalty, or both. (f) The facility shall accept the determination and recommended penalty or request an administrative hearing in writing within 20 days of the mailing of the notice. If the facility accepts the determination and recommended penalty, the board shall issue an order approving both. (g) If the facility requests an administrative hearing or fails to respond within 20 days, the executive director or the director's designee shall set a hearing before the State Office of Administrative Hearings. (h) Section 142.31 (e)-(h) and (j)-(l) of this title (relating to Procedure for Facility and Chemical Dependency Counselor Disciplinary Hearings) apply to notice of the hearing, the hearing, hearings procedures, the proposal for decision, exceptions, replies to exceptions, the commission's decision, and motions for rehearing. 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 February 7, 1996. TRD-9601798 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 143. Introduction 40 TAC sec.sec.143.11-143.19, 143.31-143.36 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.143.11-143.19 and 143.31-143.36, concerning appeals hearings, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register(20 TexReg 6303). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.461.012(15), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing functions of the commission, including rules that prescribe policies and procedures followed by the commission in administering any commission programs. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, sec.461.012(15). 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 February 7, 1996. TRD-9601718 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 143. Awards Subchapter A. Funding Mechanisms 40 TAC sec.sec.143. 11-143.16 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.143. 11- 143.16, concerning awards funding mechanisms. Sections 143.12-143.16 are adopted with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6304). Section 143.11 is adopted without changes and will not be republished. These rules are being adopted to describe the methods used by the commission to award funds to applicants. The new rules provide a clear understanding of the commission's funding mechanisms and how they are used. The commission received comments from Sabine Valley Center, and sec.143.15 has been clarified in response. Additional changes have been made in response to further review and discussion by staff, and the rules have also been edited to improve clarity and readability. A summary of comments, commission responses, and changes to the rules follows. The following comment addresses sec.143.12 (relating to Competitive Negotiation): Comment: Commenter believes in the competitive process, but it is understood that all proposals meeting the minimum score will be considered equal, and selection will be based on lowest bid. It is unfortunate that, even with the current maximum reimbursement rate, which is extraordinarily low, program would be rewarded to provide services at an even lower rate, knowing that by cutting dollars, quality is also being cut. Response: This is the process for treatment applications only. To prevent the quality of services from deteriorating, the commission has set strict performance standards, and each applicant must include the cost of maintaining compliance when determining the bid price. Available funds are not sufficient to meet the need. By selecting the most cost-effective providers from among those who provide a satisfactory level of service, the commission hopes to extend services to the greatest possible number of individuals. Service quality will be carefully monitored during the contract period. The following comment addresses sec.143.15 (relating to Noncompetitive Renewal). Comment: Commenter questioned how continuing regional need for services will be determined and what the criteria for beneficial is. Response: The commission determines need by tracking and analyzing various needs indicators to provide statistical data for each region. In future funding cycles, needs assessment information compiled by the Regional Advisory Consortia will also be considered. Renewal is considered beneficial when the service is still necessary (relative to other service needs) and the provider is maintaining compliance with commission standards, as stated in subsection (c). Wording has been added to clarify this section. The rules are adopted under the Texas Health and Safety Code, sec.461.012(15) , which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the new rules is the Texas Health and Safety Code, Chapter 461. sec.143.12. Competitive Negotiation. The commission may solicit proposals from a number of sources by publishing a request for proposal (RFP) in the Texas Register. After the evaluation process, the commission negotiates with one or more applicants who meet the specified requirements. sec.143.13. Noncompetitive Negotiation. (a) The commission may solicit a proposal from only one source if it is not feasible to use competitive procedures. (b) In addition, one of the following must apply: (1) A competitive process failed to elicit acceptable bids. (2) The agency awarding or appropriating the funds to the commission either authorized the noncompetitive negotiation or approved the entity to receive funds. (3) Because of an emergency, it is necessary to proceed without formal advertising to avoid delay. (4) The material or service to be purchased is available from only one source. (c) The commission follows the procedures below: (1) A notice that funds are available for the service shall be published in the Texas Register for at least 15 days. (2) The commission will conduct a cost analysis or budget review which includes verification of the proposed cost data, the projections of the data, and the evaluation of the specific elements of costs and profit (if applicable and authorized). (3) The commission will evaluate the organization and the proposed program in relation to federal and state requirements and criteria set by the agency. (4) If applicable, the commission will obtain consent from federal funding sources as required by Office of Management and Budget (OMB) Circular A-102. (5) Applicable state regulations, such as the Historically Underutilized Business (HUB) Program, will also be followed. (d) After a noncompetitive award is made, the commission reserves the right to use a competitive process in subsequent years. sec.143.14. Unsolicited Proposals. (a) Unsolicited proposals will be considered only when sufficient and proper funds are available. (b) Unsolicited proposals do not include late or advance proposals for known commission requirements that can be obtained through competitive negotiation. (c) A valid unsolicited proposal shall be innovative or unique, meet a specific need of an underserved population, or meet any other unmet need. (d) Ongoing programs are not eligible for awards through this process. (e) The project shall be completed within a 12-month period, and the award shall not be renewed. (f) Total cost shall not exceed $25,000. (g) An unsolicited proposal shall be developed by the applicant without commission supervision. (h) Staff will evaluate unsolicited proposals if funds are available. (i) If the proposal meets all requirements and appears to be worthwhile, an award recommendation may be submitted to the commission's governing board or designee for approval. (j) If applicable, the commission will submit the proposal for federal approval as required by Office of Management and Budget (OMB) Circular A-102. (k) The commission will also follow applicable state regulations, such as the Historically Underutilized Business (HUB) Program. sec.143.15. Noncompetitive Renewal. (a) The commission may renew a competitive award annually for up to four years without further competition. (b) The commission may renew a noncompetitive award annually for an indefinite period, provided that a periodic review documents that competition is not possible. (c) A grant shall not be renewed unless: (1) the commission finds a continuing regional need for the services (relative to other services); and (2) the provider continues to meet eligibility requirements. (d) Renewal of an award is not automatic. The commission may renew an award when renewal is authorized and available data indicates the conditions in subsection (c) of this section have been satisfied. sec.143.16. Categorical Awards. When funds are available from other federal sources, the commission may: (1) mail a notice to interested applicants; (2) participate in the initial review of applications; and (3) prepare and submit a consolidated state application to the federal agency, when applicable. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601801 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter B. Eligibility 40 TAC sec.sec.143.21, 143.23-143.25 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.143.21 and 143.23-143.25, concerning eligibility for commission awards. Sections 143. 21 and 143.25 are adopted with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6304). Section 143.23 and sec.143.24 are adopted without changes and will not be republished. Proposed sec.143.22 (relating to Abstinence as a Treatment Goal) described an obsolete policy and is being withdrawn. These rules are being adopted to establish minimum criteria for persons who wish to apply for funding from the commission. The new rules ensure that all applicants for commission funding meet minimum criteria. The commission received comments from the Association of Substance Abuse Providers of Texas, Dallas Helps, Sabine Valley Center, Sul Ross State University Rio Grand College, and the Texas Counseling Association. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. All comments submitted were fully considered by the commission. Additional changes have been made in response to comments regarding wording and further review and discussion by staff, and the rules have also been edited to improve clarity and readability. A summary of comments, commission responses, and changes to the rules follows. The following comments address sec.143.21 (relating to Eligibility Criteria): Comment: Commenter questioned if for-profit entities eligible for all treatment funds or only state funds. Response: Federal funds cannot be used to provide financial assistance to any entity other than a public or non-profit entity. Therefore, for-profit providers are only eligible to compete for treatment services funded with state dollars (general adult, adolescent, and court commitment). Wording has been revised to specify these services. Comment: Qualified credentialed counselors should be required to be in good standing with their respective licensing boards, not just licensed chemical dependency counselors. Response: The commission supports the intent of this suggestion, but does not have the resources to conduct the necessary verification. Comment: The term "satisfactorily resolved" needs further clarification. Response: Requirements cannot be specifically listed in the rules because they vary according to the specific situation. Each provider is informed of the actions needed to resolve issues when action is taken. This section has also been revised to specify that an applicant must be licensed to provide services to the proposed target population (instead of at the proposed level of service) for 180 days to be eligible for funding. Because legal counsel has determined that the commission does not have statutory authority to regulate interns, the reference to counselor interns has been removed. The following comment addresses sec.143.23 (relating to Application Information): Comment: Wording should be added to ensure that this process is complete before the funding/contract start date. Response: This section describes information required during the application process, which by definition must occur before the funding start date. The rules are adopted under the Texas Health and Safety Code, sec.461.012(15) , which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the new rules is the Texas Health and Safety Code, Chapter 461. sec.143.21. Eligibility Criteria. (a) An application shall not be considered unless the provider meets the following criteria: (1) The provider shall be a legally established public, private nonprofit, or for-profit organization. For-profit entities are only eligible to be considered for funding to provide treatment services (general adult, court commitment, and youth) and shall be funded through a unit cost competitive procurement. (2) Providers seeking funding for treatment services shall have been licensed to provide services to the proposed target population for 180 days unless funds are being sought for developmental purposes. (3) All of the provider's licensed chemical dependency counselors shall be in good standing with the commission. (4) The provider and all counselors shall be in compliance with any commission agreed order. (5) Providers who have previously been funded by the commission shall be in compliance with the following requirements: (A) If the applicant has been suspended or terminated by the commission at any time in the past all issues shall be satisfactorily resolved. (B) If the applicant owes a refund to the commission it shall be on schedule with the terms of the repayment agreement. (C) The applicant shall have submitted an annual audit as required by the grant agreement or contract. (D) The applicant shall have corrected all deficiencies noted in previous audits or submitted an acceptable corrective action plan. (E) The applicant shall have returned all requested refunds, as required. (b) Requests for proposals (RFPs) and noncompetitive negotiations may establish additional eligibility standards. (c) Providers shall continue to meet eligibility standards after funds are awarded or be subject to sanctions. sec.143.25. Litigation. An applicant shall disclose to the commission in writing any pending or threatened litigation which might prevent the applicant from meeting funding requirements, if funded. This includes but is not limited to: (1) an action, suit, or proceeding before any court or governmental body, including environmental and civil rights matters; and (2) employee labor disturbances. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601802 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter C. Competitive Funding Process 40 TAC sec.sec.143.31-143.46 The Texas Commission on Alcohol and Drug Abuse adopts new sec.143.31-143. 46, concerning the competitive funding process. Sections 143.31, 143.33-143.42, and 143.44 are adopted with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6304). Sections 143.32, 143.43, 143.45, and 143.46 are adopted without changes and will not be republished. These rules are being adopted to describe the procedures used in the commission's primary funding mechanism, the Request for Proposal (RFP) process. The new rules provide for fair and consistent treatment of all applications received by the commission. The commission received comments from: the Association of Substance Abuse Providers of Texas, Jefferson County Council on Alcohol and Drug Abuse, Sabine Valley Center, and the South East Texas Regional Planning Commission. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. All comments submitted were fully considered by the commission. Additional changes have been made in response to comments regarding wording and further review and discussion by staff, and the rules have also been edited to improve clarity and readability. A summary of comments, commission responses, and changes to the rules follows. The following comments address sec.143.34 (relating to Competition and Collusion): Comment: Many of the commission's requirements are costly and thereby eliminate and restrict competition. Response: Requirements ensure that clients receive an acceptable quality of service. The commission will not fund providers who are unable to meet minimum requirements. Comment: The rule requires proposals to include only material produced by employees. Commenter questioned if this meant that an agency may not contract with a grant writer or use board members and other volunteers from assisting with the proposal. Response: This is not the intent; the wording has been revised. The following comment addresses sec.143.39 (relating to Screening): Comment: Commenter asked if unsuccessful applicants be notified with 30 days of submission, submission deadline, or review. Response: Wording has been revised to specify submission deadline. The period has also been increased to 45 days. The following comments address sec.143.41 (relating to Peer Review): Comment: If awards are based on a funding allocation to Health and Human Services Commission (HHSC) regions, it seems inconsistent to set up competition and peer review based on a smaller unit. The scenario may arise where there are no competing RFPs in a HHSC region because the applications are all from different state planning regions. Yet, they are all truly competing for the allocation available to the HHSC region. This rule could take away the opportunity for Peer Review in the funding decision process. Response: Accept. The section has been revised to indicate that "competing" will be determined within the HHSC region. Comment: The relationship between the peer review process and funding decisions is not clear. Response: The peer reviewers evaluate conformance with award criteria, which are one of the factors considered in the decision process. Wording in sec.143.42 has been revised to reference peer review scores. Comment: After peer review is complete, publish a list of those persons (and their affiliation) who participated in the peer review process. Response: The comment was declined. Anonymity is necessary to protect the privacy of the peer reviewers and ensure their continued objectivity. The following comment addresses sec.143.42 (relating to Funding Decisions): Comment: Commenter asked how will providers be advised of adjustments and will they have recourse. Response: Adjustments in funding allocations will be reflected in the awards decisions. The provision for adjusting the award criteria allows the commission to interpret the criteria in ambiguous situations. These adjustments will not substantially change the content of the criteria, so applicants will not be formally notified. Applicants do not have recourse to challenge funding decisions. The following comments address sec.143.44 (relating to Acceptance): Comments: Historically, providers have been afforded little time to carefully review letter of award, sign and return. Wording should be added to ensure that the contracting process is completed before the funding start date. Response: The commission will make every effort to complete the process before the funding start date, but does not feel that this needs to be specified in the rules. Comment: Agencies submit applications for funding based on the content of the RFP. If modifications or stipulations are added after the fact, that changes what the applicant bid on. Additional stipulations must be negotiated. Response: The comment was declined. The funding process already provides for negotiation to determine the terms and conditions listed in the letter of award. Wording has been added to explain that the terms and conditions are designed to assist providers in achieving full compliance with requirements stated in the Request for Proposal and the Compliance Guide. The rules are adopted under the Texas Health and Safety Code, sec.461.012(15) , which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the new rules is the Texas Health and Safety Code, sec.461. sec.143.31. Award Criteria. (a) The commission shall develop award criteria for each request for proposal (RFP) based on state and federal funding mandates which address priorities, restrictions, and prohibitions. (b) Funds are awarded through a plan based on: (1) an allocation formula which recognizes need in the Health and Human Services Commission (HHSC) regions; (2) peer review rankings; and (3) cost of proposed service. (c) The commission may consider additional factors in allocating funds, including: (1) appropriateness for the commission funding; (2) potential contribution of proposed services; and (3) past performance and compliance. (d) Award criteria shall be developed in accordance with policies and procedures established by the board and listed in the request for proposal (RFP). sec.143.33. Cancellation or Suspension of Solicitation. (a) The commission has the right to reject all offers and cancel a solicitation. Reasons for cancellation include: (1) the specifications given in the request for proposal (RFP) were inaccurate, inadequate, or ambiguous; (2) the services are no longer required; (3) the offers received indicated that the services can be purchased by a less expensive method; (4) probable cause is found to believe that the bids/offers are collusive or were submitted in bad faith; (5) none of the applicants are considered responsive; and (6) the responsible contracting authority determines cancellation is in the commission's best interest. (b) The commission may suspend a solicitation because of uncertainty in federal regulations, commission policy, or similar requirements. The process may resume when the issue is resolved, or the solicitation may be canceled. sec.143.34. Competition and Collusion. (a) The commission shall maximize open and free competition. Competitive requests for proposals shall not include unwarranted requirements which eliminate or restrict participation of qualified potential providers. (b) The award process shall be fair and impartial. (c) Proposals shall represent the efforts of the applicant organization. (d) Lobbying of commission staff or commissioners is prohibited. sec.143.35. Advertisement of Solicitation. (a) The commission publishes a notice of the intent to purchase services through a competitive process in the Texas Register. The notice includes: (1) the service to be purchased; (2) the geographic area to be served; (3) funding limitations; (4) method of payment; (5) contract period; (6) any limitations on who may submit an offer; (7) how to obtain a request for proposal (RFP); and (8) the application deadline. (b) The commission maintains a mailing list of persons interested in receiving a copy of funding notices. The commission attempts to reach as many potential applicants as possible, depending on available staff time and funding. sec.143.36. Information about the Funding Process. (a) An applicant may obtain information about the funding process only through the methods described in the application package. (b) Applicants with questions about a request for proposal shall request information according to these instructions. (c) The commission does not give potential providers information that may give them any competitive advantage over other potential providers. (d) The commission representatives do not discuss applications with applicants after the submission deadline. sec.143.37. Application. (a) An organization shall apply for funding using forms and procedures specified by the commission. (b) The application shall be signed by the organization's authorized official. (c) Providers seeking noncompetitive renewal awards must submit an application each year. (d) Applications shall be received at the commission by the date and time stated in the request for proposal. The commission will not consider any material related to an application (except for Texas Review and Comment System comments) that is received after the due date. (e) Applications shall be submitted by mail or in person. The commission does not accept applications by facsimile. sec.143.38. Texas Review and Comment System (TRACS) Review. (a) Applicants seeking financial assistance from the commission shall comply with the Texas Review and Comment System (TRACS) as described in the request for proposal. (b) A favorable Texas Review and Comment System recommendation is not required for applicants to submit proposals to the commission. sec.143.39. Screening. Commission staff conduct an evaluation for eligibility and completeness using minimum requirements stated in the request for proposal. An application shall meet all screening criteria to qualify for further consideration. The commission notifies applicants eliminated through the screening process within 45 days of the submission deadline. sec.143.40. Internal Review. Commission staff conduct an evaluation of each applicant's performance and compliance history, including current status with the commission. Staff may also contact other funding sources during this process. sec.143.41. Peer Review. (a) The commission maintains a peer review process to evaluate competing applications. (1) Applications are competing when two or more applications are received from the same Health and Human Services Commission planning region for the same service, service level, setting, and target population. (2) The commission uses peer review or all competitive awards unless the scope of the award or the number of competing applications received does not justify the cost. (b) The peer review process is designed to promote fairness, objectivity, and impartiality. (c) The commission solicits applications from professionals outside Texas to serve as peer reviewers. Peer reviewers shall demonstrate appropriate training and experience and shall have no personal interest in the outcome. (d) The peer reviewers score each application according to the review criteria stated in the request for proposal. The commission provides written procedures and training for all peer reviewers. sec.143.42. Funding Decisions. (a) Funding decisions are: (1) made by the commission's governing board or designee; and (2) based on the funding allocations, peer review scores (which reflect conformance with the award criteria), and the cost of the proposed service. (b) Adjustments may be made to the funding allocations and award criteria to meet unanticipated changes and needs. (c) Staff apply the funding allocation formulas and award criteria to determine which applications will be recommended for funding. (d) The governing board or designee shall review and approve the recommendations. sec.143.44. Acceptance. (a) The commission will send successful applicants written notice within 30 days of the funding decision. (b) To receive an award, the applicant shall accept any additional or special terms and conditions listed in the grant award notice and any changes in the funding application. Terms and conditions are designed to assist providers in achieving full compliance with requirements stated in the request for proposal and the Provider Compliance Guide. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601805 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 148. Facility Licensure Standards Subchapter A. Licensure Information General Provisions 40 TAC sec.sec.148.1-148.4 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.1-148.4, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register(20 TexReg 6305). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. General Provisions This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601719 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter A. Licensure Information 40 TAC sec.sec.148.1-148.4, 148.21-148.27, 148.41, 148.42, 148. 61 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.148.1-148. 4, 148.21-148.27, 148.41, 148.42, and 148.61, concerning chemical dependency facility licensure information. Sections 148.2-148.4, 148.22-148.26, 148.41, and 148.61 are adopted with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6304). Sections 148.1, 148.21, 148.27, and 148.42 are adopted without changes and will not be republished. The title of sec.148.26 has been changed from "Discontinuing Treatment" to "Closing a Treatment Program". These rules are being adopted to describe general provisions; procedures for licensure application, renewal, and changes in status; licensure fees; licensure reviews; sanctions and injunctions; and definitions. These rules will specify the procedures required for licensure. The commission received comments from the Texas Nurses' Association, Dallas Helps, Jefferson County Council on Alcohol and Drug Abuse, Lubbock Regional MHMR Center, Sabine Valley Center, Sul Ross State University Rio Grand College, Texas Counseling Association, Permian Basin Community Centers, the Texas Council on Problem and Compulsive Gambling, and a number of individuals. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. Additional changes have been made in response to comments regarding wording and further staff review, and the rules have also been edited to improved clarity and readability. All comments submitted were fully considered by the commission. A summary of comments, commission responses, and changes to the rules follows. The following comments address sec.148.2 (relating to License Required: Comment: There is confusion about licensure of criminal justice programs, which needs to be clarified. Response: The commission and the Texas Department of Criminal Justice are developing a memorandum of understanding to address this and other licensure issues. Comment: Everyone who provides chemical dependency treatment should be licensed by the commission. The fact that an agency operates under the guise of the federal government or a private psychiatric facility licensed by the Texas Department of Health does not assure the knowledge base to treat chemical dependency. Response: These exemptions are mandated by the Texas Health and Safety Code, sec.464.003. Comment: Commenter questioned what is meant by "support services" and does it include assessments and educational activities. Response: The term defined in sec.148.61 has been changed from "supportive services" to "support services". This exemption is found in Texas Health and Safety Code, sec.464.003. It does not refer to activities such as education and assessment. Comment: All individuals, including licensed chemical dependency counselors and private licensed health care practitioners, should be licensed by the commission if they provide chemical dependency services. Response: This rule only exempts licensed professionals practicing within the scope of their licenses, which provides assurance of professional competency. A licensed professional who provides a structured chemical dependency treatment program is required to obtain a facility license, but it is not appropriate to require a private practitioner to meet standards written for treatment facilities. This exemption is also mandated by Texas Health and Safety Code, sec.464.003. Comment: The phrase "exempt under state law" is too vague. Many ministers tend to think that they can treat people regardless of training. Response: This provision has been replaced with an additional exemption provided by law. Exemptions for ministers providing chemical dependency counseling are specified in the Texas Administrative Code, Title 40, sec.150.4 (relating to Counselor Licensure). A treatment facility operated by a minister is not exempt from facility licensure rules. Comment: A licensed program should not be required to become certified to offer a Drug and Alcohol Driving Awareness Program. Response: This certification is required by the State Board of Insurance through Board Order #60509. Licensure does not ensure that the facility has the training and expertise to deliver the required curriculum. This section has also been revised to clarify the provision relating to programs licensed by the Texas Department of Health. Because the commission is no longer designating interns, a provision has been added requiring treatment facilities which compensate interns to provide counseling, assessment, or intervention services to be approved clinical training institutions. The following comment addresses sec.148.3 (relating to Application of the Rules): Comment: Commenter questioned why commission activity does not set precedent, that there should be consistency in the application of the rules. Response: The rules are intended to provide consistency, and this statement has been removed. The following comment addresses sec.148.21 (relating to Licensure Application): Comment: Only an applicant for initial licensure should have to submit a complete licensure application and fee. There should not be a fee for a change in status unless it involves an additional program and location, and then the fee should be limited to $50. Response: Most facilities experience significant change over two years. The application allows the commission to update its files and verify that a facility's licensure status is appropriate. All changes in status involve significant processing and review and cost the commission more than $50. By law, the commission is required to raise at least half of its operating expenses through licensure fees. The following comments address sec.148.22 (relating to Licensure Renewal): Comment: Commenter asked if the commission will advise licensees prior to the 90 days that the license is about to expire. Response: Yes, the licensee shall be advised. Comment: The renewal should not need to be mailed more than 60 days before expiration. Response: The time frame has been reduced to 60 days. Comment: A $500 penalty for late renewal is ridiculous. After 90 days a penalty of $50-100 is sufficient. Response: The commission has had great difficulty collecting fees by the established deadline. A penalty of only $50-100 would not provide adequate incentive for facilities to pay the fee on time, particularly large facilities. The following comments address sec.148.25 (relating to Licensure Fees): Comment: Fees are increasing, but provider reimbursement is unchanged. Response: Funding and licensure are unrelated activities. Licensure fees are required to support the licensure function. Comment: It would be assumed that providers may also charge the commission for requested documentation at the listed rates. Response: The rules has been revised to state that fees will be charged only for lists and labels that are unrelated to the regulatory process. The following comments relate to sec.148.61 (relating to Definitions): Comment: Commenter suggested replacing "licensed medical professional" and "medical care" to "licensed health professional" and "health care". The term "medical" suggests a licensed physician. Response: This change has been made throughout the rules. Comment: Under the definition of qualified credentialed counselor, recognize a psychological associate and clinical nurse specialist or nurse practitioner with a specialty in psyche-mental health. Response: The definition now includes these credentials. Comment: Under the definition of qualified credentialed counselor, allow 90 clock hours of specific chemical dependency education from an accredited college or university to substitute for one year of chemical dependency counseling experience. Response: The definition has been revised to allow 90 hours of education to substitute for one year of experience. Because the commission does not require education required for counselor licensure to be obtained from accredited colleges and universities, the rule does not include this limitation. Comment: Commenter questioned why a certified alcohol and drug abuse counselor is not recognized as a qualified credentialed professional. Response: A person who is a certified alcohol and drug abuse counselor but is not a licensed chemical dependency counselor is not legally authorized to practice chemical dependency counseling in the state of Texas. Comment: A definition for CADAC should be included. Response: The term "CADAC" is not used in these rules. Comment: Definitions for compulsive gambling and certified compulsive gambling counselor should be added. Response: These terms are not used in the rules. Comment: The Board of Nurse Examiners changed the term "advanced nurse practitioner" to "advanced practice nurse". Response: The terminology has been changed throughout rules because the commission no longer designates counselor interns, the definitions for counselor intern and direct supervision have been revised, and a definition has been added for counselor trainee. Obsolete terms and terms not used in the rules have been removed The rules are adopted under the Texas Health and Safety Code, Chapter 464, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the new rules is the Texas Health and Safety Code, Chapter 464. sec.148.2. License Required. (a) A facility providing chemical dependency treatment in Texas shall have a license issued by the commission unless it is: (1) a facility maintained or operated by the federal government or its agencies; (2) a facility directly operated by the State of Texas; (3) a chemical dependency treatment program approved by the Texas Department of Health within a licensed general hospital, specialty hospital or private psychiatric facility; (4) an educational program for intoxicated drivers; (5) an individual who personally provides support services to chemically dependent persons but does not offer or purport to offer a chemical dependency treatment program; (6) the office of a