PROPOSED RULES
Before an agency may permanently adopt a new or amended section or repeal an 
existing section, a proposal detailing the action must be published in the Texas 
Register at least 30 days before action is taken. The 30-day time period gives 
interested persons an opportunity to review and make oral or written comments on 
the section. Also, in the case of substantive action, a public hearing must be 
granted if requested by at least 25 persons, a governmental subdivision or 
agency, or an association having at least 25 members.
Symbology in proposed amendments. New language added to an existing section is 
indicated by the use of bold text. [Brackets] indicate deletion of existing 
material within a section.

TITLE 7. BANKING AND SECURITIES
PART VII. State Securities Board
CHAPTER 105.Rules of Practice in Contested Cases
7 TAC sec.sec.105.1-105.10
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the State 
Securities Board or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The State Securities Board proposes the repeal of sec.sec.105.1-105.10, 
concerning rules of practice in contested cases. Repeal of the existing Chapter 
105 will allow for the simultaneous adoption of a new Chapter 105, which is 
being concurrently proposed. 
John R. Morgan, Deputy Securities Commissioner, David Grauer, Director, 
Enforcement Division, and Michael S. Gunst, Director, Dealer Registration 
Division have determined that for the first five-year period the repeals are in 
effect there will be no fiscal implications for state or local government as a 
result of enforcing or administering the repeals. 
Messrs. Morgan, Grauer, and Gunst also have determined that for each year of the 
first five years the repeals are in effect the public benefit anticipated as a 
result of enforcing the repeals will be the elimination of outdated procedures. 
There will be no effect on small businesses. There is no anticipated economic 
cost to persons who are required to comply with the repeals as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The repeals are proposed under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
The repeals affect Texas Civil Statutes, Articles 581-14, 581-23, and 581-24. 
sec.105.1. Scope.
sec.105.2. Notice.
sec.105.3. Presiding Officer or Body.
sec.105.4. Appearance.
sec.105.5. Postponements.
sec.105.6. Written Answers, Briefs, and Stipulations. 
sec.105.7. Presentation of Evidence.
sec.105.8. Subpoenas and Depositions.
sec.105.9. Disposition.
sec.105.10. Record.
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 January 21, 1997.
TRD-9700897
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

7 TAC sec.sec.105.1-105.19
The State Securities Board proposes new sec.sec.105.1-105.19, concerning rules 
of practice in contested cases. The existing Chapter 105 is being concurrently 
proposed for repeal. 
John R. Morgan, Deputy Securities Commissioner, David Grauer, Director, 
Enforcement Division, and Michael S. Gunst, Director, Dealer Registration 
Division, have determined that for the first five-year period the rules are in 
effect there will be no fiscal implications for state or local government as a 
result of enforcing or administering the rules. 
Messrs. Morgan, Grauer, and Gunst also have determined that for each year of the 
first five years the rules are in effect the public benefit anticipated as a 
result of enforcing the rules will be that the rules will reflect the provisions 
of the Administrative Procedure Act and other requirements regarding hearings in 
contested cases conducted by the State Office of Administrative Hearings. There 
will be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the rules as proposed. Comments on the 
proposal to be considered by the Board must be submitted in writing within 30 
days after publication of the proposed sections in the Texas Register. Comments 
should be sent to David Weaver, State Securities Board, P.O. Box 13167, Austin, 
Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The new rules are proposed under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
The new rules affect Texas Civil Statutes, Articles 581-14, 581-23, and 581-24.

sec.105.1. Scope.
These rules of practice are applicable to contested cases under the Texas 
Securities Act (the "Act"). A "contested case" means a proceeding in which the 
legal rights, duties, or privileges of a party are to be determined after an 
opportunity for adjudicative hearing. A "party" means an applicant for 
registration as a dealer or salesman under the Act, sec.sec.15 or 18, applicant 
for registration of securities under the Act, sec.7, or a person named in an 
administrative action taken, or proposed to be taken by the Securities 
Commissioner. In a contested case, each party is entitled to an opportunity for 
hearing after reasonable notice of not less than 10 days and to respond and 
present evidence and argument on each issue involved in the case. Such hearings 
shall be open to the public in accordance with the Public Information Act, Texas 
Government Code, Chapter 551, and conducted in accordance with the 
Administrative Procedure Act, Texas Government Code, Chapter 2001. 

sec.105.2. Service of Notice.
Unless otherwise specified in this chapter, notice to a party in a contested 
case shall be by personal service or by registered or certified mail to the 
party's last known address. Service by mail shall be complete upon deposit of 
the document, enclosed in a postpaid, properly addressed wrapper, in a post 
office or official depository under the care and custody of the United States 
Postal Service. 

