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 10. COMMUNITY DEVELOPMENT PART I. Community Development CHAPTER 53.Home Investment Partnerships Program 10 TAC sec.sec.53.1-53.18 The Texas Department of Housing and Community Affairs (Department) is adopting the repeal of Program Rules sec.sec.53.1-53.18 concerning the HOME Investment Partnership Program Rules. These sections provide procedures for the allocation by the Department of certain funds available under federal and state laws and regulations to, among others, qualified public entities, for-profit and non- profit organizations and low- and very-low income families. The repeal is adopted without changes and will not be republished. The Department did not receive any public comment regarding the adoption of the repeal during the 30-day comment period. The sections are repealed under Title II of the Cranston-Gonzales National Affordable Housing Act of 1990, (42 United States Code sec.sec.12701-12839) and 24 Code of Federal Regulations, Part 92. The repeal is adopted pursuant to the authority at Texas Government Code, Chapter 2306; Acts of the 73rd Legislative Regular Session, Senate Bill 45, Chapter 141, Page 292, effective May 16, 1993; and Act of the 73rd Legislative Regular Session, Senate Bill 1356, Chapter 725, Page 2838, effective September 1, 1993. Certification. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 31, 1996. TRD-9611018 Larry Paul Manley Executive Director Texas Department of Housing and Community Affairs Effective date: August 21, 1996 Proposal publication date: June 25, 1996 For further information, please call: (512) 475-3916 10 TAC sec.sec.53.30-53.40 The Texas Department of Housing and Community Affairs (Department) is adopting the repeal of Program Rules sec.sec.53.30-53.40 concerning the HOME Investment Partnership Program Rules. These sections provide procedures for the allocation by the Department of certain funds available under federal and state laws and regulations to, among others, qualified public entities, for-profit and non- profit organizations and low- and very-low income families. The repeal is adopted without change and will not be republished. The Department did not receive any public comment regarding the adoption of the repeal during the 30-day comment period. The sections are repealed under Title II of the Cranston-Gonzales National Affordable Housing Act of 1990, (42 United States Code sec.sec.12701-12839) and 24 Code of Federal Regulations, Part 92. The repeal is adopted pursuant to the authority at Texas Government Code, Chapter 2306; Acts of the 73rd Legislative Regular Session, Senate Bill 45, Chapter 141, Page 292, effective May 16, 1993; and Act of the 73rd Legislative Regular Session, Senate Bill1356, Chapter 725, Page 2838, effective September 1, 1993. Certification. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 31, 1996. TRD-9611019 Larry Paul Manley Executive Director Texas Department of Housing and Community Affairs Effective date: August 21, 1996 Proposal publication date: June 25, 1996 For further information, please call: (512) 475-3916 10 TAC sec.53.51, sec.53.62 The Texas Department of Housing and Community Affairs (Department) HOME Investment Partnerships (HOME) Program is adopting amendments to sec.53.51 concerning definitions and sec.53.62(c)(3) concerning program administration of funds available under federal and state laws and regulations for the HOME Program. The amendments further define and clarify a term used in the program and expand the Department's ability to redistribute deobligated funds more efficiently. The amendments are adopted without change, and will not be republished. The Department did not receive any public comment regarding the adoption of the amendments during the 30-day comment period. The amended sections are adopted under Title II of the Cranston-Gonzales National Affordable Housing Act of 1990, (42 United States Code sec.sec.12701- 12839) and 24 Code of Federal Regulations, Part 92. The amendments are adopted pursuant to the authority at Texas Government Code, Chapter 2306; Acts of the 73rd Legislative Regular Session, Senate Bill 45, Chapter 141, Page 292, effective May 16, 1993; and Act of the 73rd Legislative Regular Session, Senate Bill 1356, Chapter 725, Page 2838, effective September 1, 1993. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 31, 1996. TRD-9611020 Larry Paul Manley Executive Director Texas Department of Housing and Community Affairs Effective date: August 21, 1996 Proposal publication date: June 11, 1996 For further information, please call: (512) 475-3916 TITLE 22. EXAMINING BOARDS PART XXIV. Texas Board of Veterinary Medical Examiners CHAPTER 571.Licensing Examinations 22 TAC sec.571.19 The Texas Board of Veterinary Medical Examiners adopts new sec.571.19, concerning Temporary License for Texas Racing Commission Veterinarians with changes to the proposed text published in the March 19, 1996, issue of the Texas Register (21 TexReg 2115). The adopted changes are in the second sentence of subsection (a)(2) and subsection (e). The new section clarifies that veterinarians receiving a temporary license are restricted to those duties and assigned by the Texas Racing Commission in connection with its employment of the licensee. The Board considered oral comments prior to adopting the rule. Concern was expressed that the competency criteria listed in section (c) was inadequate. The Texas Veterinary Medical Association stated that it felt that the rule was not needed since the licensed DVM population in Texas should be adequate to fill the Commission's needs. Dr. Couch, Chief Veterinarian, Texas Racing Commission stated that the rule was necessary because in many cases the licensee may have a conflict of interest by currently serving as an animal's veterinarian or employed by an owner or trainer. The new section is adopted to aid the Texas Racing Commission in employing qualified veterinarians to regulate para-mutual horse and greyhound racing in Texas. The section will grant temporary licensure to applicants identified by the Texas Racing Commission as being necessary for the regulation of para-mutual horse and greyhound racing. Applicants will be required to successfully complete the State Board Jurisprudence Examination, and their authority is limited to those responsibilities certified by the Texas Racing Commission. Any practice outside the special duties assigned by the Texas Racing Commission will constitute a violation of the Veterinary Licensing Act and/or Rules of Professional Conduct and will result in disciplinary action by the Board. Temporary licenses are issued for one year and not renewable, but the Board may issue successive licenses. All temporary licenses will expire September 1, 1997. The new rule is being adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The new rule affects the Veterinary Licensing Act, Article 8890 sec.10B(a) which authorizes the Board to issue temporary licenses. sec.571.19.Temporary License for Texas Racing Commission Veterinarians. (a) Certification of need. As authorized by the Act, sec.10B(a), the Board may issue temporary licenses to veterinarians certified by the Texas Racing Commission, provided the applicants comply with the following conditions: (1) Applicants for temporary licensure must be identified to the board, in writing, by the Texas Racing Commission as being necessary for the regulation of para-mutual horse and greyhound racing in Texas. The notification letter to the Board must contain the applicant's name, mailing address, and identify the special duties that require a temporary license. (2) Applicants must take and pass the Texas Jurisprudence Examination prior to licensure. A grade of 75% has been established as the minimum passing grade. Each applicant will receive a letter from the Board notifying him/her of the results of the examination. Notification of a passing score on the Texas Jurisprudence Examination constitutes limited authority to practice veterinary medicine in Texas only within the scope of their employment and in accordance with the responsibilities certified by the Texas Racing Commission. Failure of the Texas Jurisprudence Examination requires reapplication for a temporary license. (3) A completed application, on the form designated by the Board, including payment of any relevant examination fees and written certification of employment duties by the Texas Racing Commission, shall be submitted no less than 45 days prior to the date of the next available Texas Jurisprudence Examination. (b) Applicant Criteria. Applicants for a temporary license under sec.10B(a) cannot be otherwise licensed under sec.10A and must meet the following minimum criteria: (1) Proof of graduation from an American Veterinary Medical Association (AVMA) accredited college of veterinary medicine or an Educational Commission for Foreign Veterinary Graduates (ECFVG) Certificate issued by the AVMA. (2) Proof of licensure in another state or jurisdiction of the United States. (3) Certification and sponsorship by the Texas Racing Commission. (4) Determination of competence in the field of para-mutual horse or greyhound racing, as provided in subsection (c) of this section; and (5) Passing grades on the Texas Jurisprudence Examination. (c) Competency Criteria. In determining competency, the Board may consider one or more of the following: (1) Certification of special competency issued by a specialty board recognized by the AVMA. (2) Commission as an officer of the United States armed services, either active or retired status. (3) Proof of certification in good standing as "racing veterinarian", as certified by the American Racing Commission International, in the state of primary licensure. (4) Other criteria necessary to ensure the safety of para-mutual horse and greyhound racing in Texas. (d) Term of Temporary License. A temporary license issued under this rule shall expire on the earlier of one year from the date of issuance; or on September 1, 1997. Temporary licenses are not renewable The Board may issue successive temporary licenses to the same applicant in which case it may waive the Texas Jurisprudence Examination requirement. (e) Disciplinary Action. Any practice of veterinary medicine by a temporary licensee outside the scope of employment and special duties identified by the Texas Racing Commission shall constitute a violation of the Act and the Rules of Professional Conduct and shall result in disciplinary action. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610995 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 CHAPTER 573.Rules of Professional Conduct General Professional Ethics 22 TAC sec.573.9 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.573.9, concerning Nonresident Consultants with changes to the proposed text published in the March 19, 1996, issue of the Texas Register (21 TexReg 2116). The change is in the last sentence and serves to clarify that practitioners not licensed in Texas are limited to consultations under the direct supervision of a licensee and may not otherwise practice. The agency is adopting this amendment to include the definition of "consultations" currently contained in sec.573.65 to clarify its application to non-resident consultants as authorized by the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.3(e). The rule defines consultation as the act of rendering professional advice, limited to diagnosis and prognosis, and prohibits consultants from rendering treatment or performing surgery. A non-substantive amendment is made to correct grammatical errors. No comments were received regarding adoption of the amendment. The amendment is adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects the Veterinary Licensing Act, Article 8890, sec.3(e) regarding consultations by veterinarians residing in other states. sec.573.9.Nonresident Consultants. Pursuant to the Act, sec.3(e) consultation is defined as the act of rendering professional advice about a specific case. Consultations are limited to diagnosis and prognosis, and do not include treatment or surgery. Licensed veterinary practitioners from other states may enter the State of Texas for purposes of consultation on an individual case basis for a specific purpose. Nonresident consultants may not establish a routine visit schedule of consults in Texas. Consultants must, at all times, consult under the direct supervision of a veterinarian licensed in this State. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610994 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 Responsibility to Clients 22 TAC sec.573.29 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.573.29, concerning Complaint Information and Notice to Clients without changes to the proposed text published in the March 19, 1996, issue of the Texas Register (21 TexReg 2116). The agency is adopting this amendment to expand the title and provide the agency's new address and telephone number. The amendment also includes a toll-free number for consumers' use to secure complaint forms and other enforcement information as provided in the Government Code, Article 4512p mandating the creation of the Health Professions Council and charging it with the creation of a toll-free complaint information line. The section will provide consumers with correct information on how to file a complaint. The Board received an oral comment that "effective way" should be defined in subsection (a) of the rule. The Board does not believe this is necessary since subsection (b) lists examples of acceptable forms of notification. The amendment is being adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects the Veterinary Licensing Act, Article 8890, sec.18B(d) which states the Board shall provide reasonable assistance to a person who wishes to file a complaint with the Board. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610993 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 Other Provisions 22 TAC sec.573.64 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.573.64, concerning Continuing Education Requirements without changes to the proposed text published in the March 19, 1996, issue of the Texas Register (21 TexReg 2117). The agency is adopting this amendment to provide continuity in approving programs for continuing education credit. The section will allow the Board President to designate the veterinarian Board member authorized to approve continuing education programs. The Board received a comment that ethics should be a mandatory part of the continuing education necessary to renew a practitioner's license. It is not Board policy to restrict the general continuing education obtained, except in disciplinary cases. The amendment is being adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects the Veterinary Licensing Act, Article 8890, sec.13(g) which requires the Board to establish a minimum number of continuing education hours obtained by a licensee prior to license renewal. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610992 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 22 TAC sec.573.65 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.573.65, concerning Definitions without changes to the proposed text published in the March 19, 1996, issue of the Texas Register (21 TexReg 2117). The agency is adopting this amendment to clarify that the definition of "consultation" applies to all Texas licensed veterinarians. The amendment requires Texas licensed veterinarians to establish a veterinarian- client-patient relationship prior to performing any service, other than acting as a consultant, in compliance with the Veterinary Licensing Act and Rules of Professional Conduct. No comments were received regarding adoption of the amendment. The amendment is adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects the Veterinary Licensing Act, Article 8890, sec.2(2) which defines the practice of veterinary medicine. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610991 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 CHAPTER 575.Practice and Procedure 22 TAC sec.575.26 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.575.26, concerning Complaint Form without changes to the proposed text published in the March 19, 199, issue of the Texas Register (21 TexReg 2118). The agency is adopting this amendment to provide the new address for the Board offices and improve the format of the form. The amendment to the complaint form corrects typographical errors and moves the signature line and date to the first page for administrative convenience. The certification statement appearing before the signature line has been amended to include attachments. No comments were received regarding adoption of the amendment. The amendment is adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects the Veterinary Licensing Act, Article 8890, sec.18B(c) which requires the Board to adopt a standardized form for complaints. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610990 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 CHAPTER 577.General Administrative Duties Board Members and Meetings 22 TAC sec.577.2 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.577.2, concerning Meetings without changes to the proposed text published in the March 19, 1996, issue of the Texas Register (21 TexReg 2118). The agency is adopting the amendment to provide the Board with a means to take immediate action on urgent items in an efficient and economical manner. The amendment incorporates the use of telephone conferences for special called meetings when convening a quorum of the Board is difficult or impossible. The Board did receive one oral comment that "urgent business" as it appears in subsection (c) should be more fully defined. The Board does not agree with the comment since the Board's authority to meet is clearly defined by the Open Meetings Act and Veterinary Licensing Act. The amendment is adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects the Veterinary Licensing Act, Article 8890, sec.5(j) which states that the Board is subject to the Open Meetings Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610989 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 22 TAC sec.577.3 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.577.3, concerning Compensation without changes to the proposed text published in the March 19, 1996, issue of the Texas Register (21 TexReg 2119). The agency is adopting this amendment to conform with the statutory requirements outlined in the General Appropriations Act. The amendment sets the reimbursement rate for travel expenses in accordance with those amounts established by state law. No comments were received regarding adoption of the amendment. The amendment is adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects the Veterinary Licensing Act, Article 8890, sec.5(h) which entitles members of the Board to receive a per diem as set by legislative appropriation. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610988 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 Staff and Miscellaneous 22 TAC sec.577.12 The Texas Board of Veterinary Medical Examiners adopts an amendment to sec.577.12, concerning Directory of Licensees without changes to the proposed text published in the March 19, 1996, issue of the Texas Register (21 TexReg 2119). The agency is adopting this amendment because the General Appropriations Act, House Bill 1, 74th Legislative Session, did not provide the Board with funding to print and distribute a directory to all licensees. The amendment removes the stipulation that the directory will be furnished to licensees at no charge and provides that it will be furnished upon request at a charge dictated by rules of the Texas General Services Commission. The directory of all currently licensed veterinarians, or a select listing, will be made available upon request in printed and electronic formats. The amendment also changes the title of the rule to more accurately reflect the document addressed in the rule. No comments were received regarding adoption of the amendment. The amendment is being adopted under the authority of the Veterinary Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states "The Board may make, alter, or amend such rules and regulations as may be necessary or desirable to carry into effect the provisions of this Act." The amendment affects the Veterinary Licensing Act, Article 8890 sec.19(a) which mandates that the Board, by rule, establish reasonable and necessary fees to produce sufficient revenue to cover the costs of administering the Act. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610987 Ron Allen Executive Director Texas Board of Veterinary Medical Examiners Effective date: August 20, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 305-7555 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART I. Texas Department of Human Services CHAPTER 3. Income Assistance Services The Texas Department of Human Services (DHS) adopts amendments to sec.sec.3.704 and sec.3.902, concerning resources and income, in its Income Assistance Services chapter. The justification for the amendments is to comply with a federal mandate from the Department of Health and Human Services that exempts from income and resources any money received from crime victims compensation programs. The amendments will function by ensuring that DHS is in compliance with federal law. SUBCHAPTER G. Resources 40 TAC sec.3.704 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 31, which provides the department with the authority to administer public and financial assistance programs. The amendments are adopted to be effective September 1, 1996, to comply with federal requirements. The amendment implements the Human Resources Code, sec.sec.22.001-22.030 and sec.31.0325. sec.3.704. Types. (a) (No change.) (b) Aid to Families with Dependent Children. Exclusions from resources in AFDC are: (1)-(11) (No change.) (12) vehicles. DHS exempts the value of one vehicle owned and used by the certified group for transportation if the equity is less than $1500. If the equity exceeds $1500, DHS counts the excess as a resource. DHS counts the equity of all other vehicles. (13) reimbursements. DHS exempts reimbursements for repairing or replacing a lost or damaged resource which would not otherwise affect eligibility are exempt if the applicant uses the reimbursement for the intended purpose. (14) crime victim payments. DHS exempts payments received from crime victims compensation programs. (c)-(d) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610959 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: September 1, 1996 For further information, please call: (512) 438-3765 49 TAC sec.3.902 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 31, which provides the department with the authority to administer public and financial assistance programs. The amendment is adopted to be effective September 1, 1996, to comply with federal requirements. The amendment implements the Human Resources Code, sec.sec.22.001-22.030 and sec.31.0325. sec.3.902. Types. (a) (No change.) (b) Aid to families with dependent children. Exclusions from income for AFDC are (1)-(19) (No change.) (20) crime victim compensation. DHS exempts payments received from crime victims compensation programs. (c)-(d) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1996. TRD-9610960 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: September 1, 1996 For further information, please call: (512) 438-3765 TITLE 30. ENVIRONMENTAL QUALITY PART I. Texas Natural Resource Conservation Commission CHAPTER 101.General Rules 30 TAC sec.101.24, sec.101.27 Editor's Note: Part of the following rules were inadvertently left out of the August 6, 1996 issue of the Texas Register and are being printed in their entirety for clarification. The commission adopts amendments to sec.101.24 and sec.101.27, concerning the collection of inspection and emissions fees from stationary sources, without changes to the proposed text as published in the April 30, 1996, issue of the Texas Register (21 TexReg 3685). The adopted changes to sec.101.24, Inspection Fees, replace the schedule of multiple due dates of November 1, November 15, and December 1 with one due date of November 1 for the fiscal year. Also, a provision is added incorporating late payment penalties as required by Water Code, sec.5.235, which would assess a penalty of 5.0% of the amount due, and if the fees are not paid within 30 days after the day on which the fees are due, an additional 5.0% penalty would be imposed. An annual interest rate of 12.0% would be imposed on delinquent fees beginning 60 days from the date on which the fee is due. The adopted changes to sec.101.27, Emissions Fees, set the fee at $26 per ton of emissions for Fiscal Year (FY) 1997. This is the same rate per ton charged in the current fiscal year. That rate will remain at $26 per ton for future fiscal years until amended. The emissions fee payment schedule with multiple due dates of November 1, November 15, and December 1 is being replaced with one due date of November 1 for the fiscal year. Also, a provision is added incorporating late payment penalties as required by Water Code, sec.5.235, which would assess a penalty of 5.0% of the amount due, and if the fees are not paid within 30 days after the day on which the fees are due, an additional 5.0% penalty would be imposed. An annual interest rate of 12.0% would be imposed on delinquent fees beginning 60 days from the date on which the fee is due. Minor administrative changes are also made to both sections to make more explicit those parts of the agency that have specific responsibilities regarding these rules. The agency has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code, sec.2007.043. The following is a summary of that assessment. The specific purposes of this adopted rule amendment are: to establish the emissions fee rate in sec.101.27 for FY 97 and future years until amended; to simplify the payment schedules for sec.101.24 and sec.101.27 to one due date of November 1; and to add penalties for late payment of fees as required by statute. The rules will substantially advance these specific purposes by establishing the emissions fee rate at $26 per ton, replacing the fee payment schedule, and establishing penalty and interest rates for late payment of fees. Promulgation and enforcement of these emissions fee and inspection fee rule amendments do not address and will not affect private real property. A public hearing was held on May 23, 1996, in Austin. No public testimony was offered at the public hearing. The public comment period closed on May 30, 1996. The commission received three written comments on the proposal from the following: Exxon Company, U.S.A., Texas Mid-Continent Oil & Gas Association, and Texas Utilities Services. All commenters addressed the issue of balances available in the Clean Air Fund. One commenter recommended that the commission adopt an alternative emissions fee rate of $10 per ton rather than the proposed $26 per ton rate. Another commenter did not recommend specific alternative rates, but did generally support the concept of a lower fee than the rate proposed based on the understanding that maintaining the fee rate at $26 per ton will result in a significant balance in the Clean Air Fund. Another commenter supported the commission's proposal, but requested the agency consider a lower fee for FY 1998 in order to avoid further increases in fund balances and to increase revenues available to businesses for both environmental and economic improvements. Commenters generally acknowledged that the federally-authorized emissions fees be utilized for operation of the Federal Operating Permit Program authorized by Title V of the federal Clean Air Act Amendments and requested that the commission ensure that adequate funds are available for this program. While maintaining the fee rate at $26 per ton will not eliminate the entire fund balance, a significant reduction of the balance will be realized each year that the fee remains at the current rate. Although the current rate is below the United States Environmental Protection Agency's presumptive norm (which includes annual inflation adjustments) to fund the Title V Operating Permits program, the existence of a fund balance allows the agency to avoid raising the rate to the presumptive level. It should also be noted that the fund balance is a result of the collection and expense of a number of sources of revenues over a period of time, including permit and inspection fees and mobile source (vehicle safety inspection) fees, in addition to the emissions fee. It should also be recognized that some balance must remain in the fund at the end of each year in order to maintain cash flow for the agency pending the receipt of new payments after the start of each new fiscal year, and to fund the agency's costs for employee benefits and related expenses that are appropriated to the Employees Retirement System and must be available from the fund in addition to amounts appropriated to the commission. In addition, while a significant fund balance will result, current trends clearly indicate that the rates of emissions have been declining each year and that revenues to the Clean Air Fund and related fund balances will naturally decrease as a result, if fee rates remain constant. Lowering the fee rate would accelerate this trend. To lower the fee rate dramatically at this time, however, to a level which would eliminate the projected fund balance, would actually require a significant increase in the fee the following year. To eliminate the fund balance prior to the 1998-1999 biennium would also eliminate any additional resources in the Clean Air Fund that might be considered by the 75th Legislature in its evaluation and recommendation of funding levels for the Title V Operating Permit Program or related air quality initiatives. The commission acknowledges that businesses and industry make substantial financial contributions to the state's air quality efforts through emission fees, and that currently a fund balance in excess of immediate legislative spending authority exists. It is the commission's opinion that until the next legislature evaluates the financial needs of the state air quality initiatives for the 1998-1999 biennium, dramatic reductions in fee rates would be inappropriate and potentially disruptive to long range financial planning. The agency does intend to evaluate funding for FY 1998, and will consider these issues in conjunction with actions taken by the 75th Legislature in the appropriation of Clean Air Fund fees. The amendments are adopted under the Texas Health and Safety Code, the Texas Clean Air Act (TCAA), sec.382.017, which provides the commission with the authority to adopt rules consistent with the policy and purposes of the TCAA. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 24, 1996. TRD-9610697 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: August 14, 1996 Proposed publication date: April 30, 1996 For further information please call: (512) 239-1966 CHAPTER 114. Control of Air Pollution From Motor Vehicles The Texas Natural Resource Conservation Commission adopts the repeal of sec.114.11 relating to Emissions and Alternative Fuel Vehicle Requirements for Motor Vehicle Fleets. The commission also adopts new sec.114.30 concerning Definitions; sec.114.31 concerning Requirements for Mass Transit Authorities; sec.114.32 concerning Requirements for Local Governments and Private Persons; sec.114.33 concerning Use of Certain Vehicles for Compliance; sec.114.34 concerning Exceptions; sec.114.35 concerning Exceptions for Certain Mass Transit Authorities; sec.114.36 concerning Reporting; sec.114.37 concerning Record Keeping; sec.114.38 concerning Program Compliance Credits; sec.114.39 concerning Mobile Emission Reduction Credit Program; sec.114.40 concerning The Texas Mobile Emission Reduction Credit Fund; and a corresponding revision to the State Implementation Plan (SIP) relating to clean-fuel vehicle use by local governments and private persons. Adopted with changes as published in the May 7, 1996, issue of the Texas Register (21 TexReg 3900) are sec.sec.114.30 - 114.39. Section 114.40 is adopted without changes and will not be republished. Revisions to Chapter 114 concerning Control of Air Pollution from Motor Vehicles, and the corresponding SIP revision are to implement Senate Bill 200 (SB 200), Acts of the 74th Texas Legislature, 1995, pertaining to the alternative fuels program; House Bill 734 (HB 734), Acts of the 72nd Texas Legislature, 1991, pertaining to the operations and functions of certain mass transit authorities; the 1990 Federal Clean Air Act as amended, Acts of the 101st U.S. Congress, pertaining to provisions for attainment and maintenance of health protective national ambient air quality standards, and for other purposes. Section 114.30 concerning Definitions, defines terms unique to sections sec.sec.114.30-114.40. In response to comments, definitions of Lessor and Operates Primarily were added to sec.114.30; in response to comments definitions of Conventional Vehicle, Emergency Vehicle, Fleet, Gross Vehicle Weight Rating, Own, and Vehicle were revised; and definitions of Alternative Fuel, Local Government Fleet, Mass Transit Fleet, and Primarily Operated were deleted for clarity and conformity. Section 114.31 concerning Requirements for Mass Transit Authorities, contains the clean-fuel vehicle requirements for mass transit authorities. The requirement is for the affected mass transit authorities to have 50% of their total fleet vehicles certified as clean-fuel vehicles by September 1, 1996. The revisions to sec.114.31 were made to conform with revisions to sec.114.30, in response to comments, for clarification, and revised agency rule drafting guidelines. Section 114.32 concerning Requirements for Local Governments and Private Persons contains clean-fuel vehicle requirements for local governments and private persons. The requirements are for these fleets to have: 10% of their total fleet as clean-fuel vehicles by September 1, 1998, or to have 30% of their new purchases as clean-fuel vehicles after September 1, 1998; 20% of their total fleet as clean-fuel vehicles by September 1, 2000, and to have 50% of their new purchases as clean-fuel vehicles after September 1, 2000; and 45% of their total fleet as clean-fuel vehicles by September 1, 2002, and to have 90% of their new purchases as clean-fuel vehicles after September 1, 2002. The revisions to sec.114.32 were made to conform with revisions to sec.114.30, in response to comments, and revised agency rule drafting guidelines. Section 114.33 concerning Use of Certain Vehicles for Compliance implements a "grandfather clause" for affected entities as provided by SB 200. Entities which have attempted to comply with earlier fuel usage mandates through the purchase of vehicles operating on certain defined fuels (electricity, ethanol, liquefied petroleum gas, methanol, and natural gas), may use these vehicles, up to a specific maximum, for compliance with this program. The revisions to sec.114.33 were made in response to comments and for clarity. Section 114.34 concerning Exceptions provides for exceptions from the clean-fuel vehicle requirements. Affected entities may be granted an exception from the clean-fuel vehicle requirements, on a case by case basis, if: 1) a firm is engaged in a fixed price contract with a public works agency where compliance with the clean-fuel vehicle requirements would cause economic harm to the firm; 2) adequate fueling required for the operation of certified clean-fuel vehicles is unavailable; 3) financing for the increased cost of operation of clean-fuel vehicles in unavailable from fuel suppliers; and 4) the costs, over the lifetime of the clean-fuel vehicle's operation, are more than the costs of the operation of conventional vehicles. The revisions to sec.114.34 were made in response to comments and revised agency rule drafting guidelines. A clarification with regard to the generation and trading of Program Compliance Credits (PCCs) and Mobile Emission Reduction Credits (MERCs) during an exception period was made at the recommendation of staff. Section 114.35 concerning Exceptions for Certain Mass Transit Authorities implements HB 734, which requires the commission to adopt rules for certification of exceptions for certain transit authorities. The commission has determined that this section only applies to Capital Metro in Austin. The revisions to sec.114.35 were made in response to comments. Section 114.36 concerning Reporting provides the general reporting requirements for affected entities. The revisions to sec.114.36 were made in response to comments, revised agency rule drafting guidelines, and for clarity. Section 114.37 concerning Record Keeping requires affected entities to maintain copies of their annual reports for three years on site and make such copies available to the executive director or local air pollution control agencies having jurisdiction in the area upon request. No commenters submitted testimony on this section. The revisions to sec.114.37 were made due to revised rule drafting guidelines. Section 114.38 concerning PCCs establishes PCCs as required by SB 200. PCCs are not based on actual emission reductions but have values as determined by the legislature. The credits can only be generated by entities that are subject to the requirements and have exceeded the program's purchase and/or percent of fleet requirements. PCCs may be used for an affected entity's own requirements, or for trades to other affected entities within the same non-attainment area. The revisions to sec.114.38 were made in response to comments, revised agency rule drafting guidelines, and for clarity. Section 114.39 concerning the Mobile Emission Reduction Credit Trading Program establishes the MERC trading program. MERCs are based on quantified emission reductions from certified clean-fuel vehicles. MERCs may be generated by affected entities, or by entities or individuals utilizing clean-fuel vehicles but who are not covered by the requirements. MERCs are generated by affected entities through exceeding the purchase and/or percent of total fleet requirements, and may be used for a fleet's own compliance, trades to other fleets, trades to stationary sources, or for compliance with any other mobile emission program that has marketable credits. MERCs are restricted to trading only within the non-attainment area where they were generated. The revisions to sec.114.39 were made in response to comments, revised agency rule drafting guidelines, and for clarity. Section 114.40 concerning The Texas Mobile Emission Reduction Credit Fund establishes the Texas Mobile Emission Reduction Credit Trading Fund. The section allows affected entities to enter into binding contracts with the commission to generate MERCs provided that the United States Environmental Protection Agency (EPA) is named as a third party beneficiary. These contracts are enforced through the courts of the State of Texas by orders of specific performance. The commission has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code, Section 2007.043. Promulgation and enforcement of these rules will not affect private real property. Public hearings were held in Beaumont and Houston on June 3, 1996, in Irving and El Paso on June 4, 1996, and in Austin on June 5, 1996. The comment period closed June 5, 1996. Texas Motor Transport Association and the American Trucking Association (TMTA/ATA) submitted joint comments. Ryder System, Inc. (Ryder) submitted general comments in agreement with TMTA/ATA. GENERAL COMMENTS. Eighteen commenters submitted general comments on the overall proposal. Autotronic Controls Corporation (ACC) fully supported the proposal. El Paso Natural Gas Company (EPNG) and the United States Environmental Protection Agency (EPA) supported the proposal but suggested changes. An individual, Associated Pipe Line Contractors, Inc. (APLC), Browning Ferris Industries (BFI), the City of Dallas (Dallas), the Engine Manufacturers Association (EMA), Exxon, Frito Lay, Inc. (Frito Lay), Ryder, the Texas General Land Office (GLO), TMTA/ATA, and Vastar Resources (Vastar) opposed the proposal. The City of Plano (Plano), El Paso Electric Company (EPEC), Equipment Maintenance Council (EMC) and Frito Lay (El Paso) did not generally support or oppose the proposal, but suggested changes. EMA, Ryder, and TMTA/ATA commented that the proposed SIP revision cannot constitute a substitute for the Federal Clean Fuel Fleet (FCFF) program. Ryder and TMTA/ATA commented that the commission did not follow the proper procedure to opt-out of the FCFF and that the proposal is not approvable. EMA stated that the program cannot serve as a substitute because it does not consist of provisions other than those found in the 1990 Federal Clean Air Act Amendments (FCAAA) as required by sec.182(b)(4)(B) of that Act. EPA submitted testimony, however, stating that the proposal can constitute a substitute program. The provisions of the 1990 FCAAA allow states to opt-out of all or part of the FCFF program provided they adopt a program that demonstrates equivalent benefits to those attained by the FCFF program. On November 13, 1992, the Texas Air Control Board submitted a SIP revision to EPA proposing to opt-out of the FCFF program and allowing Texas the opportunity to develop and implement a substitute for the federal program. The commission adopted the Texas Alternative Fuel Fleet Program on July 6, 1994, as the substitute for the FCFF program. Subsequently, the 74th Texas Legislature gave the commission further direction for implementing a substitute program with the passage of SB 200 in 1995. Therefore, the commission is modifying its substitute program to implement the direction of the Legislature. The prior SIP revision will be withdrawn and replaced with the new requirements applicable to private and local government fleets in the Houston/Galveston and El Paso non-attainment areas. Throughout this process, the commission and its predecessor agency have worked with EPA to ensure that the requirements for opting out of the federal program are met. EPA has determined that the proposed clean-fuel vehicle requirements can constitute a substitute for the FCFF program. A clean-fuel vehicle is defined by SB 200 and this regulation as a vehicle certified by EPA to a minimum of the low-emission vehicle, or LEV, standards. EPA, in its comments on the proposal, has stated that the proposal does consist of provisions other than those found in Part C of Title II of the FCAAA. Therefore, the proposed fleet requirements can be substituted for the FCFF provided they achieve long-term reductions in ozone-producing and toxic air emissions equal to those achieved under the federal program. EPA also noted that equivalency can be demonstrated by comparing the number of clean-fuel vehicles under each program. Thus, the commission and EPA believe it is within the commission's ability to adopt the clean-fuel vehicle requirements of SB 200 as a substitute program for the FCFF, and that equivalency can be achieved. Dallas, Frito Lay, GLO, Ryder, and TMTA/ATA commented on the status of the Dallas/Fort Worth (DFW) nonattainment area under the program and the commission's phased rulemaking approach. The GLO opposed the phased rulemaking, stating that the commission has no statutory basis for excluding private and local government fleets in the DFW area, and that DFW's inclusion was necessary because a substantial percentage of the area's emissions inventory comes from mobile sources. The GLO also commented that Beaumont/Port Arthur's (BPA) exclusion jeopardizes equivalency. Dallas, Frito Lay, Ryder, and TMTA/ATA opposed the inclusion of the DFW nonattainment area in the second phase of the rulemaking, stating that such requirements would pose undue economic harm to fleets. Frito Lay questioned the need for the program in the non-attainment areas. Health and Safety Code, sec.382.132, which was not amended by SB 200, extends the clean-fuel vehicle requirements over each of the non-attainment areas. Therefore, the commission is directed by the legislature to implement a clean- fuel vehicle program for fleets that operate primarily in the nonattainment areas. However, the commission consulted members of the legislature and other interested parties on SB 200's implementation and determined that the phased approach was appropriate for implementing SB 200. This phased rulemaking approach is being taken under the commission's general rulemaking authority in the Texas Clean Air Act, Health and Safety Code, Chapter 382, and in particular, sec.382.011 and sec.382.017. The first phase satisfies the immediate need to address the transit fleet requirements, with their initial deadline of September 1, 1996, and puts into place the exceptions from those requirements, the grandfather clause, and compliance options in the forms of PCCs and MERCs. It also addresses the commission's commitment to adopt and implement a substitute program for the FCFF program in the serious and above nonattainment areas. The second phase of this rulemaking which will address the local government and private fleet requirements in the remaining nonattainment areas will begin Spring 1997. The commission believes that this approach is appropriate to allow time for further deliberation with all interested parties, including the legislature, on the implementation of the program in those areas. The BPA nonattainment area has been reclassified as a moderate non-attainment area, thus its inclusion in the SIP is not necessary for equivalency. As the federal program applies only in the serious and above nonattainment areas, the clean-fuel vehicle program is not necessary as a control measure for the BPA area. BFI commented that the provisions of this program should be consistent with the FCFF program. Texas has opted-out of the FCFF program in order to implement a substitute program. As a substitute, Texas' program must consist of requirements other than those found in the FCFF program. There will, therefore, be specific differences between the two programs. With the passage of SB 200, the commission received further direction from the legislature on the specific programmatic elements of the substitute program, including fleet purchase requirements, covered fleets, exceptions, and credit programs. The commission is following this direction in its implementation of this program. BFI commented that clean-fuel vehicles should be exempted from certain transportation control measures such as high-occupancy vehicle (HOV) lane restrictions. Agency staff consulted with representatives from the metropolitan planning organizations in the nonattainment areas. Concerns were expressed that allowing single-occupancy clean-fuel vehicles on HOV lanes could create perception problems among other drivers concerning eligibility for using HOV lanes. Agency staff were requested to consult with EPA on the necessity of including the exemptions in a substitute program. After consulting EPA, the commission determined that, because Texas opted out of the FCFF program, the primary federal requirement of a substitute program is that it meet equivalency, and a substitute program can be accepted without the inclusion of these exemptions. Thus, the commission has made no change in response to this comment, preferring to leave any such exemptions at the option of the local metropolitan planning organizations. BFI commented that fleet operators should be permitted to apply clean-fuel vehicles toward any required employer trip reduction (ETR) program. HR 325, signed by President Clinton in December, 1995, (codified as 42 U.S.C. 7511(d)(B)) provided that previously mandated ETR programs can now be implemented at the option of the state. As a result, the commission will remove the ETR provisions from the SIP and repeal the ETR rule. Thus, it is not necessary to allow clean-fuel vehicle credits to be applied to ETR programs since the commission is no longer implementing a mandatory ETR program for the Houston/Galveston nonattainment area. BFI commented that the commission should recognize that EPA, pursuant to the FCAAA, sec.245(b), may relax the emission standards for heavy-duty vehicles if EPA determines that compliance is not technologically feasible for clean diesel- fueled vehicles. Fleet operators will have the opportunity to apply for exceptions on a variety of grounds, including if the projected net costs of operating clean-fuel vehicles exceed comparable costs for conventional vehicles. The commission believes that this exception will address any technological concerns. If clean- diesel powered clean-fuel vehicles are not available for any reason, and a fleet demonstrates to the satisfaction of the executive director that the operation of other clean-fuel vehicle choices exceed comparable costs for conventional vehicles, then the fleet should qualify for an exception from the percentage of purchase and/or the percentage of total fleet requirements. Therefore, the commission has made no change in response to this comment. EPEC recommended that, to the extent practical, the commission should allow credit for clean-fuel vehicle programs implemented and maintained in Ciudad Juarez. The commission recommends that this proposal be submitted by EPEC for consideration by the Joint Advisory Committee for the Improvement of Air Quality as part of its charge to study the feasibility of local emissions trading programs or other economic incentive programs to reduce air pollution in the region. The Joint Advisory Committee was established by the United States and Mexican federal governments to review proposals for regional control strategies in the El Paso del Norte airshed and make recommendations to regulatory entities. The commission supports the work of the committee, and will be available to provide any assistance on this issue in its role as a member. APLC and Frito Lay commented on the potential economic impact of the program. APLC, commenting on the fiscal note accompanying the proposal, stated that no cost savings will result from the program's implementation. APLC also commented that the proposal does not address the potential economic impacts on businesses that must compete. Frito Lay commented that the clean-fuel vehicle program's emissions reductions will not prove cost-effective in light of the vehicle and infrastructure investments that will have to be made to comply. The commission recognizes that costs may be associated with complying with the clean-fuel vehicle requirements. However, SB 200 and the regulation will address these concerns through exceptions from the requirements if a fleet can demonstrate that the projected net costs of the fueling, conversion or replacement, and operation of clean-fuel vehicles reasonably is expected to exceed comparable costs for conventional vehicles when measured over the expected useful life of such vehicles and after considering any state or federal funding incentives. The commission believes that this exception addresses the economic concerns of fleets by allowing them an exception if the program proves too costly to implement. Additionally, the commission will not prescribe the manner in which a fleet demonstrates the cost-effectiveness exception. This will give fleets the flexibility to determine whether or not the program is cost- effective after evaluating their particular fleet needs and operations. The commission does not believe that competing businesses will be at an unfair advantage because similar businesses will face the same requirements. Detailed guidance which contains recommended methods of applying for exceptions is currently in development. APLC commented that a number of pilot projects intended to determine the viability of using natural gas in medium- to heavy-duty trucks (weighing less than 26,000 pounds gross vehicle weight rating (GVWR)) have been abandoned because of a lack of adequate refueling facilities, reduced operating range, increased costs, and the general unsuitability of using those vehicles. The commission believes that these concerns will be addressed by the exceptions provided in the regulation. Exceptions are available for a lack of adequate refueling facilities for clean-fuel vehicles and if compliance is not projected to be cost-effective over the lifetime of the vehicles. Detailed guidance which contains recommended methods of applying for exceptions is currently in development. APLC commented that there appear to be no provisions requiring compliance by firms that transact business within the non-attainment areas but are domiciled elsewhere provided they do not operate their fleets primarily within the nonattainment area. The commission has made no changes in response to this comment. Only fleets which "operate primarily" within a nonattainment area are required to comply with the program. The commission has defined "operates primarily" to mean the "use of a fleet in any one affected non-attainment area more than 50% of the average annual vehicle miles traveled (VMT) or operating time as documented by the affected entitiy from July 1, through June 30th of each year." Thus, fleets which transact business in the nonattainment areas but are domiciled outside the nonattainment areas will not be covered if their fleets operate less than 50% of the total annual VMT inside the nonattainment area. Vastar expressed concern about the overlapping provisions of this regulation with those of the FCFF program, and the alternative fuels requirements of the 1992 Energy Policy Act (EPACT). The provisions of this regulation serve as a substitute for the FCFF program, and, therefore, replace those requirements in Texas. Thus, fleets operating in Texas will not be subject to the FCFF program. The commission believes that it will be possible to comply with both EPACT and the clean-fuel vehicle requirements of this program when private and local government fleets become subject to the requirements of EPACT. EPACT is not an emissions-based program, but rather focuses on fuel-use by requiring certain fleets in metropolitan statistical areas and consolidated metropolitan statistical areas (including each nonattainment area in Texas) to ensure that certain percentages of their purchases are fueled by natural gas, propane, ethanol, methanol, hydrogen, electricity, bio-diesel, or other alternative fuels (reformulated gas (RFG) and diesel are not eligible for use under EPACT). Its goal is to reduce petroleum imports by encouraging the use of those fuels. Thus, a fleet could comply with the requirements of both programs through the purchase of certain percentages of clean-fuel vehicles that operate on one of the fuels allowed under EPACT. Commission staff will be available to provide any assistance to fleets impacted by both regulations. The United States Department of Energy (DOE) administers the EPACT rules, and has adopted a rule affecting alternative fuel providers in the specified areas. Providers are defined as those that produce, store, refine, process, transport, distribute, import, or sell wholesale or retail any alternative fuel other than electricity, or those who generate, transmit, import, or sell electricity wholesale or retail. These providers must ensure that 30% of their light-duty motor vehicle purchases for Model Year 1997 are fueled by the alternative fuels eligible for use. DOE intends to issue an Advanced Notice of Public Rulemaking covering requirements for private and municipal fleets before the end of 1996. EMC and Plano recommended that the regulation use the same fuel-neutral language as SB 200. Under the program as proposed, affected entities are required to purchase vehicles that meet the clean-fuel requirements regardless of the type of fuel on which they operate. The definition of "clean-fuel vehicle" ensures the fuel neutrality in the regulation. A "clean-fuel vehicle" is defined as "any vehicle in a class or category of vehicles that has been certified to meet for any model year: (A) the clean-fuel vehicle standards applicable under the Federal Clean Air Act as amended Part C, Subchapter II, (U.S.C. 42 Section 7581 et seq.); (B) emission limits at least as stringent as the applicable low-emission vehicles standards for the clean-fuel fleet program under 40 Code of Federal Regulations (CFR), Sections 88.104-94, 88.105-94, and as published in the Federal Register of September 30, 1994; and (C) vehicles certified to the inherently low-emission vehicle (ILEV) standards under 40 CFR Section 88.311-93 as published in the Federal Register, March 1, 1993, will also be considered clean-fuel vehicles." This language derived from SB 200, with the added clarification that ILEVs are included. EMC and Plano submitted comments regarding the procedure for public response. EMC stated that the commission should provide additional forums for public comment. Plano suggested that the commission publicize its meetings more effectively. In soliciting public comment, the commission has followed the guidelines promulgated by 40 CFR, sec.51.102, relating to public hearings. Public hearings were held in Beaumont and Houston on June 3, 1996, in Irving and El Paso on June 4, 1996, and in Austin on June 5, 1996. Notice of each hearing was published in the Texas Register and local newspapers more than 30 days in advance. The commission attempted to notify all interested organizations and regrets any inconvenience experienced by the commenters. Frito Lay (El Paso) commented that RFG will not be available in the El Paso area. Thus, fleets in El Paso have limited options for meeting the program requirements. The commission has made no change in response to this comment. Although the commission understands the concerns of fleets in the El Paso area, it is required to include El Paso in the fleet program by both federal and state law. The provision implements Health and Safety Code, sec.382.132, which was not amended by SB 200, regarding affected areas. The provision also implements the 1990 FCAAA, sec.246(a)(2), regarding covered areas. For a vehicle using RFG to be used to meet the program requirements, the vehicle/fuel configuration must be certified by the EPA to the LEV standard. At this time, EPA certifies vehicles for use with all gasoline formulations on indolene, a baseline gasoline. Thus, any vehicle certified to LEV on indolene would, in fact, also meet LEV not only on RFG, but on oxygenated gasoline and low Reid Vapor Pressure gasoline available in El Paso. If the fuel required for vehicles necessary for a fleet's operations to meet LEV is not available in an area, sec.114.34(a)(2) provides an exception for fuel unavailability for which the fleet may be eligible. DEFINITIONS. Sixteen commenters submitted testimony on sec.114.30. Houston Lighting and Power(HL & P;) supported a specific definition. American Automotive Leasing Association (AALA), Adams Laboratories/National Association of Fleet Administrators (AL/NAFA), APLC, BFI, Brown and Root, Inc. (Brown & Root), Dallas Area Rapid Transit (DART), EMA, EPNG, Frito Lay, GLO, Mrs. Baird's Bakeries, Inc. (Mrs. Baird's), Ryder, Texas Association of Business and Chambers of Commerce (TABCC), Texas Utilities (TU), and Vastar