private licensed health care practitioner or licensed chemical dependency counselor who personally renders individual or group services within the scope of the practitioner's license and in the practitioner's individual office; or (7) a 12-step or similar self-help chemical dependency recovery program: (A) that does not offer or purport to offer a chemical dependency treatment program; (B) that does not charge program participants; and (C) in which program participants may maintain anonymity. (b) The facility shall have a licensure certificate for each program and site. (c) A licensed facility shall have written approval from the commission before accepting court commitments. (d) A facility shall not compensate a counselor trainee for performing counseling, assessments, or interventions before receiving written approval as a clinical training institution from the commission. sec.148.3. Application of the Rules. (a) The commission's interpretation of these rules shall be binding on all applicants and licensees. (b) Information, opinions, and advice provided by commission staff shall not be considered binding on the board if the matter requires action by the board. sec.148.4. Variances. (a) The commission's executive director may grant a temporary variance to a facility or group of facilities. (b) To be eligible for a variance, a facility shall show: (1) an alternative method is used to meet the intent of the rule; and (2) the variance will not jeopardize the health, safety, or welfare of clients. (c) The commission's executive director or designee will determine if an alternative is equivalent to the written rule and when it will be accepted during licensure reviews. sec.148.22. Licensure Renewal. (a) A license issued by the commission expires at the end of two years and may be renewed. (b) The licensee shall file a renewal application and renewal fee at least 60 days before the license expires. (c) The facility shall not provide services after the license expiration date unless it has received written notification that the renewal has been approved. (d) If the commission receives the renewal application one to 90 days after the expiration date, the licensee shall pay a $500 penalty in addition to the renewal fee. (e) The license cannot be renewed if more than 90 days have passed since the expiration date. The licensee shall submit an application for a new license. sec.148.23. Changes in Status. (a) A facility shall give the commission advance notice of any proposed change in a program's licensure status and submit the appropriate application and fees. Notice of less than 60 days may delay approval. (b) The facility shall receive written approval from the commission before implementing any of the following changes: (1) additional program site; (2) new organization name; (3) additional services; (4) new address; (5) increase in client capacity; or (6) change in client gender or age group. sec.148.24. Change in Ownership. (a) The facility shall notify the commission before a change in ownership. (b) A license becomes invalid when a program changes ownership and the licensure certificate shall be returned to the commission at that time. (c) The new owner shall apply for a new license and is subject to the same procedures and fees as any other applicant. sec.148.25. Licensure Fees. (a) A single licensure fee is charged and collected for each licensure period. (b) Licensure fees are not refundable. (c) A facility shall pay the full licensure fee for any licensure period during which it provides chemical dependency treatment. Failure to notify the commission of closure does not excuse a licensee from paying fees. (d) Fees shall be paid in full by certified check, cashier's check, or money order. (e) The schedule for licensure fees is: (1) application fee-$100; (2) base fee-$1,000; (3) fee per site-$100; (4) fee per bed-$30; (5) maximum fee per facility-$4,000. (f) The following fees are also charged: (1) list of licensed facilities-$15; (2) facility labels-$5.00; (3) certificate replacement-$10. sec.148.26. Closing a Treatment Program. (a) Any facility that voluntarily suspends services for more than 30 days shall notify the commission with a letter justifying why the commission should not retire the license. If granted, inactive status is limited to six months. The licensee is responsible for all licensure fees while on inactive status. (b) The facility shall notify the commission in writing within 30 days when it closes a chemical dependency treatment program. (c) A license becomes invalid when a program closes and the licensure certificate shall be returned to the commission at that time. (d) Surrender of a license does not interrupt an investigation or sanctions process. Unless the facility is cleared through investigation or hearings, the commission will impose the proposed sanctions. The facility is not eligible to regain the license until all outstanding investigations, disciplinary proceedings, or hearings are resolved. sec.148.41. Sanctions. (a) The commission's executive director may deny, suspend, revoke, or refuse to renew a license if an applicant, licensee, owner, member of the governing body, administrator, or clinical staff member of the facility: (1) has a documented history of client abuse or neglect as determined by the commission's executive director; or (2) fails to comply with any provision of the Act or other applicable statute, or with a commission rule. (b) The commission may impose an administrative penalty against a person regulated under the Act who violates authorizing statutes, or a rule or order adopted under the statutes. (c) A person practicing without a license is subject to a civil penalty of up to $200 for each violation of the Act or these rules. Each day a violation continues or occurs is a separate violation. sec.148.61. Definitions. The following terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise. Abuse-Any act or failure to act which is done knowingly, recklessly or intentionally, including incitement to act, which caused or may have caused injury to a client. Injury may include, but is not limited to: physical injury, mental disorientation, or emotional harm, whether it is caused by physical action or verbal statement. Client abuse includes: (A) any sexual activity between facility personnel and a client; (B) corporal punishment; (C) nutritional or sleep deprivation, (D) efforts to cause fear; (E) the use of any form of communication to threaten, curse, shame, or degrade a client; (F) restraint that does not conform with these rules; (G) coercive or restrictive actions taken in response to the patient's request for discharge or refusal of medication or treatment that are illegal or not justified by the patient's condition; and (H) any other act or omission classified as abuse by the Texas Family Code, sec.261.001. Act-Texas Health and Safety Code, Chapter 464. Adequate-Reasonably sufficient; enough to meet the need. Admission-Formal acceptance of a prospective client to a treatment facility. Adolescent-An individual 13 through 17 years of age whose disabilities of minority have not been removed by marriage or judicial decree. Adult-An individual 18 years of age or older, or an individual under the age of 18 whose disabilities of minority have been removed by marriage or judicial decree. Advanced practice nurse-A registered nurse currently licensed in Texas who is prepared for advanced practice and approved by the Texas State Board of Nurse Examiners. Advertise-To solicit or induce, through print or electronic media, including radio, television, or direct mail, to purchase the services provided by a treatment facility. Aftercare services -Services provided by a facility to a client who has been discharged and is no longer receiving services from any of that facility's treatment programs. Aftercare may be provided by the facility directly or through a letter of agreement with another provider. Applicant-A person who has submitted a complete application to the commission for licensure, relicensure, or change in status, and paid the application fee. Approval-Written authorization. Chemical dependency -The abuse of, psychological or physical dependence on, or addiction to alcohol, a toxic inhalant, or any substance designated as a controlled substance in the Texas Controlled Substances Act. Chemical dependency counselor-A qualified credentialed counselor or counselor intern. Chemical dependency education-A planned, structured presentation of information related to chemical dependency, including but not limited to: physiological and psychological effects, emotional and social deterioration, rehabilitation and relapse, and risk of acquiring Human Immunodeficiency Virus. Chemical dependency treatment-A planned, structured, and organized program designed to initiate and promote a person's chemical-free status or to maintain the person free of illegal drugs. It includes, but is not limited to, the application of planned procedures to identify and change patterns of behavior related to or resulting from chemical dependency that are maladaptive, destructive, or injurious to health, or to restore appropriate levels of physical, psychological, or social functioning lost due to chemical dependency. Child-An individual under the age of 13. Client-An individual who is receiving services from a chemical dependency treatment facility licensed by the commission. All licensed chemical dependency counselors providing chemical dependency services at a facility have a client- counselor relationship with any client receiving chemical dependency or related services from the facility which extends for two years beyond the date that services cease. Commission-The Texas Commission on Alcohol and Drug Abuse. Commissioners-Members of the commission's governing body. Confidentiality laws -Federal law (42 United States Code, sec.290 dd-2) and state law (Texas Health and Safety Code, Chapter 611) and regulations adopted pursuant to these statutes. Consenter-The individual legally responsible for giving informed consent for a client. This may be the client, parent, guardian, or conservator. Unless otherwise provided by law, a legally competent adult is his or her own consenter. Consenters include adult clients, clients 16 or 17 years of age, and clients 13-16 year of age admitting themselves for chemical dependency treatment under the provisions of the Family Code, sec.32.003. Consultant-An individual who is not an employee who provides services to the facility for compensation. Contract provider -A legal entity with whom the facility has a written agreement for services. Counselor-A chemical dependency counselor. Counselor intern (CI)-A person pursuing a course of training in chemical dependency counseling at a regionally accredited institution of higher education or an approved clinical training institution who has been designated as a counselor intern by the institution. A counselor intern shall only perform functions that are part of the supervised course of training. The supervised course of training includes educational hours, practicum hours, and supervised work experience hours that are described in writing, performed under the auspices of the institution, and performed under the direct supervision of a qualified credentialed counselor. Counselor trainee -A person working to accumulate the 4, 000 hours of supervised work experience required for licensure. A trainee receiving compensation for performing assessments, counseling, or crisis intervention shall be designated as a counselor intern by a regionally accredited institution of higher education or an approved clinical training institution. Detoxification services -Chemical dependency treatment designed to systematically reduce the amount of alcohol and other toxic chemicals in a client's body, manage withdrawal symptoms, and encourage the client to seek ongoing treatment for chemical dependency. Direct care staff-Staff responsible for providing treatment, care, supervision, or other client services that involve a significant amount of face- to-face contact. Direct supervision -Oversight and direction of a counselor trainee provided by a qualified credentialed counselor (QCC). The qualified credentialed counselor shall: (A) assume responsibility for the actions of the trainee within the scope of the trainee's clinical training; ; (B) be on site for assistance; (C) conduct a complete review of the trainee's written work product at least weekly; (D) observe the trainee providing services to chemical dependency clients at least weekly; and (E) meet with the trainee at least weekly to provide written and verbal feedback and direction. Discharge-The time when a client leaves a facility and will no longer be receiving chemical dependency treatment. Documentation-A written record that includes required content, date, and signature. Employee-An individual hired directly by the facility to provide services in exchange for money or other compensation, as determined under the usual common law rules. An employee is subject to the will and control of the employer not only as to what shall be done but as to how it shall be done. Ensure-Take all reasonable and necessary steps to achieve results. Experience-Direct participation in a similar job activity supervised by a qualified individual. Exploitation-An act or process to use, either directly or indirectly, the labor or resources of a client for monetary or personal benefit, profit or gain of another individual or organization. FTE-Full Time Equivalent staff position requiring 40 hours per week. Facility-A legal entity with a single governing body, a single administration, and a single staff that provides chemical dependency treatment. Facility director -The individual authorized by the governing body to act on its behalf in the overall administration of the facility. Governing body -The individual or individuals legally established to operate a facility. The governing body has ultimate authority and responsibility for the facility's services and operations. HIV-Human Immunodeficiency Virus infection. Immediate supervision -Being physically present while a task is being performed. Individual counseling -A face-to-face interaction between a client and a counselor to help a client identify, understand, and resolve issues and problems related to chemical dependency. Individual service day-A day on which a specific client receives services. Inform-To communicate through mail, by telephone or telecopier, by courier, electronically, or in person. Intake-The administrative process for gathering information about a prospective client and giving a prospective client information about the treatment facility and the facility's treatment and services. Intervention and assessment service-A service that offers assessment, counseling, evaluation, intervention, or referral services or makes treatment recommendations to an individual with respect to chemical dependency. License-A grant of authority to a facility to provide chemical dependency treatment in the state of Texas, which is issued by the commission under the Act. Licensed chemical dependency counselor (LCDC)-A counselor licensed by the Texas Commission on Alcohol and Drug Abuse. Licensed dietitian -An individual who is currently licensed or provisionally licensed by the Texas State Board of Examiners of Dietitians. Licensed marriage and family therapist (LMFT) -An individual who is currently licensed as a marriage and family therapist by the Texas State Board of Examiners of Marriage and Family Therapists. Licensed master social worker (LMSW)-An individual who is licensed as a master social worker by the Texas Department of Human Services. Licensed health professional-A physician, physician assistant, registered nurse, or licensed vocational nurse as defined in these rules. Licensed professional counselor (LPC)-An individual licensed as a professional counselor by the Texas State Board of Examiners of Professional Counselors. Licensed psychological associate-A person licensed as a psychological associate by the Texas State Board of Examiners of Psychologists. Licensed vocational nurse (LVN)-A nurse licensed by the Texas State Board of Vocational Nurse Examiners. Mechanical restraint -Use of a physical device to control or restrict a person's physical movement or actions. Medical emergency -Physical symptoms requiring immediate medical attention to prevent death or imminent harm. Medication-Any drug used to treat a condition or relieve symptoms, including prescription drugs and over-the-counter drugs. Medication error -Medication not given according to the written order. Includes duplicate doses, missed doses, and doses of the wrong amount or drug. Mental health referral service-A service that does not provide treatment directly but instead refers clients in need of mental health services to qualified providers. Neglect-Actions resulting from inattention, disregard, carelessness, ignoring or omission of reasonable consideration that caused, or might have caused, physical or emotional injury to a client. Examples of neglect include, but are not limited to: (A) failure to provide adequate nutrition, clothing, or health care; (B) failure to provide a safe environment free from abuse; (C) failure to maintain adequate numbers of appropriately trained staff; (D) failure to establish or carry out an appropriate individualized treatment plan; and (E) any other act or omission classified as neglect by the Texas Family Code, sec.261. 001. Notify-Inform in writing. Offer-To make available. On call-Immediately available for telephone consultation. On duty-Scheduled and present at the site to perform job duties. Orders (written, verbal, or telephone)-Direct communication between a physician and licensed program staff in which the physician directs specific treatments. Person-An individual, firm, partnership, corporation, association, or other business or professional entity. Personal restraint -Physical contact to control or restrict a person's physical movement or actions. Personnel-Members of the governing body, employees, contract providers, consultants, agents, representatives, volunteers, and other individuals working on behalf of the facility through a formal or informal agreement. Physician-An individual licensed by the Texas State Board of Medical Examiners to practice medicine, or an individual employed by any agency of the United States who has a license to practice medicine in any other state of the United States. Physician assistant -An individual registered as a physician assistant by the Texas State Board of Medical Examiners. Policy-A statement of direction or guiding principle issued by the governing authority. Procedure-A set of step-by-step instructions. Program-A specific level of chemical dependency treatment delivered to a defined client population. Program Director -The individual who manages a chemical dependency treatment program. Provide-To perform or deliver. Psychiatric emergency -Symptoms requiring immediate psychiatric attention. Psychologist-An individual licensed as a psychologist by the Texas State Board of Examiners of Psychologists. Qualified credentialed counselor (QCC)-A licensed chemical dependency counselor or one of the professionals listed below who can demonstrate two years of chemical dependency counseling experience or one year of chemical dependency counseling experience and 90 clock hours (six semester hours) of chemical dependency training including the 12 core functions from an accredited college or university or an education provider approved by the commission. Documentation shall be available upon request. The following professionals are eligible to serve as QCCs: (A) licensed professional counselor (LPC); (B) licensed master social worker (LMSW) ; (C) licensed marriage and family therapist (LMFT); (D) licensed psychologist; (E) licensed physician (MD); (F) certified addictions registered nurse (CARN); (G) licensed psychological associate; and (H) advance practice nurse recognized by the Board of Nurse Examiners as a clinical nurse specialist or nurse practitioner with a specialty in psyche- mental health (APN-P/MH). Qualified mental health referral service-A service that does not provide treatment directly but instead refers clients in need of chemical dependency treatment to qualified providers. A mental health referral service shall meet the statutory requirements of Texas Health and Safety Code, sec.164.007. Refer-Identify appropriate services and provide information needed to access them. Registered nurse (RN)-A professional nurse licensed by the Texas State Board of Nurse Examiners. Rehabilitation activities or services-A formalized program of training, based upon a written program description to assist the client in acquiring personal habits, attitudes, values and social interaction skills that will enable the client to function effectively and/or become gainfully employed. Residential site -A site owned, leased, or operated by the facility where clients sleep overnight. Retaliate-Adverse actions taken to punish or discourage a person who reports a violation or cooperates with an investigation, inspection, or proceeding. Such actions include but are not limited to suspension or termination of employment, demotion, discharge, transfer, discipline, restriction of privileges, harassment, and discrimination. Screening-Determining whether a client meets the program's admission criteria, based on the person's reason for admission, medical and chemical use history, and other needed information. Seclusion-The placement of a client alone in a room from which exit is prevented. Service day-A day during which the program provides scheduled services to any client. Sexual exploitation -A pattern, practice, or scheme of conduct that can reasonably be construed as being for the purposes of sexual arousal or gratification or sexual abuse of any person. It may include sexual contact, a request for sexual contact, or a representation that sexual contact or exploitation is consistent with or part of treatment. Site-A single identifiable location owned, leased, or controlled by a facility where any element of chemical dependency treatment is offered or provided. Small family living environment-A single apartment unit, house, or similar residence designed for an average size family, with no more than four bedrooms. Solicit-To contact a person for the purpose of inducing the person, directly or indirectly, to enter treatment or make a referral. Special treatment procedures-Personal restraint, mechanical restraint, and seclusion. Staff-Individuals who provide services for the facility in exchange for money or other compensation, including employees, contract providers, and consultants. STDs-Sexually transmitted diseases. Stock prescription drugs-Prescription drugs which are packaged in the original manufacturer's container. Support services -Services designed to provide individuals with a stable living environment, such as meals, shelter, and access to peer support groups. Treatment level -The intensity of treatment provided by a program. Treatment protocol -Instructions for the delivery of treatment services to groups of clients by non-licensed and licensed staff. Unethical conduct -Conduct prohibited by the ethical standards adopted by state or national professional organizations or by rules established by a profession's state licensing agency. Unprofessional conduct -An act or omission that violates commonly accepted standards of behavior for individuals or organizations. Volunteer-An individual who provides services for the facility without compensation. Unpaid students are volunteers. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601814 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Licensure Procedures 40 TAC sec.sec.148.21-148.27 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.21-148.27, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6305). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. Licensure 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 legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601720 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Licensure Sanctions 40 TAC sec.sec.148.41-148.46 The Texas Commission on Alcohol and Drug Abuse adopts sec. sec.148.41-148.46, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6306). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. Licensure Sanctions This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601721 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Definitions 40 TAC sec.148.61 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.148.61, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6306). The rule is being repealed to allow adoption of a revised version of the rules. The repeal of this rule deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeal. The repeal is adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeal is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. Definitions This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601722 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter B. Facility Management Administration 40 TAC sec.sec.148.71-148.74 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.71-148.74, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6307). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. Administration This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601723 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter B. Facility Management 40 TAC sec.sec.148.71-148.75, 148.91-148.93, 148.111-148.117, 148.131 148.132 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.148. 71- 148.75, 148.91-148.93, 148.111-148.117, 148.131, and 148.132, concerning chemical dependency facility management. Sections 148.71, 148.73-148.75, 148. 92, 148.93, 148.111-148.114, 148.116, 148.117, 148.131, and 148.132 are adopted with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6307). Sections 148.72, 148.91, and 148.115 are adopted without changes and will not be republished. These rules are being adopted to establish minimum criteria for organizational structure and procedures, standards of conduct, referral practices, personnel and staff development, and safety. These rules will ensure sound organizational structure, qualified personnel, and appropriate referral practices in facilities licensed by the commission. The commission received comments from Sabine Valley Center, Dallas Helps, Serenity Center, and the Association of Substance Abuse Providers of Texas. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. Additional changes have been made in response to comments regarding wording and further staff review, and the rules have also been edited to improved clarity and readability. All comments submitted were fully considered by the commission. A summary of comments, commission responses, and changes to the rules follows. The following comments address sec.148.71 (relating to Governing Body): Comment: Monthly review of utilization reports is cited in the rules; commenter asked what utilization reports are required. Response: This provision has been removed. Comment: The licensure rules have no quality assurance, no utilization review/utilization management, and no financial accountability, which are important for consumer protection. Response: General rules relating to financial responsibility have been included in this section. Although quality assurance and utilization review/utilization management are important functions, they are not minimally required to protect the health, safety, and welfare of clients and ensure adequate treatment is delivered. The following comment addresses sec.148.75 (relating to Required Facility Reports): Comment: The rules have a requirement to submit requested data to the Texas Department of Health, but the Texas Department of Health has never requested any. Response: To fulfill the legislative mandate, the commission and the Texas Department of Health combined information needs in a single annual survey. The requirement for facilities to report violations has been moved from sec.148.74 (relating to Standards of Conduct), extending the time frame to 72 hours. The following comment refers to sec.148.113 (relating to Initial Training): Comment: Commenter asked what the term "all other staff" refers to, when a previous statement includes the phrase "all employees". Response: Staff, as defined in these rules, include contract providers and consultants as well as employees. The rule has been modified to specify these categories of staff. The following comments refer to sec.148.114 (relating to Special Training Requirements): Comment: Training requirements should include frequency for all courses. Response: Training without stated frequencies are required only one time. This has been clarified in the rule. Comment: There is no doubt that training on tuberculosis and sexually transmitted diseases would be very useful, but to require it for all staff is a very expensive requirement. Response: The rule has been modified to require providers to give staff information covering these items. Comment: Commenter asked who is to do the training on intakes. After a year or so on the job, staff are more capable than administration to train. Commenter also asked if there is a way to document competency in this area and not require the eight hours of annual training for seasoned staff. Response: Eight hours of intake training every year is a statutory mandate. The individual's clinical supervisor would be appropriate for training. Training could also include staff discussions related to the appropriateness of intake and observed practice followed by feedback. Comment: Commenter asked why a requirement for 30 hours of continuing education required here, shouldn't this rule remain under rules covering counselor licensure; and does this imply it is the facility's responsibility, not the intern's. Response: This requirement has been removed. The following comments address sec.148.116 (relating to Personnel Files and Training Records): Comment: The verbiage "if applicable" has been removed form certain items required in personnel files. Additional paperwork that is not applicable is an expensive waste of money. Response: "As applicable" was moved to the introductory clause to avoid needless repetition. Comment: Requiring disciplinary action records in personnel files should include a time limit in situations where the action has been fully resolved to insure that the record does not unduly influence managers in further personnel decisions. Response: The action should be a permanent part of the personnel file. Correction does not change the fact that the situation occurred. It is the organization's responsibility to establish and monitor polices regarding the use of that information in personnel decisions. Section 148.117 (relating to Basic Staffing Requirements) has been revised because the commission no longer designates counselor interns. The rule restricts facility use of counselor trainees and sets out the standards a facility shall meet to be approved as a clinical training institution. The following comment addresses sec.148.131 (relating to General Environment) : Comment: For the sake of the client's health, smoking cessation should be a goal, but prohibiting any smoking on the program site would be counterproductive. Restricting treatment to those willing to give up smoking imposes an incredible barrier to treatment. Additional health and safety hazards are created when clients must leave the site to smoke, especially near heavy traffic and in cold weather. Effort will be diverted from treatment to evading and enforcing this policy. It would extremely difficult to retain clients. Recommend restoring the previous restrictions on smoking inside the building and vending machines. Response: The commission agrees and has replaced the proposed restrictions with the previous restrictions. This section now requires compliance with the Americans with Disabilities Act. The restriction on weapons has also been moved to this section from sec.148.132 (relating to Emergency Evacuation). The rules are adopted under the Texas Health and Safety Code, Chapter 464, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the new rules is the Texas Health and Safety Code, Chapter 464. sec.148.71. Governing Body. (a) The facility's governing body is legally responsible for the management, services, and operations of the program. The governing body shall: (1) have legal authority to operate in the state of Texas; (2) designate a facility director; (3) develop and maintain an organizational chart; (4) establish codes of conduct; (5) approve the program's description and policies; (6) set up and maintain effective systems for planning, budgeting, and managing all resources; (7) review and approve an annual budget; (8) ensure compliance with all applicable laws, rules, and commission requirements; (9) ensure professional and ethical operations; (10) review operations and services and take appropriate action as needed; and (11) know the facility's licensure status and ensure that problems are resolved. A member of the governing authority shall participate in the licensure review summary. (b) The governing body shall hold meetings at least quarterly and keep minutes that include: (1) date and time; (2) place; (3) participants; (4) quarterly review of financial statements; (5) summary of discussions; and (6) actions taken. sec.148.73. Policies, Procedures, and Licensure Rules. (a) The facility shall operate according to a written program description and policies and procedures that comply with licensure rules. (b) The program description shall include: (1) program purpose or mission statement; (2) services and how they are provided; and (3) description of the target population. (c) The governing body shall establish policies that comply with licensure rules, and the facility director shall use the policies to develop and implement all needed procedures. (d) The policy and procedures manual shall be current, well organized, and easily accessible to all staff at all times. (e) The facility shall inform staff about any changes to the policy and procedure manual that are relevant to their job duties and provide training as needed. sec.148.74. Standards of Conduct. (a) The facility and all of its personnel shall: (1) protect the health, safety, rights, and welfare of clients; (2) provide adequate services as described in the program description; (3) comply with all applicable laws, regulations, policies, and procedures; (4) maintain required licenses, permits, and credentials; and (5) comply with professional and ethical codes of conduct. (b) Neither the facility nor any of its personnel shall: (1) commit an illegal, unprofessional or unethical act; (2) assist or knowingly allow another person to commit an illegal, unprofessional, or unethical act; (3) knowingly provide false or misleading information; (4) omit significant information from required reports and records or interfere with their preservation; (5) retaliate against anyone who reports a violation or cooperates during a review, inspection, investigation, hearing, or other related activity; or (6) interfere with commission reviews, inspections, investigations, hearings, or related activities. This includes taking action to discourage or prevent someone else from cooperating with the activity. (c) Facility personnel shall report violations of laws, rules, and professional and ethical codes of conduct to the commission. (d) The facility shall have written policies on staff conduct and reporting procedures that comply with this section. sec.148.75. Required Facility Reports. (a) The facility director shall report these incidents to the commission in writing within 72 hours of discovery: (1) fire and other natural disasters; (2) substantial disruption of program operation; (3) death of an active client (on or off the program site); and (4) violations of laws, rules, and professional and ethical codes of conduct. (b) The facility director shall report all incidents of alleged client abuse, neglect, and exploitation to the commission as described in sec.148.161 of this title (relating to Client Abuse, Neglect, and Exploitation). (c) The facility shall submit required financial and utilization data as requested by the Texas Department of Health. sec.148.92. Advertising and Billing. (a) A facility shall not advertise or purport to offer any level of chemical dependency treatment unless it holds the required license. (b) A facility shall not engage in false, misleading, or deceptive advertising. This includes making unsubstantiated claims, promises of cure, or guarantees of treatment results. (c) The facility shall not advertise intervention and assessment services unless the services are available and provided by qualified chemical dependency counselors. (d) The facility shall not represent that a referral service is qualified unless it complies with all the standards found in Texas Health and Safety Code, sec.164.007 (relating to Qualified Referral Services). (e) The facility shall not charge for undelivered services unless: (1) the facility offers a scheduled service described in the client's treatment plan; (2) the client does not