sec.105.3. Computation of Time.
Unless otherwise required by law, in computing any period of time set forth in 
this chapter, the date of the act, event, or default after which the designated 
period of time begins to run is not to be included. The last day of the period 
so computed is to be included, unless it is a Saturday, Sunday, or a legal 
holiday, in which event the period runs until the end of the next day which is 
not a Saturday, Sunday nor a legal holiday. 

sec.105.4. Request for Hearing.
An applicant taking exception to the failure or refusal of the Securities 
Commissioner to register the applicant as a dealer or salesman under the Act, 
sec.sec.15 or 18, or failure to register securities of the applicant under the 
Act, sec.7, may request a hearing pursuant to the Act, sec.24, by filing a 
written request with the Securities Commissioner. A party named in an ex parte 
order issued, or proposed to be issued by the Securities Commissioner may 
request a hearing pursuant to the Act, sec.24, by filing a written request with 
the Securities Commissioner no later than the 30th day after the date on which 
the party is notified of such action or proposed action. 

sec.105.5. Presiding Officer or Body. 
All hearings in contested cases will be conducted by the State Office of 
Administrative Hearings pursuant to the Administrative Procedure Act. An 
informal disposition of a contested case may be made by the Securities 
Commissioner without a hearing by stipulation of the parties, agreed settlement, 
consent order, or default. 

sec.105.6. Notice of Hearing. 
(a) A notice of hearing shall include: 
(1) a statement of the time, place and nature of the hearing;
(2) a statement of the legal authority and jurisdiction under which the hearing 
is to be held; 
(3) a short, plain statement of the matters asserted;
(4) a description of the relief requested; and 
(5) if applicable, the disclosure language set forth in sec.105.7 of this title 
(relating to Written Response to Notice of Hearing).
(b) The Director or an Assistant Director of the Enforcement Division may sign 
notices of hearings. 

sec.105.7. Written Response to Notice of Hearing.
(a) If the notice of hearing provides for at least 30 days notice to a party 
prior to the hearing in a contested case, the respondent shall file with both 
the staff of the State Securities Board and the State Office of Administrative 
Hearings a written answer or other responsive pleading to the matters asserted 
in the notice of hearing no later than the 20th day after the date of service of 
notice to the respondent of the hearing. 
(1) Such a notice of hearing shall include the following disclosure language set 
forth in capital letters and 12-point boldface type: IF YOU DO NOT FILE A 
WRITTEN ANSWER OR OTHER WRITTEN RESPONSIVE PLEADING TO THIS NOTICE OF HEARING NO 
LATER THAN THE 20TH DAY AFTER THE DATE ON WHICH THIS NOTICE WAS MAILED TO YOU, 
OR IF YOU FAIL TO ATTEND THE HEARING, THE SECURITIES COMMISSIONER MAY DISPOSE OF 
THIS CASE WITHOUT A HEARING AND GRANT THE RELIEF SET FORTH IN THIS NOTICE. THE 
RESPONSE MUST BE FILED IN AUSTIN, TEXAS, WITH THE STAFF OF THE STATE SECURITIES 
BOARD AND THE STATE OFFICE OF ADMINISTRATIVE HEARINGS. 
(2) Such a notice of hearing shall include the mailing addresses where the 
response may be filed with the staff of the State Securities Board and the State 
Office of Administrative Hearings. 
(b) The failure of a respondent to timely file a written response as provided in 
this section shall entitle the agency to the remedies relating to default set 
forth in sec.105.8 of this title (relating to Default).
(c) If the notice of hearing provides for less than 30 days notice to a party 
prior to the hearing in a contested case, then no answer need be filed and all 
allegations will be deemed to be denied by the party. 