opposed specific definitions and recommended clarifications or revisions. HL & P; submitted testimony regarding the definition of "alternative fuels," stating support for fuel neutrality. The commission agrees with the commenter that the program is fuel-neutral. However, the commission has reviewed the regulation and determined that the inclusion of the definition of alternative fuel is unnecessary because the fuel- neutral concepts of this definition are included in the definition of clean-fuel vehicle. Moreover, the term alternative fuel is not used in this regulation. BFI, Frito Lay, and TABCC commented on the definition of "capable of being centrally fueled". BFI supported the use of the EPA's definition. Frito Lay requested clarification on the definition and stated that requiring vehicles to travel outside of their normal route for refueling is inefficient. TABCC recommended the inclusion of mileage or operational standards in the definition. The commission has made no change in response to these comments. This definition implements Health and Safety Code, sec.382.131(2), regarding the definition of "capable of being centrally fueled," as added by SB 200. Thus, the commission is directed by statute to define and implement the provision in this manner. In addition, because the program does not exclude vehicles that are not capable of being centrally fueled, the inclusion of mileage and operational standards is not necessary. With regard to out of route refueling, an exception is available for a lack of refueling necessary for the operation of clean-fuel vehicles. Fleets will be able to take into consideration their normal operating range when applying for this exception. BFI recommended the use of the EPA's definition of "centrally fueled". The definition in the proposal implements Health and Safety Code, sec.382.131(3), regarding the definition of "centrally fueled" as added by SB 200. Thus, the commission is directed by statute to define "centrally fueled" in this manner. GLO and Vastar submitted testimony on the definition of "control". GLO commented that subparts (A) and (C) appear not to apply and that (B) should be broader and incorporate terminology and concepts raised in the FCAA. Vastar commented that the definition of "control" is confusing and thus the definition of "private person" should be modified to clarify that the word "control" refers to the management of vehicles. The commission has made no change to the definition of "control" in response to these comments. The definition of control is necessary for determining entities that are affected by the program. Subpart (A) provides for the aggregation of fleets under common direction. Subpart (C) clarifies that if an entity has control of employees who operate vehicles necessary for business purposes, then that entity controls these vehicles. The definition of "private person" was not modified in response to this comment since that definition encompasses more than vehicle management. It also includes the concepts of ownership, operation, and control. GLO commented that the definition of "dual-fuel vehicle" should follow the industry's definition. The commission has made no change in response to this comment. Staff has incorporated the definition of dual-fuel as defined by EPA in 40 CFR Section 88.102-94. The commission determined that it is necessary to follow the EPA definition of dual-fuel vehicle because EPA is responsible for certifying dual- fuel vehicles. AALA, AL/NAFA, Brown & Root, Mrs. Baird's, TABCC, and Vastar submitted testimony on the definition of "fleet". AALA and TABCC commented that the definition should use the term "sum of all fleet vehicles" and that the rule's definition exceeded the requirements of the statute. AL/NAFA is concerned that the definition is too broad and will include road graders and other specialized equipment and vehicles over 26,000 pounds. Brown & Root recommended a change in the definition to "all vehicles that are owned and operated by an affected entity..." and that subparagraph (A) should be amended to read "registered in, designated to operated from a single location, and primarily operated within the same non-attainment area." Brown and Root also suggested that sec.114.32 should be changed to conform with this amended definition. Mrs. Baird's recommended that the commission add the term "contracted" to the definition of "fleet". Vastar requested a change in subparagraph (B) to read "registered outside a NAA but operated primarily within the same NAA". The commission believes that a general definition for the term "fleet" is necessary because the statute makes the distinction between how local governments and private persons determine they are covered by the program. Health and Safety Code, sec.382.134, covers local governments with more than 15 vehicles, and private persons with more than 25 fleet vehicles. Thus, the definition for fleet is necessary to define those local governments that are impacted by the program. A local government, therefore, would count all the registered vehicles in its fleet to determine coverage (excluding law enforcement and emergency vehicles). If that fleet totals more than 15 vehicles, the fleet is then required to meet the requirements applicable to its fleet vehicles. Private fleets, however, only have to count their fleet vehicles to determine coverage under the program. This distinction is provided by the statute, and the commission is following the direction provided by statute. The commission has re-examined the regulation and modified the definition of "fleet" to read: "all vehicles that are owned, operated, or controlled by an affected entity and are registered under the Texas Transportation Code, sec.502.002 and operated primarily within any one nonattainment area." This clarification of the definition of "fleet," as well as a conformity change to the definition of "vehicle," provides that non-road vehicles are not included in the program. In addition, the commission has not added the term "contracted" to the definition of "fleet." The commission believes the definition of "control" captures the concept of "contracted." With regard to Vastar's comment, the commission believes that concern is addressed by the definition of "operates primarily." AALA, AL/NAFA, Brown & Root, DART, EMA, EPNG, Mrs. Baird's, Ryder, TABCC, and Vastar commented on the definition of "fleet vehicle" and recommended changes. AALA recommended that the commission define the term "facilities serving both business customers and the general public" using the EPA's definition of "contract refueling". AL/NAFA commented that fleets which are fueled at public facilities should be included in the program only if they have contracts for refueling with those facilities. AL/NAFA also commented that they support the exemption for vehicles which are parked at the residence of an individual. Brown & Root requested the addition of subparagraph (D) to read " a vehicle that is designated to operate from more than one location" and subparagraph (E) to read "a vehicle that is leased". EMA commented that the commission should revise the definition to include only vehicles that are centrally fueled or capable of being centrally fueled in order to more closely conform to the FCFF. EPNG recommended adding the phrase "...who reports to a central location no more often than once per week". Mrs. Baird's commented that the definition should include all vehicles that report to a central location regardless of where they are parked. Mrs. Baird's also commented that some fleet operators may use the definition's exemptions to bypass the intent of the regulation and thus cause economic disadvantage to those operators who comply with the regulation. Ryder expressed concern that the central fueling facilities that they provide are not used by their lease customers who utilize straight trucks. Vastar commented that the commission should not use the term "fleet vehicle" to define "fleet vehicle" and recommended that the word "fleet" be removed from the definition. The commission has made no change in response to these comments. This definition implements Health and Safety Code, sec.382.131, relating to definitions as amended by SB 200. Thus the commission is directed by statute to implement the definition of "fleet vehicle" in this manner. DART recommended that the commission should exempt emergency, law enforcement, non-road, and tunnel vehicles operated by transits from the definition of "fleet vehicle". The commission has made no change in response to this comment. Although the commission is sympathetic to the special circumstances of these vehicles, allowing exclusions of these vehicles would go beyond the direction of the statute. TABCC requested a clarification of the term "available for personal use" and stated that commuting should be considered personal use. The commission has made no change to the regulation in response to this comment. This provision implements Health and Safety Code, sec.382.131, relating to definitions as amended by SB 200. Thus the commission is directed by statute to implement the provision in this manner. However, the commission has determined that it will interpret the term "available for personal use" as pertaining to any fleet vehicle which could be utilized for personal purposes, regardless of whether it is actually used for personal business. TU commented that the definition of "gross vehicle weight rating" (GVWR) needs clarification as to whether the GVWR can be determined from a vehicle's title. TU requested instructions as to how to determine a vehicle's GVWR. The commission agrees with the commenter and has modified the definition of "gross vehicle weight rating" to read "The value specified by the manufacturer as the maximum design loaded weight of a vehicle. This is the weight as expressed on the vehicle's registration, and includes the weight the vehicle can carry or draw." The commission will use the weight on the registration and not the title as stated in the proposal. Under this definition, a fleet that operates tractor- trailers would take the combined weight of those vehicles. AALA, Ryder, TABCC submitted testimony on the definition of "own". AALA requested the commission change the definition to include "having beneficial title to the vehicle". Ryder requested a clarification in the definition as to the relationship between a lessor and a lessee. TABCC expressed concern that leased vehicles may be counted as part of both the lessee's and the lessor's fleets and recommended changing the definition of "own" to read: "having legal title to the vehicle; excluding a lessor holding title to a vehicle leased to a lessee for a period of thirty consecutive days or more." The commission has made no change to the definition of "own" in response to these comments. However, the commission has addressed these concerns by defining "lessor" as, "a person who leases or rents vehicles to other entities for the purpose of short-term rental or an extended term leasing (with or without maintenance), without a driver, under a contract. Fleets that are owned, operated, or controlled by lessors for operations other than lease or rental to other entities may be subject to the requirements of this chapter." In addition, sec.114.32(m) provides that the requirements do not apply to lessors with regard to vehicles they lease or rent to other entities. Under this approach, a lessor that holds legal title and is not responsible for the day-to-day operation of the vehicles it leases would not be responsible for ensuring compliance with the program. APLC, Brown & Root, GLO, and TABCC commented on the definition of "primarily operated". APLC commented that the definition required a fleet to track VMT which is economically unfeasible. Brown & Root recommended that the commission change the definition to read: "Use of a motor vehicle which has been designated to a local area for at least 75% of its use in the previous calendar year. Use is measured in vehicle miles traveled. Use of the motor vehicle is expected to be the same in future years." Brown & Root further recommended that "primarily operated" mean operated at least 75% or up to 95% of the time. GLO commented that the definition, which is based on VMT, is too restrictive and should be related to time of operation in the area. TABCC commented that VMT is difficult to track and that the commission should consider alternatives to VMT reporting. TABCC recommended that the definition be revised to 75% as in the federal program. TABCC was concerned as to whether total VMT should be considered for the previous year or for the life of the vehicle. The commission has re-evaluated the regulation, deleted the definition of "primarily operated" and defined "operated primarily" to be consistent with the statute. The commission has defined "operates primarily" to mean "use of a fleet in any one affected nonattainment area more than 50% of the average annual VMT or operating time as documented by the affected entity from July 1, through June 30th of each year." The commission believes that operating more than 50% of the time in an area constitutes operating primarily in that area on the basis that it would represent the majority of a fleet's operation in the affected area. This approach will allow fleets the opportunity to average their fleet's operation, rather than focus on the percentage of VMT or time for each individual vehicle. In addition, it provides fleets the flexibility to determine whether they operate primarily in an affected area by tracking either VMT or time. GLO commented on the definition of "Program Compliance Credit" stating that credits should be granted to fleet operators for each clean-fuel vehicle purchased to meet the requirements of the program and that excess credits should be available for banking, trading, or selling. The commission has made no change in response to this comment. This definition is based on Health and Safety Code, sec.382.142, regarding PCCs as added by SB 200. This section states that PCCs be awarded for the acquisition of cleaner vehicles than required, more clean-fuel vehicles than required, clean-fuel vehicles in categories not otherwise required, and clean-fuel vehicles earlier than required. The commission believes, therefore, that only clean-fuel vehicles which exceed the program requirements should be eligible for PCCs. BFI and GLO recommended the addition of new definitions. BFI commented that the commission should include the EPA's definition of "covered fleet operator". GLO requested that the commission define the terms "affected entity", "fleet to fleet trading", and "fleet to fleet credits". The commission has made no change in response to these comments. The commission has determined that these definitions are not necessary to the regulation. The term "covered fleet operator" is not referenced in the regulation. In addition, EPA's definition of "covered fleet operator" only relates to fleet vehicles which are centrally fueled or capable of being centrally fueled. The term "affected entity" is not defined because covered entities are defined in other ways within the text of the regulation. The state program includes all fleet vehicles, regardless of where they are fueled. The terms "fleet to fleet trading" and "fleet to fleet credits" are not defined because their meanings are evident within the context of the rule. Fleet to fleet trading occurs when one fleet trades its credits to a fleet which has a need for credits. A fleet to fleet credit is a credit which is traded in a fleet to fleet trade. Detailed guidance is in development that will further explain credit trading procedures. REQUIREMENTS FOR MASS TRANSIT AUTHORITIES. Five commenters submitted testimony on sec.114.31. An individual, Comprehensive Environmental Services, Inc. (CES), EMA, GLO, and Mayor, Day, Caldwell & Keeton, representing the Metropolitan Transit Authority of Harris County (Houston METRO) opposed elements of the proposed section. An individual and CES submitted comments regarding dual-fuel vehicle use by a transit authority as a clean-fuel vehicle for compliance. An individual questioned how clean-fuel use will be monitored in dual-fuel transit vehicles. CES recommended that fuel-usage requirements be added to the provision allowing LEV certified dual-fuel vehicles to be used for compliance. SB 200 did not contain fuel-use requirements for any dual-fuel vehicles. Thus, the commission has not made any changes in response to these comments. Dual-fuel vehicles must meet EPA certification requirements (40 CFR) in order to be eligible for compliance with the LEV requirements of this regulation. Under the EPA certification requirements, a light-duty dual-fuel vehicle must meet a minimum of the LEV standards on the clean fuel and the transitional low-emission vehicle standards on the conventional fuel. These requirements are only applicable to the light-duty vehicle class. Other classes (light-duty trucks and heavy-duty vehicles) must meet a minimum of the LEV standards on both fuels in order to receive certification and be eligible for compliance with this rule. Dual-fuel vehicles that are not certified by EPA to the LEV standards are eligible to be counted for compliance under the grandfathering provision of sec.114.33 provided they meet the criteria of that section. As with LEV- certified dual-fuel vehicles, SB 200 did not prescribe a fuel-use percentage for those vehicles. The commission will, therefore, follow that direction in its implementation of this provision. EMA and Houston METRO commented that the commission should not issue rules governing vehicles weighing more than 26,000 pounds GVWR until further direction is received from the legislature. EMA stated that the inclusion of those vehicles violates the FCAAA, sec.177 which prohibits states from limiting the sale of new motor vehicle engines certified to meet federal standards and from taking any action that would create a "third vehicle." EMA also stated that the FCAAA, sec.209 prohibits states from enforcing any emissions standards from new motor vehicles. EMA expressed concern that the commission expected manufacturers to make LEV-certified engines available. EMA recommended that the transit provisions conform to federal requirements and not cover those vehicles. The commission has made no change in response to these comments. Section 114.31 implements the Health and Safety Code, sec.382.133, regarding requirements for mass transit fleets as amended by SB 200. The commission is, therefore, following the direction of the legislature with respect to these requirements. SB 200 placed transit authorities under the clean-fuel vehicle requirements and did not limit those requirements to their fleet vehicles weighing less than 26,000 pounds GVWR. Vehicles heavier than 26,000 pounds GVWR are considered heavy-duty vehicles and are subject to heavy-duty clean-fuel vehicle standards. The commission is obligated by the statute to implement the provisions covering mass transit authorities by September 1, 1996. The commission recognizes that there are currently few, if any, heavy-duty vehicles certified to the clean-fuel vehicle standards and anticipates that economic exceptions will be available to the affected transit fleets. Additionally, transit fleets can generate or obtain MERCs or PCCs to be counted toward their compliance. Detailed guidance on these options is currently in development. With regard to the FCAAA requirements, the commission disagrees that this action prohibits or limits the manufacture or sale of new vehicles, or that this action results in a "third vehicle" for Texas. The requirements of the program cover fleet operators, and do not require engine and vehicle manufacturers to produce clean-fuel vehicles, including those weighing more than 26,000 pounds GVWR for transit authorities. The choice to produce such clean-fuel vehicles remains with vehicle and engine manufacturers, who will determine the feasibility of producing the technology based upon the factors they consider for their normal business practices. If clean-fuel vehicles weighing more than 26,000 pounds GVWR are not available for any reason, transit fleets will be able to apply for exceptions from the compliance requirements of the regulation. The commission will work with fleets and manufacturers to implement this program in the most cost-effective and common-sense manner possible. EMA commented that the covered fleet size requirements for transit authorities should be amended to conform with the FCFF program. The transit provision implements Health and Safety Code, sec.382.133, regarding requirements for mass transit fleets, which does not define a minimum fleet size for transit authorities. The commission, therefore, is following the direction of statute in its implementation of this provision. The statute defines covered transit authorities as those created under Texas Transportation Code, Chapters 451, 452, and 453 that operate in the state's nonattainment areas, regardless of size. Thus, the commission has made no change in response to this comment. GLO recommended that the provision which stated only one type of credit may be used per vehicle for compliance be clarified. The commission believes that the provision is clear and has made no change in response to this comment. A qualifying clean-fuel vehicle may generate either MERCs or PCCs. A fleet then has the flexibility to determine which type of credit is used. This will avoid double-counting of credits. An individual opposed allowing MERCs and PCCs to be used for compliance by transit fleets, including MERCs for light-rail programs. The commission has made no changes in response to this comment. Health and Safety Code, sec.382.142 and sec.382.143, as added by SB 200, create the PCC and MERC programs in order to allow all affected fleets flexibility in complying with the clean-fuel vehicle requirements, and as an incentive for fleets to do more than the minimum requirements. With specific regard to MERCs for light-rail systems operated by transit fleets, the commission believes that light-rail systems which replace vehicles with direct emissions should earn suitable emission reduction credit. REQUIREMENTS FOR LOCAL GOVERNMENTS AND PRIVATE PERSONS. Twelve commenters submitted testimony on sec.114.32. An individual, APLC, BFI, Dallas, EMA, EPEC, Frito Lay, Mrs. Baird's, Texas Instruments (TI), TMTA/ATA, and Vastar opposed the proposed section. GLO requested clarification of a specific provision. ACC, APLC, BFI, Dallas, EMA, EPEC, Frito-Lay, Mrs. Baird's, Ryder, TI, and TMTA/ATA commented on the implementation schedule for local government and private fleets. APLC, BFI, Dallas, EMA, EPEC, Frito-Lay, Mrs. Baird's, Ryder, TI, and TMTA/ATA all stated that the schedule is too aggressive and will have a negative economic impact on their fleets; the dual percent of purchase and percent of total fleet requirements for 2000 and 2002 should be modified to give fleets the option to meet either requirement, but not both; normal vehicle replacement rates would not result in the mandated total fleet requirements; and that the necessary technology and infrastructure is underdeveloped. BFI and EMA further recommended conforming the implementation schedule to the federal program. BFI also recommended that the percentages be allowed to be met through credit programs or conversions to clean-fuel vehicles. TI also recommended that the commission allot time for a testing period for clean-fuel vehicles before implementing the program. However, ACC commented that, with specific regard to the El Paso nonattainment area, there is adequate natural gas refueling. Additionally, ACC commented that in general the promulgation of rules will reduce uncertainty and lead to certifications of vehicle conversion programs and increased training of technicians. The commission has made no change to the proposal in response to these comments. The provision implements Health and Safety Code, sec.382.134, as amended by SB 200, which establishes the compliance schedule for private and local government fleets. There is no provision in the statute for changing the 2000 and 2002 dual percentage requirements, conforming the purchase requirements to the federal requirements, or allotting time for a test program. The commission is, therefore, following the direction of the statute in its implementation of these requirements. The commission recognizes that fleets may find it difficult to achieve the compliance requirements. If fleets are unable to satisfy these requirements by acquiring clean-fuel vehicles, purchasing PCCs or MERCs, or grandfathering vehicles under sec.114.33, they will be able to apply for one of the exceptions, including an exception which addresses negative economic impact on the fleet. Detailed guidance outlining the credit and exception options is in development. An individual opposed the exclusion of law enforcement and emergency vehicles from the clean-fuel vehicle requirements. EPEC commented that vehicles essential for utility service should be added to the list of excluded vehicles. The commission has made no changes in response to these comments. These exclusions implement Health and Safety Code, sec.382.134(a)(1), as added by SB 200 which provides that emergency and law enforcement vehicles operated by local governments and emergency vehicles operated by private fleets are not subject to the clean-fuel vehicle requirements. Thus, the commission is following statutory direction in its implementation of this provision. However, with regard to emergency and law enforcement vehicles, if affected fleets choose to purchase vehicles for these purposes that are certified as clean-fuel vehicles, fleets will be able to earn PCCs and MERCs. Utility service vehicles are not excluded unless they can be designated by a local authority as an emergency vehicle. Vastar recommended that rental vehicles should also be excluded from the program if the rental period is for less than 120 days. Vastar stated that the inclusion of such vehicles would be burdensome in light of the percentage and reporting requirements. Health and Safety Code, sec.382.134(a)(2) prescribes the vehicles that are excluded from the program and made no provision for the exclusion of rental vehicles that are operated by affected entities. The commission is, therefore, following that direction in its implementation of the program. Vastar recommended that sec.114.32(b) clarify that only local government and private fleets that meet the criteria of sec.114.32(a) are subject to the provisions. The commission agrees with this comment, and the regulation has been revised to provide this clarification. USE OF CERTAIN VEHICLES FOR COMPLIANCE (GRANDFATHER CLAUSE). Fifteen commenters submitted testimony on sec.114.33. An individual, Dallas, the Dallas County Commissioners Court (Dallas County), DART, EMC, Exxon, the City of Fort Worth (Fort Worth), Frito Lay, Houston METRO, Mrs. Baird's, Plano, Ryder, TABCC, TI and TMTA/ATA opposed the proposed section and recommended changes. Exxon, Frito Lay, Mrs. Baird's, Ryder, TABCC, and TMTA/ATA all commented on the fuels and vehicles allowed to be used under the "grandfather clause." Exxon, Frito Lay, Mrs. Baird's, Ryder, TABCC, and TMTA/ATA expressed concern that the provision would not allow clean-fuel vehicles purchased prior to September 1, 1998 to be used for compliance, particularly those fueled by reformulated gasoline or diesel. Ryder commented that listing the five fuels (electricity, ethanol, liquefied petroleum gas, methanol, and natural gas) violated SB 200's fuel-neutrality. The grandfather clause in sec.114.33, as interpreted by the commission, has a limited purpose. Its intent is to allow certain vehicles which would not otherwise meet the program's requirements to be used for compliance. However, since the meaning in the statute is ambiguous, the commission has had to interpret the statutory wording to accomplish this purpose. Health and Safety Code, sec.382.142(b)(4), as added by SB 200, contains language which could indicate that a LEV-certified clean-fuel vehicle could be grandfathered if it is certified to the federal Tier I emission standards. This is counterintuitive since a clean-fuel vehicle is defined by Health and Safety Code, sec.382.131(4), as a vehicle certified to a minimum of the LEV standards. Therefore, there is no need to grandfather this vehicle since it would be in compliance with the program's LEV requirements. The commission has, therefore, interpreted the grandfather clause to apply to vehicles which are not certified to the LEV standards but are capable of operating on one of the five fuels specified in prior state statutes and regulations. The commission believes this to be a common sense approach which will provide relief for fleets that voluntarily, or in anticipation of prior fleet requirements, converted vehicles to be capable of operating on one of the five fuels. For this reason, the commission has not removed any reference to the five fuels in sec.114.33(2) and believes this does not violate the fuel- neutrality of the program's clean-fuel vehicle requirements. The intent of the grandfather clause remains to allow vehicles capable of using one of the five specified fuels, and which meet the other conditions of sec.114.33, to be counted toward compliance with the total fleet percentage requirements. Fleets that purchase clean-fuel vehicles, certified to LEV on any fuel, are not penalized by the grandfather clause. Clean-fuel vehicles purchased before the mandated fleet compliance dates are eligible for MERCs and PCCs, as provided by Health