attend or refuses to participate; and (3) the facility has documentation that the client was informed of this billing policy in writing at the time of admission. sec.148.93. Solicitation and Referral. (This section does not apply to Community Mental Health Centers established under Texas Health and Safety Code, Chapter 534.) (1) The facility shall comply with all statutes and regulations governing solicitation and referral, including those found in Texas Health and Safety Code, Chapter 164. (2) The facility shall not illegally or unfairly solicit or refer clients and shall not allow others to do so on its behalf. (3) The facility shall not solicit referrals without proper disclosure and consent. (4) The facility shall not own, operate, manage, control, or enter into a relationship with an intervention and assessment service that makes referrals to a treatment facility for inpatient treatment of mental illness or chemical dependency unless the intervention and assessment service meets all requirements listed in Texas Health and Safety Code, Chapter 164. (5) The facility shall have written policy and procedures that prohibit illegal or unfair solicitation and referral. sec.148.111. Organizational Structure. (a) The facility shall have a current organizational chart and document the current number of FTEs for each position. (b) Each staff and volunteer position shall have a written job description which specifies: (1) duties and responsibilities; and (2) minimum qualifications, including the level of education, training, or related work experience required. (c) The facility shall have written agreements with persons who provide chemical dependency services to the facility on a regular basis. This includes all persons who provide services that are required by the licensure rules. sec.148.112. Hiring Practices. (a) The facility shall hire applicants who meet the minimum qualifications listed in the job description. (b) The application or resume shall document required education, training, and related work experience. (c) Facility staff shall verify the current status of all required credentials with the credentialing authority by phone or letter. (d) The facility shall develop and implement procedures for reviewing the background and suitability of any employee with access to clients. The review shall be appropriate for each person's level of access and shall adequately protect clients. (e) The facility shall comply with all applicable laws, including the Texas Civil Practice and Remedies Code, sec.81.003, which relates to employment reference checks. sec.148.113. Initial Training. (a) Each employee shall complete initial training before working without immediate supervision. (b) The initial training shall include discussion of licensure rules relating to: (1) client rights; (2) client grievance procedures; (3) confidentiality of client-identifying information; (4) client abuse, neglect, and exploitation; (5) requirements for reporting abuse, neglect, and other serious incidents; (6) standards of conduct; (7) emergency and evacuation procedures; and (8) the individual's specific job duties. (c) Contract providers and consultants shall receive orientation on these topics appropriate to their qualifications and responsibilities. sec.148.114. Special Training Requirements. (a) The facility shall ensure that staff are adequately trained and competent to perform job duties. (b) Staff shall have all required training before performing job duties independently. Unless otherwise specified, training in the topics listed below is required only once. (c) The facility shall annually provide at least eight hours of approved training in issues relating to abuse, neglect, exploitation, illegal, unprofessional, and unethical conduct. This training shall comply with the interagency memorandum of understanding on abuse training. (d) All staff and volunteers shall complete HIV training based on the AIDS/HIV Model Workplace Guidelines for direct service providers established by the Texas Department of Health. (e) All employees shall receive information on tuberculosis and STDs that includes: (1) high-risk populations, (2) symptoms; (3) containment; (4) standard testing and treatment procedures; (5) available resources; and (6) appropriate referral. (f) All direct care employees shall have current certification in first aid and CPR. (1) Personnel in licensed medical facilities are exempt if emergency resuscitation equipment and trained response teams are available 24 hours a day. (2) Licensed medical physicians, registered nurses, licensed vocational nurses, physician assistants, and advanced practice nurses are also exempt. (g) All direct care employees shall have training and competency in nonviolent crisis intervention. (1) The instructor shall have successfully completed a course for crisis intervention instructors or have equivalent training and experience. (2) The training shall teach employees how to use verbal and other non- physical methods for prevention, early intervention, and crisis management. (h) All direct care employees working in programs that use special treatment procedures shall have training and competency in the safe methods of the specific procedures used. (i) The program shall implement procedures to ensure that all staff providing chemical dependency education consistently deliver the required information. (j) Each employee providing chemical dependency counseling shall demonstrate competency in the facility's treatment modalities before working without immediate supervision. (k) Each employee who conducts intakes or screenings shall complete eight hours of training in the program's intake and screening procedures annually. An employee shall not conduct screening or intake unless training is complete and current. (l) All direct care employees working in detoxification programs shall complete detoxification training which shall: (1) be provided by a physician, physician assistant, advanced practice nurse, or registered nurse with at least one year of documented experience in detoxification. (2) include: (A) signs of withdrawal; (B) observation and monitoring procedures; (C) appropriate intervention; and (D) complications requiring transfer. (m) All employees responsible for supervising clients in self-administration of medication who are not credentialed to administer medication shall complete documented training from a physician, pharmacist, physician assistant, or registered nurse before performing this task. The training shall include: (1) prescription labels; (2) medical abbreviations; (3) routes of administration; (4) use of drug reference materials; (5) storage, maintenance, handling, and destruction of medication; (6) documentation requirements; and (7) procedures for medication errors, adverse reactions, and side effects. sec.148.116. Personnel Files and Training Records. (a) The facility shall ensure that staff are adequately qualified, trained, and supervised to perform assigned duties. (b) The facility shall maintain a current personnel file on each employee that includes, as applicable: (1) job description; (2) application or resume; (3) verification of current credentials; (4) documentation of appropriate screening; (5) signed documentation of required training; (6) written supervisory approval to provide treatment services independently; (7) records of direct supervision for all counselor trainees (including interns); (8) annual performance evaluations; and (9) records of any disciplinary actions. (c) Documentation for in-service training shall include: (1) date; (2) number of hours; (3) content; (4) instructor's name and qualifications; (5) signature of the instructor (or equivalent verification); and (6) signature of the person completing the training. (d) Personnel files shall be kept for at least two years after the individual stops working at the facility. sec.148.117. Basic Staffing Requirements. (a) The facility shall provide an adequate number of qualified staff to comply with licensure rules, provide the services described in the program description, and protect the health, safety, and welfare of clients. (b) Individuals responsible for planning, directing implementation of, or supervising the facility's treatment services shall be qualified credentialed counselors (QCC). (c) Chemical dependency education shall be taught by chemical dependency counselors or people who have the education and experience needed to teach the material, including knowledge of chemical dependency and its relationship to the topic. (d) Chemical dependency counseling shall be provided only by chemical dependency counselors. (e) All chemical dependency counselor trainees (including interns) shall work under the direct supervision of a qualified credential counselor. (1) The QCC may not supervise more than five trainees. (2) The facility shall adjust the supervisor's direct treatment responsibilities to allow adequate time for supervision. (f) A facility shall not compensate a counselor trainee for performing counseling, assessments, or interventions after September 1, 1996, unless the facility has received written approval from the commission as a clinical training institution and the facility has designated the trainee as a counselor intern. To be approved as a clinical training institution, a facility shall apply for approval and have: (1) a written description of the clinical training goals and objectives; (2) a written description of the clinical training experiences and activities; (3) a documented system of direct supervision; and (4) a documented system for evaluating the progress of interns in writing and providing them with appropriate information and guidance. (g) Counselors providing group or individual counseling focused on trauma, abuse, or sexual issues shall have specialized education and training which is defined in writing by the program. (h) One or more direct care staff trained in first aid, CPR, and non-violent crisis intervention shall be on duty at all times that the program is in operation. (i) Staff included in staff-to-client ratios shall not have job duties that interfere with effective client supervision. (j) The facility shall not allow its clients to serve as staff. (k) The facility shall ensure that personnel do not endanger the health, safety or well-being of clients and do not use mood-altering substances which interfere with their job performance. sec.148.131. General Environment. (a) The facility shall provide a safe, secure, and well-maintained environment. The facility shall also ensure compliance with Americans with Disabilities Act (ADA). (b) The environment shall enhance client dignity and confidentiality. (c) The facility shall have adequate space, furniture, and supplies for the services described in the program description. (d) The facility shall have private counseling space. Staff shall not office in space needed for other activities. (e) The facility shall prohibit smoking inside facility buildings. (f) The facility shall not permit vending machines that dispense tobacco products on the program site. (g) The facility shall prohibit firearms and double-edged, fixed-blade knives on the site. sec.148.132. Emergency Evacuation. The facility shall respond effectively during a fire or other emergency. Every program shall: (1) have emergency evacuation procedures that include provisions for the handicapped; (2) hold fire drills on each shift at least quarterly and correct identified problems promptly; (3) be able to clear the building safely and in a timely manner at all times; (4) post exit diagrams conspicuously throughout the program site; (5) post emergency numbers by all phones; and (6) have adequate first aid supplies which are visible or well labeled and easy to access at all times. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601815 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Referral 40 TAC sec.sec.148.91-148.93 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.91-148.93, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6307). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601724 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Personnel and Staff Development 40 TAC sec.sec.148.111-148.117. The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.111-148.117, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6308). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601725 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Safety 40 TAC sec.148.131, sec.148.132 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.148.131 and sec.148.132 concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6308). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601726 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter C. Client Management Client Rights 40 TAC sec.sec.148.141-148.146. The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.141-148.146, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6308). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601727 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter C. Client Management 40 TAC sec.sec.148.141-148.147, 148.161-148.163, 148.171-148. 173, 148.181- 148.185 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.148. 141- 148.147, 148.161-148.163, 148.171-148.173, and 148.181-148.185, concerning client management in licensed chemical dependency facilities. Sections 148. 142- 148.145, 148.161, 148.162, 148.173, 148.183, and 148.184 are adopted with changes to the proposed text as published in the August 25, 1995, issue of the Texas Register (20 TexReg 6616). Sections 148.141, 148.146, 148.147, 148.163, 148.171, 148.172, 148.181, 148.182, and 148.185 are adopted without changes and will not be republished. These rules are being adopted to establish minimum criteria regarding client rights and grievances; abuse, neglect, and exploitation; client information security and confidentiality; and crisis management, including special treatment procedures. The rules will ensure protection of client rights and information in facilities licensed by the commission. The commission received comments from Sabine Valley Center, Austin Family House, and the Coalition for Nurses in Advance Practice. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. Additional changes have been made in response to comments regarding wording and further staff review, and the rules have also been edited to improved clarity and readability. All comments submitted were fully considered by the commission. A summary of comments, commission responses, and changes to the rules follows. The following comment addresses sec.148.161 (relating to Client Abuse, Neglect, and Exploitation): Comment: The rules state that the facility should not investigate incidents unless directed to do so. Commenter asked if that means the commission has full responsibility for all investigations and can the internal client rights function be eliminated. Response: Wording has been revised to state that facilities shall conduct internal investigations unless otherwise directed by the commission. The following comment addresses sec.148.83 (relating to Special Treatment Procedures) and sec.148.85 (relating to Documenting Special Treatment Procedures): Comment: The 74th Legislature passed Senate Bill 673 which allows physicians to delegate the authority to order medical devices. Specific requirements for physician authorization for special treatment procedures should be reviewed in light of new practice patterns. Response: Rules have been revised to reflect this change. Section 148.143 (relating to Voluntary Clients-Additional Rights) has been revised to correct time frames related to requests for discharge. The rules are adopted under the Texas Health and Safety Code, Chapter 464, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the new rules is the Texas Health and Safety Code, Chapter 464. sec.148.142. Client Bill of Rights. The facility shall respect and protect clients' rights. The Bill of Rights shall include: (1) You have the right to a humane environment that provides reasonable protection from harm and appropriate privacy for your personal needs. (2) You have the right to be free from abuse, neglect, and exploitation. (3) You have the right to be treated with dignity and respect. (4) You have the right to appropriate treatment in the least restrictive setting available that meets your needs. (5) You have the right to be told about the program's rules and regulations before you are admitted. (6) You have the right to be told before admission: (A) the condition to be treated; (B) the proposed treatment; (C) the risks, benefits, and side effects of all proposed treatment and medication; (D) the probable health and mental health consequences of refusing treatment; and (E) other treatments that are available and which ones, if any, might be appropriate for you. (7) You have the right to accept or refuse treatment after receiving this explanation. (8) If you agree to treatment or medication, you have the right to change your mind at any time (unless specifically restricted by law). (9) You have the right to a treatment plan designed to meet your needs, and you have the right to take part in developing that plan. (10) You have the right to meet with staff to review and update the plan on a regular basis. (11) You have the right to refuse to take part in research without affecting your regular care. (12) You have the right not to receive unnecessary or excessive medication. (13) You have the right not to be restrained or placed in a locked room by yourself unless you are a danger to yourself or others. (14) You have the right to have information about you kept private and to be told about the times when the information can be released without your permission. (15) You have the right to communicate with people outside the facility. This includes the right to have visitors, to make telephone calls, and to send and receive sealed mail. This right may be restricted on an individual basis by your doctor or the person in charge of the program if it is necessary for your treatment or for security, but even then you may contact an attorney or the Texas Commission on Alcohol and Drug Abuse at any reasonable time. (16) You have the right to be told in advance of all estimated charges and any limitations on the length of services that the facility is aware of. (17) You have the right to receive an explanation of your treatment or your rights if you have questions while you are in treatment. (18) If you consented to treatment, you have the right to leave the facility within four hours of requesting release unless a physician determines that you pose a threat of harm to yourself and others. (19) You have the right to make a complaint and receive a fair response from the facility within a reasonable amount of time. (20) You have the right to complain directly to the Texas Commission on Alcohol and Drug Abuse at any reasonable time. (21) You have the right to get a copy of these rights before you are admitted, including the address and phone number of the Texas Commission on Alcohol and Drug Abuse. (22) You have the right to have your rights explained to you in simple terms, in a way you can understand, within 24 hours of being admitted. sec.148.143. Voluntary Clients-Additional Rights. In addition to the rights described in sec.148.142 of this title (relating to Client Bill of Rights), voluntary clients shall be advised as to the following rights with regard to requests for discharge. (1) You have the right to leave the treatment facility within four hours after you tell a staff person you want to leave. If you want to leave, you need to say so in writing or tell a staff person. If you tell a staff person you want to leave, the staff person must write it down for you to ensure that it is documented. There are only three reasons why you would not be allowed to leave: (A) First, if you change your mind and want to stay at the facility, you can sign a document that states that you do not wish to leave, or you can tell a staff member that you do want to stay, and the staff member has to write it down for you. (B) Second, if your doctor thinks you need to stay longer and an application for court-ordered services or emergency detention is filed with a judge, you may not be able to leave. The judge would be asked to decide if you should stay at the facility or if you should be allowed to leave. You can only be made to stay if the judge decides that either: (i) you are likely to cause serious harm to yourself; (ii) you are likely to cause serious harm to others; or (iii) your condition will continue to deteriorate and you are unable to make an informed decision as to whether or not to stay for treatment; and (iv) your application must be filed within the next business day after the doctor's examination. (C) Third, if you are under 16 years old, and the person who admitted you (your parents, guardian, or conservator) doesn't want you to leave, you may not be able to leave. If you request release, staff must explain to you whether or not you can sign yourself out and why. The facility must notify the person who does have the authority to sign you out and tell that person that you want to leave. That person must talk to your doctor, and your doctor must document the date, time and outcome of the conversation in your medical record. (2) Within four hours of telling staff you want to leave, you have the right to be examined face-to-face and assessed for discharge readiness by your doctor, with input from your treatment team. The doctor must note in your medical record and tell you about any plans to file an application for court-ordered treatment or for detaining you for other clinical reasons. If the doctor finds that you are ready to be discharged, you should be discharged without further delay. (3) Nobody can ask a judge to commit you for services while you are a voluntary client unless you leave the facility without permission or you refuse or are unable to consent to appropriate and necessary treatment. Even if you leave the facility without permission or refuse or are unable to consent to appropriate and necessary treatment nobody can ask a judge to commit you unless: (A) you are likely to cause serious harm to yourself or others; or (B) your condition will continue to deteriorate and you are unable to make an informed decision as to whether or not to stay for treatment. If an order of protective custody is sought, the doctor must show that as a result of your deteriorating condition, you are very likely to present a risk of serious harm to yourself or others. sec.148.144. Rights of Persons Apprehended for Emergency Detention. (a) The rights of each person apprehended for emergency detention for inpatient chemical dependency services at a treatment facility are granted under the relevant sections of the Texas Health and Safety Code, Chapter 462. The client shall be advised immediately of these rights orally, in writing, and in simple non-technical terms. Each person apprehended or detained, but not yet admitted, for emergency detention shall be advised of the following rights: (1) You have the right to be told: (A) where you are; (B) why you are being kept at the facility; and (C) that your detention may result in a longer period of involuntary care. (2) You have the right to be told that anything you do or say may be used to determine whether you should be allowed to leave and whether you need court- ordered treatment. What you say may also be used in court. (3) You have the right to call an attorney at any reasonable time. The facility shall help you call an attorney if you ask. (4) You have the right to have a preliminary examination by a physician conducted immediately upon arrival at the treatment facility, following apprehension, to determine whether your condition meets the criteria for admission under emergency detention. (5) You will not be allowed to leave if the doctor believes that: (A) you may seriously harm yourself or others; (B) the risk of this happening is likely unless you are restrained; and (C) emergency detention is the least restrictive means of restraint. (6) If the doctor decides you do not meet all of these criteria, you shall be allowed to leave. A decision concerning whether you shall stay shall be made within 24 hours, except weekends and legal holidays, the decision may be delayed until 4:00 p.m. on the first regular work day. The decision may also be delayed in the event of an extreme weather emergency. If the court is asked to order you to stay longer, you shall be told that you have a right to a hearing within 72 hours. (7) If the physician finds you do not need to be here, you have the right to be released and will be taken back to where you were picked up or to another suitable place. (b) If the person is accepted for treatment on an emergency detention, the personnel of the treatment facility shall immediately advise the person of the following rights: (1) You have the right not to be detained for more than 24 hours after the hour of initial detention unless an order for further detention is obtained, except that if the 24-hour period ends on a Saturday, Sunday or legal holiday or before 4:00 p.m. on the first business day succeeding the Saturday, Sunday or legal holiday, the period of detention shall end no later than 4:00 p.m. of the first succeeding business day. (2) You have the right to be released if the head of the facility determines that the criteria for emergency detention, as outlined in the Texas Health and Safety Code, sec.462.043(b), no longer apply. (3) You have the right to be transferred back to the location of apprehension, or other suitable place, if released from emergency detention, unless you are arrested or object to the return. (4) You have the right to be informed that no later than the 24th hour after the hour of initial detention, the head of the treatment may file a petition for court-ordered treatment. (5) You have the right to be informed that if a petition for court-ordered treatment is filed, you are entitled to a judicial probable cause hearing to determine whether you should remain in the treatment facility. This hearing must take place no later than 72 hours after your detention begins under the order of protective custody. (6) You have the right to have an attorney appointed if you do not have an attorney, when application for court-ordered services is filed. (7) You have the right to communicate with your attorney at any reasonable time and to have assistance in contacting the attorney. (8) You have the right to be informed that anything you say to the personnel of the treatment facility may be used in making a determination relating to detention, may result in the filing of a petition for court-ordered treatment, and may be used at a court hearing. (9) You have the right to present evidence and to cross-examine witnesses who testify on behalf of the petitioner at a hearing. (10) You have the right to refuse medication unless there is an imminent likelihood of serious physical injury to you or others if the medication is refused. (11) You have the right to be informed that beginning on the 24th hour before a hearing for court-ordered treatment, you may refuse to take medication unless the medication is necessary to save your life. (12) If you live in Texas, you have the right to request that a hearing be held in the county of which you are a resident. sec.148.145. Order of Protective Custody-Special Rights. Clients apprehended, detained, admitted or held under an order of protective custody must be advised of the following rights: (1) You have the right to call an attorney or to have an attorney appointed to represent you in a hearing to determine whether you must remain in custody until a hearing on court-ordered chemical dependency treatment is held. (2) Before a probable cause hearing is held, you have the right to be told in writing: (A) that you have been placed under an order of protective custody; (B) why the order was issued; (C) the time and place of the hearing; and (D) this notice must also be given to your attorney. (3) You have the right to a hearing within 72 hours of your detention, except that on weekends or legal holidays or in the event of an extreme weather emergency, the hearing may be delayed until 4:00 p.m. on the first regular workday. (4) You have the right to be released from custody if: (A) 72 hours have passed and a hearing has not taken place (except that on weekends or legal holidays or in the event of an extreme weather emergency, the hearing may be delayed until 4:00 p.m. on the first regular workday; (B) an order for court-ordered chemical dependency treatment has not been issued within 14 days of the filing of an application (unless the court granted an extension); or (C) your doctor finds that you no longer need court-ordered chemical dependency treatment. sec.148.161. Client Abuse, Neglect, and Exploitation. The facility shall protect clients from abuse, neglect, and exploitation. (1) Any person who receives an allegation or has reason to suspect that a client has been, is, or will be abused, neglected, or exploited shall immediately inform the facility director or designee. (2) If the allegation involves sexual exploitation, the facility director shall also comply with reporting requirements listed in the Civil Practice and Remedies Code, sec.81.006. (3) The facility director shall take immediate action to prevent or stop the abuse, neglect, or exploitation and provide appropriate care and treatment. (4) The facility director or designee shall make a verbal report to the Texas Commission on Alcohol and Drug Abuse within 24 hours. This is in addition to the reports specified in the Texas Human Resources Code, sec.48.082 and the Texas Family Code, sec.261.001. (5) The person who reported the incident shall submit a written incident report to the facility director within 24 hours. (6) The facility director shall send a written report to the Texas Commission on Alcohol and Drug Abuse within two working days after receiving notification of the incident. This report shall include: (A) the name of the client and the person the allegations are against; (B) the information required in the incident report or a copy of the incident report; (C) other individuals, organizations, and law enforcement notified. (7) The facility director or designee shall also notify the legal consenter. If the client is the legal consenter, family members and significant others may be notified only if the client gives written consent. (8) The facility shall investigate the complaint and take appropriate action unless otherwise directed by the commission. (9) The governing authority or its designee shall take action needed to prevent any confirmed incident from recurring. (10) The facility shall: (A) document all investigations and resulting actions and keep the documentation in a central file; (B) have a written policy that clearly prohibits the abuse, neglect, and exploitation of clients and a written procedure that defines the steps that will be taken to investigate and resolve any alleged incident; (C) enforce the policy and procedure and provide appropriate sanctions for confirmed violations. sec.148.162. Behavior Management. Facility staff shall use appropriate behavior management to enforce program rules and protect the health, safety, welfare, and rights of all clients. (1) The governing body shall adopt a written policy on behavior management. The policy shall ensure that behavior management is reasonable. It shall also clearly prohibit: (A) physical discipline; (B) measures involving the use of food, water, sleep, or bathroom privileges; (C) consequences that are harsh, cruel, or excessive; (D) consequences that are used for the convenience of staff; or (E) behavior management that is authorized, supervised, or carried out by clients. (2) The facility director or designee shall monitor compliance and enforce the policy. Violations will be considered client abuse. (3) The program shall have a written procedure describing what action will be taken when a client violates program rules. (4) The procedure shall clearly identify grounds for client discharge. (5) When staff impose behavioral consequences, they shall explain the reasons and describe appropriate behavior. (6) Staff shall use behavior management fairly and objectively. (7) The facility director shall approve any system used by the program to modify client behavior by granting or restricting privileges. (A) Written criteria shall be: (i) designed to support treatment goals; (ii) stated in behavioral terms when possible; and (iii) applied consistently to all clients. (B) Client progress through the system shall be documented in the client record. (8) The program may have a system of client government if staff monitor the clients' governing group and approve its decisions. sec.148.173. Release of Confidential Information. (a) The facility shall implement written procedures for protecting and releasing client information that conform to federal and state confidentiality laws. (b) Staff shall follow written procedures for responding to verbal and written requests for client-identifying information. (c) Facility personnel shall not acknowledge the presence of a client or disclose any client-identifying information unless: (1) the client gives full written consent; (2) the disclosure is authorized by an appropriate court order as defined in the federal regulations; (3) the disclosure is made to medical personnel in a medical emergency or to qualified personnel for research, audit, or program evaluation; or (4) the disclosure is otherwise permitted by law. (d) The client's written consent to release information shall include: (1) the name of the person or program releasing the information; (2) the name of the individual or organization receiving the information; (3) the name of the client; (4) the specific purpose of disclosure; (5) how much and what kind of information will be released; (6) the signature of the legal consenter; (7) the date of signature; (8) a statement that the consenter may revoke the consent at any time (unless otherwise restricted by law), but the revocation will not affect information already released under the consent; and (9) the date, event, or condition upon which the consent will expire. (e) The facility shall not deny clients access to the content of their records except as provided by the Texas Health and Safety Code, sec.611.0045. sec.148.183. Special Treatment Procedures. Staff shall use special treatment procedures appropriately to protect the health, safety, and rights of clients and other individuals. (1) The governing body shall adopt a policy to authorize or prohibit the use of personal restraint, mechanical restraint, and seclusion. (2) In programs authorized to use special treatment procedures, direct care staff shall be trained as described in sec.148.114 of this title (relating to Special Training Requirements). (3) Staff shall not use special treatment procedures unless: (A) a client's behavior endangers the client or others; and (B) less restrictive methods have been tried and failed. (4) Staff shall not use special treatment procedures as discipline, for the convenience of staff, or as a substitute for less restrictive methods of intervention. (5) Staff shall not use more force than is reasonable and necessary to prevent imminent harm during special treatment procedures. The use of unnecessary force is client abuse. (6) Staff shall obtain authorization from the supervising qualified credentialed counselor before starting restraint or seclusion or as soon as possible. (A) Authorization may be obtained in person or by phone. (B) The facility shall not use standing authorizations for special treatment procedures. (C) Each authorization shall include a maximum time frame. (7) When staff restrain or seclude a client, they shall immediately (or as soon as possible) tell the client what behavior is required for release. (8) Staff shall release the client as soon as the client's behavior is no longer a danger to self or others. (9) If a potentially dangerous situation arises (such as choking, seizures, or fire), the client shall be released immediately. (10) During special treatment procedures, staff shall provide attention for personal needs, including: (A) regular meals and fluids; (B) regularly prescribed medications; and (C) use of a toilet. (11) Clinical staff shall evaluate the incident during the next treatment plan evaluation and develop other strategies for managing the client's behavior and preventing similar incidents. (12) The facility director or designee shall: (A) review all incident reports involving special treatment procedures; (B) investigate unusual or possibly unjustified use of the procedures; and (C) take appropriate action to address any identified problems. (13) Facilities using personal restraint shall comply with the following. (A) Staff shall not personally restrain a client for longer than one hour. At the end of one hour, staff shall implement the facility's psychiatric emergency procedures. (B) The supervising staff member shall observe the client throughout the incident. (14) Facilities using seclusion shall comply with the following: (A) Seclusion rooms shall be set up to prevent clients from harming themselves and shall allow staff to observe clients easily in all parts of the room. (B) Staff shall not hold a client in seclusion more than 12 hours. At the end of 12 hours, staff shall implement the facility's psychiatric emergency procedures. (C) Staff shall conduct a visual check every 15 minutes and give the client attention for personal needs. (15) Facilities using mechanical restraint shall comply with the following: (A) Staff shall obtain authorization for mechanical restraint from a physician (or a physician assistant or advanced practice nurse to whom the physician has delegated such authority). (B) A client may not be held in mechanical restraint more than 12 hours. At the end of 12 hours, staff shall implement the facility's psychiatric emergency procedures. (C) A staff member shall be watching the client throughout the period of restraint. (D) Staff shall check the client's circulation every 15 minutes and adjust the restraint as needed. (E) The program shall not use devices that are not designed for the therapeutic restraint of humans. (16) The facility shall have a written procedure for staff that ensures compliance with this section. sec.148.184. Documenting Special Treatment Procedures. Staff shall record the following information in the client record within 24 hours: (1) the circumstances leading to the client's loss of control; (2) the specific behavior that made special treatment necessary; (3) less restrictive interventions that were tried before restraint or seclusion began; (4) the signed authorization of the supervising qualified credentialed counselor or physician (or a physician assistant or advance practice nurse to whom the physician has delegated such authority); (5) the names of the staff members who implemented the procedure; (6) the date and time the procedure began and ended; (7) the specific type of hold or device used during restraint; (8) the behavior required for release; (9) the client's response; (10) observations made, including the 15 minute checks; and (11) the attention given for personal needs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601816 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 25, 1995 For further information, please call: (512) 867-8720 Abuse, Neglect, and Exploitation 40 TAC sec.sec.148.161-148.163, 148.165 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.161-148.163 and 148.165, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6309). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601728 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Client Information 40 TAC sec.sec.148.171-148.173 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.171-148.173, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6309). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601729 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Crisis Management 40 TAC sec.sec.148.181-148.185 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.181-148.185, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6310). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601730 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 ` Subchapter D. Program Services General Program Services Provisions 40 TAC sec.148.201, sec.148.202 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.148.201 and sec.148.202 concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 Tex Reg 6310). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601731 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter D. Program Services 40 TAC sec.sec.148.201, 148 202, 148.211-148.214, 148.231-148. 235, 148.251- 148.254, 148.261-148.268 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.148.201, 148 202, 148.211-148.214, 148.231-148.235, 148.251-148.254, and 148.261-148. 268, concerning program services in licensed chemical dependency facilities. Sections 148.201, 148.202, 148.211-148.214, 148.231-148.235, 148.251-148.254, 148.262, and 148.265-148.268 are adopted with changes to the proposed text as published in the August 25, 1995, issue of the Texas Register (20 TexReg 6616). Sections 148.261, 148.263, and 148.264 are adopted without changes and will not be republished. These rules are being adopted to establish minimum standards for program services, including the four treatment levels; special provisions for special populations; food and nutrition; and medication. The rules will provide more effective chemical dependency treatment in facilities licensed by the commission. The commission received comments from Sabine Valley Center, Coalition for Nurses in Advanced Practice, Texas Nurses Association, Jefferson County Council on Alcohol and Drug Abuse, Aliviane NO-AD, Career and Recovery Resources, Northeast Texas Council on Alcohol and Drug Abuse, Women and Children' Halfway House of San Angelo, Land Manor, Gateway Foundation, and the Texas Department of Criminal Justice (Parole Division). Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. Additional changes have been made in response to comments regarding wording and further staff review, and the rules have also been edited to improved clarity and readability. All comments submitted were fully considered by the commission. A summary of comments, commission responses, and changes to the rules follows. The following comments address sec.148.202 (relating to Services Required In All Programs): Comment: Rural areas have very limited access to the referral resources and do not have the funding to provide the services directly. Response: Facilities can contact the local department of health for assistance in this area. Comment: All programs should be required to provide education on compulsive gambling. Response: Many programs include compulsive gambling in their standard curricula. Furthermore, all counselors receive training and should be bringing this issue into counseling as appropriate. The commission does not want to add more requirements for facility staff training at this time. This section has also been revised to remove the requirement for nicotine addiction treatment. The following comments address sec.148.211 (relating to Level I Treatment): Comment: The words "detoxification", "stabilization", and "Level I treatment" are used for the same process. Terminology used in the rules should be consistent. Response: All references have been replaced with "Level I Detoxification" or "detoxification". Comment: Rules should require a registered nurse to serve as director of nursing and be on duty at least 40 hours per week. This is standard for long term care facilities and is equally applicable to treatment facilities. Licensed vocational nurses are not educationally prepared to serve as the only nursing staff. Response: Although this would be desirable, the commission feels the current rule requiring a registered nurse to be on call is adequate. The following comments address sec.148.212 (relating to Level II Treatment): Comment: Counselor caseloads are 1:10, but the rules have no specific ratios for adolescent programs. Response: Unless otherwise specified in sec.148.231 (relating to Adolescents) , the general standards apply to adolescents as well as adults. Comment: Level II treatment for women and children does not have a transitional phase allowing women to go back to work and become independent. The regular program is very full, and women cannot work and attend all hours. Response: The level system does allow transitional phases. If clients receive 30 hours per week during the first half of treatment, and 10 hours per week during the last half, the resulting average is the required 20 hours per week. Also, any structured activity can be included in the 20 hours, including attendance at peer support meetings. The following comments address sec.148.214 (relating to Level IV Treatment): Comment: Commenter asked if the requirement for two hours of structured activities per week apply to outpatient settings. If so, this more than doubles the expectation of clients and will increase the workload of the counselors and may result in fewer clients being given services. Response: This does apply to outpatient programs, but the requirement has not changed from previous standards. Comment: Two hours per week of structured activities causes problems for clients where the ability to arrange transportation or take time off from work is difficult (this is also true in rural areas). It also puts a real financial burden on programs, and means that fewer clients will be served. Nor does it allow for a reasonable "phasing down" of clients, or aftercare. Change to two hours per month to allow treatment most appropriate for client needs. Response: Level IV requires an average of two hours of structured activities per week, so that clients can receive more hours of service in the earlier phases of treatment and then taper off as they near discharge. Aftercare is part of a more intensive level of care and is not considered a separate treatment episode. The commission does not believe that a program offering less can provide treatment that impacts clients. Also, a variety of activities, including attendance at peer support groups, qualify as structured activities. The following comments address sec.148.233 (relating to Children's Services): Comment: Childcare centers (on- or off-site) do not always have a licensed medical professional on duty. We propose that trained staff should be allowed to give medication with appropriate training and signed authorization from the parent. Response: The rules have been revised to allow this option. Comment: It was proposed that the staff-child ratio be lowered for toddlers to 1:6. Most of these children have significant behavior challenges. This is totally different than regular daycare. Response: The rules have been revised as suggested. The following comments relate to sec.148.233 (relating to Correctional Facilities): Comment: The correctional section should also apply to community-based facilities. Response: The rules have been revised as suggested. Comment: It was suggested to add a clause allowing the Texas Department of Criminal Justice contract requirements to supersede licensure standards, as was allowed for the commission contracts in previous rules. Response: The rules have been revised as suggested. Comment: Commenter asked if the commission will be developing a separate set of rules for transitional therapeutic communities. This had been planned but is not in the proposed rules. Response: An memorandum of understanding being developed between the commission and the Texas Department of Criminal Justice will address this an other licensure issues. The following comments address rules relating to medication: Comment: Rules should be amended to reflect provisions of Senate Bill 673, which allow advanced practice nurses and physician assistants to prescribe medication and medical devices. Response: Rules on medication and special treatment procedures have been revised to reflect this change. Comment: It is not clearly stated that medications must be administered by legally authorized persons. Replace the term "staff" with "licensed health professional". Response: This provision was stated in sec.265(b), but requirements are now stated separately for medication administration and supervision of self- administration to avoid confusion. The rules are adopted under the Texas Health and Safety Code, Chapter 464, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the new rules is the Texas Health and Safety Code, Chapter 464. sec.148.201. General Information. (a) Every program shall comply with the rules in sec.148.202 of this title (relating to Services Required in All Programs). (b) Every program shall also comply with the rules in all applicable Treatment Level sections: (1) Section 148. 211 of this title (relating to Level I Treatment); (2) Section 148. 212 of this title (relating to Level II Treatment); (3) Section 148. 213 of this title (relating to Level III Treatment); or (4) Section 148.214 of this title (relating to Level IV Treatment). (c) Additional rules and exemptions for specific populations and programs appear under Special Provisions. sec.148.202. Services Required In All Programs. (a) All services shall be delivered according to a written plan. (b) The program shall be culturally appropriate for the population served. (c) Members of the client's treatment team shall demonstrate effective communication and coordination. (d) Every residential client shall have a medical history and physical examination. (e) Chemical dependency education shall follow a course outline that identifies lecture topics and major points to be discussed. (f) The program shall provide education about the health risks of tobacco products and nicotine addiction. (g) The program shall provide HIV education based on the Model Workplace Guidelines for Direct Service Providers developed by the Texas Department of Health. (h) Clients shall have access to HIV counseling and testing services directly or through referral. (1) Services shall be voluntary, anonymous, and not limited by ability to pay. (2) Counseling shall be based on the model protocol developed by the Texas Department of Health. (i) The program shall make testing for tuberculosis and sexually transmitted diseases available to all clients unless the program has access to test results obtained during the past year. (1) Services may be made available directly or through referral. (2) If a client tests positive, the program shall refer the client to an appropriate health care provider and take appropriate steps to protect clients and staff. (j) The program shall: (1) provide access to appropriate health care and mental health services directly or through referral; (2) refer pregnant clients who are not receiving prenatal care to an appropriate health care provider and monitor follow-through; and (3) refer clients to ancillary services necessary to meet treatment goals. sec.148.211. Level I Treatment. (a) All clients admitted to Level I Detoxification programs shall be in need of detoxification. (b) Every client shall have a medical history and physical. (1) Residential clients shall have the medical history and physical within 24 hours of admission. If the facility cannot meet this deadline because of exceptional circumstances, the circumstances shall be documented in the client record. Until a client's medical history and physical is complete, staff shall observe the client closely and monitor vital signs. (2) Outpatient clients shall have the medical history and physical before admission. (c) The program shall provide continuous supervision for clients. (1) In residential programs, direct care staff shall be awake and on site 24 hours a day. (A) During day and evening hours, at least two awake staff shall be on duty for the first 12 clients, with one more person on duty for each additional one to 16 clients. (B) At night, at least one awake staff member shall be on duty for the first 12 clients, with one more person on duty for each additional one to 16 clients. (2) In outpatient programs, direct care staff shall be awake and on site whenever a client is on site. Clients shall have access to on-call staff 24 hours a day. (d) If the program accepts clients with acute detoxification symptoms or a history of acute detoxification symptoms, the program shall have: (1) a licensed vocational nurse or registered nurse on duty during all hours of operation; and (2) a physician on call 24 hours a day. (e) Level of observation shall be based on medical recommendations and program design. (f) A physician shall approve all medical policies, procedures, guidelines, tools, and forms, which shall include: (1) screening instruments (including a medical risk assessment) and procedures; (2) treatment protocol or standing orders for each chemical the program is prepared to detoxify; and (3) emergency procedures. (g) The clinical supervisor shall be a physician, physician assistant, advanced practice nurse, or registered nurse. (h) The program shall: (1) ensure continuous access to emergency medical care; (2) provide clients access to mental health evaluation and linkage with mental health services when indicated; and (3) use written procedures to encourage clients to seek appropriate treatment after detoxification. (i) Direct care staff shall complete training as described in sec.148.114 of this title (relating to Special Training Requirements). (j) Staff shall help each client develop an individualized post-detoxification plan that includes appropriate referrals. sec.148.212. Level II Treatment. (a) All clients admitted to Level II shall be: (1) medically stable; and (2) able to participate in treatment. (b) The program shall have enough staff to provide close supervision and individualized treatment. (c) Counselor caseloads shall not exceed 1:10. (d) Direct care staff shall be awake and on site during all hours of program operation. The direct care staff-to-client ratio shall be at least 1:16 during: (1) the hours clients are awake in residential programs; and (2) all hours of operation in outpatient programs. (e) Counselors shall complete a comprehensive client assessment within three individual service days of admission for all clients transferred from Level I or admitted directly to a Level II program. (f) An individualized treatment plan shall be completed for all clients within five individual service days of admission. (g) The facility shall deliver an average of 20 hours of structured activities per week for each client, including: (1) ten hours of chemical dependency education and/or counseling; (2) four hours of additional education, counseling, or rehabilitation activities; and (3) three hours of structured social and/or recreational activities. (h) Each client shall have an opportunity to participate in physical recreation at least weekly. (i) Program staff shall offer chemical dependency services to identified significant others. (j) The program shall provide each client with opportunities to apply knowledge and practice skills in a structured, supportive environment. sec.148.213. Level III Treatment. (a) All clients admitted to Level III shall be: (1) medically stable; and (2) able to function with limited supervision and support. (b) The program shall have enough staff to meet treatment needs within the context of the program description. (c) Counselor caseloads shall not exceed 1:16. (d) Direct care staff shall be awake and on site during all hours of program operation. The direct care staff-to-client ratio shall be at least 1:16 during: (1) the hours clients are awake in residential programs; and (2) all hours of operation in outpatient programs. (e) For clients transferred from Level I or admitted directly to this level of treatment, counselors shall complete a comprehensive client assessment within five individual service days of admission. (f) All clients shall have an individualized treatment plan within seven individual service days of admission. (g) The facility shall deliver an average of ten hours of structured activities per week for each client, including at least five hours of chemical dependency education and/or counseling. (h) The program design and application shall include increasing levels of responsibility for clients and frequent opportunities for clients to apply knowledge and practice skills in structured and non-structured settings. sec.148.214. Level IV Treatment. (a) All clients admitted to intermediate programs shall be: (1) medically stable; and (2) able to function with minimal structure and support. (b) The program shall have enough staff to provide clients with adequate support and guidance. (c) The program shall set limits on counselor caseload size that ensure effective, individualized treatment and rehabilitation. Criteria used to set the caseload size shall be documented. (d) The program shall be adequately staffed during hours of operation to ensure effective service delivery. (e) In residential programs, the awake direct care staff-to-client ratio shall be at least 1:16 during the hours clients are awake. (f) For clients transferred from Level I or admitted directly to this level of treatment, counselors shall complete a comprehensive client assessment within: (1) five individual service days of admission in residential programs; and (2) 45 calendar days of admission in outpatient programs. (g) All clients shall have an individualized treatment plan within: (1) seven individual service days of admission in residential programs; and (2) 45 calendar days of admission in outpatient programs. (h) The facility shall deliver an average of two hours of structured activities per week for each client, including at least one hour of chemical dependency education or counseling. These activities shall be designed to help clients establish a healthy, independent lifestyle. (i) The program shall offer chemical dependency counseling services. (j) The program design and application shall include increasing levels of responsibility for clients and frequent opportunities for clients to independently apply knowledge and practice skills in non-structured settings. sec.148.231. Adolescents. (a) The facility shall address the special needs of adolescents and protect their rights. (b) Residential facilities shall have separate bedrooms and bathrooms for adults and adolescents and for males and females. Adults and adolescents shall not be housed on the same floor. (c) Adults and adolescents may be mixed for specific groups or activities when no conflict exists. (d) The facility shall obtain consent for admission and authorization to obtain medical treatment at the time of admission for all clients under 16 years of age. (e) Providers shall observe legal or other statutory laws which define the adult population to be served when it is different from the commission's definition. (f) Residential and day-treatment shall provide access to education approved by the Texas Education Agency when treatment is expected to last more than 14 days. (g) The program's treatment services, lectures, and written materials shall be age-appropriate and easily understood by clients. (h) The facility shall allow regular communication between an adolescent client and the client's family and shall not arbitrarily restrict any communications without clear, written. individualized clinical justification documented in the client record. (i) The facility shall ensure that staff who plan, supervise, or provide education or counseling to adolescents have specialized education or training in the emotional, mental health, and chemical dependency problems of adolescents and appropriate treatment for them. (1) Individuals who plan or supervise such services shall be qualified credentialed counselors. (2) Direct care employees shall have training in human adolescent development, family systems, adolescent psycho-pathology and mental health, chemical dependency and addiction in adolescents, and adolescent socialization issues. (j) All direct-care employees shall be trained and competent to use personal restraint. (k) In residential programs, the direct care staff-to-client ratio shall be at least 1:8 during waking hours (including program-sponsored activities away from the facility) and 1:16 during sleeping hours. (l) Clients shall be under direct supervision at all times. (1) At the program site, staff shall be within eyesight or hearing distance and readily available at all times. If clients are not within eyesight, staff shall conduct visual checks at least once every hour, including bed checks. (2) In public places, clients shall be within eyesight at all times. (m) Admission criteria shall limit admission to adolescents 13 through 17 years of age. (1) Children who are 10 through 12 years of age and young adults 18 through 20 years of age may be admitted only when the assessment indicates that the individual's needs, experiences, and behavior are similar to those of adolescent clients. (2) Each exception shall be approved in writing by the program director. (n) The treatment plan shall address adolescent needs and issues. (o) The program shall involve the adolescent's family or an alternate support system in the treatment process or document why this is not happening. (p) Staff shall not provide, distribute, or facilitate access to tobacco products. (q) Staff shall not use tobacco products in the presence of adolescent clients. (r) The program shall prohibit adolescent clients from using tobacco products on the program site or during structured program activities. (s) Residential programs shall define the level of care provided according to the statewide level of care system. sec.148.232. Parents and Their Dependent Children. (a) The program shall address the specialized needs of the parent and include services for children. (b) Education, counseling, and rehabilitation services shall address: (1) the effects of chemical dependency on a woman's health and pregnancy; (2) parenting skills; and (3) health and nutrition. (c) The program shall have a procedure to regularly assess parent-child interactions. Any identified needs shall be addressed in treatment. (d) Program staff shall provide access to family planning services. (e) The program shall provide or arrange for childcare with a qualified provider while the parent participates in treatment activities. Before supervising children independently, the provider shall have infant CPR certification and at least eight hours of training in the following areas: (1) chemical dependency and its impact on the family; (2) child development and age-appropriate activities; (3) child health and safety; (4) universal precautions; (5) appropriate child supervision techniques; and (6) signs of child abuse. (f) Staff shall not allow anyone except the legal guardian or a person authorized by the legal guardian to take a child away from the facility. If an individual shows documentation of legal custody, staff shall record the person's identification before releasing the child. (g) The program shall have a procedure to use if a parent abuses or neglects a child. (h) Residential programs shall not accept dependents over the age of 12. (i) Children over the age of six shall not share a bedroom with a member of the opposite sex who is not in the child's immediate family. sec.148.233. Children's Services. (a) General requirements. (1) The program shall ensure that children are directly supervised by parents or qualified providers at all times. (2) The program shall have a written policy and a current schedule showing who is responsible for the children at all times. (3) The daily activity schedule shall include a variety of structured and unstructured age-appropriate activities. (4) The program shall provide a variety of age-appropriate equipment, toys, and learning materials. (5) School age children shall have access to school. (6) Standards protecting the health, safety, and welfare of clients apply to their children. (7) Behavior management shall be fair, reasonable, consistent, and related to the child's behavior. Physical discipline is prohibited. (b) Staffing. (1) Every children's program shall have a supervisor or consultant with at least: (A) 90 clock hours of education and training in child development and/or early childhood education; and (B) one year of documented experience providing services to children. (2) Before supervising children independently, direct care employees shall have infant CPR certification and at least eight hours of training in: (A) chemical dependency and its impact on the family; (B) child development and age-appropriate activities; (C) child health and safety; (D) universal precautions; (E) appropriate child supervision techniques; and (F) signs of child abuse. (3) All direct care employees shall have current certification in CPR for infants and children. A staff person with such certification shall be on duty at all times. (4) When staff are responsible for children, the staff-to-child ratio shall not exceed 1:4 for infants (18 months and younger) and 1:6 for toddlers and children. (5) When clients are responsible for children, the parent-to-child ratio shall not exceed 1:2 for infants (18 months and younger) and 1:4 for toddlers and children. Clients shall not supervise another parent's children without written consent from the legal guardian and staff approval. (c) Safety practices. (1) The evacuation procedures shall include provisions for children approved by the fire marshal. (2) The program shall not allow children to use: (A) climbing equipment or swings on or near concrete or asphalt; (B) toys that explode or shoot things; and (C) other sharp or dangerous items. (3) The program shall have safeguards to prevent children from using toys that are dangerous because they are not age-appropriate. (4) The program site shall meet the additional physical plant requirements listed in sec.148.372 of this title (relating to Additional Physical Plant Requirements for Children). (d) Health practices. (1) The program shall have procedures for isolating parents and children who have communicable diseases and providing them with appropriate care and supervision. (2) The program shall keep current immunization records for each child at the program site as required by the Texas Department of Health. (3) The program shall obtain a consent to obtain emergency medical care for each child at admission. (4) Each child shall have a medical assessment from a medical doctor, physician assistant, advanced practice nurse, or registered nurse within 96 hours of admission. Copies of an assessment performed up to seven days before admission may be used. (5) The program shall provide potty chairs for small children and sanitize them after each use. (6) The program shall provide age-appropriate bathing facilities. Infants shall not be bathed in sinks. (7) Staff, volunteers, and parents shall use universal precautions when caring for children other than their own. (8) The program shall ensure that children are clean and appropriately dressed. (9) Staff shall check all diapers frequently, change without delay, and dispose of the diapers in a sealed container. (10) The program shall provide an adequate diet for childhood growth and development, including two snacks per day. (11) Children's medication shall be given according to the label by the parent, a licensed health professional, or an employee trained in self- administration of medication, and documented by a trained staff member. The facility shall obtain written consent from the parent to administer the medication, as required. If trained staff give the medication, the facility must document the circumstances or situation that prevents the parent or licensed health professional from performing the duties. The facility shall assume full responsibility for the proper administration and documentation of medication. sec.148.234. Correctional Facilities. (a) Community based programs participating in the state's Criminal Justice Initiative shall implement modified policies and procedures as required by the Texas Commission on Alcohol and Drug Abuse and the Texas Department of Criminal Justice (TDCJ). (b) Programs in state correctional facilities are not required to meet standards in areas under the control of the TDCJ, Institutional Division as approved by TDCJ and the commission. In-Prison Therapeutic Communities (IPTCs) and Substance Abuse Felony Punishment Facilities (SAFPs) shall implement modified policies and procedures meeting commission licensure requirements to the extent they do not conflict with TDCJ,(Institutional Division) rules. When TDCJ rules conflict with the commission's rules, TDCJ rules prevail. (c) County and city jails shall comply and be in good standing with the Texas Jail Standards. (d) Programs operating in correctional facilities under the jurisdiction of TDCJ, Institutional Division are exempt from the following sections: (1) Sections 148.351-148.359 of this title (relating to Residential Physical Plant requirements); (2) Sections 148.251-148.254 of this title (relating to Food and Nutrition); and (3) Sections 148.261-148.269 of this title (relating to Medication). (e) In addition, licensed treatment programs located in state correctional facilities are exempt from obtaining medical histories and physical examinations and providing medical care when these services are provided by the Texas Department of Criminal Justice, Institutional Division. sec.148.235. Pharmacotherapy Programs. (a) Synthetic narcotic programs shall provide appropriate chemical dependency treatment based on the medical model. (b) Synthetic narcotic programs shall comply with applicable rules established by the Texas Department of Health (Texas Administrative Code, Title 40 sec.sec.229.141-229.152) and the Food and Drug Administration (Code of Federal Regulations, Title 21, Chapter 1, Part 291). (c) The commission's rules for medication (sec.sec.148.261-148.268 of this title) do not apply to methadone and other synthetic narcotics regulated by the Texas Department of Health. (d) Admission screening shall be performed by a licensed health professional or a chemical dependency counselor with at least one year of pharmacotherapy experience. (e) Admission shall be authorized by a physician. (f) Each client shall have a medical history and physical examination filed in the client record as required by the Texas Department of Health. (g) Treatment shall be consistent with recognized standards of current pharmacotherapy practice. (h) Counseling and medical services shall be based on the assessment and recommendations of the treatment team and ordered by a physician. (1) The program shall provide at least four individual counseling sessions during the first 45 days of treatment. (2) After the first 45 days, the frequency of counseling shall be based on the individualized assessment. (3) The client record shall contain documentation to support the frequency of counseling ordered. (i) The program shall provide case management services. (1) A case manager shall be assigned to each client. (2) The case manager shall be a chemical dependency counselor or a licensed health professional. (3) When the client is participating in regular counseling, the primary counselor shall be the case manager. (j) The client record shall contain regular documentation of the client's status, including: (1) adequacy of dose; (2) results of recent drug urine screens; (3) physical status and use of prescription medication; (4) employment/vocational needs; (5) legal and social status; (6) overall client stability; and (7) other relevant information. (k) All direct care employees shall demonstrate knowledge or receive training that includes: (1) symptoms of opiate withdrawal; (2) drug urine screens; (3) current standards of pharmacotherapy; and (4) poly-drug addiction. sec.148.251. Meals in Outpatient Programs. (a) Programs shall provide a meal break after five consecutive hours of scheduled activities. (b) If the facility prepares meals in a centralized kitchen on site, it shall pass an annual kitchen health inspection as required by the Texas Food, Drug, and Cosmetics Act (Texas Health and Safety Code, Chapter 431). sec.148.252. Meals in Residential Programs. (a) The program shall provide wholesome, well-balanced meals. (b) The program shall provide modified diets to residents who medically require them as determined by a licensed health professional. Special diets shall be prepared in consultation with a licensed dietitian. (c) All food shall be selected, stored, prepared, and served in a safe, healthy manner. (d) The program shall provide at least three meals daily, with no more than 14 hours between any two meals. (e) A licensed dietitian shall approve menus and written guidelines for substitutions in advance; or (1) approve a meal planning manual with sample menus and guidelines for substitutions; (2) approve menus prepared by new staff before they plan meals independently; (3) review a sample of menus served at least annually; and (4) provide staff training as needed. sec.148.253. Meals Prepared by Clients. (a) Staff shall provide training and supervision needed to ensure compliance with the rules in sec.148.252 of this title (relating to Meals in Residential Programs). (b) The program shall define duties in writing and have written instructions posted or easily accessible to clients. (c) If menu planning and independent meal preparation are part of the clients' treatment program, a licensed dietitian shall: (1) approve the client training curriculum; and (2) provide training or approve a training program for staff who instruct and supervise clients in meal preparation. sec.148.254. Meals Provided by a Food Service. When meals are provided by a food service, a written contract shall require the food service to: (1) comply with the rules in sec.148.252 of this title (relating to Meals in Residential Programs); and (2) pass an annual kitchen health inspection as required by the Texas Food, Drug, and Cosmetics Act (Texas Health and Safety Code, Chapter 431). sec.148.262. Medication Storage. (a) Medications, syringes, and needles shall be accessible only to staff who are authorized to provide medication. (b) The program shall keep all prescription and non-prescription medications, syringes, and needles in locked storage. Used needles and syringes shall be placed in rigid, puncture-proof containers. (c) The program shall store all medications, syringes, and needles in their original containers in a neat and orderly fashion. (d) The program shall store all medication under appropriate conditions. Drugs requiring refrigeration shall be stored in a locked compartment separate from food items. (e) Clients may not keep prescription or non-prescription medication in their personal possession on site without specific authorization from a physician or a properly authorized physician assistant or advanced practice nurse. Staff shall ensure that authorized clients keep medication on their persons or safely stored. (f) The facility shall ensure that stock prescription medications are stored in a licensed pharmacy or physician's office and dispensed by a pharmacist or physician as required by the Texas Pharmacy Act (Texas Civil Statutes, Article 4542a-1). (g) The facility must ensure that medication is in a properly labeled container. If clients are required to take medication with them off site, the medication must be in an appropriate container with an appropriate label. sec.148.265. Staff Qualifications and Training. The facility shall ensure that staff who handle or administer medication are properly credentialed and trained. (1) Single doses of prescription medication shall be prepared and packaged by a licensed pharmacist or physician. (2) Prescription medication shall be administered only by physicians, physician assistants, registered nurses, licensed vocational nurses, and other staff who are legally authorized to administer medication. (3) The program shall have a comprehensive drug reference manual easily accessible to staff. (4) Staff who supervise self-administration shall be trained as described in sec.148.114 of this title (relating to Special Training Requirements). sec.148.266. Authorization for Medication. (a) Staff shall not give prescription medication to a client without a prescription or order from a physician or an authorized physician assistant or advanced practice nurse. (b) Each written order for medication shall include: (1) the date prescribed; (2) the name and dose of the medication; (3) the frequency and route of administration; and (4) the signature of the physician, physician assistant, or advanced practice nurse. sec.148.267. Administration of Prescription Medication. (a) Licensed health professionals shall administer and discontinue medication exactly as ordered. (b) Licensed health professionals shall document each dose administered in the client's record. (c) The medication administration record shall include: (1) the client's name; (2) drug allergies (or the absence of known allergies); (3) the name and dose of each medication; (4) the frequency and route of each medication; (5) the date and time of each dose administered; and (6) the signature of the staff person who administered each dose. (d) When a client is absent for scheduled doses, staff shall take action to ensure that the client receives the medication as prescribed. (e) When a medication error is identified or a client appears to have an adverse reaction to medication, a licensed health professional shall: (1) notify a physician or an authorized physician assistant or advanced practice nurse; (2) complete an incident report; and (3) document the facts and the physician (or physician assistant or advanced practice nurse) contact in the client record. sec.148.268. Self-Administration of Medication. (a) Clients may self-administer medication under the supervision of staff who are trained as described in sec.148.114 of this title (relating to Staff Training). (b) Supervision is limited to: (1) removing the container from storage; (2) handing the container to the client; (3) observing the client take the medication; (4) immediately reporting to a medical professional any unusual signs, symptoms, or actions; and (5) returning the container to storage. (c) Staff shall document each dose supervised in the client's record. (d) The medication record shall include: (1) the client's name; (2) drug allergies (or the absence of known allergies); (3) the name and dose of each medication; (4) the frequency and route of each medication; (5) the date and time of each dose supervised; and (6) the signature of the staff person who supervised each dose. (e) When a client is absent for scheduled doses, staff shall take action to ensure that the client receives the medication as prescribed. (f) When a medication error is identified or a client appears to have an adverse reaction to medication, staff shall: (1) notify a physician or an authorized physician assistant or advanced practice nurse; (2) complete an incident report; and (3) document the facts and the physician (or physician assistant or advanced practice nurse) contact in the client record. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601817 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 25, 1995 For further information, please call: (512) 867-8720 Treatment Levels 40 TAC sec.sec.148.211-148.214 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.211-148.214, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6310). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601732 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Special Provisions 40 TAC sec.sec.148.231-148.235 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.231-148.235, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6311). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601733 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Food and Nutrition 40 TAC sec.sec.148.251-148.254 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.251-148.254, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6311). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601734 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Medication 40 TAC sec.sec.148.261-148.268 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.261-148.268, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6311). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601735 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 27> Subchapter E. Treatment Process Admission 40 TAC sec.sec.148.281-148.284 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.281-148.284, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6312). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601736 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter E. Treatment Process 40 TAC sec.sec.148.281-148.284, 148.291-148.293, 148.301-148.304, and 148.321- 148.325 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.148. 281- 148.284, 148.291-148.293, 148.301-148.304, and 148.321-148.325 concerning the treatment process. Sections 148.282, 148.284, 148.291-148.293, 148.301, and 148.325 are adopted with changes to the proposed text as published in the August 25, 1995, issue of the Texas Register (20 TexReg 6617). Sections 148.281, 148.283, 148.302-148.304, and 148.321-148.324 are adopted without changes and will not be republished. These rules are being adopted to establish minimum criteria for the delivery of chemical dependency treatment in licensed chemical dependency facilities. The rules will provide more effective and consistent delivery of chemical dependency treatment services. The commission received comments suggesting revisions from Aliviane NO-AD and the Coalition for Nurses in Advanced Practice. Minor changes have been made in response to comments regarding wording and further staff review, and the rules have also been edited to improved clarity and readability. The following comment addresses sec.148.301 (relating to Psychosocial History): Comment: There seems to be inconsistency on what constitutes an assessment. Please specifically delineate in regards to ASI and SASSI, and address the issue of counselor interns. Response: To be acceptable as assessments, instruments such as ASI and SASSI must include narrative material interpreting the data gathered; this material must address the required topics. A counselor intern can administer the instrument and even draft the narrative portions, but a qualified credentialed counselor must review and sign off on the assessment. The rules are adopted under the Texas Health and Safety Code, Chapter 464, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the new rules is the Texas Health and Safety Code, Chapter 464. sec.148.282. Screening. (a) Every client admitted to the program shall meet the admission criteria. (1) In programs providing Level II, III, or IV treatment, screening shall be done by a chemical dependency counselor. Counselor interns shall consult with a qualified credentialed counselor who authorizes admission. (2) In Level I programs, screening shall be done by a licensed health professional. Non-physicians shall have at least one year of detoxification treatment experience. (A) A chemical dependency counselor with one year of detoxification experience may do the screening with consultation from a licensed health professional who authorizes the admission. (B) In outpatient and supported living detoxification programs, a physician, physician assistant, or advanced practice nurse shall examine the client face- to-face and authorize the admission. (3) Clients shall be treated in the least restrictive environment available that best meets their needs. (b) Justification for admission (based on the admission criteria) shall be signed by the individual authorizing admission and filed in the client record at admission. (c) If an individual is not admitted, the program shall document the reason and refer the applicant to appropriate services. sec.148.284. Client Orientation. (a) The facility shall provide a complete orientation for clients and consenters within 24 hours. When appropriate, the orientation should include family members and significant others identified by the client. (b) The facility shall explain the information aloud in a way the client and consenter can understand. (c) The orientation shall include: (1) Client Bill of Rights; (2) client grievance procedure; (3) program rules; (4) violations and other behavior that can lead to disciplinary action or discharge; (5) any behavior management procedures used to enforce program rules; (6) the program's philosophy and treatment objectives; (7) opportunities for family or significant others to be involved in the treatment program; and (8) rules about visits, telephone calls, mail, and gifts, as applicable. (d) If an emergency or the client's physical or mental condition prevents orientation within 24 hours, staff shall explain the circumstances in the client record and present the information to the client as soon as possible. (e) The client record shall contain documentation, signed and dated by the client, showing that the client understands and has received a copy of the Client Bill of Rights, the client grievance procedure, and the program rules. sec.148.291. Detoxification History. (a) The program shall obtain enough medical and psychosocial information about the client to provide a clear understanding of the client's present status. (b) A chemical dependency counselor or licensed health professional shall collect and document the following information: (1) alcohol and other drug use, past and present; (2) past psychiatric and chemical dependency treatment; (3) significant medical history and current health status; (4) current living situation; (5) current employment situation; and (6) current emotional state and behavioral functioning. (c) The detoxification history shall be initiated within 24 hours of admission, and completed and filed in the client record within 72 hours of admission. If an emergency or the client's physical condition prevents documentation within 24 hours, staff shall explain the circumstances in the client record and obtain the information as soon as possible. (d) A complete medical history and physical examination shall be filed in the client record within 24 hours of admission. A medical history and physical examination completed during the 24 hours preceding admission may be substituted if it is approved by the program's physician, physician assistant, or advanced practice nurse. sec.148.292. Stabilization Plan. (a) A clinical staff person authorized by the program shall identify the client's short term needs (based on the detoxification history, the medical history, and the physical examination) and develop an appropriate detoxification plan. (b) The detoxification plan shall be reviewed and signed by a physician or another licensed health professional. Non-physicians shall have at least one year of detoxification experience. (c) The client shall also sign the detoxification plan. (d) The completed and signed detoxification plan shall be filed in the client record within 24 hours of admission. (e) The program shall revise the detoxification plan whenever the client's needs change significantly. sec.148.293. Detoxification Notes. The program shall implement the detoxification plan and document the client's response. (1) Program staff shall document services provided to the client. This may be done by filing a copy of the program schedule in the client record and documenting the client's level of participation. (2) Detoxification notes shall include: (A) the client's physical condition, including vital signs; (B) the client's mood and behavior; (C) client statements about the client's condition and needs; and (D) information about the client's progress or lack of progress in relation to detoxification goals. (3) Additional notes shall be documented as needed. sec.148.301. Psychosocial History. (a) A counselor shall document a psychosocial history that provides a thorough understanding of the client's history and present status, including: (1) circumstances leading to admission; (2) alcohol and other drug use, past and present; (3) past psychiatric and chemical dependency treatment; (4) significant medical history and current health status; (5) family and social history; (6) current living situation; (7) relationships with family of origin, nuclear family, and significant others; (8) education and vocational training; (9) employment history (including military) and current status; (10) legal history and current legal status; (11) emotional state and behavioral functioning, past and present; and (12) strengths, weaknesses, and needs. (b) The program may use a client questionnaire to gather some of the information needed for the psychosocial evaluation, but a counselor shall review and discuss the questionnaire with the client and document the discussion, including additional information needed to provide a clear and comprehensive psychosocial history. (c) Programs may use a psychosocial history from an outside source if: (1) it meets the commission's criteria; (2) it was completed during the six months preceding admission; and (3) a counselor reviews the information with the client and documents an update. (d) A qualified credentialed counselor shall review and sign the psychosocial history and/or any updates. (e) For residential clients, a completed medical history and physical examination shall be filed in the client record within 96 hours of admission. (1) The facility may use a medical history and physical examination completed up to 30 days before admission or received from the referring facility if a physician, physician assistant, advanced practice nurse, or registered nurse reviews the information with the client and documents an update within 96 hours of admission. (2) When the update reflects a significant change in the client's status, the client shall receive further evaluation from a physician. sec.148.325. Request for Discharge. (a) The facility shall not hold a voluntary client against the consenter's will. (b) The facility shall have written procedures for handling discharges and discharge requests that comply with applicable statutes. (See also sec.148.143 of this title (relating to Voluntary Clients-Additional Rights.)) (c) The facility shall comply with the provisions of Texas Health and Safety Code, sec.164 and shall not try to keep a client in treatment by coercion, intimidation, or misrepresentation. (d) The facility shall not say or do anything to influence the client's decision that is not justified by the client's condition. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601818 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 25, 1995 For further information, please call: (512) 867-8720 Stabilization Process (Level I) 40 TAC sec.sec.148.291-148.293. The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.291-148.293, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6312). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601737 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Primary and Transitional Treatment Process (Level II, III, and IV) 40 TAC sec.sec.148.301-148.304. The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.301-148.304, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6313). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601751 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Discharge 40 TAC sec.sec.148.321-148.325 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.321-148.325, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6313). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601752 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Subchapter F. Physical Plant General Physical Plant Provisions 40 TAC sec.148.341 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.148.341, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6313). These rule is being repealed to allow adoption of a revised version of the rules. The repeal of this rule deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeal. The repeal is adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeal is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601753 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 40 TAC sec.sec.148. 341, 148.351-148.359, 148.371, 148.372 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.148.341, 148.351-148.359, 148.371, and 148.372, concerning physical plant requirements for licensed chemical dependency facilities. Sections 148.341, 148.351, 148.353, 148.355-148.357, 148.371, and 148.372 are adopted with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register(20 TexReg 6314). Sections 148.352, 148.354, 148.358, and 148.359 are adopted without changes and will not be republished. These rules are being adopted to describe requirements for the physical plants of residential treatment facilities, including inspections, space; exits; fire systems; furniture and supplies; lighting; plumbing; sanitation; ventilation, small family living environments, and additional requirements for facilities housing children. The rules will ensure a safer environment for clients receiving treatment in facilities licensed by the commission. The commission received one comment from the Serenity Center addressing sec.148.353 (relating to Exits). Minor changes have been after further staff review, and the rules have also been edited to improved clarity and readability. Comment: Commenter asked if under these rules, is an internal wooden staircase considered a fire escape route. Response: No wooden structure can serve as a fire escape unless it is treated to be non-combustible. The rules are adopted under the Texas Health and Safety Code, Chapter 464, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the new rules is the Texas Health and Safety Code, Chapter 464. sec.148.341. General Physical Plant Provisions. (a) All programs shall comply with the following rules. (1) The entire facility, including grounds, buildings, furniture, appliances, and equipment, shall be structurally sound, in good repair, clean, and free from health and safety hazards. (2) Each program site shall pass an annual fire marshal inspection and comply with all applicable laws, codes, and ordinances. (3) Mobile homes shall not be used for client sleeping areas. (b) The commission's executive director may waive routine physical plant inspections for programs located in facilities licensed by another state agency, provided the commission has determined that the license requires an equivalent level of safety. The commission reserves the right to monitor compliance and require corrective action. (c) An outpatient program which offers optional housing to clients in small family living environments shall comply with all rules in sec.148.371 of this title (relating to Small Family Living Environments). (1) The facility is responsible for the selection, inspection, approval, and monitoring of these units regarding building safety, maintenance, repair, fire safety, and sanitation, including all required inspections and approvals. (2) These units shall not be individually licensed by the commission, but shall be subject to inspection and corrective action. (3) The commission reserves the right to prohibit use of a small family living environment if it determines the housing arrangement jeopardizes the health, safety, and welfare of clients. sec.148.351. Required Inspections. (a) The facility shall pass all required inspections and keep a current file of reports and other documentation needed to demonstrate compliance with applicable laws and regulations. The inspections must be signed, dated, and free of any outstanding corrective actions. The following inspections are required: (1) annual fire marshal inspection; (2) annual inspection of the alarm system by the fire marshal or an inspector authorized to install and inspect such systems; (3) quarterly fire alarm system test by facility staff; (4) annual kitchen inspection as specified in the Texas Health and Safety Code, Chapter 431; (5) gas pipe pressure test once every three years by the local gas company or a licensed plumber; (6) annual inspection and maintenance of fire extinguishers by personnel licensed or certified to perform those duties; and (7) regular inspections of elevators as required by the Safety Code for Elevators and Escalators. (b) The program shall keep the following information on file: (1) certificate of occupancy as required by local authorities; (2) documentation that the water supply is from a system approved by the Department of Health or a system regulated by the local authority; (3) documentation that the sewage system is connected to a system approved by the Department of Health or a system regulated by the local authority; (4) documentation that the program site complies with national or local electrical codes; (5) a fire alarm installation certificate; and (6) documentation that the liquefied petroleum supply has been inspected and approved by the Texas Railroad Commission, if applicable. sec.148.353. Exits. (a) Exit doors and routes shall be well lit and free from obstruction at all times. (b) There shall be an illuminated "EXIT" sign over each exit. Where the exit is not visible, there shall be an illuminated "EXIT" sign with an arrow pointing the way. (c) Rooms for 50 or more people shall have exit doors that swing out. (d) No door may require a key for emergency exit. Locked facilities shall have emergency exit door releases as described in the Life Safety Code and approved by the fire marshal. (e) Windows shall provide a secondary means of escape. Windows shall not be less than 20 inches in width and 24 inches in height, unless: (1) the sleeping room has a door leading directly to the outside of the building; or (2) the facility is protected throughout by an approved automatic sprinkler system. (f) Every building shall have at least two exits that are well separated. (g) Every multiple-story building shall have at least two fire escapes (not ladders) on each story that are well separated. Fire escapes shall: (1) be made of non-combustible material; (2) have sturdy handrails or walls on both sides; and (3) provide a safe path to the ground. (h) Stairs and ramps shall be permanent and have non-slip surfaces. (i) Exit routes higher than 30 inches (such as stairs, ramps, balconies, landings, and porches) shall have full-length side guards. sec.148.355. Furniture and Supplies. (a) Each client shall have a separate bed of solid construction with a mattress. (b) Each bed shall have a pillow and clean linens, including two sheets, a pillowcase, and a blanket or bedspread. Additional blankets shall be available in cold weather. (c) The facility shall provide an adequate supply of basic items for grooming and personal hygiene, including clean towels. (d) Personal appliances shall be in good working order and inspected for safety hazards. (e) All clients shall have access to laundry services or properly maintained laundry facilities. (f) Trash containers shall be made of metal or United Laboratories-approved plastic. Trash containers in kitchens and dining areas shall be covered. sec.148.356. Lighting. (a) The facility shall have adequate lighting to provide a safe environment and meet user needs. (b) Lighting shall be provided outside the building and in parking lots. (c) Bedrooms shall have windows with appropriate coverings for privacy. (d) Light bulbs shall have shades, wire guards or other shields. sec.148.357. Plumbing. (a) There shall be at least one sink, one tub or shower, and one toilet for every eight residents. All of the fixtures must be in good working order and have the appropriate drain and drain trap to prevent sewage gas escape back into the facility. (b) The facility shall provide an adequate supply of hot water for the number of residents and the program schedule. (c) Showers and tubs shall have no-slip surfaces and curtains or other safe enclosures. (d) Clean drinking water shall be readily available to all residents. sec.148.371. Small Family Living Environments. (a) A small family living environment is a single apartment unit, house, or similar residence (housing no more than six people) which is available to adult clients participating in an outpatient program. Small family living environments shall be permitted only under these circumstances: (1) housing arrangements are offered as an option to outpatient clients needing temporary living arrangements in order to access services; (2) clients using the housing are adults; (3) use of the housing is completely voluntary; it is neither required nor implied as a condition of participation; (4) clients using the housing are not discriminated against or given preference over other clients, either in admissions or services; and (5) housing is used by no more than 25% of the clients in a program. (b) A facility shall meet all residential physical plant rules in sec.sec.148.351-148.359 of this title (relating to Required Inspections, Space Requirements, Exits, Fire Systems, Furniture and Supplies, Lighting, Plumbing, Sanitation, and Ventilation) if: (1) clients are required to live in the housing as a condition of receiving treatment services, or (2) more than 25% of the clients in an outpatient program live in the optional housing. (c) Each client who lives in a small family living environment shall sign a consent before admission that includes the following provisions: (1) housing is offered as an option and is not required as a condition for participation in the program; (2) use of the housing is completely voluntary; (3) clients using the housing are not discriminated against or given preference over other program participants, either in admissions or services; (4) the housing units are not licensed facilities and do not meet the health and safety standards required in residential facilities; (5) the facility is responsible for the selection, inspection, approval, and monitoring of these units regarding building safety, maintenance, repair, fire safety, and sanitation, including all required inspections and approvals; and (6) clients may leave the housing at any time without affecting their treatment services. (d) If the unit is owned or operated by another entity, the facility shall have a written agreement that defines responsibilities and addresses: (1) finances; (2) maintenance; and (3) client confidentiality. (e) Each unit shall meet applicable state laws and local codes and ordinances. (f) Buildings shall be inspected and approved annually by the fire marshal as required. (g) Each unit shall have at least one working, portable A:B:C fire extinguisher for the living area and one B:C fire extinguisher for the kitchen. Fire extinguishers shall be approved by the Underwriter Laboratories or the fire marshal. (h) Each unit shall have at least one working smoke detector approved by the Underwriter Laboratories or the fire marshal. (i) Doors shall not require a key for exit from the inside. (j) Buildings and grounds shall be structurally sound, in good repair, and clean. (k) The residence shall be maintained in a sanitary condition. (l) All plumbing, equipment, and appliances shall be maintained in good working condition. (m) Clients shall be able to keep the temperature between 65 degrees and 85 degrees Fahrenheit. (n) There shall be at least 40 square feet per client in multiple-occupant bedrooms and at least 80 square feet per client in single-occupant bedrooms. (o) In multiple-occupant residences, bedrooms shall have doors for privacy. (p) The residence shall have a bathroom with a sink, a toilet, and a tub or shower with an adequate supply of hot water. (q) The residence shall have cooking facilities that include a sink with hot water, a stove, and a refrigerator. (r) Lighting shall be sufficient to meet the needs of clients. (s) The residence shall be appropriately furnished and have an atmosphere that preserves client dignity and confidentiality. (t) Each client shall have a separate bed with a solid frame and mattress. (u) The residence shall have adequate closet and drawer space for each client to store clothes and personal property. (v) Clients shall have access to private or public laundry facilities. (w) The facility shall inspect the residence at least quarterly to monitor compliance with these rules and correct identified problems. sec.148.372. Additional Physical Plant Requirements for Children. (a) The building shall provide a safe and sanitary environment appropriate for children. (b) Rooms and buildings shall have at least 30 usable square feet of indoor activity space per child when occupied by children. (c) Where children share sleeping space with parents, bedrooms shall have at least 30 usable square feet per infant (in cribs) and 40 usable square feet per child. (d) Nurseries shall have 35 usable square feet per crib. (e) Heating equipment shall be cool enough to touch safely. (f) Heavy furniture and equipment shall be securely installed to prevent tipping or collapsing. (g) Electrical outlets accessible to children shall have child-proof covers or safety devices. (h) Air conditioners, fans, and heating units shall be mounted out of children's reach or have safety guards. (i) Grounds shall be kept free of standing water and sharp objects. (j) Tap water shall be no hotter than 110 degrees Fahrenheit. (k) Items potentially dangerous for children shall be stored safely. (l) Areas that are more than two feet above ground level (such as stairs, porches, and platforms) shall have railings low enough for children to reach. (m) Tanks, ditches, sewer pipes, dangerous machinery, and other hazards shall be fenced. (n) The program site shall have adequate outdoor play space with a safe route of access. (o) Outdoor play areas shall be enclosed by a fence at least four feet high if: (1) the play area is located close to a road, pool, deep ditch, or other hazard; or (2) there are more than six children in the group. (p) Outdoor play equipment shall be in a safe location and securely anchored (unless portable by design). (q) Buildings, furniture, and equipment shall not have openings or angles that could trap or injure a child's head. (r) Swing seats shall be durable, lightweight, and relatively pliable. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601819 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Residential Physical Plant Requirements 40 TAC sec.sec.148.351-148.359 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.148.351-148.359, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6314). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601754 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Special Physical Plant Requirements 40 TAC sec.148.371, sec.148.372 The Texas Commission on Alcohol and Drug Abuse adopts the repeal sec.148. 371 and sec.148.372, concerning facility licensure standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6314). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for licensure of chemical dependency treatment facilities. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601755 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 149. Court Commitments Subchapter A. Civil Court Commitments 40 TAC sec.sec.149. 11-149.16, 141.21, 149.22, 149.31-149.33, 149.54 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.149. 11- 149.16, 149.21, 149.22, 149.31-149.33, and 149.54, concerning chemical dependency court commitments. Sections 149.11, 149.13-149.16, 149.21, 149.22, 149.31-149.33, and 149.54 are adopted with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6314). Section 149.12 is adopted without changes and will not be republished. Additionally, the name of the chapter has been changed from Court Commitments and Related Procedures to Court Commitments and the name of the subchapter has been changed from Court Commitments to Civil Court Commitments. These rules are being adopted to establish minimum requirements for facilities accepting court commitments, including staff training, documentation; procedures for client admission under emergency detention and orders of protective custody; and special rights for clients under emergency detention and orders of protective custody. The rules provide more effective regulation of facilities that treat chemically dependent clients admitted under court order. The commission received comments from the Northeast Texas Council on Alcohol and Drug Abuse, the Texoma Council on Alcohol and Drug Abuse, and Christian Farms Treehouse. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. Additional changes have been made in response to comments regarding wording and further staff review, and the rules have also been edited to improve clarity and readability. All comments submitted were fully considered by the commission. A summary of comments, commission responses, and changes to the rules follows. Comment: A definitions section would be helpful. Response: The commission agrees and will propose a new definitions section in a separate action. The following comments addresses sec.149.13 (relating to Licensure): Comment: Facilities who accept adult in-patient involuntary commitments but do not accept emergency detentions should not be required to obtain Prevention and Management of Aggressive Behavior (PMAB) training if the facility has a policy prohibiting restraint and seclusion. PMAB is quite costly and often difficult to obtain, and it is a burden which has not been proven to be necessary. Response: The commission accepts this comment. There is no distinction in the acuity level of clients received through emergency detention and court commitments. For both categories, a non-violent crisis intervention course equivalent in content to the first half of PMAB training (the portion that does not address restraint) will be acceptable, and the rules have been revised to reflect this. The following comment addresses sec.149.14 (relating to Training): Comment: Level IV programs should be allowed to accept court commitments. Excluding this level is prejudging the level of services needed by individuals, which is a decision that should be made by a judge. A person on court commitment does not necessarily need ten hours per week. Rural areas do not have populations to make a Level III economically feasible, and Level IV can be used to provide interim services when a more intensive level is not available. Response: The commission accepts this comment in part. Judges do not determine the level of service needed by a committed person; that is a clinical decision. Any person who is committed by the courts, however, usually needs more than two hours of treatment per week. The commission does recognize that appropriate services are not available in many regions, and acknowledges that a less intensive service is often the "least restrictive means available" as required by law. In such areas, the commission may consider approving a facility that provides Level IV services to accept court committed clients that meet the program's admission criteria, subject to annual review. The rules are adopted under the Texas Health and Safety Code, sec.464.009, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules and standards for approval of chemical dependency treatment facilities to accept court commitments. The code affected by the new rules is the Texas Health and Safety Code, sec.464.009. sec.149.11. Authority. Texas Health and Safety Code, sec.464.009, gives the commission authority to establish rules and criteria for facilities accepting chemical dependency clients under emergency detention or order of protective custody. sec.149.13. Licensure. (a) The facility shall be licensed to provide chemical dependency treatment by: (1) the Texas Commission on Alcohol and Drug Abuse; or (2) the Texas Department of Health. (b) Facilities licensed by the commission shall be licensed to provide the appropriate level of service: (1) emergency detention: Level I or Level II residential services; (2) adult inpatient involuntary civil or criminal commitments: Level II or Level III residential services for adults; (3) adult outpatient involuntary civil or criminal commitments: Level II or Level III outpatient services; (4) juvenile inpatient commitments: Level II residential services for adolescents; (5) juvenile outpatient commitments: Level II or Level III outpatient services for adolescents. (c) In areas where Level II or Level III services are not available, the commission may approve a Level IV outpatient program to receive adult outpatient involuntary civil commitments. The program shall not, however, accept inappropriate clients who do not meet its admission criteria. Approval of a Level IV program is limited to one year. The commission may renew the approval annually if the arrangement is still necessary and appropriate. (d) Facilities licensed by the Texas Department of Health shall provide services equivalent to those specified in subsection (b) of this section. sec.149.14. Training. (a) The facility's court commitment program shall provide training for at least two designated staff to ensure they understand and comply with court commitment statutes, regulations, and procedures. (b) All court commitment staff and volunteers providing direct client services shall receive training in Prevention and Management of Aggressive Behavior (PMAB). The second part of PMAB training (relating to restraint procedures) is not required, and a facility may substitute another non-violent behavior management course with content equivalent to the PMAB training. This training shall be documented in personnel files. sec.149.15. General Procedures. (a) The facility's court commitment program shall implement procedures for compliance with Federal and State Statutory and Administrative Code provisions that relate to the care and custody of court committed clients. These provisions include: (1) Code of Federal Regulations, Title 42, Part 2-Confidentiality of Alcohol and Drug Abuse Patient Records; (2) Texas Health and Safety Code, Chapter 462; and (3) Texas Administrative Code, Title 25, Chapters 41-42. (b) The facility shall have a procedure for reporting unauthorized departures to the referring courts. Verbal report shall be made immediately, with written confirmation within 24 hours. sec.149.16. Documentation. (a) In addition to the documentation requirements set out in the commission's Licensure Standards, the provider shall document as a part of the client's record the conditions and/or behaviors that caused the client's entry into the civil court commitment process. (b) The client record shall also contain copies of the following documents: (1) order for emergency detention (if applicable); (2) application for court-ordered treatment services; (3) two physician's certificates of medical examination for chemical dependency; (4) order of protective custody for chemical dependency; (5) notice of hearing of application for court-ordered chemical dependency treatment; (6) waiver of attendance at hearing (if applicable); (7) finding of probable cause hearing; (8) order of commitment or writ of commitment; and (9) transfer order (if applicable). (c) A facility shall provide services according to the provisions in the current version of the commission's Provider Compliance Guide. sec.149.21. Admissions: Chemical Dependency Emergency Detention. (a) Detention without warrant. A person who is brought to a treatment facility after being apprehended without a warrant by a peace officer under Texas Health and Safety Code, Chapter 462, shall be given a preliminary examination by a physician as soon as possible within 24 hours of the time of apprehension. (1) If the examining physician determines that emergency detention is necessary, the physician shall prepare a written opinion which states: (A) the person is chemically dependent; (B) the person evidences a substantial risk of serious harm to self or others; (C) the risk of harm is imminent unless the person is immediately restrained; and (D) necessary restraint cannot be accomplished without emergency detention. (2) If the examining physician determines there is no reason for emergency detention, the person shall be released. If the person is not arrested and does not object, arrangements shall be made for immediate transportation, at the expense of the county in which the person was apprehended, to: (A) the location in which the person was apprehended; (B) the person's place of residence in Texas; or (C) another suitable location. (b) Detention with warrant. A person who is brought under a magistrate order for emergency apprehension and detention to a treatment facility under Texas Health and Safety Code, Chapter 462, shall be given a preliminary examination by a physician as soon as possible within 24 hours of the time of apprehension. Copies of the application for warrant and the warrant itself shall be transmitted to the treatment facility. (1) If the examining physician determines that emergency detention is necessary, the physician or designee shall prepare a written opinion which states: (A) the person is chemically dependent; (B) the person evidences a substantial risk of serious harm to self or others; (C) the risk of harm is imminent unless the person is immediately restrained; and (D) necessary restraint cannot be accomplished without emergency detention. (2) If the examining physician determines there is no reason for emergency detention, the person shall be released. If the person is not arrested and does not object, arrangements shall be made for reasonable, prompt return to: (A) the location at which the person was apprehended; (B) the person's place of residence, if in Texas; or (C) another suitable location. (3) If the 24-hour period following presentation at the treatment facility of a person apprehended under Texas Health and Safety Code, Chapter 462, ends on a Saturday or Sunday, or a legal holiday, the period of detention shall end at 4:00 p.m. on the first succeeding business day. If extremely hazardous weather conditions exist or a disaster occurs, the presiding judge or magistrate may by written order extend the period by an additional 24 hours for each day of hazardous weather or disaster. The written order shall declare an emergency exists because of the weather or the occurrence of a disaster. (c) Release from emergency detention. If the head of a facility or designee determines at any time during the emergency detention that the criteria in Texas Health and Safety Code, sec.462.043(b), no longer apply, the person shall be released. Arrangements shall be made for the person's return to the location of the apprehension, the person's place of residence or other suitable place, unless the person is arrested or objects to the return. (d) Rights of a person admitted for emergency detention. A person admitted for emergency detention shall be advised within 24 hours of admission, orally and in writing, in simple, non-technical terms, of the following rights as referenced in sec.149.22 of this title (relating to Rights of Persons Apprehended for Emergency Detention for Inpatient Chemical Dependency Services): (1) to be advised of the location of detention, the reasons for detention, and the fact that detention could result in a longer period of involuntary commitment; (2) to contact an attorney of the person's own choosing with a reasonable opportunity to contact that attorney; (3) to be transported back to the location of the apprehension, the person's place of residence or other suitable place, if not admitted for emergency detention, unless the person is arrested or objects to the return; (4) to be released if the head of the facility determines that any of the four criteria for emergency detention set out in Texas Health and Safety Code, sec.462.043(b), no longer apply; and (5) to be advised that the person's communications with a treatment professional may be used in proceedings for further detention. (e) Information about rights to be supplied upon admission. A person admitted for treatment under subsection (a) or (b) of this section shall be advised immediately, orally and in writing, in simple, non-technical terms, of the following information. (1) The person may be detained for treatment for not more than 24 hours after the hour of the initial detention unless an order for further detention is obtained. (2) If the head of the facility finds that the criteria for emergency detention as described in Texas Health and Safety Code, sec.462.043(b), no longer apply, the person will be released. (3) No later than the 24th hour after the hour of initial detention, the head of the facility may file a petition to have the person committed for court- ordered treatment under Texas Health and Safety Code, sec.462.042. (4) If a petition for court-ordered treatment is filed, the person is entitled to a probable cause hearing not later than the 72nd hour after the hour on which detention begins under an order of protective custody to determine whether the person should remain in the facility. (5) If an application for court-ordered services is filed, the person has a right to have counsel if the person does not have an attorney. (6) The person has the right to communicate with counsel at any reasonable time and to have assistance in contacting the counsel. (7) Anything the person says to personnel of the treatment facility may be used in making a determination relating to detention, may result in the filing of a petition for court-ordered treatment, and may be used at a court hearing. (8) The person is entitled to present evidence and to cross-examine witnesses who testify on behalf of the petitioner at a hearing. (9) The person may refuse medication unless there is an imminent likelihood of serious physical injury to the person or others if the medication is refused. (10) Beginning on the 24th hour before a hearing for court-ordered treatment, the person may refuse to take medication unless the medication is necessary to save the person's life. (11) The person is entitled to request that a hearing be held in the county of which the person is a resident, if within the state. (f) Emergency detention. If the head of the facility determines during the period of emergency detention that the person requires further treatment, an application for court-ordered treatment shall be filed and an order of protective custody obtained under Texas Health and Safety Code, Chapter 462, as described in sec.149.31 of this title (relating to Admissions: Persons Court Ordered to Inpatient Chemical Dependency Services). The application shall be in writing and shall state: (1) the name and address of the person, including county of residence, if known; (2) that the person is chemically dependent: (A) that the person is likely to cause serious harm to self or others; or (B) will continue to suffer abnormal mental, emotional, or physical distress, will continue to deteriorate in ability to function independently if not treated, and is unable to make a rational and informed choice as to whether or not to submit to treatment; and (3) that the person is not charged with a criminal act, attempt, or threat of serious bodily injury to another person (not including a juvenile alleged to be a child engaged in delinquent conduct or conduct indicating a need for supervision as defined in the Family Code, sec.51.03). sec.149.22. Rights of Persons Apprehended for Emergency Detention. (a) The rights of each person apprehended for emergency detention for inpatient chemical dependency services at a treatment facility are granted under the relevant sections of Texas Health and Safety Code, Chapter 462. The client shall be advised immediately of these rights orally, in writing, and in simple non-technical terms. Each person apprehended or detained, but not yet admitted, for emergency detention shall be advised of the following rights: (1) You have the right to be told: (A) where you are; (B) why you are being kept at the facility; and (C) that your detention may result in a longer period of involuntary care. (2) You have the right to be told that anything you do or say may be used to determine whether you should be allowed to leave and whether you need court- ordered treatment. What you say may also be used in court. (3) You have the right to call an attorney at any reasonable time. The facility shall help you call an attorney if you ask. (4) You have the right to have a preliminary examination by a physician conducted immediately upon arrival at the treatment facility, following apprehension, to determine whether your condition meets the criteria for admission under emergency detention. (5) You will not be allowed to leave if the doctor believes that: (A) you may seriously harm yourself or others; (B) the risk of this happening is likely unless you are restrained; and (C) emergency detention is the least restrictive means of restraint. (6) If the doctor decides you do not meet all of these criteria, you shall be allowed to leave. A decision concerning whether you shall stay shall be made within 24 hours, except weekends and legal holidays, the decision may be delayed until 4: 00 p.m. on the first regular work day. The decision may also be delayed in the event of an extreme weather emergency. If the court is asked to order you to stay longer, you shall be told that you have a right to a hearing within 72 hours. (7) If the physician finds you do not need to be here, you have the right to be released and will be taken back to where you were picked up or to another suitable place. (b) If the person is accepted for treatment on an emergency detention, the personnel of the treatment facility shall immediately advise the person of the following rights: (1) You have the right not to be detained for more than 24 hours after the hour of initial detention unless an order for further detention is obtained, except that if the 24-hour period ends on a Saturday, Sunday or legal holiday or before 4:00 p.m. on the first business day succeeding the Saturday, Sunday or legal holiday, the period of detention shall end no later than 4:00 p.m. of the first succeeding business day. (2) You have the right to be released if the head of the treatment facility determines that the criteria for emergency detention, as outlined in Texas Health and Safety Code, sec.462. 043(b), no longer apply. (3) You have the right to be transferred back to the location of apprehension, or other suitable place, if released from emergency detention, unless you are arrested or object to the return. (4) You have the right to be informed that no later than the 24th hour after the hour of initial detention, the head of the treatment facility may file a petition for court-ordered treatment. (5) You have the right to be informed that if a petition for court-ordered treatment is filed, you are entitled to a judicial probable cause hearing to determine whether you should remain in the treatment facility. This hearing must take place no later than 72 hours after your detention begins under the order of protective custody. (6) You have the right to have an attorney appointed if you do not have an attorney, when application for court-ordered services is filed. (7) You have the right to communicate with your attorney at any reasonable time and to have assistance in contacting the attorney. (8) You have the right to be informed that anything you say to the personnel of the treatment facility may be used in making a determination relating to detention, may result in the filing of a petition for court-ordered treatment, and may be used at a court hearing. (9) You have the right to present evidence and to cross-examine witnesses who testify on behalf of the petitioner at a hearing. (10) You have the right to refuse medication unless there is an imminent likelihood of serious physical injury to you or others if the medication is refused. (11) You have the right to be informed that beginning on the 24th hour before a hearing for court-ordered treatment, you may refuse to take medication unless the medication is necessary to save your life. (12) If you live in Texas, you have the right to request that a hearing be held in the county of which you are a resident. sec.149.31. Admissions: Persons Court-Ordered to Inpatient Chemical Dependency Services. (a) Court-ordered treatment. (1) Before a hearing on court-ordered treatment may be held, there shall be on file with the court two certificates of medical examination (CME) for chemical dependency completed by physicians who have examined the person within 30 days preceding the date on which the final hearing is held. The court may appoint the necessary physicians to examine the person and to file the CMEs with the court if the CMEs are not filed with the application. (2) A CME shall be dated and signed by the examining physician and shall include the following information: (A) name and address of the examining physician; (B) name and address of the person; (C) date and place of the examination; (D) the period, if any, during which the person was under the examining physician's care; (E) accurate description of the treatment, if any, given by or administered under the direction of the examining physician; and (F) the examining physician's opinion and the detailed basis for that opinion concerning whether the person: (i) is chemically dependent; (ii) is likely to cause serious harm to self and/or others; (iii) will continue to suffer abnormal mental, emotional, or physical distress and to deteriorate in ability to function independently if not treated; and (iv) is unable to make a rational and informed choice as to whether or not to submit to treatment. (b) Order of protective custody. An order of protective custody (OPC) may be filed only in the court in which an application for court-ordered treatment is pending and shall be accompanied by a CME for chemical dependency as described in Texas Health and Safety Code, sec.462.064, prepared by a physician who has examined the proposed patient within five days of the filing of the motion. A person charged with a criminal offense may be detained under an OPC if the person meets the requirements of Texas Health and Safety Code, sec.462.065, and the head of the facility agrees to the detention. (c) Probable cause hearing. (1) A person admitted by a treatment facility under an order of protective custody shall be provided a probable cause hearing within 72 hours of the signing of the order for protective custody unless the person waives the right to a hearing. (A) If that 72-hour period ends on a Saturday, Sunday or legal holiday, the probable cause hearing shall be held on the first succeeding business day. The judge or magistrate may postpone the hearing each day for an additional 24 hours if the judge or magistrate declares that an extreme emergency exists because of extremely hazardous weather conditions or on the occurrence of a disaster that threatens the safety of the proposed patient or another essential party to the hearing. (B) At the hearing, the person and the person's attorney are entitled to appear and present evidence on any allegation or statement in the CME for chemical dependency. (2) A person ordered during a probable cause hearing to be returned to the treatment facility to await a hearing on court-ordered treatment should be accompanied by: (A) a copy of the CME for chemical dependency; (B) any affidavits or other material submitted as evidence in the hearing; and (C) a notification of probable cause hearing. (3) A person returned to the treatment facility following a probable cause hearing shall be detained until the hearing on court ordered treatment or until the head of the facility determines that the person no longer meets the criteria for detention as described in Texas Health and Safety Code, Chapter 462. (d) Application for court-ordered treatment approved. If the application for court-ordered treatment is approved, the person shall be admitted to the treatment facility for a period not to exceed 90 days. The judge may, on request of the person, allow participation in licensed outpatient treatment in lieu of inpatient treatment, if the judge believes it is in the best interest of the patient. (e) Application for court-ordered treatment not approved. If the application for court-ordered treatment is not approved, the person shall be discharged by the facility. (f) Renewal of order for court-ordered treatment. (1) If the head of the facility determines during the period of court-ordered treatment that the person admitted under subsection (d) of this section requires further treatment for chemical dependency and is likely to cause serious physical harm to self or others, an application for renewal of the original order may be filed. The application shall be filed not later than the 14th day before the date on which the original order will expire. (2) The application shall be accompanied by two new CMEs for chemical dependency which comply with the requirements as described in subsection (a)(2) of this section. (3) An application for renewal is treated as an original application for court-ordered treatment. The rights of the person and the information to be supplied upon admission, as described in sec.149.21 of this title (relating to Admissions: Chemical Dependency Emergency Detention), and the provisions for an order of protective custody as described in subsection (b) of this section and a probable cause hearing as described in subsection (c) of this section apply to the application for renewal. (4) If the application is approved, the person shall be admitted for an additional period of treatment not to exceed 90 days. (5) If the application is not approved, the person shall be discharged by the facility. (g) Modification of order for inpatient treatment. The head of a facility may request a modification of order for inpatient treatment to require the person to participate in outpatient care or services. (1) The request shall be made of the court that entered the commitment order and shall explain in detail the reasons for the request. (2) The request shall be accompanied by a CME for chemical dependency signed by a physician who examined the person during the preceding seven days. (3) The person shall be given notice of the request. (4) The court will designate an individual to be responsible for the person's outpatient care or services. That individual shall submit a general program of treatment for outpatient care or services to the court within two weeks after the modified order has been entered. (5) The modified order shall not extend beyond the term of the original order. sec.149.32. Order of Protective Custody-Special Rights. Clients apprehended, detained, admitted or held under an order of protective custody shall be advised of the following rights. (1) You have the right to call a lawyer or to have a lawyer appointed to represent you in a hearing to determine whether you shall remain in custody until a hearing on court-ordered chemical dependency treatment is held. (2) Before a probable cause hearing is held, you have the right to be told in writing: (A) that you have been placed under an order of protective custody; (B) why the order was issued; (C) the time and place of a hearing to determine whether you shall remain in custody until a hearing on court-ordered chemical dependency treatment; and (D) this notice shall also be given to your attorney. (3) You have the right to a hearing within 72 hours of your detention, except that on weekends or legal holidays, the hearing may be delayed until 4:00 p.m. on the first regular workday, or in the event of an extreme weather emergency. (4) You have the right to be released from custody if: (A) 72 hours have passed and a hearing has not taken place (except for weather emergencies and extensions for weekends and legal holidays); (B) an order for court-ordered chemical dependency treatment has not been issued within 14 days of the filing of an application (30 days if a delay was granted); or (C) your doctor finds that you no longer need court-ordered chemical dependency treatment. sec.149.33. Passes and Furloughs. Inpatient facilities shall have a procedure on passes and furloughs. If furloughs (absences over 72 hours) are permitted, the procedure shall include the following provisions. (1) The facility director shall designate one or more administrative hearing officers to conduct administrative hearings concerning revocation of furloughs. The hearing officer shall be a mental health or chemical dependency professional who is not directly involved in the client's treatment. (2) The facility director shall notify the court that issued the commitment order when a client is furloughed. (3) The reason for the return from furlough shall be documented in the client's record. (4) The facility director may secure the client's detention and return to the facility if: (A) the client is absent from the facility without permission; (B) the client has violated the terms of a furlough; or (C) the client's condition has deteriorated to the extent that his continued absence is inappropriate. (5) The process shall be initiated by: (A) signing a certificate authorizing the client's detention and return; or (B) filing the certificate with a magistrate and requesting the magistrate to order the client's detention and return. (6) An administrative hearing shall be held within 72 hours of a client's return to the facility. The hearing shall be informal with both the facility staff and the client given the opportunity to present information and arguments. If the client desires, a member of the staff may serve as the client's advocate. (7) The hearing officer shall determine within 24 hours of the hearing's conclusion whether the revocation is justified. (8) The hearing officer shall document the decision in the client's record, including a written explanation of the reasons for the decision and the information on which the hearing officer relied. (9) If the hearing officer decides that the furlough should not be revoked, the client shall be permitted to leave the facility under the terms of the furlough. sec.149.54. Admissions: Persons Court-Ordered to Outpatient Chemical Dependency Services. (a) Court-ordered treatment. At the request of the person, the court may enter an order for the person to participate in licensed outpatient treatment, in lieu of inpatient treatment, if the judge believes it is in the person's best interest. (b) Motion for modification of order for outpatient treatment. A motion may be filed with the court that ordered outpatient treatment to modify the order to specifically require inpatient treatment. This section applies only to a change in the general program incorporated in the court's order. (c) Order for temporary detention. The individual responsible for the court- ordered outpatient care or treatment or the head of the facility providing the outpatient care or treatment shall file for an order of temporary detention before the modification hearing. (1) The application shall state that: (A) the person served meets the criteria for court-ordered treatment as described in sec.149.31 of this title (relating to Admissions: Persons Court- ordered to Inpatient Chemical Dependency Services) and: (i) has not complied with the court's order; or (ii) has deteriorated to the extent that outpatient care or services are no longer appropriate; and (B) detention in an approved inpatient treatment facility is necessary to evaluate the appropriate setting for continued court-ordered services. (2) The person may be detained for not more than 72 hours. If that 72-hour period ends on a Saturday, Sunday, or legal holiday, the modification hearing shall be held on the first succeeding business day. The judge or magistrate may postpone the hearing each day for an additional 24 hours if the judge or magistrate declares that an extreme emergency exists because of extremely hazardous weather conditions or on the occurrence of a disaster that threatens the safety of the person or another essential party to the hearing. (3) The head of the facility shall release the person held under an order of temporary detention if notice is not received within the 72-hour period described in paragraph (2) of this subsection. (4) A person released from temporary detention continues to be subject to the terms of the order committing the person to an approved outpatient treatment program if the order has not expired. (d) Order of modification of order for outpatient services. The court order to modify previously ordered outpatient treatment and specifically require inpatient treatment shall be supported by at least one certificate of medical examination for chemical dependency signed by a physician who examined the person not later than the seventh day before the hearing. A modified court order may not extend beyond the period prescribed for the original order. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601820 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 149. Project Funding Funding Overview 40 TAC sec.149.26 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.149.26, concerning uniform grant and contract management standards, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6315). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of this rule deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeal. The repeal is adopted under the Texas Health and Safety Code, sec.461.012(15) , which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules governing the functions of the commission, including rules that prescribe the policies and procedures followed by the commission in administering any commission programs. The code affected by the repeal is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 461. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601756 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 150. Licensure of Chemical Dependency Counselors 40 TAC sec.sec.150.1-150.18, 150.20, 150.22 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.150.1-150.18, 150.20, and 150.22, concerning licensure requirements for chemical dependency counselors, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6316). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Civil Statutes, Article 4512o, sec.5, which provides the Texas Commission on Alcohol and Drug Abuse with the authority to adopt rules necessary for the performance of its duties under the Statute. The code affected by the repeals is the Texas Civil Statutes, Article 4512o. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601757 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 150. Counselor Licensure 40 TAC sec.sec.150.1-150.10, 150.31-150.33, 150.36-150.38, 150.51-150.54, 150.61 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.150.1-150. 10, 150.31-150.33, 150.36-150.38, 150.51-150.54, and 150.61 concerning licensure requirements for chemical dependency counselors. Sections 150.1-150. 6, 150.8- 150.10, 150.31-150.33, 150.36-150.38, 150.51-150.54, and 150.61 are adopted with changes to the proposed text as published in the August 25, 1995 issue of the Texas Register (20 TexReg 6617). Section 150.7 is adopted without changes and will not be republished. The title of sec.150.9 has been changed from "Official Roster" to "Current Standing". Proposed sec.150.34 (relating to Counselor Interns) and sec.150.35 (relating to Criminal Justice Peer Interns) have been withdrawn. The new rules are being adopted to establish definitions; set requirements and exemptions for licensure; describe procedures for licensure application; set licensure fees; establish minimum requirements for licensure, including background investigations, examination, renewal, and reciprocity; describe sanctions for violations; and set standards for counselor ethics. The rules will ensure that chemical dependency counseling and related services are provided only by qualified counselors. The commission received comments from A Way Out, Alamo Recovery Centers, Aliviane NO-AD, Bouchard Counseling Center, East Texas Council on Alcohol and Drug Abuse, Gateway Foundation, Hunt County Family Services, Southwest Community Empowerment Center, Sul Ross State University Rio Grand College, Texas Council on Problem and Compulsive Gambling, Texas Counseling Association, and a number of individuals. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. Additional changes have been made in response to comments regarding wording and further staff review, and the rules have also been edited to improve clarity and readability. All comments submitted were fully considered by the commission. A summary of comments, commission responses, and changes to the rules follows. Because the commission has determined that it does not have statutory authority to designate or regulate counselor interns, rules related to counselor interns have been revised throughout this chapter. Interns shall now be designated by approved clinical training institutions, which have responsibility for providing oversight and direction. Individuals accumulating the 4,000 hours of supervised work experience are referred to as trainees. Trainees receiving compensation for performing counseling, assessments, or interventions must also be counselor interns. The following comments address sec.150.3 (relating to Definitions): Comment: Under the definition of qualified credentialed counselor, recognize a psychological associate and clinical nurse specialist or nurse practitioner with a specialty in psyche-mental health. Response: These credentials have been added to the definition. Comment: Under the definition of qualified credentialed counselor, allow 90 clock hours of specific chemical dependency education from an accredited college or university to substitute for one year of chemical dependency counseling experience. Response: The definition has been revised to allow 90 hours of education to substitute for one year of experience. Because the commission does not require education required for counselor licensure to be obtained from accredited colleges and universities, the rule does not include this limitation. Comment: Commenter questioned why a certified alcohol and drug counselor is not recognized as a qualified credentialed counselor. Response: A person who is a certified alcohol and drug counselor but is not a licensed chemical dependency counselor is not legally authorized to practice in the state of Texas. Comment: The definition of continuing education hour should be revised to recognize compulsive gambling as specific chemical dependency education. Response: Compulsive gambling education is accepted as related hours, not specific hours. Although there is a relationship between compulsive gambling and chemical dependency, the two conditions are not the same. Comment: Definitions for compulsive gambling and certified compulsive gambling counselor should be added. Response: A definition for compulsive gambling has been added, but the term "certified compulsive gambling counselor" is not used in these rules and is therefore not defined. Comment: The definition of supervised work experience does not reference counselor intern status, which is required. Response: The definition has been revised to state that an individual must be a counselor intern if paid work experience includes counseling, assessments, or interventions. A person may accumulate hours in the other nine core functions without being a counselor intern. Because the commission no longer designates counselor interns, the definitions of counselor intern, direct supervision, and supervised work experience have been revised and new definitions have been added for approved clinical training institution, approved education institution, approved practicum provider, and counselor trainee. The Criminal Justice Peer Intern program no longer exists and related definitions have been deleted, including continuum of care, criminal justice peer intern, phase iii supervised recovery, and therapeutic community. Definitions have been added for each of the credentials referenced in the definition of qualified credentialed counselor. The definition of 12 core functions now includes a definition for each of the functions listed. A definition for cultural competency has been added to specify acceptable coursework. Definitions for other terms used in this chapter have also been added. The following comments address sec.150.4 (relating to Exemptions): Comment: The rules should specify the context of a minister's exemption. Some think they can run a private practice with no license. Response: The rules have been revised to specify that a minister must be providing pastoral counseling in the scope of congregational duties. Comment: Commenter asked if it is correct that interns are exempt as stated in the rules. Response: Yes; this is specified in Texas Civil Statutes, Article 4510o, sec.3(b)(2). Counselor interns work under the auspices of training institutions and will no longer be regulated by the commission. The following comment addresses sec.150.5 (relating to License Required): Comment: Counselors should be required to include letters of credentialing following their signatures when acting in a professional capacity. Response: The commission encourages this, but does not believe that mandating it would significantly benefit the public. The following comments address sec.150.6 (relating to Scope of Practice) and sec.150.8 (relating to Consumer Information): Comment: Commenter asked if the treatment of compulsive gambling is excluded. Response: Compulsive gambling treatment does not fall within the scope of chemical dependency counseling. The state does not regulate compulsive gambling treatment, however, and no license is needed to provide compulsive gambling services. Comment: Require the license to be posted. Response: The rules have been revised as suggested. Section 150.10 (relating to Fees) has been revised to eliminate the old schedule of fees. Proposed fees for documentation requests have been limited to standard publications. Language has also been changed to reflect that exam fees may change when new exam administration contracts are negotiated. Section 150.31 (relating to Licensure Application) no longer requires applicants to read the statute in addition to the rules. The following comments address sec.150.32 (relating to Requirements for Licensure): Comment: A person who is a qualified credentialed counselor should be considered by the commission for licensing. Response: The commission does not have authority to do this. Minimum requirements for licensure are set forth in Texas Civil Statutes, Article 4510o, sec.10. Comment: Commenter questioned why a paid staff member does not get credit for work experience, but a volunteer does. The rules don't say that supervised work experience cannot start until after internship. Response: Under the revised rules, a person who is not a counselor intern may accumulate supervised work experience hours on a paid or voluntary basis, provided that experience does not include counseling, assessments, or interventions. A person must be a counselor intern or work on a voluntary basis to acquire hours in these areas, because it is illegal to perform these functions otherwise. This section has also been revised to describe educational exemptions, as well as limitations for independent study. Several provisions from proposed sec.150.34 (relating to Counselor Interns) have been moved to this section. The following comments address sec.150.33 (relating to Background Investigations): Comment: Special provisions should be made for clients completing therapeutic community programs (shorter time frames). Response: Many people with criminal histories later become good counselors, particularly if they completed treatment. Others, however, relapse into criminal behavior. Waiting the longer period of time offers greater assurance the person will not relapse, and the commission feels these time frames are necessary to protect the public safety and welfare. Comment: Commenter asked why sodomy is listed as a reason to be brought before the commissioners for review, and can't be covered in Category I, II, or III. Response: Sodomy not associated with sexual assault would not be included here, and the list has been revised to clarify this. This section has also been revised to list examples of specific convictions in each category. The time period designated for each category is now counted from the date of the last conviction in that category instead of the last conviction of any kind. The process for reviewing applications involving murder, sexual assault, or kidnapping has been restructured. Category I guidelines will be applied, followed by review from senior staff. The board will review cases only on appeals. The following comments address sec.150.36 (relating to Examination): Comment: A person should be allowed to take the written exam immediately after completing the 270 educational hours. It is unfair to test theoretical knowledge four years after the coursework. Changing this requirement would encourage interns to remain in the field. Response: Applicants will be allowed to take the written exam after completing the educational hours and the practicum. Comment: Applicants who do not pass the exam on the third time should be allowed to test again, provided they get further education and wait a set amount of time. Failure is often a reflection of test-taking ability, not competence. Do not place a limit on testing. Response: The commission accepts this comment in part. The rule has been revised to allow a person to test four times. The commission does not have the authority to allow additional testing, because the limit is established in law (Texas Civil Statutes, 4510o, sec.11). The following comments address sec.150.38 (related to License Expiration and Renewal): Comment: Extra continuing education hours should be allowed to be carried forward and credited to the next cycle. Response: Each cycle is counted separately because the purpose of continuing education is for counselors to keep abreast of changes in the field and refresh the core knowledge base. Comment: Completion of advanced training and education should be considered in lieu of continuing education units. Response: Work completed while pursuing an advanced degree can be counted as continuing education units. Advanced education is not a substitute for continuing education, however, because the field continues to change. Comment: The requirement for continuing education units in compulsive gambling should be deleted; people have to take the same basic courses over and over. Response: The requirement has been modified to exempt persons who can show at least six documented hours of compulsive gambling continuing education. Comment: Compulsive gambling hours should be increased to require three hours of training on adolescents and three hours of training on adults. Response: While the commission strongly supports the development of advanced gambling courses, such courses are not widely available at this time. Requiring three hours of adolescent compulsive gambling training would place an unrealistic expectation on counselors seeking licensure renewal. Comment: Commenter asked what are acceptable courses in cultural competency. Response: The rule has been modified to specify that courses must be specific to racial/ethnic issues, and a definition has been added to sec.150.3. Comment: Eliminate the required continuing education hours in ethics, HIV, cultural awareness, compulsive gambling, and sexual abuse. Other disciplines do not have similar restrictions. Fifteen of the 60 hours should not be wasted repeating basic courses. Without the requirement, counselors will be able to learn more by pursuing new developments in the field and targeting identified needs. It would also be less time-consuming for the commission to process renewals. Response: Because the field has no established curriculum, these specifications were implemented to ensure all counselors receive training in a number of critical areas. The commission is considering requiring these hours before licensure to avoid the restrictions on continuing education. This would, however, be a substantive rule change and must be handled through a separate action. In the meantime, the categories have been expanded to include other critical topics, providing the licensee with more options. Ethics will include courses in legal and liability issues, HIV will include courses on other infectious diseases associated with chemical dependency, and sexual abuse will include courses on dual diagnosis, another very prevalent and important condition among the client population. This section has also been revised to include guidelines used for approval of continuing education hours. The following comment addresses sec.150.52 (relating to Reciprocity): Comment: Commenter asked why is the certified alcohol and drug counselor is not reciprocal within the state of Texas when the same test is used as for the licensed chemical dependency counselor and the requirements are the same. Response: By Statute (Texas Civil Statutes, Article 4512o, sec.14), the commission can grant reciprocity only to a counselor who is certified or licensed by another state. Licensure also includes additional requirements, such as passing the criminal background check. The following comments address sec.150.61 (relating to Ethical Standards): Comment: Commenter asked why the code of ethics now excludes sexual orientation from the non-discrimination clause as it is important to keep this requirement. Response: Sexual orientation was never part of the commission's code of ethics. Comment: The new rules state that a counselor cannot enter into a professional relationship with members of the client's family. This used to refer to the counselor's family. As written, counselors could not do the family work that is such an important part of the treatment process. Response: Text has been corrected to refer to the counselor's family. Section 150.54 (relating to Suspension for Failure to Pay Child Support) now includes provisions for reinstatement. The new rules are adopted under the Texas Civil Statutes, Article 4512o, which provide the Texas Commission on Alcohol and Drug Abuse with the authority to establish a procedures for the licensure of chemical dependency counselors. The code affected by the new rules is the Texas Civil Statutes, Article 4512o. sec.150.1. Authority. The commission has authority under Texas Civil Statutes, Article 4512o, to adopt and enforce rules for the licensure of chemical dependency counselors. sec.150.2. Application of the Rules. (a) The commission's interpretation of these rules shall be binding on all applicants and licensed chemical dependency counselors. (b) Information, opinions, and advice provided by commission staff shall not be considered binding on the board if the matter requires action by the board. sec.150.3. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Applicant-A person who has submitted an application for licensure and paid the application fee. Approved clinical training institution-An individual or legal entity approved by the commission to supervise a counselor trainee who performs counseling, assessments, or interventions. The commission currently recognizes: (A) practicum sites approved by Texas Association of Alcoholism and Drug Abuse Counselors; and (B) chemical dependency treatment facilities licensed by the commission which are approved as clinical training sites. Other programs or entities requesting this designation must receive approval on a case-by-case basis. Approved education institution-An individual or legal entity approved by the commission to provide the 270 hours of education required for licensure. The commission currently recognizes regionally accredited institutions of higher education and education providers approved by Texas Association of Alcoholism and Drug Abuse Counselors. Other programs or entities requesting this designation must receive approval on a case-by-case basis. Approved practicum provider-An individual or legal entity approved by the commission to supervise practicums. The commission currently recognizes practicum sites approved by the Texas Association of Alcoholism and Drug Abuse Counselors. Certified addictions registered nurse (CARN)-An individual certified as an addictions registered nurse by the National Nurses Society on Addictions. Chemical dependency counseling-Assisting an individual or group to develop an understanding of chemical dependency problems, define goals, and plan action reflecting the individual's or group's interest, abilities, and needs as affected by claimed or indicated chemical dependency problems. Commission (TCADA) -The Texas Commission on Alcohol and Drug Abuse. Client-A person who receives counseling or treatment services from a licensed chemical dependency counselor, or from an organization where the counselor is working on a paid or voluntary basis. A client's status continues for two years after services end. Compulsive gambling -A condition marked by continuous or periodic loss of control over gambling; a progression in frequency and amount wagered and in the preoccupation with gambling and with obtaining money with which to gamble; irrational thinking; and a continuation of the behavior despite adverse consequences. Continuing education hour-At least 50 minutes of participation in an organized, systematic learning experience which deals with and is designed for the acquisition of knowledge, skills, and information. Continuing education shall be related or specific to chemical dependency counseling. Counselor intern -A person pursuing a course of training in chemical dependency counseling at a regionally accredited institution of higher education or an approved clinical training institution who has been designated as a counselor intern by the institution. A counselor intern shall only perform functions that are part of the supervised course of training. The supervised course of training includes educational hours, practicum hours, and supervised work experience hours that are described in writing, performed under the auspices of the institution, and performed under the direct supervision of a qualified credentialed counselor. Counselor trainee -A person working to accumulate the 4, 000 hours of supervised work experience required for licensure. A trainee receiving compensation for performing assessments, counseling, or crisis intervention shall be designated as a counselor intern by a regionally accredited institution of higher education or an approved clinical training institution by September 1, 1996. Cultural awareness and sensitivity-Cross-cultural competency skills and cultural diversity training for specific use with persons of a different race or ethnicity than the applicant. Classes, courses, or workshops may be focused on specific race-ethnicity based cultures and sub-cultures, reducing or ameliorating the effects of racism, or development of specific cross-cultural competencies. Direct supervision -Oversight and direction of a counselor trainee provided by a qualified credentialed counselor. The qualified credentialed counselor shall: (A) assume responsibility for the actions of the trainee within the scope of the trainee's clinical training; (B) be on site for assistance; (C) conduct a complete review of the trainee's written work product at least weekly; (D) observe the trainee providing services to chemical dependency clients at least weekly; and (E) meet with the trainee at least weekly to provide written and verbal feedback and direction. DWI-Driving While Intoxicated. Inactive status -A period during which counselors maintain their licenses but do not act as counselors, represent themselves as counselors, or provide counseling services. Licensed chemical dependency counselor (LCDC)-A person who: (A) renders, for compensation, chemical dependency counseling or chemical dependency counseling-related services to an individual, group, organization, corporation, institution, or the general public; (B) implies that the person is licensed, trained, or experienced in chemical dependency counseling; and (C) holds a license under this chapter to offer or provide chemical dependency counseling. Licensed marriage and family therapist (LMFT) -An individual who is currently licensed as a marriage and family therapist by the Texas State Board of Examiners of Marriage and Family Therapists. Licensed master social worker (LMSW)-An individual who is currently licensed as a master social worker by the Texas Department of Human Services. Licensed professional counselor-An individual licensed as a professional counselor by the Texas State Board of Examiners of Professional Counselors. Licensed psychological associate-A person licensed as a psychological associate by the Texas State Board of Examiners of Psychologists. Licensee-An individual who holds a license from the Texas Commission on Alcohol and Drug Abuse to practice chemical dependency counseling and whose license is active and not under suspension. Physician-An individual licensed by the Texas State Board of Medical Examiners to practice medicine, or an individual employed by any agency of the United States who has a license to practice medicine in any other state of the United States. Probation-A period of time during which a licensed chemical dependency counselor shall abide by special conditions established by the commission. Psychologist-An individual currently licensed as a psychologist by the Texas State Board of Examiners of Psychologists. Qualified credentialed counselor (QCC)-A licensed chemical dependency counselor or one of the professionals listed below who can demonstrate two years of chemical dependency counseling experience or one year of chemical dependency counseling experience and 90 clock hours (six semester hours) of chemical dependency training including the twelve core functions from an accredited college or university or an education provider approved by Texas Association of Alcoholism and Drug Abuse Counselors. Documentation shall be available upon request. The following professionals are eligible to serve as qualified credentialed counselors: (A) licensed professional counselor (LPC); (B) licensed master social worker (LMSW); (C) licensed marriage and family therapist (LMFT); (D) licensed psychologist; (E) licensed physician (MD); (F) certified addictions registered nurse (CARN); (G) licensed psychological associate; and (H) advance practice nurse recognized by the Board of Nurse Examiners as a clinical nurse specialist or nurse practitioner with a specialty in psyche- mental health (APN-P/MH). Related education hours-Coursework in psychology, upper division sociology, counseling, mental health, behavioral science, psychiatric nursing, pharmacology, ethics, and rehabilitation counseling. Sexual exploitation -A pattern, practice, or scheme of conduct by a person regulated under this Act that may include sexual contact, that can reasonably be construed as being for the purpose of sexual arousal or gratification or sexual abuse of any person. It is not a defense to sexual exploitation of a client or former client if it occurs: (A) with consent of the client or former client; (B) outside of therapy or treatment; (C) off the premises used for therapy or treatment; or (D) within a two-year period following termination of treatment. Specific education hours to alcohol and drug (A&D) -Courses that deal directly with substances that alter the mind and/or moods, or counseling to deal with dependency or addiction to any of these substances. Supervised work experience-Documented, verifiable, work experience providing chemical dependency services which is performed by a counselor trainee under the direct supervision of a qualified credentialed counselor. Supervised work experience may be paid or voluntary. An individual receiving compensation for performing assessments, counseling, or crisis intervention shall be designated as a counselor intern by a regionally accredited institution of higher education or an approved clinical training institution by September 1, 1996. These activities shall be part of the counselor intern's supervised clinical training and performed under the auspices of the institution. TAADAC-The Texas Association of Alcoholism and Drug Abuse Counselors. 12 core functions -Screening, intake, orientation, assessment, treatment planning, counseling, case management, crisis intervention, client education, referral, report and record keeping, and consultation, defined as follows: (A) screening-the process by which a client is determined appropriate and eligible for admission to a particular program. (B) intake-the administrative and initial assessment procedures for admission to a program. (C) orientation-describing to the client: (i) general nature and goals of the program; (ii) rules governing client conduct and infractions that can lead to disciplinary action or discharge from the program; (iii) the hours services are available; (iv) treatment costs to be paid by the client, if any; and (v) clients' rights. (D) assessment-those procedures by which the counselor/program identifies and evaluates an individual's strengths, weaknesses, problems, and needs. (E) treatment planning-process by which the counselor and the client: (i) identify and rank problems needing resolution; (ii) establish agreed-upon immediate and long-term goals; and (iii) decide on a treatment process and the resources to be utilized. (F) counseling-the utilization of special skills to assist individuals, families, or groups in achieving the objectives leading to recovery through: (i) exploration of a chemical dependency-related problem and its ramifications; (ii) examination of attitudes and feelings; (iii) consideration of alternative solutions; and (iv) decision making. (G) case management-activities which bring services, agencies, resources, or people together within a planned framework of action toward the achievement of established goals. it may involve liaison activities and collateral contacts. (H) crisis intervention-those services which respond to an alcohol and/or drug abuser's needs during acute emotional and/or physical distress. (I) client education-provision of information to individuals and groups concerning alcohol and other drug abuse and the available services and resources. (J) referral-identifying the needs of the client that cannot be met by the counselor or agency and assisting the client to utilize the support systems and community resources available. (K) report and record keeping-charting the results of the assessment and treatment plan, and writing reports, progress notes, discharge summaries, and other client-related data. (L) consultation-relating with professional within one's own and other fields to assure comprehensive, quality care of the client. sec.150.4. Exemptions. (a) This chapter does not apply to the activities and services of the following people when they are acting within the scope of their authorized duties: (1) counselors employed by federal institutions; (2) school counselors certified by the Texas Education Agency; (3) licensed psychologists, licensed professional counselors, and licensed master social workers; (4) religious leaders of congregations providing pastoral counseling within the scope of their congregational duties; and (5) designated counselor interns who are obtaining supervised work experience as part of a supervised course of clinical training at a regionally accredited institution of higher education or an approved clinical training institution. (b) Residents of other states are exempt if: (1) they are legally authorized to provide chemical dependency counseling in those states; and (2) they do not offer or provide chemical dependency counseling in Texas for more than 30 days in any 12-month period. (c) A person who qualifies for an exemption but chooses to get a license from the commission is subject to the same rules and sanctions as other licensees. sec.150.5. License Required. An individual identified to the public as a chemical dependency counselor must be licensed or exempt under this chapter. Except as provided by this chapter, individuals who are not licensed chemical dependency counselors shall not: (1) offer or provide chemical dependency counseling; (2) perform chemical dependency assessments or interventions; (3) represent themselves as chemical dependency counselors; or (4) use any name, title or designation that implies licensure under this chapter. sec.150.6. Scope of Practice. A licensed chemical dependency counselor is licensed to provide chemical dependency services involving the application of the principles, methods, and procedures of the chemical dependency profession as defined by the profession's ethical standards and the twelve core functions. The license does not qualify an individual to provide services outside this scope of practice. Practicing beyond the scope of practice may lead to sanctions as described in sec.150.53 of this title (relating to Sanctions). sec.150.8. Consumer Information. (a) Upon request, the commission provides information describing its regulatory function and procedures used for filing and resolving complaints. (b) Licensed chemical dependency counselors shall keep the certificate of licensure and a public complaint notice prominently displayed in their place of business. The public complaint notice shall include: (1) the name, mailing address, and telephone number of the commission; and (2) a statement telling consumers that a complaint against a licensed chemical dependency counselor may be filed with the commission. sec.150.9. Current Standing. (a) A person's name and address will not appear on any list produced by the commission unless the person is in good standing when the list is compiled. (b) Licensed chemical dependency counselors shall notify the commission in writing within 14 days of a change in address. sec.150.10. Fees. (a) The schedule for licensure fees is: (1) initial application fee-$25; (2) initial licensure fee-$75; (3) renewal fee: (A) renewal application fee-$25; (B) license renewal fee-$75; (4) inactive status fee-$75; (5) certificate replacement fee-$25. (b) The commission charges a fee for a list of licensed counselors or a set of mailing labels, equal to $.01 per name plus a $5.00 handling fee. (c) The commission contracts with an outside organization to administer the licensure examination, and the fee charged by the contract organization is subject to change. The current fee shall be printed in the notice of the opportunity for examination sent to eligible applicants each testing cycle. Examination fees shall be paid directly to the contract organization administering the examination. (d) A licensee who submits a late renewal application shall pay a penalty fee as described in sec.150.38 of this title (relating to License Expiration and Renewal). (e) Licensure fees paid to the commission are not refundable. The organization administering the licensure examination shall establish a refund policy for examination fees. (f) Fees shall be paid in full with a cashier's check or money order. sec.150.31. Licensure Application. (a) A person who wants to be licensed shall submit the application fee and a complete licensure application. The application shall: (1) be submitted on the form currently provided by the commission; (2) include a recent full-face wallet-size photograph of the applicant; and (3) be signed, dated, and notarized. (b) An applicant shall: (1) disclose and provide complete information on all misdemeanor and felony convictions; (2) read the commission rules (Texas Administrative Code, Title 40, Chapter 150); (3) follow all laws and rules, including the ethical standards; and (4) allow the commission to seek any additional information or references necessary. sec.150.32. Requirements for Licensure. (a) To be eligible for a license under this chapter, a person shall: (1) be at least 18 years of age; (2) have a high school diploma or its equivalent; (3) successfully complete 270 classroom hours of approved curricula provided by approved education institutions; (A) at least 135 hours shall be specific chemical dependency education; (B) the remaining hours shall be related education; (C) no more than 12 hours of related independent study or guided learning courses shall be accepted. Independent study or guided learning courses shall be faculty- or instructor-guided and monitored, and students shall have access to faculty or instructors for questions and assistance in the completion of such course work; (4) complete 4,000 hours of approved supervised experience working with chemically dependent persons as defined in sec.150.3 of this title (relating to Definitions), which shall be documented on a form provided by the commission; (5) complete 300 hours of approved supervised field work practicum at an approved practicum site, which shall be documented on a form provided by the commission; (6) submit two letters of reference from licensed chemical dependency counselors; (7) submit a written case presentation to the commission; (8) pass an oral chemical dependency counselor examination approved by the commission; (9) pass the written chemical dependency counselor examination approved by the commission; (10) be worthy of the public trust and confidence, as determined by the commission; and (11) sign a written agreement to abide by the standards of ethics contained in sec.150.61 of this title (relating to Ethical Standards). (b) Applicants holding a baccalaureate degree in chemical dependency counseling, sociology, psychology, or any other degree approved by the commission are exempt from the 270 hours of education and the 300 hour practicum. If the applicant submits supporting documentation, the commission may waive any portion of the 4,000 hours supervised work experience that it deems the applicant has met. Degree programs approved by the commission include but are not limited to: (1) baccalaureate degrees in social work or marriage and family that have an internship or field placement course; and (2) master's or doctorate degrees in social work, guidance and counseling, or rehabilitation counseling. (c) No more than 12 hours of related independent study or guided learning courses shall be accepted. Independent study or guided learning courses shall be faculty- or instructor-guided and monitored, and students shall have access to faculty or instructors for questions and assistance in the completion of such course work. (d) An applicant shall complete the required 270 hours of education before participating in a practicum to meet licensure requirements, with one exception. Students enrolled in an accredited university, college, junior college, or community college may complete the practicum before completing the 270 hours of education if the practicum is: (1) part of the assigned curriculum; and (2) performed under the auspices of the educational institution. (e) The commission shall not accept a practicum without documentation from the practicum provider that shows the student successfully completed all 300 hours. (f) An applicant receiving compensation for performing assessments, counseling, or crisis intervention as part of the 4, 000 hours of supervised work experience shall be designated as a counselor intern by a regionally accredited institution of higher education or an approved clinical training institution by September 1, 1996. sec.150.33. Background Investigation. (a) The commission conducts a background investigation on every applicant for licensure. Checks are conducted when: (1) an individual submits the initial application for licensure; (2) an applicant has met all other requirements for licensure; and (3) a licensed chemical dependency counselor applies for license renewal. (b) The commission obtains a criminal history report from the Texas Department of Public Safety. If authorized by statute, the commission will also obtain a criminal history report from the Federal Bureau of Investigations (FBI). (c) The individual shall disclose and provide complete information regarding all misdemeanor and felony convictions. Failure to make full and accurate disclosure will be grounds for immediate denial of the application, disciplinary action, or license revocation. (d) The commission evaluates the present fitness of any individual who has a record of misdemeanor or felony convictions to provide chemical dependency counseling. (e) Factors considered by the commission in determining the present fitness of a person who has been convicted of a crime may include: (1) the number and nature of criminal conviction(s); (2) the age at the time each crime was committed; (3) the amount of time since last conviction; (4) the conduct and work history of the person before and after the criminal conviction(s); (5) evidence of the person's rehabilitation efforts and outcome; (6) two letters of recommendation from qualified credentialed counselors; and (7) other evidence of fitness that may be relevant. (f) If the person's criminal activity is related to a history of chemical dependency, the commission will also consider the person's efforts and success in achieving recovery, including participation in treatment and/or self-help groups, number of relapses, and length of time in continuous recovery. (g) Applications with criminal histories are categorized according to the seriousness of the offense. The category shall be determined by the most serious offense, as defined by law. (1) Category I: Felonies or misdemeanors that may result in harm to others. Category I offenses include but are not limited to: (A) arson; (B) robbery; (C) attempted robbery; (D) assault (felony or misdemeanor); (E) theft from person (felony or misdemeanor); and (F) DWI involving injury or accident. (2) Category II: Felonies which do not result in harm to others. Category II offenses include but are not limited to: (A) any combination of three or more misdemeanors from Category III; (B) burglary; (C) theft (felony); (D) three or more DWIs; (E) felony DWI; (F) larceny (felony); (G) forgery (felony); (H) possession of a controlled substance (felony); (I) delivery of a controlled substance (felony); (J) fraud/credit card abuse; (K) unauthorized use of a motor vehicle; (L) unlawfully carrying a weapon (felony or misdemeanor); and (M) burglary of a vehicle. (3) Category III: Misdemeanors which do not result in harm to others. Three or more Category III convictions shall be reclassified as a Category II offense. Category III offenses include but are not limited to: (A) one or two DWIs; (B) possession of a controlled substance (misdemeanor); (C) disorderly conduct; (D) arrest and convictions resulting from traffic warrants ; (E) reckless damage; (F) resisting arrest; (G) theft (misdemeanor); (H) bad check; (I) prostitution; (J) public intoxication; (K) criminal mischief (misdemeanor); and (L) driving while license suspended. (h) Licensure staff process the applications according to the following eligibility criteria. Meeting the following criteria does not ensure that the application will be approved, because the factors stated in subsection (e) of this section are considered in making the decision. (1) All applicants shall have a stable work and/or education history. Applicants with a history of chemical dependency shall also demonstrate evidence of treatment or rehabilitation and at least two years of continuous recovery. (2) An applicant with a Category I conviction shall have at least ten years since the last Category I conviction to be eligible for a license. (3) An applicant with a Category II conviction shall have at least seven years since the last Category II conviction to be eligible for a license. (4) An applicant with a Category III conviction shall have at least five years since the last Category III conviction to be eligible for a license. (i) The decision regarding appropriate action on the application will be made by the assistant deputy director for compliance and the executive director in cases involving one or more of the following convictions: (1) murder, including but not limited to attempted murder, vehicular manslaughter, involuntary manslaughter, and homicide; (2) sexual assault, including but not limited to attempted sexual assault, rape, indecency with a child, molestation, sexual assault of a child, and indecent exposure; and (3) kidnapping, attempted kidnapping, or a related conviction. (j) An applicant for licensure or renewal whose application is denied may request a hearing under the procedures established in Texas Administrative Code, Title 40, Chapter 142. To the extent that the denial is based on the applicant's criminal background, the hearing shall also be governed by Texas Civil Statutes, Article 6252-13c. sec.150.36. Examination. (a) The written and oral chemical dependency counselor examination is offered twice a year. An applicant may take the written and oral portions of the exam separately. (b) To take the examination, an applicant shall complete all activities and submit all required documentation and fees by the specified deadlines. Failure to receive notice from the commission does not waive or extend examination deadlines. (c) To be eligible for the written examination, an applicant shall: (1) submit a complete application and pay the application fee; (2) complete the 270 hours of approved curricula, including at least 135 classroom hours specific to chemical dependency counseling and up to 135 hours of related classroom hours; (3) complete the approved 300 hour practicum; (4) have two letters of reference from licensed chemical dependency counselors on file; (5) send the commission a letter of intent to test before the deadline; and (6) pay the written examination fee before the deadline. (d) To be eligible for the oral examination, an applicant shall: (1) complete the 270 hours of approved curricula, including at least 135 classroom hours specific to chemical dependency counseling and up to 135 hours of related classroom hours; (2) complete the