sec.105.8. Default. 
(a) The Securities Commissioner may make an informal disposition of the 
contested case by default by issuing an order in which the relief requested in 
the notice of hearing is granted and the matters set forth in the notice are 
deemed admitted as true upon proof to the Securities Commissioner of proper 
notice to a respondent in a contested case and that the respondent has failed 
to: 
(1) file a written response as provided in sec.105.7 of this title (relating to 
Written Response to Notice of Hearing); or 
(2) appear in person or through a legal representative on the day and at the 
time set for the hearing of the case, whether or not a written response has been 
filed. 
(b) The administrative law judge assigned to a contested case shall promptly 
grant a motion by the staff of the State Securities Board to seek informal 
disposition of the case by default. 
(c) Upon the motion of a respondent, the Securities Commissioner may, for good 
cause shown, set aside a default order and reschedule a hearing with the State 
Office of Administrative Hearings. 
(1) A motion by a respondent to set aside a default order shall be filed with 
the Securities Commissioner not later than the 20th day after the date of 
service of notice to the respondent of the default order. 
(2) A reply by the staff of the State Securities Board to the motion by a 
respondent to set aside a default order must be filed with the Securities 
Commissioner not later than the 30th day after the date of service of notice to 
the respondent of the default order. 
(3) If the Securities Commissioner does not formally grant or deny the motion 
filed by a respondent to set aside a default order not later than the 45th day 
after the date of service of notice to the respondent of the default order, the 
motion shall be considered denied. 

sec.105.9. Appearance.
In order to promote speedy and orderly hearings, parties and their attorneys, if 
any, should arrive at the place designated for the hearing at least one hour 
prior to the time set for such hearing in order to provide the parties an 
opportunity to resolve procedural matters. 
(1) An individual may appear in his or her own behalf; a member of a partnership 
may represent the partnership; a bona fide officer of a corporation, trust, 
association, or other form of organization may represent that entity; and a duly 
authorized officer or employee of a state commission or of a department or 
political subdivision of the state may represent the state commission or the 
department or political subdivision of the state, in any proceeding. 
(2) A person may be represented in a contested case by an attorney-at-law duly 
admitted to practice in Texas under the rules of the Texas Supreme Court. 
Attorneys who are admitted to practice law in states other than Texas must 
comply with the Texas Supreme Court rules governing admission to the Bar of 
Texas. 
(3) When a respondent appears in his or her own behalf the respondent shall file 
with the staff of the State Securities Board or otherwise state on the record an 
address at which any notice or other written communication required to be served 
upon or furnished to the respondent may be sent. When an attorney appears in a 
representative capacity, the attorney shall file with the staff of the State 
Securities Board or otherwise state on the record a notice of such appearance, 
which shall state the attorney's name, address, and telephone number and the 
name and address of the person or persons on whose behalf the attorney appears. 
Any additional notice or other written communication required to be served or 
furnished to the client may be sent to the attorney at the attorney's stated 
address. 
(4) Disruptive conduct at any hearing may be ground for exclusion of the person 
responsible therefor from said hearing for the duration of the hearing. 

sec.105.10. Continuance. 
(a) Motions for continuance shall: 
(1) be in writing, and shall set forth the specific grounds upon which the party 
seeks the continuance; 
(2) be filed no later than five days before the date of the hearing, except, for 
good cause demonstrated in the motion, the administrative law judge may consider 
a motion filed subsequent to that time or presented orally at the hearing; 
(3) indicate that the movant has contacted the other party or parties and 
whether there is opposition to the motion, or describe in detail the movant's 
attempts to contact the other party or parties; 
(4) if seeking a continuance to a date certain, include a proposed date or dates 
(preferably a range of dates) and indicate whether the party or parties 
contacted agree on the proposed new date or dates; and
(5) be served on the other party or parties according to applicable filing and 
service requirements, except that a motion for continuance filed five days or 
less before the date of the hearing shall be served by hand or facsimile on the 
same date it is filed with the office, or by overnight delivery on the next day, 
unless the motion demonstrates such service is impracticable. 
(b) Responses to written motions for continuance shall be in writing, except 
responses to written motions for continuance filed on the date of the hearing 
may be presented orally at the hearing. Written responses to motions for 
continuance shall be filed on the earlier of: 
(1) three days after receipt of the motion; or 
(2) the date and time of the hearing. 

sec.105.11. Stipulations, Agreed Settlements and Consent Orders. 
(a) The parties to a hearing may, by stipulation in writing filed with the 
administrative law judge or by the making of a statement into the record, agree 
upon the facts or any portion of the facts involved in the pending controversy, 
which stipulation may be considered and used as evidence in the hearing. 
(b) At any time, the parties to a contested case may agree to a settlement of 
all matters in controversy in connection with the case and the Securities 
Commissioner may make an informal disposition of the case by agreed settlement 
or consent order without further proceedings by the State Office of 
Administrative Hearings. 