and Safety Code, sec.382.142 and sec.382.143. A fleet will be able to use generated credits toward its own compliance, or buy or trade the credits to other fleets. Additionally, a fleet operator would be able to count a clean-fuel vehicle purchased prior to September 1, 1998 toward the total fleet percentage requirements for as long as that vehicle is in operation. Dallas County, DART, Mrs. Baird's, and TABCC submitted comments on the 30% limit in the grandfather clause. Mrs. Baird's commented that fleets should be allowed to receive credits for more LEV certified vehicles then the percentage limit allows. TABCC expressed concern that only 30% of any clean-fuel vehicles purchased prior to September 1, 1998, could be counted toward compliance. This provision implements Health and Safety Code, sec.382.142(b)(4)(C), as added by SB 200, which places a cap of 30% on the number of vehicles that may be grandfathered. Under the commission's interpretation of this grandfather provision, the 30% cap only applies to those vehicles which meet the grandfather requirements in sec.114.33. Thus, a fleet operator would be able to count as many clean-fuel vehicles purchased before that date toward compliance with the percent of total fleet requirements for as long as the vehicles are in operation. Therefore, the commission has made no changes in response to these comments. Dallas, Dallas County, DART, EMC, Fort Worth, Plano, and TI requested the removal of the Tier I requirement covering light-duty vehicles and trucks under the grandfather clause, stating that all vehicles that meet the emissions standards to which they were originally certified should be grandfathered. They expressed concern that the Tier I requirement penalizes them for converting vehicles and incurring significant infrastructure expenses before the Tier I standards were phased in beginning in Model Year 1994. In addition, Dallas expressed concern about being penalized under this program when other counties in that nonattainment area were given exemptions from the inspection/maintenance (I/M) program. This provision implements Health and Safety Code, sec.382.142(b)(4)(B), as added by SB 200, which states that vehicles must meet a minimum of the Tier I standards to be grandfathered. Thus, the commission is following the direction of the statute in its implementation of this provision, and no change has been made in response to these comments. However, since the Tier I standards only apply to light-duty vehicles and trucks, the commission added a provision in the proposal that allows any heavy-duty vehicle that is capable of operating on one of the five fuels and meets the emissions standards to which it was certified at the time of manufacture to be grandfathered. With regard to Dallas' comment about the I/M program, Health and Safety Code, sec.382.132 regarding affected areas, which was not amended by SB 200, extends the fleet requirements over all nonattainment areas. While the commission is implementing SB 200 in phases, with local government and private fleets in the DFW and BPA nonattainment areas not being covered by this first phase of the rulemaking, the commission is obligated to implement the fleet program in the areas prescribed by statute. The phased rulemaking approach will, however, allow time for further discussion on the program's implementation in the DFW and BPA areas with interested parties, including the legislature. The commission anticipates that the second phase of this rulemaking will begin in Spring 1997. An individual commented that the grandfather clause should require operation on one of the five fuels, not simply require the capability of operation. This provision implements Health and Safety Code, sec.382.142(b)(4)(A), as added by SB 200, which provides only that a vehicle be capable of operating on a fuel. Therefore, the commission is following this direction in its implementation of this provision, and no change has been made in response to this comment. Houston METRO requested that its pilot ignition natural gas (PING) vehicles be eligible for grandfathering. Houston METRO's PING vehicles are eligible for grandfathering under the existing grandfather clause in sec.114.33 because they are capable of operating on natural gas. Therefore, the commission has made no change in response to this comment. EXCEPTIONS. Nine commenters submitted testimony on sec.114.34. AL/NAFA, APLC, CES, EPEC, GLO, Houston METRO, Mrs. Baird's, and TABCC generally supported the proposed section but suggested changes or clarifications. An individual opposed the proposed section. AL/NAFA, APLC, Mrs. Baird's, and TABCC submitted testimony on the second exception regarding fleet vehicles operating in areas which lack adequate refueling facilities. AL/NAFA and TABCC commented that fleet operators should be required to include a demonstration that "alternative fuels that meet the normal requirements and practices of the principal business of the affected person are not available in the area." APLC expressed concern because they dispatch trucks over a wide area and cannot predetermine the availability of adequate refueling facilities. Mrs. Baird's commented that this exception does not contain any mileage or operational guideline requirements to demonstrate inadequate refueling opportunities. The commission has made no change to this section in response to these comments. The commission has determined that this program is fuel neutral and that affected entities are required to purchase or acquire vehicles that meet the clean-fuel vehicle requirements, which can be met on any type of fuel. In addition, the commission will require that all currently available clean-fuel vehicle/fuel configurations be evaluated by the affected entity before an exception application is reviewed. The executive director will consider granting exceptions to affected entities that can demonstrate that adequate refueling facilities are not available to refuel any currently available clean-fuel vehicle suitable for the fleet's normal operational needs. Exceptions will be granted on a case-by- case basis. Detailed guidance is in development that will further explain the exception process and allow flexibility within the program for adjustment. AL/NAFA, CES, and TABCC submitted testimony on the fourth exception which is based on economic factors relating to the use of clean-fuel vehicles. AL/NAFA commented that the commission should clarify the fact that LEVs must be certified by the EPA and that fleet operators are not required to accelerate vehicle replacement to comply with the regulations. CES recommended that the commission should require copies of existing or proposed contracts for fuels as part of an economic exception application. CES also requested a definition of the term "comparable costs". TABCC commented that the "economic justification for exceptions should be based on a reasonable amortization schedule for incremental capital costs and current operating costs." The commission has made no change in response to these comments. Detailed guidance is in development that will further clarify the exception process and will allow flexibility within the program for adjustment. Exceptions will be reviewed on a case-by-case basis and determined upon the individual circumstances of each applicant. In addition, the regulation does not prescribe the manner in which an applicant demonstrates the conditions for an exception exist. A fleet operator may consider its individual and unique circumstances when applying for an exception. If that demonstration is acceptable to the executive director, the applicant will qualify for the exception. The commenter is correct in stating that LEVs must be certified by the EPA and that the commission will not require fleet operators to accelerate vehicle replacement to comply with the regulations if the conditions of an exception are demonstrated. APLC and EPEC commented on the economic burden that may be imposed on fleet operators by the exceptions in general. APLC expressed concern that the record keeping requirements will put excepted entities at an economic disadvantage. EPEC commented that additional exceptions are necessary since existing exceptions do not address the economic burden placed on fleet operators by the program. EPEC recommended that an exception should be included in the regulation for entities that have long-standing programs of alternative fuel vehicle use, allowing another year to comply for each converted vehicle in operation. The commission has made no change in response to these comments. This provision implements Health and Safety Code, sec.382.136, regarding exceptions as amended by SB 200. Therefore, the commission is directed by statute to implement the provision in this manner. The economic burden on fleets is addressed by sec.114.34(a)(4), which allows an exception if it is not cost-effective to meet the program requirements. An exception for long-term use of alternative fuel vehicles is addressed by the grandfather clause (sec.114.33) by allowing vehicles which operate on specified fuels to be counted toward an affected entities' compliance. The commission recognizes that affected entities may have to devote additional time and resources in order to fulfill the record keeping requirements of this program and will work with them to identify those areas of major concern in order make any necessary improvements in the program's administration. However, the commission believes that these requirements are necessary to ensure the effective implementation of the program. Houston METRO recommended that the commission should include language in the regulation stating that no penalties will be assessed during the exception application review period. The commission agrees with the commenter and sec.114.34(b)(7) of the rule has been modified to state that affected entities will not be considered in violation of the applicable clean-fuel vehicle requirements of this chapter while an exception application is under review by the executive director. The application must have been received by the executive director before the relevant compliance dates. An individual and CES commented on the exceptions in general. The individual expressed opposition to the exceptions. CES requested that the commission clearly state that entities should make an effort to comply with the regulations before applying for an exception. The commission has made no change in response to these comments. This provision implements Health and Safety Code, sec.382.136, regarding exceptions as amended by SB 200. Each entity must evaluate its options for compliance and demonstrate its inability to comply with the regulations when it applies for an exception. Although the commission has attempted to allow flexibility in the information requested from entities applying for exceptions, all applications are subject to the approval of the executive director. Applications will be reviewed on a case- by-case basis. GLO recommended that an exception not be granted to a transit fleet until that fleet has met the 30% requirement of September 1, 1994. The commission has made no change in response to this comment. SB 200 changed the requirements on fleets in 1995. It is not within the commission's legal authority to retroactively impose the Senate Bill's fleet requirements, nor is the commission required to pursue potential violations of a requirement that has changed. Additionally, the commission will not deny exceptions from the requirements of this regulation based on noncompliance with the requirements of a regulation which has been superseded. EXCEPTIONS FOR CERTAIN MASS TRANSIT AUTHORITIES. One commenter submitted testimony on sec.114.35. GLO recommended that a duration of up to two years be provided for the exceptions available to Capital METRO of Austin. The commission agrees with this recommendation and has provided that an exception granted to Capital METRO will have a duration of up to two years provided the criteria set forth in sec.114.35 are met. REPORTING. Five commenters submitted testimony opposing elements of sec.114.36. AALA, CES, GLO, Houston METRO, and TABCC opposed the proposed section. AALA and TABCC expressed concern over the confidentiality of the VMT information reported by individual fleet operators. Specifically, they suggested that fleets not be required to report their VMT to the commission but be allowed to maintain these records subject to audit by the commission. The commission has made no change in response to these comments. This information is necessary both for determining the amount of credit available for trading to stationary sources and for tracking air quality benefits. Fleet owners should mark each page of a confidential document with the word "confidential." The Texas Open Records Act, Government Code Chapter 552, provides the system for the commission's processing of, and response to, requests for records in the commission's possession. Pursuant to that Act, documents claimed to be confidential when provided to the commission are submitted to the Texas Attorney General for a determination of the validity of that claim. CES recommended that the commission add an explanation of "what documentation will be acceptable to the TNRCC for demonstrating the percentage of a vehicle's operation on the clean fuel, if dual-fueled, and for demonstrating compliance with the applicable implementation schedule." The commission has made no change in response to this comment. The commission will allow flexibility for fleet operators in choosing documentation to demonstrate percent of operation on each fuel, if dual-fueled, and to demonstrate compliance with the implementation schedule. At a minimum, the compliance demonstration must include the information required in the annual report under sec.114.36. Houston METRO commented that the reporting requirements should be able to be satisfied with the same information reported through the Urban Bus Retrofit/Rebuild Program. The commission has made no change in response to this comment. Under the Urban Bus Retrofit/Rebuild Program, fleets must maintain information on-site. Information is required only on buses with rebuilt or retrofitted engines, and would not cover all vehicles affected by this regulation. Therefore, the commission finds that the reporting requirements of sec.114.36 are necessary. In order to avoid duplication with the urban bus program requirements, fleets may maintain relevant information for the fleet program in the same location as records that are kept for the urban bus program. GLO recommended that the commission require more information from reporting entities. The commission has re-evaluated the rule in response to this comment and has clarified that fleets should report the total number of vehicles registered and the total number of fleet vehicles registered. This will help the commission determine compliance, ensure enforceability, and evaluate air quality benefits. The commission does not believe that it is appropriate to request more information than is necessary for the implementation of this program. TABCC recommended that the commission require information on a reporting entity's entire fleet rather than on the entity's individual fleet vehicles. The commission has re-evaluated the rule in response to this comment. The commission has determined that it will require fleets to report the emission standards and VMT for each vehicle being used for compliance with the program requirements. This information is necessary in order to accurately determine compliance, ensure enforceability, award credits, and evaluate air quality benefits. However, should a fleet operator find it easier to submit this data on all the vehicles in the fleet, this will be acceptable to the commission, and the regulation has been modified to allow for this. PROGRAM COMPLIANCE CREDITS. Five commenters submitted testimony on sec.114.38. Central Electric Vehicle Coalition (CEVC), DART, GLO, and HL & P; generally supported the proposed section, but suggested changes or clarifications. An individual opposed the proposed section. DART commented that PCCs were intended to allow credit for emissions on vehicles that are not considered fleet vehicles. The commenter is correct in the assumption that PCCs were intended to allow credit for emissions on vehicles that are not considered fleet vehicles. Section 114.38(a)(3) allows the commission to award PCCs for the "acquisition of a clean-fuel vehicle in a category not otherwise required by sec.114.30 or sec.114.32 of this chapter." GLO questioned why the commission plans to provide a "total emissions credit summary" for PCCs if, as stated in a draft guidance document, PCCs are not based on actual emissions. The commission agrees with the commenter and the provision has been modified to read "total credit summary." DART recommended that the commission allow fleets to generate PCCs through compliance with the Urban Bus Retrofit/Rebuild Program. The commission has made no change in response to this comment. Although the commission agrees that the Urban Bus Retrofit/Rebuild Program is beneficial to air quality in general, the main goal of the urban bus program is to reduce the ambient levels of particulate matter in urban areas whereas the program established by this regulation is aimed at reducing volatile organic compounds, nitrogen oxides, and carbon monoxide. In addition, PCCs have values established by the state legislature for vehicles meeting or exceeding specific emission standards. Trading between the programs is not provided for in the statute. GLO recommended that the commission restrict PCC trades to the same class or category of vehicles. The commission has made no change in response to this comment. This provision implements Health and Safety Code, sec.382.142, relating to PCCs as added by SB 200. PCCs are based on credit values established by the state legislature and no restrictions were placed on the trading of these credits within the program. Thus, the commission is directed by statute to implement the provision in this manner. CEVC commented that the commission should not diminish PCC values for electric vehicles. Specific values for PCCs are established in the Health and Safety Code, sec.382.142, regarding PCCs, as added by SB 200. Thus, the commission is directed by statute to implement the provision in this manner, and PCC values for electric vehicles will not be diminished. An individual and HL & P; commented on the PCC program in general. HL & P; expressed support for PCCs. The individual expressed general opposition to the PCC program. The commission has made no change in response to these comments. The commission believes that PCCs will provide flexibility for fleets in complying with the program. These provisions implement Health and Safety Code, sec.382.142, relating to PCCs as added by SB 200. Thus the commission is directed by statute to implement this provision. MOBILE EMISSIONS REDUCTION CREDITS PROGRAM. Nine commenters submitted testimony on sec.114.39. APLC, BFI, CEVC, EPEC, EPNG, Frito Lay, GLO, and TABCC generally supported the proposed section but suggested changes or clarifications. An individual opposed the proposed section. Frito Lay and TABCC submitted comments regarding restrictions on trading MERCs between vehicles of different weight classes. Both stated that the commission should allow free trading among subclasses within the heavy-duty weight class and should allow trades between heavy-duty and light-duty vehicles. The commission has made no change in response to this comment. This provision implements Health and Safety Code, sec.382.143(b) as added by SB 200, which requires that the MERC program comply with EPA's requirements for an approvable program. In 40 CFR Section 88.304-94(d)(5), EPA prohibits trading between the heavy-duty and light-duty weight classes and allows trades among the heavy-duty weight subclasses in a downward direction only. EPNG and GLO commented on the requirement that fleets have a minimum of one ton per year of reduction before trading credits to stationary sources. EPNG commented that the commission should clarify whether the one ton per year of reduction applies to the amount reduced by the entire fleet or to only the amount of tradable credit. GLO commented that fleets should be allowed to aggregate their credits in order to meet the one ton per year minimum. The commission has modified sec.114.39 of the rule to clarify that the 1 ton per year of reduction applies to the amount of tradable credit, not the amount of emissions reduced by an entire fleet. In addition, sec.114.39 of the rule has been modified to provide that affected entities may aggregate MERCs generated in order to make the minimum 1 ton of emissions reductions necessary for trades to stationary sources. BFI and EPEC submitted comments regarding trading of MERCs between stationary and mobile sources. BFI stated that mobile source emission credits should be eligible for trading to stationary sources. EPEC recommended that the commission allow trades from stationary to mobile sources. The commission has made no change in response to these comments. The regulation does allow trading of credits from the program to stationary sources under sec.114.39(e), which establishes procedures for calculation of credits in tons per year. The commission is restricted from allowing fleets to use credits from stationary sources by Health and Safety Code, sec.382.143, regarding MERCs as added by SB 200 which requires rules adopted to comply with EPA's minimum requirements for an approvable Mobile Emission Reduction Credit program. EPA does not allow trading from stationary sources to mobile sources. In addition, EPA has determined that sec.246 of the 1990 Federal Clean Air Act Amendments includes provisions which prohibit trading from stationary sources to fleets. BFI recommended that the regulations allow fleet operators to earn credits for exceeding the minimum SIP requirements in a manner consistent with the federal provisions. The commission has made no change in response to this comment. The provision in the regulation implementing Health and Safety Code, sec.382.143, regarding MERCs as added by SB 200, allows fleets to generate credits by exceeding the program's minimum requirements, and the commission is implementing this program in the manner. GLO recommended that the commission clarify that MERCs are granted on a per pollutant basis. The commission agrees with the commenter and has revised sec.114.39(e) of the regulation to read: "For trades to stationary sources, the following methodology is used for the calculation of MERCs for volatile organic compounds (VOC) or nitrogen oxides (NOx) trades..." This clarifies that MERCs for trades to stationary sources will be calculated on a per pollutant basis. APLC requested that the commission clarify the credit program in the regulation. The commission has made no change in response to this comment. Detailed guidance is in development that will further explain the procedures of the credit program. CEVC commented that the commission should not diminish MERC values for electric vehicles. The commission does not set the MERC values for electric vehicles. MERC values are established based on the actual emission reductions from a clean-fuel vehicle compared with the emissions from a conventional vehicle, according to calculations provided by the EPA and the Health and Safety Code, sec.382.143, relating to MERCs as added by SB 200. An individual expressed general opposition to the MERC program. The commission has made no change in response to this comment. These provisions implement Health and Safety Code, sec.382.143, relating to MERCs, as added by SB 200. Thus the commission is directed by statute to implement the provision in this manner. The commission believes that MERCs will provide flexibility for fleets in complying with the program. TEXAS MOBILE EMISSION REDUCTION CREDIT FUND. One commenter submitted testimony on sec.114.40. An individual expressed general opposition to the generation of MERCs through binding contracts. The commission has made no change in response to this comment. These provisions implement Health and Safety Code, sec.382.143(c), relating to the Texas MERC Fund as added by SB 200. Thus, the commission is directed by statute to implement the provision in this manner. STATE IMPLEMENTATION PLAN. Three commenters submitted testimony on the proposed SIP. EPA generally supported the proposed SIP narrative, but suggested changes and clarifications. An individual and EMA opposed the proposed SIP narrative. An individual objected to the focus on meeting creditable SIP reductions rather than focusing on reaching attainment. The commission has made no change in response to these comments. Demonstrating creditable reductions is the mechanism provided by the FCAA to ensure that an area makes measured further progress towards attainment. An individual commented that the approval of the inspection and maintenance program after the 120 day period is illegal. The individual also expressed opposition to the repeal of the employer trip reduction program rules. These comments are beyond the scope of this rulemaking. EPA commented that the commission should clarify that the previous SIP revision is being withdrawn. The commission has made appropriate clarification in the SIP. EPA recommended that the commission explain why the BPA nonattainment area is not included in the SIP. Effective June 3, 1996, the EPA reclassified the BPA nonattainment area to a moderate non-attainment area. Although all of the nonattainment areas are covered be the Texas clean-fuel vehicle requirements of Health and Safety Code, Chapter 382, as amended by SB 200, the commission does not intend to submit any requirements covering fleets in the moderate non-attainment areas as a revision to the SIP since only the serious and above nonattainment areas are subject to federal clean-fuel vehicle programs. Thus, transit, private and local government fleets in the BPA and DFW nonattainment areas, while still covered by the requirements of the state program in the Texas Clean Air Act, will not be included as part of the SIP. An individual commented that diesel is not a clean fuel, as is indicated on page 12 of the SIP. The commission has made no change in response to this comment. The reference cited is a quotation from the federal program. Under the state program, fleets may use any fuel/vehicle combination which meets the LEV standard. EMA commented that the commission does not have the authority to apply warranty- and emissions-related enforcement policies as indicated in the SIP. In addition, they stated that only the entity responsible for a particular defect should be held responsible for warranty and emission defects. The commission is not instituting any additional standards for vehicle manufacturers. The commission will rely solely on EPA established standards, test procedures, warranty periods, and enforcement. An individual objected to the use of an 80% effectiveness rate for the program on page 55 of the SIP because there is no indication that an enforcement program which can actually track if such a rate exists, is proposed, or will be funded. EPA allows the use of a default rate of 80% when the effectiveness of a program cannot be determined. A number of factors will influence the effectiveness of this program, making it difficult to determine the projected effectiveness at this time. Therefore, the 80% effectiveness rate was utilized. EPA commented that the commission should make some administrative changes to the SIP. EPA recommended that the commission: delete the word "conversion" from the title of subsection (5); insert the actual requirement of equivalency; specify the EPA document used for the fleet turnover rate; add "fleets that are capable of being centrally fueled" to the last sentence on page 55; omit the extra year from table B-1 and Figure B-1; and change the reference on page 26 to "Parts 88.104-94 and 88.105-94" to read "sec...." The commission agrees with the commenter and has made the suggested changes to the SIP. The commission agrees that only the requirements for private and local government fleets are necessary for determining equivalency. Therefore, only these requirements are included in the SIP. However, the requirements for mass transits are included in the rule because the use of clean-fuel vehicles by these fleets is required by the Health and Safety Code, sec.382.133, regarding requirements for mass transit fleets as amended by SB 200. EPA commented that the program can serve as an acceptable substitute for the FCFF program. However, EPA cited several areas requiring further clarification. EPA requested that the commission ensure that the calculations for the federal program's effectiveness include fleet vehicles that are capable of being centrally fueled. In addition, EPA requested further justification of the waiver rate used in the equivalency determination. EPA also commented that it would be necessary to know the precise mix of fleet vehicles to be used under the PCC program, as the normalization to the LEV standard is not in accordance with EPA guidelines. Clarifying changes have been made to the SIP where appropriate. The commission has included calculations taking into account the federal program's inclusion of centrally fueled fleets as well as those fleets that are capable of being centrally refueled. The commission has determined that the waiver rate in the initial years of the program may be high, due to lack of clean-fuel vehicles, however, the waiver rate in the later years of the program will be lower, due to greater availability of clean-fuel vehicles. Therefore, it is the commission's estimation that the overall waiver rate will be approximately 30% over the ten year period of evaluation. Regarding the need for a precise fleet mix under the PCC program, the commission believes that few fleets will choose to use PCCs because the MERC program provides more credits for most clean-fuel vehicles. Because most fleets will choose to trade in MERCs, equivalency should not be adversely affected. 