approved 300 hour practicum; (3) complete the 4,000 hours of supervised work experience; (4) have two letters of reference from licensed chemical dependency counselors on file; (5) submit a written case study to the commission; (6) send the commission a letter of intent to test before the deadline; and (7) pay the oral examination fee before the deadline. (e) The commission shall send examinees their test results within 30 days of the examination date. (f) If requested by someone who fails the oral examination, the commission will provide a written analysis of the person's performance on the oral examination. (g) An applicant shall not take the examination more than four times. sec.150.37. Issuing Licenses. (a) After passing the examination, an applicant shall pay the licensure fee and pass a background investigation. (b) If the applicant has met all requirements for licensure, the commission shall issue a license. (c) The licensee shall return the license if it is suspended or revoked. (d) Licenses may not be duplicated to provide a counselor with a second copy of the license. (e) The commission will replace a lost or damaged certificate if the licensee provides: (1) the remnants of the original license (if damaged); (2) the original license and copy of legal documents (for a name change); (3) the original license (for printing error); or (4) a notarized statement if the license has been lost, stolen, or totally destroyed. (f) A license replaced because of a printing error or mail damage will be replaced without cost, but all other license replacements require a fee, as specified in sec.150.10 of this title (relating to Fees). The fee shall be paid in advance with a money order or cashier's check. sec.150.38. License Expiration and Renewal. (a) A license issued under this chapter is valid for two years, or until the expiration date printed on the license. (b) To renew a license, the counselor shall: (1) send a renewal application to the commission; (2) pay the renewal application and license fees; (3) demonstrate to the commission that the applicant is worthy of the public trust and confidence; and (4) complete at least 60 hours of continuing education approved by the commission during the two-year licensure period. This shall include 45 hours of education related to chemical dependency in addition to at least three hours in each of the following areas: (A) ethics (including courses in legal and liability issues, such as confidentiality); (B) HIV and other infectious diseases associated with chemical dependency (including tuberculosis and sexually transmitted diseases); (C) cultural awareness and sensitivity (courses on specific ethnic cultures, cross-competency training, and racism); (D) compulsive gambling; and (E) sexual abuse or dual diagnosis (mental illness and chemical dependence co- morbidity). (5) Individuals applying for licensure renewal who can show at least six continuing education hours of documented compulsive gambling training are not required to obtain any additional hours of compulsive gambling training. Instead, the applicant shall obtain an additional three hours of chemical dependency training to complete the required 60 hours. (c) Until the commission prepares or approves continuing education programs for licensed chemical dependency counselors, the commission will approve all continuing education (CE) hours on a case-by-case basis. (1) All continuing education courses must be related to chemical dependency. (2) The commission will accept continuing education credits from Texas Association of Alcoholism and Drug Abuse Counselors and other recognized certification boards, including, but not limited to, the Texas State Board of Nurse Examiners and the Texas State Board of Social Work Examiners. Continuing education certificates must contain: (A) date CE hours were completed; (B) number of CE hours assigned to each course; (C) CE course title; (D) educational provider number; (E) sponsoring agency name; (F) signature of instructor or coordinator; and (G) applicant's name. (3) The commission will also accept education hours from an accredited college or university. (A) College transcripts must contain the official seal of the college and the signature of the registrar. (B) One hour of college credit is equivalent to 15 CE hours. (4) No more than 12 hours of related independent study or guided learning courses will be accepted. Independent study or guided learning courses must be faculty- or instructor-guided and monitored, and students must have access to faculty or instructors for questions and assistance in the completion of such course work. (d) Renewal fees are due on or before the expiration date. A licensee who submits a late renewal application shall pay a penalty fee in addition to the renewal application and licensure fees. Failure to receive notice from the commission does not waive or extend renewal deadlines. (1) If the license is renewed within the 90-day period following the expiration date, the penalty fee is equal to one-half the current total examination fee. (2) If the license is renewed after the 90-day period following the expiration date, but within two years from the expiration date, the penalty fee is equal to the current total examination fee. (e) A license cannot be renewed more than two years after the date of expiration. To obtain a new license, the person shall comply with all requirements and procedures for obtaining an initial license. This includes passing the written and oral examinations. (f) A license ceases to be valid on the expiration date, unless the person has met all requirements before that date and is waiting to receive a renewal license. When the licensee receives the renewal license, the previous license is no longer valid. sec.150.51. Civil Penalty Enforcement. (a) A person who violates the Statute (Texas Civil Statutes, Article 4512o) or a rule in this chapter is subject to a civil penalty of not less than $50 nor more than $500 for each day of violation. (b) If a person has violated, is violating, or is threatening to violate the Statute or these rules, the commission may bring a civil action in a district court for injunctive relief to restrain the violation. sec.150.52. Reciprocity. (a) The commission may issue a license based on reciprocity if the individual: (1) submits an application and pays the application and licensure fees; (2) is at least 18 years of age; (3) passes the background investigation; and (4) is currently licensed or certified by another state as a chemical dependency counselor (or its equivalent). (b) The commission shall not issue a license based on reciprocity unless it finds that the licensing or certification standards of the state of origin are at least substantially equivalent to the requirements of this chapter. (c) The applicant must submit a copy of the reciprocal license and two letters of recommendation. sec.150.53. Sanctions. (a) The commission may refuse to issue or renew a license, place on probation a license holder whose license has been suspended, reprimand a license holder, or revoke or suspend a license for: (1) violating or assisting another to violate the Statute or these rules; (2) circumventing or attempting to circumvent the Statute or these rules; (3) participating, directly or indirectly, in a plan to evade the Statute or these rules; (4) engaging in false, misleading, or deceptive conduct as defined by Business and Commerce Code, sec.17.46; (5) engaging in conduct that discredits or tends to discredit the profession of chemical dependency counseling; (6) revealing or causing to be revealed, directly or indirectly, a confidential communication made to the licensed chemical dependency counselor by a client or recipient of services, except as required by law; (7) having a license to practice chemical dependency counseling in another jurisdiction refused, suspended, or revoked for a reason that the commission finds would constitute a violation of this chapter; (8) refusing to perform an act or service for which the person is licensed to perform under this chapter on the basis of the client's or recipient's sex, race, religion, age, national origin, or handicaps; (9) committing an act of sexual exploitation in violation of Penal Code, sec.12.14, or for which liability exists under Civil Practice and Remedies Code, Chapter 81; or (10) not attending a hearing or not responding to correspondence from the commission. (b) The commission will determine the length of the probation or suspension. The commission may hold a hearing at any time and revoke the probation or suspension. (c) Surrender or expiration of a license does not interrupt the investigation or sanctions process. Unless the licensed chemical dependency counselor is cleared through the investigation or hearings process, the commission shall impose the proposed sanctions. The individual is not eligible to regain the license until all outstanding investigations, disciplinary proceedings, or hearings are resolved. sec.150.54. Suspension for Failure to Pay Child Support. (a) The Office of the Attorney General or a custodial parent may obtain an order suspending the license of a licensed chemical dependency counselor who: (1) is a non-custodial parent; (2) owes an amount equal to more than 90 days of past due child support; and (3) is not in compliance with an existing repayment plan. (b) On receiving a final order for suspension from the Office of the Attorney General or a court with continuing jurisdiction over the support order, the commission shall: (1) record the suspension in the person's file; (2) report the suspension as appropriate; and (3) demand surrender of the suspended license. (c) The commission shall implement the terms of the final order for suspension without additional review or hearing. (d) The licensee is not entitled to a refund for any fees paid. (e) A licensee who provides chemical dependency counseling during the period of suspension is subject to civil penalties, as provided in sec.150.51 of this title (relating to Civil Penalties). (f) An order suspending a license under this section does not affect the commission's power to grant, deny, suspend, revoke, terminate, or renew a license. (g) On receiving a final order vacating or staying an order suspending a license from the Office of the Attorney General or a court with continuing jurisdiction over the support order, the commission shall promptly re-issue the license to the person if the person is otherwise qualified for the license. sec.150.61. Ethical Standards. (a) Mandate. All applicants, and licensed chemical dependency counselors shall comply with these ethical standards. (b) Discrimination not allowed. The licensed chemical dependency counselor shall not discriminate against any client or other person on the basis of sex, race, religion, age, national origin, or handicap. (c) Responsibility. The licensed chemical dependency counselor shall maintain objectivity, integrity, and the highest standards in providing services to the client. (d) Competence. The licensed chemical dependency counselor shall: (1) try to prevent the practice of chemical dependency counseling by unqualified or unauthorized persons; (2) report violations of Texas Civil Statutes, Article 4512o, or rules adopted under the statute, including violations of this section, to the commission; (3) recognize the limitations of his or her ability and shall not offer services or use techniques that exceed his or her professional competence; (4) not engage in the practice of chemical dependency counseling if impaired by, intoxicated by, or under the influence of chemicals, including alcohol; and (5) support peer assistance programs. (e) Legal standards and professional conduct. The licensed chemical dependency counselor shall uphold the law and refrain from unprofessional conduct. In so doing, the licensed chemical dependency counselor shall: (1) not make any claim, directly or by implication, that the counselor possesses professional qualifications or affiliations that the counselor does not possess; (2) not mislead or deceive the public or any person; (3) not promote, develop, market, profit from, or associate himself or herself with any commercial product, unless the counselor has determined that the product does not tend to mislead the public, is factually accurate, and is consistent with the ethical standards of the profession as set forth in this section; (4) not commit any crime of moral turpitude, or any act which might tend to discredit the profession; (f) Public statements. The licensed chemical dependency counselor shall: (1) report information fairly and accurately to clients, other professionals, and the general public, and shall not make inappropriate, unprofessional, or inaccurate representations; (2) acknowledge the work of others, including but not limited to, practicum or work experience; (3) document materials and techniques used in the performance of the counselor's professional services; and (4) advise all persons the counselor instructs or trains, in the skills or techniques of chemical dependency counseling, of the training or qualifications required to properly perform those skills or techniques. (g) Publication credit or acknowledgment. The licensed chemical dependency counselor shall give credit to, or expressly acknowledge all persons or works which have contributed to or directly influenced any publication of the counselor. (h) Client welfare. The licensed chemical dependency counselor shall respect a client's dignity, and shall not engage in any action that may injure the welfare of any client or person to whom the counselor is providing services. The licensed chemical dependency counselor shall: (1) remain loyal and professionally responsible to the client at all times, and shall inform the client of the counselor's loyalties and responsibilities; (2) not engage in any activity which could be considered a professional conflict, and shall immediately remove himself or herself from such a conflict if one occurs; (3) terminate any professional relationship or counseling service which is not beneficial, or is in any way detrimental to the client; (4) always act in the best interest of the client; (5) never require a client to divulge confidential information obtained from another professional, without obtaining the express informed consent of the professional and the client; and (6) not offer or provide chemical dependency counseling or related services in settings or locations which are inappropriate, harmful to the client or others, or which would tend to discredit the profession of chemical dependency counseling. (i) Confidentiality. The licensed chemical dependency counselor shall protect the privacy of all clients and shall not disclose confidential information without express written consent, unless required by law. The licensed chemical dependency counselor shall remain knowledgeable of and obey all state and federal laws and regulations relating to confidentiality of chemical dependency treatment records, and shall: (1) inform the client, and obtain the client's consent, before tape-recording the client, allowing another person to observe or monitor the client, or using client records for any purpose other than the provision of chemical dependency treatment of that client; (2) ensure the maintenance of confidentiality of client records; (3) not discuss or divulge information obtained in clinical or consulting relationships except in appropriate settings and for professional purposes which clearly relate to the case; (4) make every effort to avoid invasion of the privacy of the client; and (5) not reveal client identifying information, except as required by law, without the express written consent of the client. (j) Client relationships. The licensed chemical dependency counselor shall inform the client about all relevant and important aspects of the professional relationship between the client and the counselor, and shall: (1) in the case of clients who are not their own consenters, inform the client's parent(s) or legal guardian(s) of circumstances which might influence the professional relationship; (2) not enter into a professional relationship with members of the counselor's family, close friends or associates, or others whose welfare might be jeopardized in any way by such relationship; and (3) not engage in any type or form of sexual activity with a client. (k) Relationships with other professionals. The licensed chemical dependency counselor shall treat other professionals with respect, courtesy, and fairness, and shall: (1) not provide or offer to provide professional services to a client who is receiving chemical dependency treatment from another professional, except with the knowledge of the other professional and the consent of the client, until treatment with the other professional ends; and (2) cooperate with the commission, professional peer review groups or programs, and professional ethics committees or associations, and promptly supply all requested or relevant information unless prohibited by law. (l) Remuneration. The licensed chemical dependency counselor shall, in advance of treatment, establish financial arrangements with a client, which shall be in accordance with professional standards in the relevant community, including, without limitation, informing the client of the counselor's fee schedule for all treatment services to be provided to the client, and shall not: (1) charge exorbitant or unreasonable fees for any treatment service; (2) pay or receive any commission, consideration, or benefit of any kind related to the referral of a client for treatment; (3) engage in fee splitting with other professionals, without the written consent of the client; (4) use the client relationship for the purpose of personal gain, or profit, except for the normal, usual charge for treatment provided; and (5) provide treatment to a client, or accept a professional fee or any gift or gratuity from a client if the client is entitled to chemical dependency treatment free of charge, or at minimal cost to the client, through an agency or other institution, unless the client consents in writing. (m) Professional obligations. The licensed chemical dependency counselor shall: (1) make every effort to provide access to treatment, including advising clients about resources and services, taking into account the financial constraints of the client; and (2) in all activities of the profession, act to promote the welfare of all human beings. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601823 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 25, 1995 For further information, please call: (512) 867-8720 Chapter 151. Peer Assistance 40 TAC sec.sec.151. 21-151.28 The Texas Commission on Alcohol and Drug Abuse adopts new sec.sec.151. 21- 151.28, concerning peer assistance programs, with changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6317). These rules are being adopted to establish minimum requirements for peer assistance programs, including definitions, general requirements, policies and procedures, peer intervenors and advocates, and referrals. The rules provide standards for more effective and flexible peer assistance programs for impaired professionals. The commission received comments from: the Texas Association of Alcohol and Drug Abuse Counselors, the Texas Council on Problem and Compulsive Gambling, the Texas Nurses' Association, and the Texas Peer Assistance Program for Nurses. Commenters suggested revisions to the proposed rules, which have been incorporated into the rules where appropriate. The rules have also been edited to improve clarity and readability. All comments submitted were fully considered by the commission. A summary of comments, commission responses, and changes to the rules follows. Comment: The proposed rules address the peer assistance model used in early peer assistance programs. In recent years, other model have developed. It was requested that the commission permit greater flexibility for designing peer assistance programs that can effectively meet the needs of particular professions and not attempt to impose a single program design on all programs. Response: The commission accepts the comment and has made changes throughout the chapter to provide greater flexibility. Comment: Commenter would like the commission to revisit the issue of helping to fund a peer assistance programs for licensed chemical dependency counselors as outlined in the original licensure law. Response: The commission cannot levy an additional surcharge at this time due to a legislative spending cap. This is not a situation that can be addressed through a rule change. Comment: Compulsive gambling should be included in the rules for peer assistance programs. Response: These rules apply to any board-approved peer assistance program organized and operated under the authority of Texas Health and Safety Code, Chapter 467. The impairments addressed by peer assistance programs are defined in the Texas Health and Safety Code, sec.467.001. The commission does not have the authority to write rules exceeding statutory provisions. Comment: The proposed rules do not apply to professions per se, but rather to peer assistance programs operating under the authority of the Texas Health and Safety Code, Chapter 467. Response: Section 151.23 has been revised in response to this comment. Comment: The term "peer intervenor" is used several times but is not defined. Response: This term has been added to the definitions. Comment: The definition of mental health professional should also include registered nurses who are board-approved as clinical nurse specialists in psychiatric and mental health nursing and advance practice nurses with a master's degree in psychiatric/mental health nursing or addictions. Response: The definition of mental health professional has been revised as suggested. Comment: A definition should be included for peer advocate, who is a person with the primary duty of coordinating and leading an intervention upon a peer. Response: The definition has been added, and this term is used throughout the chapter. Comment: Requirements for policies and procedures are too specific, particularly regarding medical emergencies and aftercare. Not all required topics are relevant to all program models. Response: Section 151.26 (relating to Policies and Procedures) has been revised to allow peer assistance programs to develop policies and procedures appropriate to their professions. The list of suggested topics has been revised to eliminate the specific references to medical emergencies and aftercare. The rules are adopted under the Texas Health and Safety Code, sec.461.12(14), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to establish minimum criteria for approved peer assistance programs. The code affected by the new rules is the Texas Health and Safety Code, Chapter 467. sec.151.21. Authority. Authority is granted to the Texas Commission on Alcohol and Drug Abuse under Texas Health and Safety Code, sec.461.012 and sec.467.001, to establish minimum criteria for peer assistance programs. sec.151.22. Program Purpose. Peer assistance programs identify, assist, and monitor professional colleagues and students with job-impairing mental health, alcohol, or drug problems so that they may return to competent practice. Peer assistance programs offer support and assistance and have a rehabilitative emphasis rather than an adversarial or punitive emphasis. sec.151.23. Application. These sections apply to any board approved peer assistance program organized and operated under authority of Texas Health and Safety Code, Chapter 467. These sections do not apply to peer assistance programs established for licensed physicians or pharmacists or for any other profession that is authorized by law to establish a peer assistance program. sec.151.24. Definitions. The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise. Act-Texas Health and Safety Code, Chapter 467. Advocate-A peer professional who volunteers to provide support and education for another peer professional who has been referred to or who is participating in an approved peer assistance program under authority of the Act. Chemical dependency -Abuse of, psychological dependence on, or addiction to alcohol or a controlled substance. Impaired professional -An individual whose ability to perform professional services is impaired by chemical dependency or by mental illness. Licensing/disciplinary authority-A state agency or board that licenses or has disciplinary authority over professionals. Mental health professional-An individual licensed by the state as a physician, professional counselor (LPC), chemical dependency counselor (LCDC), psychologist, marriage and family therapist (LMFT), master social worker (LMSW). Mental health professional also includes a clinical nurse specialist (CNS), a psychiatric and mental health nurse, an advanced practice nurse with a master's degree in psychiatric and mental health nursing (PMHNP), and a certified addictions registered nurse (CARN). Peer assistance program-A program designed to help an impaired professional which is established or approved by a licensing or disciplinary authority, and meets the criteria established by the Texas Commission on Alcohol and Drug Abuse and any additional criteria established by the licensing or disciplinary authority. Peer intervenor -A person designated by an approved peer assistance program who operates similar to an advocate but having a primary duty of coordinating and leading an intervention upon a chemically dependent or mentally ill peer professional. The peer intervenor may or may not be a peer professional who volunteers to provide such services. Professional-An individual who may incorporate under the Texas Professional Corporation Act (Texas Civil Statutes, Article 1528e), or who is licensed, registered, certified, or otherwise authorized by the state to practice as a licensed professional. Qualified mental health referral service-A service that refers clients in need of treatment to qualified providers and meets the statutory requirements of Texas Health and Safety Code, sec.164.007. Qualified service organization agreement-A written agreement between the peer assistance program and the licensing or disciplinary authority which meets the requirements of the Code of Federal Regulations, Title 42, Part 2, sec.2.11 (on the Confidentiality of Alcohol and Drug Abuse Patients). sec.151.25. General Requirements. The peer assistance program shall: (1) be administered by a committee of professionals who have no potential for direct financial gain from these activities. Members shall be geographically representative of Texas, and shall include at least one professional who is recovering from chemical dependency or mental illness; (2) be statewide and made available to all members of the profession; (3) be available seven days a week, 24 hours a day. This may be accomplished through a toll-free telephone number with a recording device for after-hour calls; (4) be strictly confidential within the requirements of the Act. Record keeping should be kept to a minimum and wherever possible, case numbers should be used in place of names. Where applicable, the peer assistance program shall enter into a qualified service organization agreement to protect confidentiality of patient records; (5) implement a written plan for: (A) ongoing program evaluation; and (B) promotion and publicity to encourage use of the program. sec.151.26. Policies and Procedures. The program shall have written policies and procedures, which state philosophy and methods for program operation. Handbooks for peer intervenors or advocates should include, as appropriate: (1) a statement of purpose; (2) a brief explanation of the rehabilitative nature of the program; (3) a summary of the licensing or disciplinary body's role in the process; (4) information on confidentiality, including the requirements of Code Federal Regulations, Title 42, Part 2, sec.2.11 (on the Confidentiality of Alcohol and Drug Abuse Patients); (5) documentation requirements; (6) procedures for early identification and intervention; (7) instructions for handling crises, including resources and phone numbers; (8) resources and procedures for assisting the professional to access treatment; (9) provisions for follow-up; (10) information on relapse; (11) provision of continued monitoring and support after treatment; and (12) information about reentry to the profession. sec.151.27. Peer Intervenors and Advocates. The peer assistance program shall: (1) develop and implement a written plan to recruit volunteers from among its profession to become intervenors or advocates; (2) require and provide at least eight hours of training to volunteers before they become peer intervenors or advocates. At least five hours of training shall be conducted by a mental health professional and should include information on: (A) chemical dependency and mental illness, including appropriate treatment; (B) guidelines for identification; (C) intervention skills; and (D) policies and procedures used by the program. (3) implement a continuing education program for peer intervenors or advocates, including annual training events. sec.151.28. Referrals. (a) The peer assistance program shall maintain a current list of: (1) the councils on alcohol and drug abuse in Texas; and (2) licensed chemical dependency treatment facilities. (b) Peer intervenors and advocates shall not refer impaired professionals directly to specific programs or professionals. The peer intervenor may refer the individual to: (1) the local council on alcohol and drug abuse; or (2) a qualified mental health referral service. (c) Peer intervenors may also provide an individual with a list of all licensed chemical dependency treatment facilities in the county of residence and help the individual locate additional qualified mental health professionals and services in the phone book. (d) Neither the peer assistance program nor any individual associated with it (including peer intervenors, advocates and committee members) shall accept compensation for referrals. Compensation includes: (1) pay; (2) anything of value; and (3) any other form of benefit or consideration. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601826 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 151. Licensure Court Commitments 40 TAC sec.151.601, sec.151.602 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.151.601 and sec.151.602, concerning general approval of chemical dependency treatment facilities for involuntary court commitments by civil and criminal state courts having proper jurisdiction, without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6317). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, Subtitle B, sec.464.009(b)(7), which provides the Texas Commission on Alcohol and Drug Abuse with the authority to approve treatment facilities to accept involuntary court commitments referred by civil and criminal state courts having proper jurisdiction. The code affected by the repeals is the Texas Health and Safety Code, Title 6, Subtitle B, Chapter 464. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601758 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Chapter 155. Community Services 40 TAC sec.sec.155.21-155.27, 155.31-155.34, 155.41-155.45 The Texas Commission on Alcohol and Drug Abuse adopts the repeal of sec.sec.155.21-155.27, 155.31-155.34 and 155.41-155.45, concerning peer assistance programs, the approval of facilities for the treatment of individuals appearing in a public place under the influence of alcohol or any other substances and funding application reviews without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6317). These rules are being repealed to allow adoption of a revised version of the rules. The repeal of these rules deletes obsolete requirements and prevents conflict with newer rules. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, Title 6, sec.sec.461.012(14), 461.012(15), 467.001(l), and 467.003(a)-(c) which provides the Texas Commission on Alcohol and Drug Abuse with the authority to set minimum criteria for approved peer assistance programs and to adopt rules governing the functions of the Commission. The code affected by the repeals is the Texas Health and Safety Code, Title 6, sec.sec.461.012(14), 461.012(15), 467.001(l), and 467.003(a)-(c). This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 7, 1996. TRD-9601759 Mark S. Smock Assistant Deputy for Finance Texas Commission on Alcohol and Drug Abuse Effective date: March 1, 1996 Proposal publication date: August 18, 1995 For further information, please call: (512) 867-8720 Part IV. Texas Commission for the Blind Chapter 169. Blind and Visually Impaired Children's Program The Texas Commission for the Blind adopts the repeal of sec.sec.169.1-169.15 and simultaneously adopts new sec. sec.169.1-169.5, 169.10-169.16, 169.25- 169.34, 169.40, 169.50-169.52, and 169.60-169.63, concerning services for blind and visually impaired children. The rules are adopted without changes to the proposed text as published in the January 2, 1996, issue of the Texas Register (21 TexReg 26). The repeals allow the agency to continue the agency's recodification efforts in bringing all agency rules into consistent form and language. The new sections will serve as the agency's policies and procedures for administering the Blind and Visually Impaired Children's Program and include what is required of persons seeking and receiving services from the commission. No comments were received regarding adoption of the repeals or new sections. 40 TAC sec.sec.169.1-169.15 The repeals are adopted under the Human Resources Code, Title 5, Chapter 91, which authorizes the commission to adopt rules prescribing the policies and procedures followed by the commission in the administration of its programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 29, 1996. TRD-9601774 Pat D. Westbrook Executive Director Texas Commission for the Blind Effective date: April 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 459-2611 Subchapter A. General Information 40 TAC sec.sec.169.1-169.5 The new rules are adopted under the Human Resources Code, Title 5, Chapter 91, which authorizes the commission to adopt rules prescribing the policies and procedures followed by the commission in the administration of its programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 29, 1996. TRD-9601775 Pat D. Westbrook Executive Director Texas Commission for the Blind Effective date: April 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 459-2611 Subchapter B. Basic Program Requirements 40 TAC sec.sec.169.10-169.16 The new rules are adopted under the Human Resources Code, Title 5, Chapter 91, which authorizes the commission to adopt rules prescribing the policies and procedures followed by the commission in the administration of its programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 29, 1996. TRD-9601776 Pat D. Westbrook Executive Director Texas Commission for the Blind Effective date: April 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 459-2611 Chapter C. Scope of Services 40 TAC sec.sec.169.25-269.34 The new rules are adopted under the Human Resources Code, Title 5, Chapter 91, which authorizes the commission to adopt rules prescribing the policies and procedures followed by the commission in the administration of its programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 29, 1996. TRD-9601777 Pat D. Westbrook Executive Director Texas Commission for the Blind Effective date: April 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 459-2611 Subchapter D. Economic Need 40 TAC sec.169.40 The new rule is adopted under the Human Resources Code, Title 5, Chapter 91, which authorizes the commission to adopt rules prescribing the policies and procedures followed by the commission in the administration of its programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 29, 1996. TRD-9601778 Pat D. Westbrook Executive Director Texas Commission for the Blind Effective date: April 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 459-2611 Subchapter E. Order of Selection for Payment of Services 40 TAC sec.sec.169.50-169.52 The new rules are adopted under the Human Resources Code, Title 5, Chapter 91, which authorizes the commission to adopt rules prescribing the policies and procedures followed by the commission in the administration of its programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 29, 1996. TRD-9601779 Pat D. Westbrook Executive Director Texas Commission for the Blind Effective date: April 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 459-2611 Subchapter F. Case Management Reimbursement Charges 40 TAC sec.sec.169.60-169.63 The new rules are adopted under the Human Resources Code, Title 5, Chapter 91, which authorizes the commission to adopt rules prescribing the policies and procedures followed by the commission in the administration of its programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 29, 1996. TRD-9601780 Pat D. Westbrook Executive Director Texas Commission for the Blind Effective date: April 1, 1996 Proposal publication date: January 2, 1996 For further information, please call: (512) 459-2611