sec.105.12. Presentation of Evidence. 
(a) Hearings are conducted in a trial format, and unless otherwise agreed among 
the parties, the staff of the Securities Board will present its opening 
statement first, will present its evidence first, and will have the right to 
open and close arguments. The administrative law judge may reasonably limit the 
time allotted for arguments by the parties. 
(b) The staff will present evidence to prove the facts alleged in the notice of 
hearing. The staff will assume the burden of proving a prima facie case by a 
preponderance of the evidence based upon reasonable inferences drawn from the 
evidence presented, except that the burden of proof of an exemption shall be 
upon the party claiming the same. 
(c) The rules of evidence as applied in nonjury civil cases in the district 
courts of this state shall be followed to the extent required by the 
Administrative Procedure Act. Irrelevant, immaterial, or unduly repetitious 
evidence shall be excluded. 
(d) Witnesses may be sworn by the administrative law judge and the testimony 
taken under oath. 

sec.105.13. Subpoenas and Discovery.
(a) On a showing of good cause, and on deposit of sums that will reasonably 
ensure payment of witness fees and mileage, the Securities Commissioner shall 
issue a subpoena addressed to the sheriff or any constable to require the 
attendance of witnesses and the production of books, accounts, records, papers, 
correspondence, or other objects as may be necessary and proper for the purposes 
of the proceedings. 
(b) On a showing of good cause, and on deposit of sums that will reasonably 
ensure payment of witness fees and mileage, the Securities Commissioner shall 
issue a commission, addressed to the several officers authorized by statute to 
take depositions, to require that the deposition of a witness be taken, which 
commission shall authorize the issuance of any subpoenas necessary. 
(c) Any party desiring to take a deposition shall make written application 
therefor, setting forth the reasons why such deposition should be taken, the 
name and residence of the witness, the matters concerning which it is expected 
to question the witness, and the time and place proposed for the taking of the 
deposition. 
(d) Depositions will be taken in the manner prescribed for depositions in the 
Administrative Procedure Act. 
(e) A witness or deponent who is not a party and who is subpoenaed or otherwise 
compelled to attend any hearing or proceeding to give a deposition or to produce 
books, accounts, records, papers, correspondence, or other objects that may be 
necessary and proper for the purposes of the proceeding is entitled to receive: 
(1) mileage allowance as required by law, for going to and returning from the 
place of the hearing or the place where the deposition is taken, if the place is 
more than 25 miles from the person's place of residence; and 
(2) a fee as required by law, for each day or part of a day the person is 
necessarily present as a witness or deponent. 
(f) Mileage and fees to which a witness is entitled shall be paid by the party 
at whose request the witness appears or the deposition is taken, on presentation 
of proper vouchers sworn by the witness and approved by the Securities 
Commissioner. 
(g) Reimbursement of travel expenses for witnesses whose presence is required by 
the Securities Commissioner at hearings and investigative proceedings shall be 
at the same rate as is paid to state employees traveling on state business. 
(h) When the staff of the State Securities Board anticipates the commencement of 
a contested case and determines that it is necessary to perpetuate testimony to 
prevent a failure or delay of justice due to the risk of unavailability of the 
testimony after the action is commenced, such as with the acute illness of a 
potential witness or receipt of information that the potential witness intends 
to leave the subpoena jurisdiction of the Securities Commissioner, the staff may 
file a request with the Securities Commissioner for a commission to take a 
deposition as set forth in subsection (b) of this section. 
(1) The request shall show: 
(A) the staff anticipates the commencement of a contested case; 
(B) the subject matter of the anticipated action and the jurisdiction therein; 
(C) the names and addresses, if known, of the persons expected to be interested 
adversely to the staff; and 
(D) the names and addresses of the persons to be examined, the substance of the 
testimony which the staff expects to elicit from each, and the reasons why the 
testimony is necessary to prevent a failure or delay of justice. 
(2) Upon filing a request with the Securities Commissioner, a notice and copy of 
the request shall be served upon the witness, or witnesses, and upon each person 
named in the request as an expected adverse party. Each person served with a 
copy of the request shall have the right to respond to the request within 10 
days of service of notice by filing a response with the staff and the Securities 
Commissioner. 
(3) In any case where justice or necessity so requires, the Securities 
Commissioner may permit the taking of such depositions upon shorter notice than 
required by paragraph (2) of this subsection, or may extend such time in order 
to permit service on any adverse party. 
(4) If satisfied that the perpetuation of testimony may prevent a failure or 
delay of justice, the Securities Commissioner may issue a commission authorizing 
the taking of such deposition. 

sec.105.14. Assessment of Hearing Costs. 
The costs charged by the court reporting service and the State Office of 
Administrative Hearings for proceedings in a contested case may be assessed 
against a party or parties in such proportions as the administrative law judge 
may determine.