30 TAC sec.114.11 Statutory authority for the clean-fuel vehicle requirements is found in the Texas Health and Safety Code, sec.382.131 through sec.382.143. In addition, under the Texas Health and Safety Code, sec.382.002 and sec.382.011, the commission is given "the powers necessary or convenient to carry out its responsibilities" to establish and maintain air quality standards. The commission also has broad authority to adopt and enforce rules pursuant to the Texas Health and Safety Code, sec.382.017. The commission is also given authority under sec.451.301 of the Texas Transportation Code. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610813 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: August 16, 1996 Proposal publication date: May 7, 1996 For further information, please call: (512) 239-1970 30 TAC sec.sec.114.30-114.40 Statutory authority for the clean-fuel vehicle requirements is found in the Texas Health and Safety Code, sec.382.131 through sec.382.143. In addition, under the Texas Health and Safety Code, sec.382.002 and sec.382.011, the commission is given "the powers necessary or convenient to carry out its responsibilities" to establish and maintain air quality standards. The commission also has broad authority to adopt and enforce rules pursuant to the Texas Health and Safety Code, sec.382.017. The commission is also given authority under sec.451.301 of the Texas Transportation Code. sec.114.30. Definitions. Unless specifically defined, the terms used in these rules have the meanings commonly ascribed to them in the field of air pollution control. In addition to these terms, the following words and terms, when used in sec.114.30 through sec.114.40 of this title (relating to Control of Air Pollution From Motor Vehicles), shall have the following meanings: Beaumont/Port Arthur nonattainment area-Hardin, Jefferson, and Orange Counties. Capable of being centrally fueled-A fleet or that part of a fleet consisting of vehicles that could be refueled 100% of the time at a location that is owned, operated, or controlled by the fleet operator or that is under contract with the fleet operator. The fact that one or more vehicles in a fleet are not centrally fueled does not exempt an entire fleet from the program. Capable of operating-Having the necessary permanently installed equipment that enables a vehicle to use a specified fuel. Centrally fueled-A fleet or that part of a fleet consisting of vehicles that are refueled 100% of the time at a location that is owned, operated, or controlled by the fleet operator or that is under contract with the fleet operator. The fact that one or more vehicles in a fleet are not centrally fueled does not exempt an entire fleet from the program. The term does not include retail credit card purchases or commercial fleet card purchases. Certified-The process established by the United States Environmental Protection Agency to ensure compliance, throughout the entire useful life of a vehicle, with the required standards as defined in 40 Code of Federal Regulations (CFR). Clean-fuel vehicle-A vehicle in a class or category of vehicles that has been certified to meet for any model year: (A) the clean-fuel vehicle standards applicable under the Federal Clean Air Act as amended Part C, Subchapter II, (U.S.C. 42 Section 7581 et seq.); (B) emission limits at least as stringent as the applicable low-emission vehicle standards for the clean-fuel fleet program under 40 CFR, Sections 88.104-94, 88.105-94, and as published in the Federal Register of September 30, 1994; and (C) vehicles certified to the inherently low-emission vehicle standards under 40 CFR, Section 88.311-93 as published in the Federal Register, March 1, 1993, will also be considered clean-fuel vehicles. Control- (A) When it is used to join all entities under common management, means any one or a combination of the following: (i) a third person or firm has equity ownership of 51 percent or more in each of two or more firms; (ii) two or more firms have common corporate officers, in whole or in substantial part, who are responsible for the day-to-day operation of the companies; (iii) one firm leases, operates, supervises, or in 51 percent or greater part owns equipment and/or facilities used by another person or firm, or has equity ownership of 51% or more of another firm. (B) When it is used to refer to the management of vehicles, means a person has the authority to decide who can operate a particular vehicle, and the purposes for which the vehicle can be operated. (C) When it is used to refer to the management of people, means a person has the authority to direct the activities of another person or employee in a precise situation, such as the workplace. Conventional vehicle-A vehicle which meets all applicable federal emission standards in place at the time of manufacture but is not certified as a clean- fuel vehicle. Dallas/Fort Worth nonattainment area-Collin, Dallas, Denton, and Tarrant Counties. Dual-fuel vehicle-Any motor vehicle or motor vehicle engine engineered and designed to be operated on two different fuels, but not a mixture of the two. El Paso nonattainment area-El Paso County. Emergency vehicle-A vehicle defined as an authorized emergency vehicle according to Texas Transportation Code, Section 541.201 (1). Emissions-The emissions of oxides of nitrogen, volatile organic compounds, carbon monoxide, particulates, or any combination of these substances. Fleet-all vehicles that are owned, operated, or controlled by an affected entity and are registered under the Texas Transportation Code, sec.502.002 and operated primarily within any one nonattainment area. Fleet vehicle-A vehicle required to be registered under the Texas Transportation Code, Section 502.002, and that is centrally fueled, capable of being centrally fueled, or fueled at facilities serving both business customers and the general public. The term does not include: (A) a fleet vehicle that, when not in use, is normally parked at the residence of the individual who usually operates it and that is available to such individual for personal use; (B) a fleet vehicle that, when not in use, is normally parked at the residence of the individual who usually operates it and who does not report to a central location; or (C) a fleet vehicle that has a gross vehicle weight rating (GVWR) greater than 26,000 pounds except vehicles owned or operated by mass transit authorities. Gross vehicle weight rating-The value specified by the manufacturer as the maximum design loaded weight of a vehicle. This is the weight as expressed on the vehicle's registration, and includes the weight the vehicle can carry or draw. Heavy-duty vehicle-Any passenger vehicle or truck capable of transporting people, equipment, or cargo, that has a GVWR greater than 8,500 lbs., and is required to be registered under the Texas Transportation Code, Section 502.002. For purposes of the Mobile Emission Reduction Credit (MERC) trading program the heavy-duty class is divided into the following subclasses: (A) Light heavy-duty vehicle - Any passenger vehicle or truck capable of transporting people, equipment, or cargo that has a GVWR greater than 8,500 lbs. but less than or equal to 10,000 lbs. (B) Medium heavy-duty vehicle - Any passenger vehicle or truck capable of transporting people, equipment, or cargo that has a GVWR greater than 10,000 lbs. but less than or equal to 19,500 lbs. (C) Heavy heavy-duty vehicle - Any passenger vehicle or truck capable of transporting people, equipment, or cargo that has a GVWR greater than 19,500 lbs. Houston/Galveston nonattainment area-Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller Counties. Inherently low emission vehicle-A vehicle as defined by 40 CFR, Part 88. Law enforcement vehicle-Any vehicle controlled by a local government and primarily operated by a civilian or military police officer or sheriff, or by state highway patrols, or other similar law enforcement agencies, and which is used for the purpose of law enforcement activities including, but not limited to, chase, apprehension, surveillance, or patrol of people engaged in or potentially engaged in unlawful activities. Lessor-A person who leases or rents vehicles to other entities for the purpose of short-term rental or a extended term leasing (with or without maintenance), without a driver, under a contract. Fleets that are owned, operated, or controlled by lessors for operations other than lease or rental to other entities may be subject to the requirements of this chapter. Light-duty vehicle-Any passenger vehicle or truck capable of transporting people, equipment, or cargo, that has a GVWR less than or equal to 8,500 lbs, and required to be registered under the Texas Transportation Code, Section 502.002. For purposes of the MERC trading program the light-duty class is divided into the following subclasses: (A) Light-duty vehicle - Any passenger vehicle capable of seating 12 or fewer passengers that has a GVWR less than or equal to 6,000 lbs. (B) Light-duty truck 1 - Any passenger truck capable of transporting people, equipment or cargo, that has a GVWR less than or equal to 6,000 lbs. (C) Light-duty truck 2 - Any passenger truck capable of transporting people, equipment or cargo, that has a GVWR greater than 6,000 lbs. but less than 8,500 lbs. Local government-A city, county, municipality, or political subdivision of a state. This term does not include school districts. Low emission vehicle-A vehicle as defined by 40 CFR, Part 88. Mass transit authority-A transportation or transit authority or department established under Chapter 141, Acts of the 63rd Legislature, Regular Session, 1973 as defined in the Texas Transportation Code, Chapters 451 (Metropolitan Rapid Transit Authorities), 452 (Regional Transportation Authorities), and 453 (Municipal Transportation Authorities), that operates a mass transit system under any of those laws. Mobile emission reduction credit-The credit obtained from an enforceable, permanent, quantifiable, and surplus (to other federal and state regulations) emission reduction generated by a mobile source as set forth in sec.114.39 and sec.114.40 of this title (relating to Mobile Emission Reduction Credit Program, and The Texas Mobile Emission Reduction Credit Fund) and which has been banked in accordance with sec.101.29 of this title (relating to Emissions Banking). Non-road vehicle-A vehicle which is not registered under the Texas Transportation Code, Section 502.002. Operate-Use of a vehicle on any public road. Operates Primarily-Use of a fleet in any one affected nonattainment area more than 50% of the average annual vehicle miles traveled or operating time as documented by the affected entity from July 1, through June 30th of each year. Own-Having legal title to a vehicle. Private person-Any individual, partnership, firm, company, business trust, corporation, organization, or association which owns, operates, or controls a fleet. Program compliance credits-Credits that may be granted to a vehicle owner/operator who exceeds the clean-fuel vehicle provisions and requirements of this chapter. Public works agency-A governmental body established by the legislative branch, including municipalities and counties acting by ordinance, charged with administrating the construction and maintenance of improvements constructed with public funds for public use, protection, or enjoyment, and those who oversee provision of public services. Tier I federal emission standards-The standards are defined in the Federal Clean Air Act as amended in Section 202, USC Title 42 Section 7521, and in 40 CFR, Part 86. The phase-in of these standards began in model year 1994. Ultra low emission vehicle-A vehicle as defined by 40 CFR, Part 88. Vehicle-A self propelled device designed to operate with four or more wheels in contact with the ground, in or by which a person or property is or may be transported, and which is registered under the Texas Transportation Code, Section 502.002. Zero emission vehicle-A vehicle as defined 40 by CFR, Part 88. sec.114.31. Requirements for Mass Transit Authorities. (a) Mass Transit authorities as defined by sec.114.30 of this title (relating to Definitions) that own, operate, or control vehicles in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston non-attainment areas are subject to the clean-fuel vehicle provisions and requirements of this chapter. (b) Mass transit authorities must ensure that at least 50% of their fleet vehicles are clean-fuel vehicles by September 1, 1996. (c) Program Compliance Credits (PCCs) or Mobile Emission Reduction Credit (MERCs) under sec.sec.114.38, 114.39, or 114.40 of this title (relating to Program Compliance Credits; Mobile Emission Reduction Credit Program; and The Texas Mobile Emission Reduction Credit Fund) may be used to meet the percentage requirements of subsection (b) of this section. (d) The acquisition of qualifying clean-fuel vehicles may qualify for both PCCs and MERCs, however only one type of credit may be used per vehicle. (e) The percentage requirements of subsection (b) of this section may be met by the dual-fuel conversion or capability of conventional gasoline-powered or diesel-powered vehicles to be certified as clean-fuel vehicles pursuant to the dual-fuel standards found in 40 Code of Federal Regulations, Part 88. (f) Vehicles converted, purchased, leased, or otherwise acquired before September 1, 1998 may be counted towards a mass transit authority's compliance with the percentage requirements of subsection (b) of this section, in accordance with sec.114.33 of this title (relating to Use of Certain Vehicles for Compliance). (g) Exceptions from the requirements of subsection (b) may be granted under sec.114.34 of this title (relating to Exceptions). (h) By September 30, of each year starting in 1996, mass transit authorities must submit annual reports as required under sec.114.36 of this title (relating to Reporting). (i) Mass transit authorities must maintain records under sec.114.37 of this title (relating to Record Keeping). (j) Mass transit authorities are eligible for MERCs under sec.114.39 or sec.114.40 of this title for the operation of light rail cars which have been demonstrated by the mass transit authority to have no direct emissions. sec.114.32. Requirements for Local Governments and Private Persons. (a) Local governments that own, operate, or control a fleet of more than 15 vehicles, excluding law enforcement and emergency vehicles, and private persons that own, operate, or control a fleet of more than 25 fleet vehicles, excluding emergency vehicles, are subject to the clean-fuel vehicle provisions and requirements of this chapter when operated primarily in the El Paso and Houston/Galveston non-attainment areas. (b) Beginning September 1, 1998, local governments and private persons, as specified by subsection (a) of this section, must ensure that their fleet vehicles are clean-fuel vehicles in accordance with the following schedule: (1) 30% of fleet vehicles purchased after September 1, 1998; or at least 10% of the fleet vehicles in the total fleet as of September 1, 1998; (2) 50% of fleet vehicles purchased after September 1, 2000; and at least 20% of the fleet vehicles in the total fleet as of September 1, 2000; and (3) 90% of fleet vehicles purchased after September 1, 2002; and at least 45% of the fleet vehicles in the total fleet as of September 1, 2002. (c) A local government or private person is not required to purchase clean-fuel vehicles if a proportion of 90% or more clean-fuel vehicles is maintained in their fleet. (d) Program Compliance Credits (PCCs) or Mobile Emission Reduction Credit (MERCs) under sec.sec.114.38, 114.39, or 114.40 of this title (relating to Program Compliance Credits; Mobile Emission Reduction Credit Program; and The Texas Mobile Emission Reduction Credit Fund) may be used to meet the percentage requirements of subsection (b) of this section. (e) The acquisition of qualifying clean-fuel vehicles may qualify for both PCCs and MERCs, however only one type of credit may be used per vehicle. (f) The percentage requirements of subsection (b) of this section may be met by dual-fuel conversion or capability of conventional gasoline-powered or diesel- powered vehicles to be certified as clean-fuel vehicles under the dual fuel standards found in 40 Code of Federal Regulations, Part 88. (g) Vehicles converted, purchased, leased, or otherwise acquired before September 1, 1998 may be counted towards a local governments or a private person's compliance with the percentage requirements of subsection (b) of this section in accordance with sec.114.33 of this title (relating to Use of Certain Vehicles for Compliance). (h) Exceptions from the requirements of subsection (b) of this section may be granted under sec.114.34 of this title (relating to Exceptions). (i) By September 1, 1997, or within 90 days of meeting the minimum fleet size where applicable, affected local governments and private persons specified under subsection (a) of this section must register with the executive director for identification and compliance tracking. Registration must include the submission of the following information: (1) the affected entity's name, mailing address, telephone and fax numbers; (2) the name, title, mailing address and telephone number of the specific person responsible for the affected fleet; and (3) the total number of vehicles owned, operated, or controlled, including non- covered and exempted vehicles. (j) Upon registration, the executive director will assign each fleet a unique identification number for data tracking purposes. (k) By September 1 of each year, starting in 1998, affected local governments and private persons must submit reports to the executive director, as required under sec.114.36 of this title (relating to Reporting). (l) Affected local governments and private persons must maintain records under sec.114.37 of this title (relating to Record Keeping). (m) The requirements sec.sec.114.30-114.40 of this title (relating to Definition; Requirements for Mass Transit Authorities; Requirements for Local Governments and Private Persons; Use of Certain Vehicles for Compliance; Exceptions; Exceptions for Certain Mass Transit Authorities; Reporting; Record Keeping; Program Compliance Credits; Mobile Emission Reduction Credit Program; and The Texas Mobile Emission Reduction Credit Fund) do not apply to lessors of vehicles with regard to vehicles they lease or rent to other entities. sec.114.33. Use of Certain Vehicles for Compliance. Vehicles converted, purchased, leased, or otherwise acquired before September 1, 1998, may be counted toward compliance with the applicable fleet percentage requirements of sec.114.31 or sec.114.32 of this title (relating to Requirements for Mass Transit Authorities, and Requirements for Local Governments and Private Persons) if the vehicles: (1) do not exceed 30% of an affected entity's fleet on September 1, 1998; (2) are capable of operating on one of the following fuels; (A) electricity; (B) ethanol, or ethanol/gasoline blends of 85% or greater ethanol; (C) liquefied petroleum gas, commonly referred to as propane; (D) methanol or methanol/gasoline blends of 85% or greater methanol; or (E) natural gas; and (3) meet at a minimum the following emission standards: (A) for light-duty vehicles, the federal Tier I emission standards under the Federal Clean Air Act as amended, Section 202, U.S.C. 42 Section 7521, and 40 Code of Federal Regulations, Part 86; or (B) for heavy-duty vehicles, the federal emission standards in place at the time of their manufacture. sec.114.34. Exceptions. (a) Exceptions from the applicable clean-fuel vehicle requirements of this chapter may be granted for a period of up to two years. Exceptions are based on the determination by the executive director that one of the following conditions exist: (1) A firm engaged in fixed price contracts with public works agencies can demonstrate that compliance with the requirements of clean-fuel vehicle provisions and requirements of this chapter would result in substantial economic harm to the firm under a contract entered into before September 1, 1997. The following documentation must be submitted to the executive director when applying for this exception: (A) copies of the relevant contracts; and (B) a demonstration of how and by what means the firm would be harmed by complying with the requirements of the clean-fuel vehicle provisions and requirements of this chapter. (2) The affected entity's vehicles will be operating primarily in an area that does not have or cannot reasonably be expected to establish adequate refueling for the operation of clean-fuel vehicles as required by the clean-fuel vehicle provisions and requirements of this chapter. The following information must be submitted to the executive director when applying for this exception: (A) the name of the county where the affected entity's fleet primarily operates; (B) the physical address of the nearest refueling station that provides fuels necessary for clean-fuel operation; and (C) a demonstration of the normal operating range of the affected entity's fleet sufficient for the executive director to determine that the fleet will be operating primarily in an area that does not have or cannot be reasonably expected to establish adequate refueling for the fleet's normal operational needs. (3) The affected entity is unable to secure financing provided by or arranged through the proposed supplier or suppliers of the fuel necessary for the operation of the clean-fuel vehicles required by the clean-fuel vehicle provisions and requirements of this chapter sufficient to cover the additional costs of such fueling. The following information must be submitted to the executive director when applying for this exception: (A) a description of the financing required by the affected entity; (B) a description of the financing offered by the proposed supplier(s) of the fuels necessary for the operation of clean-fuel vehicles; and (C) a demonstration of why the affected entity is unable to secure such financing as provided by the fuel supplier sufficient to cover the additional costs of fueling clean-fuel vehicles. (4) The projected net costs of the fueling, conversion or replacement, and operation of clean-fuel vehicles reasonably is expected to exceed comparable costs of the fueling, replacement, and operation of conventional vehicles when measured over the expected useful life of such vehicles and after including in such cost calculations any available state or federal funding or incentives for the use of fuels required to operate clean-fuel vehicles. The following information must be submitted to the executive director when applying for this exception: (A) types of vehicles needed; and (B) a demonstration of how the projected net costs of using clean-fuel vehicles exceeds the comparable costs of using conventional vehicles over the useful life of such vehicles, after the identification of any available state or federal funding or incentives for the use of fuels required to fuel clean-fuel vehicles. (b) Exception applications will be reviewed by the executive director in accordance with the following process and are subject to the following provisions: (1) Exception applications will be reviewed on a case by case basis; (2) All currently available vehicle/fuel configurations must be evaluated by the affected entity before an exception application will be reviewed; (3) The executive director may request additional information in order to evaluate an exception application; (4) Applications will be accepted by the executive director at any point within the 12 months preceding a compliance deadline, provided a current fleet report containing the information in sec.114.36 of this title (relating to Reporting) is also provided; (5) The affected entity receiving a notice of exception must maintain a copy of the notice on-site at the reported fleet address for the duration of the exception period and must make such copies available to the executive director or local air pollution control agencies upon request; (6) Affected entities who are operating under an exception may not trade or sell Program Compliance Credits or Mobile Emission Reduction Credits, or enter into a contract according to sec.sec.114.38, 114.39, or 114.40 of this title (relating to Program Compliance Credits; Mobile Emission Reduction Credit Program; and the Texas Mobile Emission Reduction Credit Fund), for the duration of the exception period; and (7) Affected entities will not be considered in violation of the applicable clean-fuel vehicle requirements of this chapter while an exception application is under review by the executive director, if the exception application has been submitted to the executive director before the applicable compliance date. sec.114.35. Exceptions for Certain Mass Transit Authorities. (a) This section applies only to a mass transit authority confirmed at a tax election before July 1, 1985, and in which the principal city has a population of less than 750,000, according to the most recent federal census. (b) The executive director may reduce any percentage specified by, or waive the requirements of, Texas Transportation Code, Section 451.301 for up to two years, for an authority on receipt of certification supported by evidence acceptable to the executive director that: (1) the authority's vehicles will be operating primarily in an area in which neither the authority nor a supplier has or can reasonably be expected to establish a central refueling station necessary for the operation of clean-fuel vehicles; or (2) the authority is unable to acquire or be provided equipment or refueling facilities necessary to operate clean-fuel vehicles at a projected cost that is reasonably expected to result in no greater net costs than the continued use of equipment or refueling facilities used to operate conventional vehicles, measured over the expected useful life of the equipment or facilities supplied. (c) Certification by the executive director that an authority covered by Texas Transportation Code, Section 451.301, is unable to comply is accomplished through development of a proposal to be submitted to the executive director. The proposal must: (1) contain an alternative implementation schedule for meeting the percentage requirements of Texas Transportation Code, Section 451.301; and (2) have been the subject of a public meeting held to discuss the authority's inability to comply with Texas Transportation Code, Section 451.301, and the alternative implementation schedule. sec.114.36. Reporting. (a) Affected entities must submit annual fleet reports to the executive director. The report must contain, at a minimum: (1) the fleet identification number (when assigned); (2) the total number of vehicles registered according to the Texas Transportation Code, sec.502.002; (3) the total number of fleet vehicles registered according to the Texas Transportation Code, sec.502.002; (4) vehicle license numbers, model years, manufacturers, model types, vehicle identification numbers, gross vehicle weight rating, fuel type(s) and certified emission standards of each vehicle being used for compliance with the requirements of sec.114.31 or sec.114.32 of this title (relating to Requirements for Mass Transit Authorities and Requirements for Local Governments and Private Persons); (5) an estimate of the annual vehicle miles traveled (VMT) for each clean-fuel vehicle; (6) if the vehicle is a dual-fuel vehicle, documentation demonstrating the percentages of the vehicle's operation on each fuel, as documented by the VMT operated on each fuel; and (7) a demonstration of compliance with the applicable implementation schedule. (b) Affected entities may submit the information required in section (a) of this section for all vehicles in their fleet. sec.114.37. Record Keeping. Affected entities must maintain copies of the reports required by sec.114.36 of this title (relating to Reporting) on-site at the reported fleet address for a minimum of three years and shall make such reports available to the executive director or local air pollution control agencies having jurisdiction in the area upon request. sec.114.38. Program Compliance Credits (a) Program Compliance Credits (PCCs) may be awarded only to affected entities for any of the following, or any combination thereof: (1) The acquisition of a clean-fuel vehicle which is certified to a more stringent emission standard than the low emission vehicle (LEV) standards, which include; (A) ultra low emission vehicle (ULEV) certified clean-fuel vehicles; (B) inherently low emission vehicle (ILEV) certified clean-fuel vehicles; or (C) zero emission vehicle (ZEV) certified clean-fuel vehicles. (2) The acquisition of clean-fuel vehicles in greater numbers than otherwise required under sec.114.31 or sec.114.32 of this title (relating to Requirements for Mass Transit Authorities and Requirements for Local Governments and Private Persons); (3) The acquisition of clean-fuel vehicles in a category not otherwise required under sec.114.31 or sec.114.32 of this title; or (4) The acquisition of a clean-fuel vehicle before the