sec.105.15. Proposal for Decision. 
(a) At the conclusion of a hearing in a contested case, the administrative law 
judge assigned to hear the case at the State Office of Administrative Hearings 
will issue orders: 
(1) setting appropriate deadlines for the filing of the parties' Proposed 
Findings of Fact and Conclusions of Law in the case, if any, and the responses 
thereto, if any; and 
(2) setting appropriate deadlines for the filing of exceptions, if any, to the 
administrative law judges's Proposal for Decision, and replies thereto, if any. 
(b) In the event exceptions to the administrative law judge's Proposal for 
Decision are not filed, the State Office of Administrative Hearings loses 
jurisdiction over the case upon the expiration of the deadline for the filing of 
such exceptions. 
(c) In the event exceptions to the administrative law judge's Proposal for 
Decision are filed, the State Office of Administrative Hearings loses 
jurisdiction over the case upon the issuance of the administrative law judges's 
ruling on the said exceptions. 

sec.105.16. Order Issued by Securities Commissioner. 
(a) Upon issuance of the proposal for decision, if any, by the administrative 
law judge assigned to the case at the State Office of Administrative Hearings, 
the complete transcript and record in the case shall be sent directly to the 
Securities Commissioner. 
(b) The Securities Commissioner may change a finding of fact or conclusion of 
law made by the administrative law judge, or may vacate or modify an order 
issued by the administrative law judge only on grounds set forth in the 
Administrative Procedure Act. The Securities Commissioner shall state in writing 
the reason or basis for such a change.

sec.105.17. Motion for Rehearing. 
A motion for rehearing must be filed with the Securities Commissioner not later 
than the 20th day after the date on which the respondent or the party's attorney 
of record is notified of a decision. A reply to a motion for rehearing must be 
filed not later than the 30th day after the date on which the party or the 
party's attorney of record is notified of the decision. The Securities 
Commissioner shall act on a motion for rehearing not later than the 45th day 
after the date on which the party or the party's attorney of record is notified 
of the decision or the motion for rehearing is overruled by operation of law. 

sec.105.18. Final Decisions and Appeals. 
(a) A decision is final and appealable: 
(1) if a motion for rehearing is not filed on time, on the expiration of the 
period for filing a motion for rehearing; or 
(2) if a motion for rehearing is filed on time, on the date: 
(A) the order overruling the motion for rehearing is rendered; or 
(B) the motion is overruled by operation of law. 
(b) A person who is aggrieved by a final decision of the Securities Commissioner 
in a contested case may seek judicial review of the decision. Judicial review of 
such a decision is under the substantial evidence rule.

sec.105.19. Record. 
(a) Testimony taken at any hearing will be recorded stenographically and 
transcribed. 
(b) The record in a contested case includes the following:
(1) all pleadings, motions, and intermediate rulings; 
(2) evidence received or considered; 
(3) a statement of matters officially noticed; 
(4) questions and offers of proof, objections, and rulings on them; 
(5) proposed findings and exceptions; 
(6) any decision, opinion, or report by the administrative law judge; and 
(7) all briefs, memoranda, or data submitted to or considered by the 
administrative law judge. 
(c) In the event a final decision or order of the Securities Commissioner is 
appealed and the agency is required to transmit to the reviewing court a copy of 
the record of the agency proceeding, or any part thereof, the appealing party 
shall pay all of the costs of the preparation of any original or certified copy 
of the record of the agency proceeding that is required to be transmitted to the 
reviewing court. The charges imposed by this subsection will be the same as 
those charged by the agency for requests for photographic reproductions and 
certified copies of public records made pursuant to the provisions of the Public 
Information Act, Texas Government Code, Chapter 552. These charges are 
considered to be a court cost and may be assessed, all or in part, by the 
reviewing court in accordance with the Texas Rules of Civil Procedure. 
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 January 21, 1997.
TRD-9700898
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

CHAPTER 107.Terminology
7 TAC sec.107.2
The State Securities Board proposes an amendment to sec.107.2, concerning 
definitions. The proposal would add a definition of federal covered securities 
and provide references to various federal statutes that are cited throughout the 
Board's rules. It would also update various other definitions and make assorted 
other clarifications and corrections. 
Micheal Northcutt, Director, Securities Registration Division, has determined 
that for the first five-year period the rule is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the rule. 
Mr. Northcutt also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be the inclusion of new and updated definitions of terms that are used 
in the Texas Securities Act and elsewhere in the Board's rules. There will be no 
effect on small businesses. There is no anticipated economic cost to persons who 
are required to comply with the rule as proposed. Comments on the proposal to be 
considered by the Board must be submitted in writing within 30 days after 
publication of the proposed sections in the Texas Register. Comments should be 
sent to David Weaver, State Securities Board, P.O. Box 13167, Austin, Texas 
78711-3167, or sent by facsimile to (512) 305-8310. 
The amendment is proposed under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
The proposed amendment affects Texas Civil Statutes, Articles 581-1, et seq. 

sec.107.2. Definitions.
The following words and terms, when used in <nl> Part VII of <ol> this <nl> 
Title (relating to the State Securities Board)<ol> [chapter], shall have the 
following meanings, unless the context clearly indicates otherwise. 
Act or Securities Act or Texas Securities Act - The <nl> Texas <ol> Securities 
Act, Texas Civil Statutes, Article <nl> 581-1 <ol> [581] et seq., as amended. 
Affiliate - An <nl>"<ol> affiliate <nl>"<ol> of, or person <nl>"<ol> affiliated 
<nl>"<ol> with a specified person, is a person that directly, or indirectly 
through one or more intermediaries, controls or is controlled by, or is under 
common control with, the person specified. 
Applicant - A person who submits an application for registration of 
securities,<nl> documents in connection with an authorization to offer and sell 
federal covered securities,<ol> or for registration as a dealer, investment 
adviser, or salesman, or who files an application for an order of the <nl> 
Securities <ol> Commissioner.
Business days - For the purpose of filing Form 133.29 pursuant to the 
requirements of <nl>sec.109.13(l)<ol> [sec.109.13(1)] of this title (relating to 
Limited Offering Exemptions), means ordinary business days and does not include 
Saturdays, Sundays, or state holidays. 
Certified - In conjunction with the term "financial statement(s)," means 
financial statement(s) prepared in accordance with generally accepted accounting 
principles and examined in accordance with generally accepted auditing standards 
by independent certified public accountants or independent public accountants 
for the purposes of expressing an opinion thereon. Such opinion shall be one 
acceptable to the <nl> Securities <ol> Commissioner. 
Detailed balance sheet - A balance sheet <nl> prepared in accordance with either 
generally accepted accounting principles or generally accepted auditing 
standards <ol>. 
Employer - For purposes of the <nl> Texas<ol> Securities Act, sec.5.I(b), 
includes a general partner of a limited partnership with respect to a security 
sold or distributed by such limited partnership in a transaction otherwise 
meeting the requirements of sec.5.I(b).
<nl> Federal covered securities <ol> - <nl>Any security or securities described 
as a "covered security" or as "covered securities" in the Securities Act of 
1933, sec.18(b). However, until October 11, 1999, federal covered securities for 
which a fee has not been paid or promptly remedied following written 
notification from the Securities Commissioner to the applicant of the nonpayment 
or underpayment of such fees required by the Texas Securities Act, shall be 
excluded from the definition of federal covered securities.<ol> 
Financial statement(s) - Balance sheet and related statements of income, changes 
in stockholders' equity, and cash flows, all (consolidated, if applicable) 
prepared in accordance with generally accepted accounting principles. The 
information contained in the <nl> previously described <ol> [above] statements 
may vary according to presentation and titles as they relate to specific 
entities, such as individuals, partnerships, and nonprofit organizations. 
Investment adviser - Every person or company who for compensation engages in 
this state in the business of providing personalized analyses, advice, and/or 
recommendations to others, either directly or through publications or <nl> 
writings <ol> [writing], as to the advisability of investing in, purchasing, or 
selling securities. However, this interpretation is deemed not to apply to: 
(A) (No change.)
(B) any lawyer, accountant, engineer, or geologist, whose performance of such 
<nl> services <ol> [practices] is solely incidental to the practice of his <nl> 
or her <ol> profession; or 
(C) (No change.)
<nl> Investment Advisers Act of 1940 <ol>- <nl>The federal statute of that name, 
as amended, 15 United States Code sec.80b-1, et seq.<ol>
<nl> Investment Company Act of 1940 <ol>- <nl>The federal statute of that name, 
as amended, 15 United States Code sec.80a-1, et seq.<ol>
NASD - <nl> The <ol> National Association of Securities Dealers, Inc.
Profit and loss statement - An income statement <nl> prepared in accordance with 
either generally accepted accounting principles or generally accepted auditing 
standards <ol>. 
Proposed plan of business - As used in the <nl> Texas <ol> Securities Act, those 
aspects and only those aspects of the business set-up (other than that done or 
proposed in respect to the pricing and selling of its securities) which would 
materially affect the business relationship between the prospective investor and 
those in control of the business as such relationship would exist after the sale 
to the public of the securities sought to be registered. 
Rule - Any statement by the Board or the <nl> Securities <ol> Commissioner of 
general applicability that implements, interprets, or prescribes law or policy, 
or describes the procedure or practice requirements of the Board or <nl> 
Securities <ol> Commissioner.
Savings and loan association - For definition see the Texas Savings and Loan Act 
(Texas Civil Statutes, Article 852a, as amended) <nl>,<ol> which regulates such 
savings and loan associations.
<nl> Securities Act of 1933 <ol>- <nl>The federal statute of that name, as 
amended, 15 United States Code sec.77a, et seq.<ol>
<nl> Securities Exchange Act of 1934 <ol>- <nl>The federal statute of that name, 
as amended, 15 United States Code sec.78a, et seq.<ol>
Security holders or purchasers of securities - As such terms are used in the 
<nl> Texas <ol> Securities Act, sec.5.I, do not include holders of any options 
granted pursuant to a plan which falls within the exemption for employee plans 
provided by the <nl> Texas <ol> Securities Act, sec.5.I(b). 
Staff - Personnel of the Securities Board, excluding the members of the Board, 
the <nl> Securities <ol> Commissioner <nl>,<ol> and the Deputy Commissioner. 
State, territory, or insular possession of the United States - As used in the 
<nl> Texas <ol> Securities Act <nl>,<ol> includes a commonwealth. 
Statement of surplus - A statement of stockholders' equity <nl> prepared in 
accordance with either generally accepted accounting principles or generally 
accepted auditing standards <ol>. 
Telephone or telegram - For purposes of the <nl> Texas <ol> Securities Act, 
sec.7.C(2)(c), includes any means of electronic transmission such as, but not 
limited to, telephone, telegraph, graphic scanning, modem, or facsimile; 
provided <nl>,<ol> however, that the office of the State Securities Board has 
the necessary equipment to accept such a transmission.
Within this state - 
(A) A person is a "dealer" who engages "within this state" in one or more of the 
activities set out in [sec.4.C of] the <nl> Texas <ol> Securities Act, 
<nl>sec.4.C, <ol> if either <nl> the person <ol> [he] or <nl> the person's <ol> 
[his] agent is present in this state or the offeree/purchaser or <nl> the 
offeree/purchaser's <ol> [his] agent is present in this state at the time of the 
particular activity. A person can be a dealer in more than one state at the same 
time.
(B) Likewise, a person is a "salesman" who engages "within this state" in one or 
more of the activities set out in [sec.4.D of] the <nl> Texas Securities <ol> 
Act, <nl>sec.4.D, <ol> whether by direct act or through subagents except as 
otherwise provided, if either <nl> the salesman <ol> [he] or <nl> the salesman's 
<ol> [his] agent is present in this state or the offeree/purchaser or <nl> the 
offeree/purchaser's <ol> [his] agent is present in this state at the time of the 
particular activity. A person can be a salesman in more than one state at the 
same time. 
(C) Offers and sales can be made by personal contact, mail, telegram, telephone, 
<nl> electronic communication, <ol> or any other form of oral or written 
communication. 
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 January 21, 1997.
TRD-9700899
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