dates required under sec.114.31 or 114.32 of this title. (b) PCCs will be awarded in two-year increments from 1998 until 2002. After 2002, credits will be awarded according to the estimated remaining useful life of the vehicle. (c) PCCs may be used to demonstrate compliance with clean-fuel vehicle provisions and requirements of this chapter, or may be banked for later use, or they may be traded, sold, or purchased, for use by any other person in the same nonattainment area, to demonstrate compliance with the clean-fuel vehicle provisions and requirements of this chapter. (d) PCCs have the following values: (1) LEV - one credit; (2) ULEV - two credits; and (3) ILEV and ZEV - three credits. (e) Affected entities proposing to generate PCCs under this chapter may apply at any time to the executive director. A current fleet report containing the information in sec.114.36 of this title (relating to Reporting) must accompany the application. Affected entities may also indicate their desire to obtain PCCs concurrent with fleet registration or annual reporting. The submission of additional vehicle or fleet information may be required. (f) PCCs will be banked with the Mobile Source Division. (g) Upon verification by the executive director: (1) each fleet will be issued a certificate where applicable; and (2) a total credit summary sheet will be issued to the fleet. sec.114.39. Mobile Emission Reduction Credit Program. (a) Mobile Emission Reduction Credits (MERCs) will be based on the difference between the emissions from the clean-fuel vehicle and the conventional vehicle, and will be awarded to affected entities and to individuals located within the state's nonattainment areas for any of the following, or combination thereof: (1) The acquisition of a clean-fuel vehicle which is certified to a more stringent emission standard than the low emission vehicle (LEV) standards, which include: (A) ultra-low emission vehicle certified clean-fuel vehicles, (B) inherently low emission vehicle certified clean-fuel vehicles, and (C) zero emission vehicle certified clean-fuel vehicles; or (2) The acquisition of clean-fuel vehicles in greater numbers than otherwise required under sec.114.31 or sec.114.32 of this title (relating to Requirements for Mass Transit Authorities, and Requirements for Local Governments and Private Persons); (3) The acquisition of clean-fuel vehicles in a category not required under sec.114.31 or sec.114.32 of this title; or (4) The acquisition of clean-fuel vehicles before the dates under sec.114.31 or sec.114.32 of this title. (b) MERCs may be: (1) used to demonstrate compliance with the clean-fuel vehicle provisions and requirements of this chapter or any other mobile source program that has marketable credits; (2) banked for later use; or (3) traded, sold, or purchased for use by any other person in the same nonattainment area to demonstrate compliance with the clean-fuel vehicle provisions and requirements of this chapter. (c) The following restrictions apply to the trading or purchasing of fleet to fleet MERCs: (1) Trades are restricted to the nonattainment area in which they are generated; (2) Light-duty vehicle MERCs are restricted to trading within the light-duty class; and (3) Heavy-duty vehicle MERCs may be traded within their specific subclass or from a heavier vehicle to a lighter vehicle (downward trading) within the heavy- duty class. (d) For fleet to fleet trading or demonstration of compliance, MERCs will be quantified in terms of fleet to fleet credits using the following equation: Figure 1: 30 TAC sec.114.39(d) (e) For trades to stationary sources, the following methodology is used for the calculation of MERCs for volatile organic compounds (VOCs) or oxides of nitrogen (NOx) trades: Figure 2: 30 TAC sec.114.39(e) (f) In order for credits to be certified as tradable for stationary sources, fleets must have a minimum of 1 ton per year reduction of VOCs or NOx. Affected entities may aggregate VOCs or NOx MERCs generated under this section in order to make the minimum one ton of emission reductions for trades to stationary sources. (g) In order to apply for a MERC, an affected entity or individual must submit the following information to the executive director: (1) the certified emission standard of the vehicle for which the affected entity or individual wishes to make an application for credit; (2) the annual VMT traveled by the vehicle; (3) the amount of time in years this vehicle is expected to be in service; and (4) a current fleet report containing the information in sec.114.36 of this title (relating to Reporting). The submission of additional vehicle or fleet information may be required at this time. (h) MERCs for trading between fleets will be banked with the Mobile Source Division. (i) MERCs for trading between fleets and stationary sources will be banked with the Emissions Bank. (j) Upon certification by the executive director, each vehicle will be issued a certificate indicating, where applicable: (1) the standard to which the vehicle is certified; (2) the weight class of the vehicle; (3) the amount of emissions reduced per year in tons; (4) the number of years the emission reductions will be credited; and (5) the number of light-duty or heavy-duty vehicle fleet to fleet MERCs. (k) A total emissions credit summary sheet will be issued to the fleet upon issuance of any MERC certificate. (l) MERCs will be awarded in two-year increments for the period of 1998 through 2002. After 2002, MERCs will be awarded according to the expected remaining useful life of the vehicle. (m) The following are considered violations of the Texas Mobile Emission Reduction Credit Program: (1) claiming a MERC without meeting the appropriate acquisition requirements; (2) submission of false date as information requested by commission rules; or (3) counterfeiting or dealing commercially in counterfeit MERC certificates. (n) Any person found to be in violation of the Texas Mobile Emission Reduction Credit Program is subject to a civil penalty of not more than $25,000 per violation. sec.114.40. The Texas Mobile Emission Reduction Credit Fund. (a) Mobile emission reduction credits may be assigned through the Texas Mobile Emission Reduction Credit Trading Fund as established by this section to affected entities provided: (1) the affected entity enters into a binding contract with the commission, agreeing to purchase and place in service in designated program areas clean-fuel vehicles in accordance with the number of credits issued and the time frame specified by the commission; and (2) the affected entity agrees to name the United States Environmental Protection Agency as a third-party beneficiary of its contract with the commission. (b) Contracts entered into under this section may be enforced in the courts of the State of Texas by an order of specific performance. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610814 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: August 16, 1996 Proposal publication date: May 7, 1996 For further information, please call: (512) 239-1970 30 TAC sec.114.21 The Texas Natural Resource Conservation Commission (commission) adopts the repeal of sec.114.21, concerning the Employer Trip Reduction (ETR) program, and the removal of the ETR provisions from the State Implementation Plan (SIP). This action removes a regulation no longer required due to an amendment to the Federal Clean Air Act (FCAA). The repeal is adopted without changes to the proposed text, as published in the April 12, 1996, issue of the Texas Register (21 TexReg 3147). The ETR program requirement was established in the FCAA Amendments of 1990 (sec.182(d)(1)(B)). Congress amended the FCAA in December of 1995 by passing House Rule (H.R.) 325. This amendment made the ETR program optional for states. As a result, the commission has removed the ETR program from the SIP and repealed the rule. As such, large employers in the Houston/Galveston nonattainment area will no longer have to implement trip reduction programs. The Houston-Galveston Area Council (HGAC) will, however, implement a voluntary initiative to reduce vehicle trips in the Houston/Galveston area. Public hearings were held in Beaumont on May 6, 1996; in Houston on May 7, 1996; in El Paso on May 8, 1996; and in Irving on May 9, 1996. A total of three persons provided testimony. The United States Environmental Protection Agency (EPA) requested modifications be made to the language in the SIP. The League of Women Voters of Texas (LWV) and an individual were against the repeal. The EPA recommended that in the section of the SIP on the ETR program, where reference is made to the recent federal legislation (H.R. 325) making ETR programs optional for states, the exact wording of the statute be used. Staff agrees. The wording has been revised as recommended. The EPA commented that the section of the SIP on ETR should include the substitute measure being used to make up the credit lost due to the cancellation of this program. The state is in the process of determining the substitute measure to be used to offset the 1.81 tons/day attributed to the ETR program. This issue will not be resolved in sufficient time to meet the approval process deadlines established for this SIP revision. The state intends to provide this information to the EPA Administrator via the letter required by H.R. 325, requesting that the ETR provisions be removed from the SIP. The LWV and one individual expressed concern about making the ETR program voluntary. Concern was expressed that a mandatory program was needed to provide the incentive for people to reduce vehicle trips and provide the necessary emission reductions. The HGAC is actively developing and implementing a voluntary commute options program for the area, known as the Regional Commute Alternatives Program (RCAP). A public outreach effort is one of the major elements of this program and will provide continued emphasis on improving public awareness about what alternative commute options are available and the importance of using them. As a regional initiative, and because it is voluntary in nature, the program can realize several advantages over the previously mandated ETR program. For example, emphasis can now be placed on alternative commute options for any trips, regardless of who is driving, what the trip is for, or when it occurs. Additionally, the cost of participation will be minimal because organizations may now adapt their efforts to what best suits their needs, while taking advantage of the RCAP program. One individual commented that the exact emission reductions associated with the voluntary trip reduction program, RCAP, were not identified in the SIP. RCAP is currently in development and not fully implemented. As a new voluntary program, exact levels of participation cannot be forecast. With this in mind, and there being no associated historical data to work with, actual emission reductions would be difficult to determine. Furthermore, SIP credits may only be claimed for programs that are enforceable. Thus, there is no requirement to identify emission reductions from this program in the SIP. The repeal is adopted under the Texas Health and Safety Code (Vernon 1992), the Texas Clean Air Act (TCAA), sec.382.017, which provides the commission with the authority to adopt rules consistent with the policy and purposes of the TCAA. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610812 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: August 16, 1996 Proposal publication date: April 12, 1996 For further information, please call: (512) 239-1970 CHAPTER 115.Control of Air Pollution from Volatile Organic Compounds SUBCHAPTER C.Volatile Organic Compound Transfer Operations Loading and Unloading of Volatile Organic Compounds 30 TAB sec.115.214, sec.115.216 The commission adopts amendments to sec.115.214 and sec.115.216, concerning Loading and Unloading of Volatile Organic Compounds (VOC), with changes to the proposal as published in the April 26, 1996, issue of the Texas Register (21 TexReg 3595). The amendment to sec.115.214, concerning Inspection Requirements, removes the requirement to comply with the fugitive emissions monitoring requirements of sec.sec.115.352-115.357 and 115.359, and substitutes a requirement for an audio- visual-olfactory (AVO) walkthrough monitoring program for control of equipment leaks at gasoline terminals. The amendment to sec.115.216, concerning Monitoring and Recordkeeping Requirements, replaces the reporting and recordkeeping requirements applicable to sec.sec.115.352-115.357 and 115.359 with reporting and recordkeeping requirements for an AVO program. These revisions are in response to a petition for rulemaking, received by the agency on February 15, 1996. The Federal Clean Air Act (FCAA) requires states to adopt a Rate-of-Progress (ROP) State Implementation Plan (SIP) which achieves by November 15, 1996, in each moderate and above ozone nonattainment area, a 15% net-of-growth reduction in the VOC emissions level. The requirement for gasoline terminals to meet the fugitive emissions monitoring requirements of sec.sec.115.352-115.357 and 115.359, part of the 15% ROP SIP for the Houston/Galveston, Dallas/Fort Worth, and El Paso ozone nonattainment areas, was adopted by the commission in May, 1994. The commission originally added the instrument inspection requirement because, at the time, gasoline terminals were characterized by the same equipment leak emission factors as refineries. It was believed that an extension of the fugitive monitoring rule (which applies to refineries) to gasoline terminals would produce meaningful additional emission reductions that could be credited towards the 15% ROP requirements. During the development of the federal Maximum Achievable Control Technology (MACT) standards for gasoline terminals (promulgated December 14, 1994; 59 FR 64303), the United States Environmental Protection Agency (EPA) revised the requirement for control of equipment leak fugitives from a quarterly instrument monitoring program to a monthly AVO program. The EPA relaxed the requirement in response to data submitted by the American Petroleum Institute (API) which showed that: 1) emission factors for gasoline terminals using an AVO monitoring program are over 99% lower than the 1980 AP-42 refinery equipment emission factors that the EPA had used for the development of the proposed MACT standard, and 2) gasoline terminals that implemented an AVO program achieved essentially equivalent emission reductions as those terminals that used an instrument monitoring program. The revision of sec.115.214(a)(5) removes the requirement for an instrument leak detection and repair program for the control of equipment leaks at gasoline terminals and replaces it with a requirement for an AVO inspection program. The revision will allow up to 15 days for repair of a leaking component. In addition, a minor revision to sec.115.214(a)(4)(E) corrects a rule reference. The revision of sec.115.216(a)(7) replaces the reporting and recordkeeping requirements applicable to sec.sec.115.352-115.357 and 115.359 with reporting and recordkeeping requirements for an AVO program. The revisions of sec.115.214(a)(5) and sec.115.216(a)(7) make the Chapter 115 fugitive component monitoring requirements for gasoline terminals more consistent with the recently adopted federal MACT standards for gasoline terminals, the New Source Performance Standards (NSPS) for gasoline terminals, and allow for cost-effective implementation of this rule. The staff's Takings Impact Assessment for these rules has concluded that promulgation and enforcement of this rule as amended will be less burdensome on regulated entities than existing requirements and will not affect private real property, and, therefore, does not constitute a taking. A public hearing was held May 28, 1996, in Austin. The comment period closed on June 7, 1996. Six commenters submitted testimony on sec.115.214 and sec.115.216. Texas Mid- Continent Oil & Gas Association (TMOGA), Exxon Company, USA (Exxon), Citgo Petroleum Corporation (Citgo), Harris County Pollution Control Department (HCPCD), and EPA generally supported the proposed revisions but suggested changes or clarifications. One individual opposed the proposed revision. TMOGA, Citgo, and Exxon suggested that the revision allow gasoline terminal owners or operators to delay repair or replacement of a leaking component beyond the 15 day limit if repair or replacement would require a unit shutdown. They requested that repair or replacement of these leaking components be allowed to be delayed until the next scheduled shutdown. The commenters also suggested that the proposed recordkeeping requirement be modified to incorporate this shutdown provision. The commenters stated that without these changes, the proposed revision is inconsistent with the federal MACT and NSPS, and more stringent than the agency permitting guidelines for gasoline terminals. The intent of the proposed language was to allow for repairs delayed beyond 15 days. This provision was addressed in the recordkeeping section, sec.115.216(a)(7)(E), which requires an explanation for those instances in which a repair must be delayed beyond 15 days. This language was taken from, and is therefore consistent with, the federal NSPS. In order to clarify that the revision does in fact allow for a shutdown provision, the commission has incorporated the language found in the agency permitting guidelines, as suggested by the commenters. EPA commented on the phrase "sight, sound or smell", suggesting that the word "or" be replaced with the word "and." EPA also suggested that the commission add the wording to state that: "each piece of equipment shall be inspected during the loading of gasoline trucks." These changes are consistent with the MACT standard for gasoline terminals and have been made. EPA also requested the commission address whether the new fugitive emission information should be addressed in the Emission Inventory and the reductions shown in the 15% plan. The agency guidance to companies submitting 1990 emissions inventories was to use the AP-42 refinery fugitive emission factors for estimating fugitive emissions from gasoline marketing terminals. This guidance was based on the best information available at the time. The new emission factor information became available in February 1995. It is not practical to revisit the 1990 emissions inventory every time better information becomes available. The agency practice is to incorporate better emission factor data by asking companies required to submit annual inventories to use current AP-42 emission information. With point sources, the reported emission data is a function of emission factors, activity level, and control strategies. It would be inaccurate for the agency to revise the inventory across the board to reflect the 1995 factor without verifying the methods of calculation for each account. Revisiting each company's calculations would not be practical at this time. The control efficiency in the 15% SIP does not change since, for gasoline terminals, an AVO program has been demonstrated to yield emission reductions equivalent to an instrument monitoring program. HCPCD commented that they have no objection to the revision as long as the emission credits are equivalent to those allowed by the current method in the 15% ROP SIP. They also suggested that the revision include a requirement for a directed maintenance program along with the AVO procedure, and that the period required for repair be shortened from 15 days to a requirement for immediate repair when practicable. The credit taken in the 15% SIP, as a result of the new rule, is not expected to change, since for gasoline terminals, an AVO program has been demonstrated to yield emission reductions equivalent to an instrument monitoring program. The Chapter 115 rule is being revised in order to be more consistent with the federal standards as well as the agency permitting guidelines. A specification for directed maintenance or for repair within a less than 15 day period would be inconsistent with these other requirements. An individual opposed the revision, and commented that an AVO program is less effective than an instrument monitoring program - both for locating leaks and for assessing the success of a repair. The commenter stated that the revision gives no guidance on repair of leaking components. The commenter asked that the commission define the term "essentially equivalent emission reductions," as used to describe the comparison of terminals using an instrument monitoring program to those using an AVO program. Finally, the commenter expressed the opinion that the commission is weakening the current rule by allowing emission reductions equivalent to those resulting from an instrument monitoring program, in order to claim additional SIP credit for terminals that do implement an instrument program. The API data, submitted to and accepted by EPA and used in the agency permitting guidelines, showed that AVO and instrument leak detection and repair fugitive monitoring programs achieve essentially equivalent emission reductions for gasoline terminals. "Essentially equivalent" refers to the API study's conclusion that there was no statistically significant difference in the leak rates found between terminals using either program. The Chapter 115 revision gives guidance on repair of leaking components. Section 115.214 requires that leaking components be repaired or replaced within 15 days or at the next scheduled shutdown if necessary. In response to the individual's last comment, no additional SIP credit can be claimed for terminals that implement an instrument monitoring program. The data shows the emission reductions from an instrument program are equivalent to, not in excess of, those resulting from an AVO program. The amendments are adopted under the Texas Health and Safety Code (Vernon 1992), the Texas Clean Air Act (TCAA), sec.382.017, which provides the commission with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.214.Inspection Requirements. (a) For all persons in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas, the following inspection requirements shall apply. (1)- (3) (No change.) (4) After November 15, 1996 for marine terminals in the Houston/Galveston area, the following inspection requirements shall apply. (A)-(D) (No change.) (E) All shore-based equipment is subject to the fugitive emissions monitoring requirements of sec.sec.115.352-115.357 and 115.359 of this title (relating to Fugitive Emission Control in Petroleum Refining and Petrochemical Processes). For the purposes of this paragraph, shore-based equipment includes, but is not limited to, all equipment such as loading arms, pumps, meters, shutoff valves, relief valves, and other piping and valves between the marine loading facility and the vapor recovery system and between the marine loading facility and the associated land-based storage tanks, excluding working emissions from the storage tanks. (5) After November 15, 1996, each gasoline terminal, as defined in sec.115.10 of this title, in the Dallas/Fort Worth, El Paso, and Houston/Galveston areas shall perform a monthly leak inspection of all equipment in gasoline service. Each piece of equipment shall be inspected during the loading of gasoline tank trucks. For this inspection, detection methods incorporating sight, sound, and smell are acceptable. Alternatively, gasoline terminals may use a hydrocarbon gas analyzer for the detection of leaks, by meeting the requirements of sec.sec.115.352-115.357 and 115.359 of this title. Every reasonable effort shall be made to repair or replace a leaking component within 15 days after a leak is found. If the repair or replacement of a leaking component would require a unit shutdown, the repair may be delayed until the next scheduled shutdown. (b) (No change.) sec.115.216.Monitoring and Recordkeeping Requirements. (a) For volatile organic compound (VOC) loading or unloading operations in the Beaumont/Port Arthur, Dallas/Fort Worth, El Paso, and Houston/Galveston areas affected by sec.115.211(a) or sec.115.212(a) of this title (relating to Emission Specifications; and Control Requirements), the owner or operator shall maintain the following information at the plant as defined by its Texas Natural Resource Conservation Commission air quality account number for at least two years and shall make such information available upon request to representatives of the commission, United States Environmental Protection Agency (EPA), or any local air pollution control agency having jurisdiction in the area: (1)-(6) (No change.) (7) For gasoline terminals in the Dallas/Fort Worth, El Paso, and Houston/Galveston areas, records of the results of the required fugitive monitoring and maintenance program, as specified in sec.115.214(a)(5) of this title, shall be maintained at the plant site for two years, and shall include the following: (A) a description of the types, identification numbers, and locations of all equipment in gasoline service; (B) the date of each monthly inspection; (C) the results of each inspection; (D) the location, nature, severity, and method of detection for each leak; (E) the date each leak is repaired and explanation if repair is delayed beyond 15 days; (F) a list identifying those leaking components which cannot be repaired or replaced until a scheduled unit shutdown; and (G) the inspector's name and signature. (8) (No change.) (b) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610816 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: August 16, 1996 Proposal publication date: April 26, 1996 For further information, please call: (512) 239-1970 SUBCHAPTER G.Consumer-Related Sources Consumer Products 30 TAC sec.115.616 The Texas Natural Resource Conservation Commission (commission) adopts an amendment to Subchapter G (Consumer-Related Sources; Consumer Products), sec.115.616, concerning Recordkeeping and Reporting Requirements. The amendment is adopted with changes to the proposed text as published in the May 7, 1996, Texas Register (21 TexReg 3908). Chapter 115, Subchapter G ("consumer products rule") establishes volatile organic compound (VOC) limitations, applicable statewide, for 24 categories of consumer products such as household cleaners, hairsprays, deodorants, and windshield washer fluid. Prior to this adoption, sec.115.616(a) of the consumer products rule required that each consumer product container or package display the day, month, and year of manufacture, or a code indicating that date, if it is manufactured after January 1, 1995. As an alternative to the product dating requirement, the current adoption allows manufacturers of regulated consumer products to display information on the product container or package, stating that the product was manufactured after the rule's applicable compliance date. The amendment offer additional flexibility and cost savings to regulated industries, particularly small businesses which might not otherwise provide date stamping, without affecting the agency's ability to effectively enforce the rule. The commission has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code Annotated, Section 2007.043. The following is a summary of that assessment. The specific purpose of the rule amendment is to provide an alternative method of complying with the rule's date stamping requirement. The rule amendment will substantially advance this specific purpose by allowing certain identifying information to be displayed on the package container or label. Promulgation and enforcement of the rule amendment will not affect private real property which is the subject of the rule because the change is only to provide an alternative method of rule compliance. A public hearing on this proposal was held May 28, 1996, at the commission's Austin offices. Written comments were received from the Chemical Specialties Manufacturers Association (CSMA), the International Sanitary Supply Association (ISSA), and an individual in support of the proposed amendment; and from the United States Environmental Protection Agency (EPA) Region 6 Dallas office in general support of the amendment. An individual expressed support for the rule amendment, since they would make enforcement easier. The CSMA supported the rule amendment, stating that they balanced regulatory and industry needs while maintaining flexibility. The ISSA also supported the amendment, citing cost savings to small businesses, facilitation of interstate marketing of consumer products, and no hindrance to state enforcement capabilities. The commission acknowledges support for the amendment. The EPA suggested revising the rule to simply allow a statement on the product package or label identifying the product's allowable VOC limitation. The EPA stated that modifying the rule in this manner would eliminate the need for case- by-case executive director approval, simplify application and enforcement of the rule, and provide useful information to the consumer. The staff supports the EPA's intent to further streamline the rule, thus retaining flexibility while eliminating the need for executive director approval. In the interests of simplifying rule application, slightly different rule language has been added to allow, as an alternative to date stamping or coding, a statement that the product was manufactured after the applicable compliance date. This approach still provides the agency with necessary information for enforcement purposes, with the added advantage that it parallels the former requirement to display the date of manufacture or a code indicating that date. The amendment is adopted under the Texas Health