CHAPTER 109.Transactions Exempt From Registration
7 TAC sec.109.13
The State Securities Board proposes an amendment to sec.109.13(k), concerning 
the uniform limited offering exemption. The amendment would clarify the 
availability of the exemption in Texas for offers and sales of federal covered 
securities offered pursuant to Securities and Exchange Commission ("SEC") 
Regulation D, Rule 506. The clarification is necessitated by the passage of the 
National Securities Markets Improvement Act of 1996, Public Law No. 104-290. It 
also adds a cross-reference to new Chapter 114, relating to federal covered 
securities (which is being concurrently proposed), for fee and filing 
requirements in connection with Rule 506 offerings in Texas. Micheal Northcutt, 
Director, Securities Registration Division, has determined that for the first 
five-year period the rule is in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the rule. 
Mr. Northcutt also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be the elimination of confusion over the requirements in Texas in 
relation to offerings of federal covered securities under SEC Rule 506. There 
will be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the rule as proposed. Comments on the 
proposal to be considered by the Board must be submitted in writing within 30 
days after publication of the proposed sections in the Texas Register<ol>. 
Comments should be sent to David Weaver, State Securities Board, P.O. Box 13167, 
Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The amendment is proposed under Texas Civil Statutes, Articles 581-28-1 and 581-
5.T. Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the Texas 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. Section 5.T provides that the Board may prescribe new 
exemptions by rule. 
The proposed amendment affects Texas Civil Statutes, Article 581-7. 