and Safety Code (Vernon 1992), the Texas Clean Air Act (TCAA), sec.382.017, which provides the commission with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.115.616.Recordkeeping and Reporting Requirements. (a) Each manufacturer of a consumer product subject to sec.115.612 of this title (relating to Control Requirements) shall clearly display on each container or package for any consumer product regulated under this subchapter, and manufactured after January 1, 1995, one of the following: (1) the day, month, and year on which the product was manufactured; (2) a code indicating such date; or (3) a statement that the product was manufactured after a certain day, month, and year which is later than January 1, 1996. (b)-(d) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610815 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: August 16, 1996 Proposal publication date: May 7, 1996 For further information, please call: (512) 239-1970 CHAPTER 117.Control of Air Pollution From Nitrogen Compounds SUBCHAPTER D.Administrative Provisions 30 TAC sec.117.540 The commission adopts amendments to sec.117.540, concerning Phased Reasonably Available Control Technology. The amendments are adopted with changes to the proposed text as published in the May 14, 1996 Texas Register (21 TexReg 4213). Chapter 117 was originally adopted in May, 1993 in response to a requirement by the United States Environmental Protection Agency (EPA) and the 1990 Federal Clean Air Act (FCAA) Amendments for states to apply reasonably available control technology (RACT) requirements to major sources of nitrogen oxides (NOx). Section 117.540 provides a mechanism for affected companies to petition the agency for additional time to comply with Chapter 117 requirements. Chapter 117 applies in the following counties designated nonattainment for ozone: Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, and Waller (Houston/Galveston (HGA) ozone nonattainment area) and Hardin, Jefferson, and Orange (Beaumont/Port Arthur (BPA) ozone nonattainment area). In addition, the 1990 FCAA amendments require states to either adopt the Federal Clean Fuel Fleet program, or implement a program which demonstrates equivalent emission reductions to the federal program. In 1995 the 74th Texas Legislature, through the passage of Senate Bill (SB) 200, amended the requirements of the Texas Clean Air Act (TCAA), Chapter 382, Subchapter F, Health and Safety Code, affecting the state's alternative fuels program. This legislation directs the commission to adopt rules to implement the requirements of the statute. The current amendments are adopted, as required by SB 200, to implement an economic incentive program to help reduce vehicle emissions and provide flexibility for fleet operators. The amendments to sec.117.540 update references to the Chapter 117 final compliance date to May 31, 1999, and correspondingly adjust all intermediate deadlines. Previously, sec.117.540(a)(7) allowed an appeal of the executive director's decision to the commission under the appeals process of Chapter 103. That chapter has been repealed, effective July, 1994. However, under new Chapter 50, relating to Action on Applications, effective June 6, 1996, the executive director may act on certain actions delegated to him by the commission. Section 50.39, regarding Motion for Reconsideration, allows persons to file with the commission a motion for reconsideration of the executive director's action. In lieu of the former appeals process, the current adoption incorporates the motion for reconsideration process from Chapter 50. Also, sec.117.540(b) is deleted because the staff's analysis of the initial control plans submitted in April, 1994 revealed that the scope of the rule requirements (only a small percentage of units would be required to retrofit with controls) was such that rule compliance was generally feasible in a two-year period. Section 117.540(c) is amended by adding language clarifying that MERCs referenced in this section are created from vehicle scrappage, and renumbering as sec.117.540(b). In addition, the amendments add new sec.117.540(c), allowing the use of clean-fuel vehicle mobile emission reduction credits (MERCs), as mandated by SB 200, to meet Chapter 117 requirements on an interim basis. A public hearing on this proposal was held June 11, 1996, at the commission's Austin offices. Written comments were received from an individual who opposed the proposed amendments, and from the EPA Region 6 Dallas office, which did not oppose the amendments [sub]x implementation schedule through phased RACT, and stated that NOtype- name="sub">x reductions should be achieved as soon as possible so that any additional reductions, if needed, can be obtained in time to achieve the ozone standard. Extensions under the phased RACT rule are available only when it can be documented that good faith efforts will not achieve rule compliance by the required date. The portion of RACT requirements that can be met by the compliance date must be implemented, and specific requirements must be met in order to qualify for an extension. If modeling determines that additional NOx reductions are needed to attain the ozone standard, the agency will refine the ozone control strategy and develop appropriate rules. An individual expressed opposition to the concept of MERCs, because allowing industry to continue to pollute instead of reducing emissions threatens public health and attainment of the ozone standard. [sub] x to purchase clean-fuel fleet MERCs to temporarily meet the requirements of Chapter 117. Since MERCs represent real reductions in NOx emissions, they are fundamentally no different from stationary source emission reduction credits (ERCs) already available for offsets and NOx RACT trading. The rule amendment merely allows a new type of credit generator to participate in the established emissions trading system. The commission does not agree with the commenter that this flexible approach to meeting rule requirements will endanger public health or air quality. The EPA Region 6 Office in Dallas stated that it does not oppose the amendments. The EPA further stated that it has not taken action on approval of Chapter 117 because of the temporary sec.182(f) exemption in effect for the HGA and BPA areas. Completion of the Urban Airshed Modeling using the Coastal Oxidant Assessment for Southeast Texas (COAST) data, currently scheduled for Spring of 1997, is expected to give a clear indication of the benefits of NOx controls in meeting the ozone standard in the HGA and BPA areas. With this and previous amendments to Chapter 117, the EPA has stated that it will postpone completeness review of Chapter 117 until the modeling results are available. The EPA noted that sec.117.540 does not require companies with approved phased RACT extensions to secure NOx ERCs for the extension period. The EPA inquired whether companies would obtain these credits in a good faith effort to comply with NOx RACT, in cases where financial considerations were not the justification for seeking an extended compliance schedule. Since there is no requirement in the rule for companies to purchase ERCs to cover an approved phased RACT extension period, such an action would be strictly voluntary. However, the option to use ERCs as a temporary compliance measure may be useful for sources whose phased RACT petitions do not meet rule criteria for approval. The commission has prepared a Takings Impact Assessment for these rules pursuant to Texas Government Code Annotated, sec.2007.043. The following is a summary of that assessment. The specific purpose of the rule amendments is to update a rule section with references to the new final compliance date, to delete obsolete rule language, and to provide additional flexibility in rule compliance through the use of clean-fuel vehicle MERCs. The rule amendments will substantially advance this specific purpose by changing dates where appropriate, deleting obsolete language, and adding provisions for the use of clean-fuel vehicle MERCs. Promulgation and enforcement of these rule amendments will not affect private real property which is the subject of the rule because the only change is to provide additional rule flexibility. The amendments are adopted under the Texas Health and Safety Code (Vernon 1992), the TCAA, sec.382.017, which provides the commission with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.117.540.Phased Reasonably Available Control Technology (RACT). (a) The owner or operator affected by the provisions of this chapter (relating to Control of Air Pollution from Nitrogen Compounds) who determines that compliance by May 31, 1999 is not practicable may submit a petition for phased RACT. The process for submitting a petition and receiving approval shall be based on the following: (1) The petition shall be submitted by October 1, 1998, or as soon as possible after such date upon a demonstration by the owner or operator that the petition was not submitted by October 1, 1998 due to unforeseen circumstances. (2) The owner or operator of the affected unit or units shall submit information in the petition to the Texas Natural Resource Conservation Commission (commission) and a copy to the United States Environmental Protection Agency (EPA) Regional Office in Dallas which will demonstrate all of the following: (A) compliance by May 31, 1999 is impracticable due to the unavailability of nitrogen oxides (NOx) abatement equipment, engineering services, or construction labor; system unreliability; manufacturing unreliability; equipment unreliability; or other technological and economic factors as the commission determines are appropriate; (B) (No change.) (C) there is a commitment to implement the portion of the phased RACT petition that can be implemented by May 31, 1999; and (D) the final compliance date specified in the petition shall be as soon as practicable, but in no case later than August 31, 2000, except as approved by the executive director. (3) Each petition for phased RACT shall contain the information required by at least one of the following criteria. (A) If compliance by May 31, 1999 is impracticable due to the unavailability of NOx abatement equipment, engineering services, or construction labor, the following information shall be included in the petition for phased RACT: (i) a list of the company names, addresses, and telephone numbers of vendors who are qualified to provide the services and equipment capable of meeting the applicable emission limitation under this chapter and who have been contacted to obtain the required services and equipment. A copy of the request for bids along with the dates of contact shall also be provided to show a good-faith effort to obtain the required services and equipment necessary to meet the requirements of this chapter by May 31, 1999; and (ii) copies of responses from each of the vendors listed in clause (i) of this subparagraph showing that they cannot provide the necessary services and install the appropriate equipment in time for the unit to comply by May 31, 1999. Such responses shall include the reasons why the services cannot be provided and why the equipment cannot be installed in a timely manner. (iii) (No change.) (B) If compliance by May 31, 1999 is impracticable due to system unreliability for sources in the utility industry, defined as the inability or threatened inability of a utility grid system to fulfill obligations to supply electric power, the following information shall be included in the petition for phased RACT: (i) standard load forecasts, based on standard forecasting models available throughout the utility industry, applied to the period May 31, 1997 - May 30, 1999; (ii) (No change.) (iii) specific reasons why an outage for the purpose of installing NOx emission control equipment cannot be scheduled by May 31, 1999. (C) If compliance by May 31, 1999 is impracticable due to manufacturing unreliability, defined as the inability or threatened inability of a source to fulfill contractual obligations to supply a product or products, the following information shall be included in the petition for phased RACT: (i) - (ii) (No change.) (iii) specific reasons why an outage for the purpose of installing NOx emission control equipment cannot be scheduled by May 31, 1999. (D) If compliance by May 31, 1999 is impracticable due to equipment unreliability, defined as the reduced availability and operating reliability of a unit resulting from the operation of NOx control equipment on that unit, the following information shall be included in the petition for phased RACT: (i) - (iv) (No change.) (E) If compliance by May 31, 1999 is impracticable due to other technical factors, the petition for phased RACT shall contain such documentation as the executive director establishes is appropriate for such technical factors. (F) If compliance by May 31, 1999 is unreasonable due to economic considerations, excluding the time value of money, the petition for phased RACT shall contain the following information showing comparisons of the cost of compliance by May 31, 1999 and the cost of compliance by the final compliance date specified in the petition: (i) the costs of additional outages, if applicable, necessitated by compliance with the emission specifications of this chapter by May 31, 1999, as demonstrated by comparison to costs of actual historical and planned outages; [sub] x abatement equipment, engineering services, or construction labor necessary to comply by May 31, 1999, and the cost of obtaining the NOx abatement equipment, engineering services, or construction labor by the final compliance date specified in the petition. Copies of legally binding contracts, signed by an authorized official of the company, shall be submitted to document these costs. If the required NOx abatement equipment, engineering services, or construction labor will be provided by the owner or operator, as provided for in paragraph (4) of this subsection, certification by an authorized official of the company may be submitted in lieu of contracts to document these costs; or (iii) (No change.) (4) All petitions for phased RACT shall include copies of legally binding contracts with the primary vendors for each project, signed by an authorized official of the company, showing a detailed design or installation schedule for the required services or equipment to be provided by that vendor, with a completion date no later than August 31, 2000, except as approved by the executive director. Any commercially sensitive financial information or trade secrets should be excised from the contracts. (5) (No change.) (6) The executive director shall approve or deny the petition within 90 days of receiving an administratively complete phased RACT petition. The executive director shall approve a petition for phased RACT if the executive director determines that compliance is not practicable by May 31, 1999, because of either the unavailability of nitrogen oxides abatement equipment, engineering services, or construction labor; system unreliability; manufacturing unreliability; equipment unreliability; or other technological and economic factors as the executive director determines are appropriate. (7) Any person affected by the executive director's decision to deny a petition for phased RACT or to deny a revision to an approved phased RACT petition may file a motion for reconsideration. Notwithstanding the applicability provisions of sec.50.31(c)(7) of this title (relating to Purpose and Applicability), the requirements of sec.50.39 of this title (relating to Motion for Reconsideration) apply. However, only a person affected may file a motion for reconsideration. Approved petitions for phased RACT may be revised by the executive director upon a showing of just cause by the applicant. (8) - (9) (No change.) (b) The executive director may approve the use of a mobile source emission reduction credit (MERC), created from vehicle scrappage, to achieve NOx emissions reductions equivalent to those required by this chapter, on an interim basis from May 31, 1999 to the date of final compliance, for a period not to exceed 36 months. Any plan involving the use of a MERC may be approved if the executive director determines that it conforms to the provisions of sec.117.570 of this title (relating to Trading) and sec.114.29 of this title (relating to Accelerated Vehicle Retirement Program). Executive director approval does not necessarily constitute satisfaction of all federal requirements, nor eliminate the need for approval by EPA. (c) The executive director may approve the use of a MERC, created from clean- fuel vehicles, to achieve NOx emissions reductions equivalent to those required by this chapter, on an interim basis from May 31, 1999 to the date of final compliance, for a period not to exceed that specified in sec.114.39 of this title (relating to MERC Program). Any plan involving the use of a MERC may be approved if the executive director determines that it conforms to the provisions of sec.117.570 of this title (relating to Trading) and sec.114.39 of this title. Executive director approval does not necessarily constitute satisfaction of all federal requirements, nor eliminate the need for approval by EPA. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 24, 1996. TRD-9610817 Barry S. Irwin Director, Legal Division Texas Natural Resource Conservation Commission Effective date: August 16, 1996 Proposed publication date: May 14, 1996 For further information please call: (512) 239-1970 TITLE 37. PUBLIC SAFETY AND CORRECTIONS PART I. Texas Department of Public Safety CHAPTER 3.Traffic Law Enforcement Traffic Supervision 37 TAC sec.3.63 Editor's Note: The following rules were inadvertently left out of the August 6, 1996 issue of the Texas Register. The Texas Department of Public Safety adopts new sec.3.63, concerning route designations for non-radioactive hazardous materials on Texas highways, without changes to the proposed text as published in the June 4, 1996, issue of the Texas Register (21 TexReg 4979). The justification for the new section will be to enhance the safety of the citizens of the political subdivision while minimizing the probability for a major catastrophe which may result from a release of hazardous materials into a highly populated and congested area. The new section establishes procedures that political subdivisions in Texas must follow to designate a non-radioactive hazardous material route in and through their respective jurisdictions. No comments were received regarding adoption of the new section. The new section is adopted pursuant to Texas Civil Statutes, Article 6675d, Texas Transportation Code, Chapter 522, and Texas Government Code sec.411.006(4), which provide the director of the Texas Department of Public Safety with the authority to establish rules for the conduct of the work of the Texas Department of Public Safety, and which authorizes the director to adopt rules regulating the safe operation of commercial motor vehicles. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 11, 1996. TRD-9610548 James R. Wilson Director Texas Department of Public Safety Effective date: August 12, 1996 Proposed publication date: June 4, 1996 For further information please call: (512) 424-2890 PART V. Texas Board of Pardons and Paroles CHAPTER 141. General Provisions Definition of Terms 37 TAC sec.141.111 The Texas Board of Pardons and Paroles adopts an amendment to sec.141.111, which adds a definition of "Serve-all date," without changes to the proposed text as published in the April 30, 1996, issue of the Texas Register (21 TexReg 3687). The Board adopts the amendment in order to increase the efficiency of the Board in managing its case load. The Board received one comment on the proposed amendment. The commenter suggested that a definition of "minimum expiration date" would clarify the amendment. The Board decided that the definition was clear as written but will keep the comment in mind for future amendments of the rules. The amendment is adopted under the Code of Criminal Procedure, Article 42.18, sec.8(g), which provides the Board with the authority to adopt reasonable rules as it may deem necessary with respect to the eligibility of prisoners for parole and mandatory supervision. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on July 24, 1996. TRD-9610641 Laura McElroy General Counsel Texas Board of Pardons and Paroles Effective date: August 14, 1996 Proposal publication date: April 30, 1996 For further information, please call: (512) 463-1883 CHAPTER 145. Parole Parole Process 37 TAC sec.145.3 The Texas Board of Pardons and Paroles adopts an amendment to sec.145.3 concerning policy statements relating to parole release decisions with changes to the proposed text as published in the April 30, 1996, issue of the Texas Register (21 TexReg 3687). The Board adopts new paragraph (3) to reiterate Board policy prohibiting discrimination against an inmate in the parole process by the consideration of the inmate's litigation activity. The paragraph is adopted in order to reiterate that consideration of litigation activity in parole decisions by the Board is prohibited and to provide a remedy of the special review process under existing sec.145.16 (b) (relating to Action upon Review of Additional Information). The Board received a comment on the proposed amendment, in the form of Plaintiffs' attorney's Motion to Compel or for Leave to Take Oral Depositions, dated April 23, 1996, but received by the Board after April 30, 1996, in which contempt action was contemplated against the Board for noncompliance of the court's order. The Board was during that time appealing the federal court's refusal to stay a portion of his order, which motion was denied by the Fifth Circuit Court of Appeals without prejudice on May 31,1996. The attorney suggested that the Board in addition to the proposed language provide a means for the Board to address inmate claims that any litigation activity may have been utilized by the Board in the parole process so as to adversely affect the inmate's chances for parole. In response to the commenter and in a further attempt to comply with court order, the Board clarified the amendment by providing inmates a remedy under the already existing special review provisions of sec.145.16 (b) for violations of the rule. The amendment is adopted under the Code of Criminal Procedure, Article 42.18, sec.8(g), which provides the Board with the authority to adopt reasonable rules as it may deem necessary with respect to the eligibility of prisoners for parole and mandatory supervision. sec.145.3. Policy Statements Relating to Parole Release Decisions by the Board of Pardons and Paroles. To aid the Board of Pardons and Paroles in its analysis and research of parole release, the board adopts the following policies. (1)-(2) (No change.) (3) Any consideration by a Board member of an inmate's litigation activities when determining an inmate's candidacy for parole is strictly prohibited. No inmate will be denied the opportunity to present to the judiciary, including appellate courts, his or her allegations concerning violations of fundamental constitutional rights. Any consideration of such legal activity during the parole process is a violation of Board policy. In the event parole is denied in violation of this subsection, the inmate may pursue a remedy under the special review provisions of sec.145.16 (b) of this title (relating to Action Upon Review of Additional Information). This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on July 24, 1996. TRD-9610651 Laura McElroy General Counsel Texas Board of Pardons and Paroles Effective date: August 14, 1996 Proposal publication date: April 30, 1996 For further information, please call: (512) 463-1883 37 TAC sec.145.12 The Texas Board of Pardons and Paroles adopts an amendment to sec.145.12 (3), concerning procedures whenever a serve-all date moves forward by more than 180 days, with changes to the proposed text as published in the April 30, 1996, issue of the Texas Register (21 TexReg 3688). The Board adopts the amendment to sec.145.12 (3) in order to increase the efficiency of the Board in managing its case load. The Board received several comments on the proposed amendment. One commenter suggested that the proposed language relating to when the "serve-all date . . . moves forward . . ." should be clarified. In response to the comment, the Board has replaced that language with language which relates to when the "serve-all date . . . is extended . . . ." Another commenter suggested that the cases should be placed in regular parole review rather than routed to the executive committee when one member of the panel which rendered the earlier decision is no longer serving. In response to that comment, the Board changed the amendment to provide the change in procedure to place the file in regular parole review rather than route the file through the executive committee. The amendment is adopted under the Code of Criminal Procedure, Article 42.18(g), which provides the Board with the authority to adopt reasonable rules as it may deem necessary with respect to the eligibility of prisoners for parole and mandatory supervision. sec.145.12. Action Upon Review. A case reviewed by a parole panel for parole consideration may be: (1)-(2) (No change.) (3) deny parole and order serve-all, but in no event shall this be utilized if the inmate's minimum expiration date is over three years from either the prior parole docket date or the date of the panel decision if the prior parole docket date has passed. If the serve-all date in effect on the date of the panel decision is extended by more than 180 days, the case shall be placed in regular parole review. (4)-(5) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on July 24, 1996. TRD-9610650 Laura McElroy General Counsel Texas Board of Pardons and Paroles Effective date: August 14, 1996 Proposal publication date: April 30, 1996 For further information, please call: (512) 463-1883 PART IX. Commission on Jail Standards CHAPTER 257.Construction Approval Rules 37 TAC sec.257.9 The Commission on Jail Standards adopts an amendment to sec.257.9 concerning Construction Approval Rules with changes to the proposed text published in the June 7, 1996, issue of the Texas Register (21 TexReg 5159). Adoption of this amendment will provide standards requiring jail cells and support areas be accessible to disabled inmates and staff in accordance with federal guidelines. The rule functions to provide equal access to all inmates and staff. One comment was received regarding adoption of this amendment. Rick Baudoin, Program Administrator of TDLR proposed that the Texas Accessibilty Standards be adopted by reference so the agency will be compliant with the Texas Architectural Barriers Act, Texas Civil Statutes, Article 9102. The amendment is adopted under Government Code, Chapter 511 which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the construction, equipment, maintenance and operation of county jails. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610852 Jack E. Crump Executive Director Commission on Jail Standards Effective date: August 16, 1996 Proposed publication date: June 7, 1996 For further information please call: (512) 463-5505 CHAPTER 259.New Construction Rules Maximum Security Design, Construction and Furnishing Requirements 37 TAC sec.259.138 The Commission on Jail Standards adopts an amendment to sec.261.138, concerning Existing Construction Rules without changes to the proposed text published in the June 7, 1996 issue of the Texas Register (21 TexReg 5160). Adoption of this amendment will delete the reference to court for remote holding cells in construction standards. The rule functions to provide standards which encompass all types of cells. No comments were received regarding adoption of this amendment. The amendment is adopted under Government Code, Chapter 511 which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the construction, equipment, maintenance and operation of county jails. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610853 Jack E. Crump Executive Director Commission on Jail Standards Effective date: August 16, 1996 Proposed publication date: June 7, 1996 For further information please call: (512) 463-5505 CHAPTER 261.Existing Construction Rules Existing Maximum Security Design, Construction and Furnishing Requirements 37 TAC sec.261.138 The Commission on Jail Standards adopts an amendment to sec.259.138, concerning New Construction Rules without changes to the proposed text published in the June 7, 1996, issue of the Texas Register (21 TexReg 5160). Adoption of this amendment will delete the reference to court for remote holding cells in construction standards. The rule functions to provide standards which encompass all types of cells. No comments were received regarding adoption of this amendment. The amendment is adopted under Government Code, Chapter 511 which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the construction, equipment, maintenance and operation of county jails. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610854 Jack E. Crump Executive Director Commission on Jail Standards Effective date: August 16, 1996 Proposed publication date: June 7, 1996 For further information please call: (512) 463-5505 CHAPTER 265.Admission 37 TAC sec.265.13 The Commission on Jail Standards adopts repeal of sec.265.13, concerning Admission without changes to the proposed text published in the June 7, 1996, issue of the Texas Register (21 TexReg 5161). Adoption of this repeal will allow for adoption of equitable treatment standards in the Records and Procedures chapter. The repeal functions to permit adoption of a new rule. No comments were received regarding adoption of this repeal. The amendment is adopted under Government Code, Chapter 511 which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the custody, care and treatment of prisoners. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610855 Jack E. Crump Executive Director Commission on Jail Standards Effective date: August 16, 1996 Proposed publication date: June 7, 1996 For further information please call: (512) 463-5505 CHAPTER 269.Records and Procedures General 37 TAC sec.269.4 The Commission on Jail Standards adopts new sec.269.4, concerning Records and Procedures with changes to the proposed text published in the June 7, 1996, issue of the Texas Register (21 TexReg 5161). Adoption of this rule will provide equitable treatment standards. The rule functions to ensure all inmates are treated equally. No comments were received regarding adoption of the new section. The new rule is adopted under Government Code, Chapter 511 which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the custody, care and treatment of prisoners. sec.269.4.Equitable Treatment. Each sheriff/operator shall have and implement a written procedure providing for equitable treatment regardless of race, religion, national origin, sex, age, or disabilities. The treatment of inmates with disabilities shall be in accordance with Title 35, CFR, Subpart B and Subpart D. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 26, 1996. TRD-9610856 Jack E. Crump Executive Director Commission on Jail Standards Effective date: August 16, 1996 Proposed publication date: June 7, 1996 For further information please call: (512) 463-5505 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART I. Texas Department of Human Services CHAPTER 3.Income Assistance Services Editor's Note: The following rules were inadvertently left out of the August 6, 1996 issue of the Texas Register. The Texas Department of Human Services (DHS) adopts an amendment to sec.3.301 and new sec.sec.3.7001-3.7004. The amendment to sec.3.301 and new sec.sec.3.7001-3.7004 are adopted with changes to the proposed text published in the April 5, 1996, issue of the Texas Register(21 TexReg 2999). The justification for the amendment and new sections is to implement new policies required by the Human Resource Code, sec.31.0325. The requirement is for certain adult household members to comply with the requirements of the finger imaging process prior to certification of Aid to Families with Dependent Children (AFDC) and food stamp benefits. The amendment and new sections will function by ensuring that the department will be implementing a welfare reform initiative passed by the 74th Texas Legislature (Regular Session 1995) in House Bill (HB) 1863. During the public comment period, DHS received comments from The Houston Welfare Rights Organization; Advocates for Nursing Home Reform; and one individual. A summary of the comments and DHS's responses follow: Comment: A commenter stated that there will be an impact on local government because persons denied benefits will have to rely on local government services. The commenter also stated that prosecutions which result will have fiscal implications for local governments, and that these fiscal impacts on local government should be properly estimated. Response: DHS is not changing the financial or non-financial requirements governing eligibility other than to implement the use of finger imaging to prevent duplicate participation. DHS is not reducing the number of individuals eligible for participation in the programs. DHS is using finger imaging to prevent participation of those who are currently receiving benefits and who are attempting to apply for and receive duplicate benefits from the same program. Federal regulation requires the state to take measures to prevent duplicate participation. DHS currently has methods in place to prevent duplicate participation; however, these methods can be circumvented. Detection of duplication occurs usually after benefits have been received and used. The use of finger imaging is intended to prevent such participation before it happens. Denial of a case because of finger imaging will only take place if all members of a household are found to be already receiving benefits on another case, or if a required member of the household fails or refuses to submit to the finger imaging process and does not qualify for an exemption from the imaging requirements. Local governments can, and many do, require applicants for assistance to first apply for and receive available assistance from DHS before receiving assistance from the local government. In this regard, DHS does not believe that there will be a fiscal impact on local governments. Comment: A commenter who addressed the effect of the proposed rule on small businesses stated, "Persons who lose eligibility for program benefits as a result of use of the rules will be less able to patronize small businesses. Some such persons may no longer be able (sic) work in small businesses where they have been working, necessitating the locating, interviewing, reference checking, and hiring of new personnel. These effects on small business should be properly estimated and the proposed rules should be withdrawn until these estimates are produced, the proposed rule to be re-published, if at all, accompanied by said estimates." Response: DHS's purpose in implementing finger imaging is to ensure that the benefits authorized by law are delivered to those for whom they are intended. DHS believes that the use of finger imaging will not prevent persons from continuing to work in small businesses where they have been working. Comment: In regard to the proposed rule preamble regarding economic costs to persons required to comply with the proposed sections, a commenter stated: "Some persons having to comply with the proposed rules will undergo the fair hearing process. This will necessitate travel to and from TDHS' offices for the fair hearings. This travel will have a economic cost. These economic costs should be properly estimated and the proposed rules should be withdrawn until these estimates are produced, the proposed rule to be republished, if at all, accompanied by said estimates." Response: DHS believes that fair hearings are accessible to persons applying for and/or receiving assistance. Hearings are normally held in the local office from which the client receives benefits, so there is no more cost to the client than that associated with filing an application or attending an interview. If the hearing officer is headquartered in a different town, DHS arranges for the hearing officer to travel to the office where the client usually receives benefits. If the client has no transportation or is unable to come to the local office, the hearing officer can arrange to hold the hearing in the client's home. Comment: A commenter stated, "HB 1863 (the underlying state legislation) does not require fingerprinting nor photo-imaging of food stamp applicants or recipients. Given the TDHS' inattention to the job training, child support, and other needs of applicants and recipients, spending money on fingerprinting and photo- imaging when such is not required is wrong. (Even though another state agency has primary child support collection responsibility, if TDHS had only devoted as much zeal to backing up clients in their dealings with child support agencies, as TDHS has shown in regard to the instant proposed rules, many, many Texas children would have had their circumstances significantly improved; self- support for many more families would long ago have become a reality.) For these reasons, the food stamp program should not be subject to fingerprint imaging nor to photo- imaging." A commenter stated that the use of the imaging process in the food stamp program would be an uncalled-for expansion of what the state statute requires, and that because the Texas statute does not explicitly authorize the use of the imaging process in the food stamp program, it is indeed, not authorized. The commenter equates this to the arguments that the long-term care industry has used that if the state law does not authorize a regulation, TDHS cannot enforce it. Response: DHS has been designated as the single state agency for administering the food stamp and AFDC programs. Authorization by statute is not necessary for DHS to implement finger imaging in either program. While HB 1863 only requires finger imaging or photo-imaging of AFDC applicants or recipients, finger imaging should help reduce both the attempts and occurrences of duplicate participation in the food stamp program as well, assuring the public that money allocated to assist the poor is, in fact, being received by the poor. Because the project is being implemented as a test, DHS believes it to be more cost effective to test the impact of finger imaging on both programs now rather than to wait on the Legislature to mandate the testing on food stamp program later. Testing both programs initially will address preemptively any discussion that the effect of imaging on food stamps would be different than on AFDC because of the low AFDC grant amounts in Texas. Comment: A commenter stated, "It is unclear from the proposed rules, if the proposal is for the combined fingerprint and photo-imaging process originally propounded by TDHS, or if only fingerprinting is contemplated. HB 1863 only authorizes fingerprint imaging or photo-imaging. See Human Resources Code, sec.31.0325. Thus, a combination of electronic fingerprint-imaging and photo- imaging is not statutorily authorized and the proposed rules should be changed to explicitly articulate that only electronic fingerprint imaging is contemplated, and not that plus photo-imaging. The law was written with an "or," the law is as the law was written, not as it might have been written." Response: DHS proposes to use the finger imaging process stipulated in HB 1863. DHS has been advised that it is a standard in the finger imaging industry to use a photograph as a part of the finger imaging process. The photograph will not be used as a part of the matching process as it would be if photo-imaging were used, but will serve as an additional source of information confirming or refuting a possible match if the finger images cannot conclusively verify the match. DHS's main purpose in including the photograph is to take every safeguard possible to ensure that any matches received are legitimate before impacting an applicant's or recipient's benefits. Comment: A commenter states that the Human Resources Code sec.31.0325(b) requires that DHS ensure "that any electronic imaging performed by the department is strictly confidential and is used only to prevent fraud by adult and teen parent recipients of assistance. Therefore, the images should be taken and stored confidentially. The rules should require that clients be effectively informed that the images will be kept strictly confidential and will only be used to prevent fraud by adult and teen recipients of assistance. Effectively inform means in writing in a language and at a level known by the Department staff to be comprehended by the person being informed, and in the absence of such knowledge by staff, orally in a language known by the staff to be comprehended by the client." Response: DHS agrees that finger imaging records must be confidential, and is incorporating security measures into the design of the Lone Star Image System (LSIS) to ensure confidentiality. In addition, staff will be trained that finger imaging records are subject to the same confidentiality requirements as other information provided by the client. Confidentiality of client records will be maintained in accordance with 7 Code of Federal Regulations (CFR) sec.272.1(c) of the food stamp regulations, 45 CFR sec.205.50(a)(1) of the AFDC regulations, and the requirements of the LSIS waiver granted to the state by the Administration for Children and Families. The Food and Consumer Service requires DHS to inform food stamp recipients that finger images may be shared with local, state, or federal law enforcement agencies for investigations authorized under the Food Stamp Act, but that their finger images will not be shared for the investigation of alleged violations of laws other than the Food Stamp Act. DHS intends to comply with these requirements by informing the clients either verbally or in writing. The written information will be conveyed by attaching an information sheet to each application in implemented areas. Similar informing procedures will be used for AFDC applicants. DHS routinely attempts to ensure that informing materials are produced using wording which can be understood by the general client population. DHS routinely informs clients in writing of the confidentiality of information provided. DHS anticipates supplementing this information in implemented areas with additional information about confidentiality of the finger imaging records, the requirement to be finger imaged, and the purposes of finger imaging. Comment: A commenter stated, "The rule should require that clients be effectively informed (as defined immediately above) of all exemptions from imaging requirements. To have rights but not be informed of them is tantamount to not having rights." Response: DHS intends to inform clients that exemptions from imaging requirements are available at the same time they are informed of the finger imaging requirements. As a result of the comments received, DHS agrees to also inform clients of the specific exemptions available at the same time. Comment: A commenter stated, "Because the statute restricts the use of the images to preventing fraud, no action beyond the avoidance or cessation of duplicate benefits issuance is authorized by the statute. Denials of issuance of assistance for the size household, and referrals for fraud prosecution go beyond preventing fraud and should not be permitted by the proposed rules. The law is as it is written, not as it might have been written. Case denial (other than of duplicate cases) is uncalled for, and most certainly entire households should not be denied because of one person's act or omission. This amounts to guilt by association." Response: As stated by HB 1863, DHS requires finger images only from those who would usually be the responsible members of the household. If DHS disqualifies individuals, but allows the disqualified individuals to apply for and receive benefits on behalf of other household members, DHS has not prevented application for or receipt of duplicate benefits. In order for the system to effectively prevent duplicate participation, finger imaging must be required of all household members who can apply for the household. The food stamp regulations require that states implement methods to prevent duplicate participation and develop follow-up procedures and corrective actions including, but not limited to, the adjustment of benefits and eligibility, filing of claims, disqualification hearings, and referrals for prosecution, as appropriate. Currently, individuals who are found to have received duplicate benefits are referred to the Office of the Inspector General for processing overissuances, holding disqualification hearings, and referring for possible prosecution under existing state statutes in the Penal Code. Implementation of finger imaging should prevent duplicate participation, but does not change corrective actions currently in place. Comment: A commenter stated, "It was revealed by TDHS staff at the Client Self-Support Services Advisory Council (CSSAC) meeting on May 2, 1996, that, contrary to what has been published in the Texas Register (21 TexReg 2999 et seq.,) the imaging process will be tested in Bexar County and Guadalupe County, not in Tarrant and Dallas Counties. TDHS published in the state's publication of record that the imaging process would begin in Tarrant and Dallas Counties. That was material information, important enough to be part of the proposed rules. There will have been reliance upon that information. That information, according to what was stated by TDHS staff before the time for commenting closed, has changed. Some persons in Bexar and Guadalupe Counties may have relied on the imaging being tested first elsewhere, in deciding not to comment. That premise having changed, the proposed rules should be withdrawn, to be re-published, if at all, with the actual test counties being stated." Response: The language of the rules stated that the program would be implemented in a test area. However, the language also provided for gradual implementation statewide, so all areas of the state were informed that the process would apply to them at some time. DHS is changing the test area to Bexar and Guadalupe counties because of possible implementation of other pilots which would jeopardize the integrity of the evaluation results. The rules will be changed to reflect the statutory language. Comment: A commenter stated that the imaging process should not be used under the food stamp program at all, but if it were to be used, it should not be used in cases where the issuance does not exceed five times the minimum. Response: Federal regulations which require the state to establish methods to prevent duplicate participation do not give the state flexibility to establish minimum amounts for those methods. Comment: A commenter stated that those who have served in the military forces and who have been honorably discharged should be exempt from any application of the proposed imaging process under the food stamp program because their trust should be presumed. Response: Federal regulations which require the state to establish methods to prevent duplicate participation do not give the state flexibility to exempt veterans from those methods. Comment: A commenter stated that DHS should effectively inform persons subject to finger imaging, that it will not be used in any way to administer immigration laws. Response: Food and Consumer Services (FCS) requires DHS to inform recipients that finger images may be shared with local, state, or federal law enforcement agencies for investigations of the Food Stamp Act, but that their finger images will not be shared for the investigation of alleged violations of laws other than the Food Stamp Act. 45 CFR sec.205.50(a)(3)(i) of the AFDC regulations requires the state to publicize provisions governing the confidential nature of information about applicants and recipients. Comment: A commenter stated that the use of finger imaging is cruel and inhumane, and that while there may be a few who abuse the system, this is no way to treat those whose only crime may be losing their jobs. Response: DHS is bound by statute to implement an imaging system for the AFDC program in Texas. Imaging technology is witnessing a rapid growth in applications in the commercial sector. As these applications become better publicized, the association with the criminal connotations of this technology is expected to drop. Comment: A commenter stated that fingerprinting is not necessary as we have "lots of identification available" in the state already, and it is an undignified requirement for AFDC and food stamp recipients. Response: DHS is not using finger imaging for identification, but for preventing duplicate participation. In fact, DHS is specifically prohibited from using finger imaging for client identification purposes by the federal agencies responsible for the Food Stamp and AFDC programs. During the public comment period, DHS received requests for a public hearing regarding the proposed rules. As a result of the requests, DHS conducted a pubic hearing to receive comments on the proposed rules on June 7, 1996. Six individuals testified at the public hearing held June 7, 1996. Many of the verbal comments were a repetition of the written comments received. Verbal testimony was presented by a representative of The Houston Welfare Rights Organization and 27 signed statements were presented concurring with that testimony. Additional comments received at the hearing are summarized and responded to as follows: Comment: A commenter stated disapproval of fingerprinting. Response: DHS is bound by statute to implement an imaging system for the AFDC program in Texas. Comment: A commenter stated that fingerprinting is a waste of money when all that is needed is a photo identification that is valid, and DHS should be helping those who have given to the system for years and cannot receive immediate assistance when they lose their job. Response: DHS will use a third-party independent evaluator to conduct a cost- benefit analysis of the finger imaging pilot studies, and that information, coupled with other data, will be provided to the Texas Legislature so that an informed decision can be made about the further expenditure of money on the use of imaging technology. Comment: A commenter stated finger imaging is not consistent with the American way of life and the poor should not be treated like second class citizens. Their rights are as important as anyone's. It would be better to spend the money on distributing the abundance of food our country has. Response: The use of biometric technology in both social services and private enterprise is increasingly becoming part of mainstream society, and this trend is expected to continue. The imaging project is attempting to ensure that the available benefits are distributed to those for whom they are intended. Comment: A commenter stated finger imaging should be used to screen out criminals from being nurse aides in nursing homes, not for AFDC families. Honest people should not be made to feel worse about themselves than they already do when applying for food stamps and other assistance. People who lose their jobs and need help are honest people, and DHS would treat them like criminals. Dignity should be kept in the system by not requiring fingerprinting. Response: The use of biometric technology in both social services and private enterprise is increasingly becoming part of mainstream society, and this trend is expected to continue. It is hoped that imaging will not be seen as a barrier to keep people out of the social services system, but instead a method to ensure that benefits are available for those who most need them. DHS initiated editorial changes to all references to the phrase "fingerprint image" by changing it to "finger imaging." In sec.sec.3.301(c), 3.7001(a) and (b), 3.7002(a), and 3.7003(a), DHS replaced the phrase "submit to the finger imaging process" to "comply with the requirements of the finger imaging process." In sec.3.7001(c), DHS changed the subsection title to "Fraud referral process." In sec.3.7004, DHS replaced the county names with the word "implemented" and changed the effective date from October 1, 1996 to November 1, 1996. SUBCHAPTER C.The Application Process 40 TAC sec.3.301 The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 31, which provides the department with the authority to administer public and financial assistance programs. The amendment implements the Human Resources Code sec.sec.22.001- 22.030 and sec.31.0325. sec.3.301.Responsibilities of Clients and the Texas Department of Human Services (DHS). (a) To apply, the client must complete the application process. This includes (1)-(5) (No change.) (6) complying with the requirements of the finger imaging process unless exempt as specified in sec.3.7002 of this title (relating to Individuals Exempt from Finger Imaging Requirements). (b)-(c) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 29, 1996. TRD-9610888 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: November 1, 1996 Proposal publication date: April 5, 1996 For further information, please call: (512) 438-3765 SUBCHAPTER QQ.Finger Imaging 40 TAC 3.7001-3.7004 The new sections are adopted under the Human Resources Code, Title 2, Chapters 22 and 31, which provides the department with the authority to administer public and financial assistance programs. The new sections implement the Human Resources Code sec.sec.22.001-22.030 and sec.31.0325. sec.3.7001.Finger Imaging Requirements. (a) Aid to Families with Dependent Children (AFDC). AFDC adults and minor parents with AFDC children (including disqualified household members) as stipulated in Human Resources Code, sec.31.0325 must comply with the requirements of the finger imaging process when an application for AFDC is filed with the Texas Department of Human Services (DHS). Finger images must be taken or be on record at the time AFDC periodic reviews are initiated. (b) Food stamps. Adult household members and minor head of food stamp households must comply with the requirements of the finger imaging process when an application for food stamps is filed with DHS. Finger images must be taken or be on record at the time food stamp recertification is initiated. (c) Fraud referral process. Individuals found to be participating or attempting to participate in the AFDC or food stamp programs twice in the same month will be referred for fraud determination as specified in sec.3.3401 of this title (relating to Fraud) and sec.3.3402 of this title (relating to Food Stamps as Obligations of the United States). sec.3.7002.Individuals Exempt from Finger Imaging Requirements. (a) Aid to Families with Dependent Children (AFDC). Individuals applying for or receiving AFDC are exempt if they: (1) have filed an appeal and have not waived continued benefits; (2) have a religious belief that does not allow the person's image to be captured; (3) are certified out of the office or are unable to come into the office; (4) are physically unable to provide the requested finger images; or (5) temporarily cannot comply with the requirements of the finger imaging process due to equipment failure. (b) Food stamps. Individuals applying for or receiving food stamps are exempt if they: (1) have a religious belief that does not allow the person's image to be captured; (2) are certified out of the office or are unable to come into the office; (3) are physically unable to provide the requested finger images; (4) temporarily cannot comply with the requirements of the finger imaging process due to equipment failure; or (5) are disqualified or ineligible to participate in the food stamp program. (c) Exemptions. Exemptions will be redetermined at each initial application or complete review. sec.3.7003.Failure to Comply. (a) If a member of the household who is required to comply with the requirements of the finger imaging process as specified in sec.3.7001(a) or (b) of this title (relating to Finger Imaging Requirements) refuses or fails to comply with the requirements of the finger imaging process, then the household's application or case will be denied. (b) The household has the right to appeal the Texas Department of Human Services' (DHS's) decision in accordance with Chapter 79, Subchapters L, M, N, and O of this title (relating to Fair Hearings; Appeals Process; Hearing Procedure; and Social Services Appeals). sec.3.7004.Implementation in Affected Areas. The requirements regarding finger imaging as described in Subchapter QQ of this title (relating to Finger Imaging) apply to recipients interviewed in offices in implemented counties effective November 1, 1996, with a gradual statewide implementation as specified in Human Resources Code, sec.31.0325. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 29, 1996. TRD-9610889 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: November 1, 1996 Proposal publication date: April 5, 1996 For further information, please call: (512) 438-3765. CHAPTER 47.Primary Home Care Service Requirements 40 TAC sec.47.2913 The Texas Department of Human Services (DHS) proposes an amendment to sec.47.2913, concerning prior approval renewal for primary home care, in its Primary Home Care chapter. The purpose of the amendment is to reflect the streamlined prior approval process. Terry Trimble, interim commissioner, has determined that for the first five-year period the proposed section will be in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Trimble also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be fewer breaks in services to primary home care clients. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed section. Questions about the content of the proposal may be directed to Frances Barraza at (512) 438-3216 in DHS's Community Care Section. Written comments on the proposal may be submitted to Supervisor, Rules Unit, Media and Policy Services- 338, Texas Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the Texas Register. The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 and 32, which provides the department with the authority to administer public and medical assistance programs and under Texas Government Code sec.531.021, which provides the Health and Human Services Commission with the authority to administer federal medical assistance funds. The amendment implements sec.sec.22.001-22.030 and sec.sec.32.001-32.041 of the Human Resources Code. sec.47.2913.Prior Approval Renewal for Primary Home Care. (a) For clients who are eligible for primary home care under the provisions of the Social Security Act, sec.1929(b), the supervisor must send the following forms to the regional nurse to obtain renewal of prior approval: (1)-(2) (No change.) (3) attendant orientation/supervisory visit [client health assessment/proposed service plan]. (b) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on July 23, 1996. TRD-9610626 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Proposed date of adoption: November 1, 1996 For further information, please call: (512) 438-3765