sec.109.13. Limited Offering Exemptions.
(a)-(j) (No change.) 
(k) Uniform limited offering exemption. In addition to sales made under the 
Texas Securities Act, sec.5.I, the State Securities Board, pursuant to the Act, 
sec.5.T, exempts from the registration requirements of the Act, sec.7, any offer 
or sale of securities offered or sold in compliance with the Securities Act of 
1933, Regulation D, Rules 230.505 and/or 230.506, including any offer or sale 
made exempt by application of Rule 508(a), as made effective in United States 
Securities and Exchange Commission Release Number 33-6389 and as amended in 
Release Numbers 33-6437, 33-6663, 33-6758, and 33-6825, and which satisfies the 
following further conditions and limitations.
(1)-(15) (No change.) 
<nl>(16)<ol> <nl> If the securities comply with this subsection (except for 
paragraphs (2)-(5) of this subsection) and are federal covered securities, as 
that term is defined in sec.107.2 of this title (relating to Definitions), the 
issuer should refer to Chapter 114 of this title (relating to Federal Covered 
Securities) for the applicable filing and fee requirements.<ol> 
(l) (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 January 21, 1997.
TRD-9700901
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

CHAPTER 113.Registration of Securities
7 TAC sec.113.2, sec.113.12
The State Securities Board proposes amendments to sec.113.2, concerning 
registration by coordination, and sec.113.12, concerning applicability of 
guidelines. Both sections are amended to reflect changes in the law necessitated 
by the passage of the National Securities Markets Improvement Act of 1996, 
Public Law No. 104-290. Section 113.2 is amended to clarify that federal covered 
securities are not required to be registered by coordination in Texas and to 
provide a cross-reference to new Chapter 114, concerning federal covered 
securities which is being concurrently proposed, for determining the fee and 
filing requirements for offerings of federal covered securities. Section 113.12 
is amended to clarify that the guidelines do not apply to offerings of federal 
covered securities; remove a reference to Chapter 123, parts of which are being 
concurrently proposed for repeal; and to add Chapter 129, administrative 
guidelines for registration of asset-backed securities, which was recently 
adopted by the Board. 
Micheal Northcutt, Director, Securities Registration Division, has determined 
that for the first five-year period the rules are in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the rules. 
Mr. Northcutt also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be clarification of their applicability to federal covered securities 
offered in Texas. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the rules 
as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The amendments are proposed under Texas Civil Statutes, Article 581-28-1. 
Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the Texas 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. 
The proposed amendments affect Texas Civil Statutes, Article 581-7. 

sec.113.2. Registration by Coordination.
(a) Time to file. Applications for registration under the <nl> Texas <ol> 
Securities Act, sec.7.C, should be filed contemporaneously with the Securities 
and Exchange Commission ("SEC") registration application. Delayed filings will 
jeopardize coordination effectiveness.
(b) Who should file. Applications to register securities of open-end investment 
companies and unit investment trusts subject to the provisions of the Investment 
Company Act of 1940, the Securities Act of 1933, and the Securities Exchange Act 
of 1934, will be considered and treated as applications to register securities 
by coordination <nl>, if the securities are not federal covered securities as 
that term is defined in sec.107.2 of this title (relating to Definitions). 
Filings and fees relating to federal covered securities are addressed in Chapter 
114 of this title (relating to Federal Covered Securities)<ol>. 

sec.113.12. Applicability of Guidelines.
The guidelines listed in this section do not apply to offerings made pursuant to 
an exemption under either the <nl> Texas <ol> Securities Act [(Act)], sec.5 or 
sec.6 <nl>, or to an offering of federal covered securities, as that term is 
defined in sec.107.2 of this title (relating to Definitions)<ol>. In other 
words, the requirements contained in one of the following guidelines would apply 
only to an offering for which an application for registration is filed with the 
Securities Commissioner: 
(1)-(3) (No change.) 
[(4) Chapter 123 of this title (relating to Administrative Guidelines for 
Registration of Open-End Investment Companies);] 
<nl>(4)<ol> [(5)] Chapter 124 of this title (relating to Administrative 
Guidelines for Registration of Periodic Payment Plans); 
<nl>(5)<ol> <nl> Chapter 129 of this title (relating to Administrative 
Guidelines for Registration of Asset-Backed Securities);<ol> 
(6)-(8) (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 January 21, 1997.
TRD-9700902
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

CHAPTER 114.Federal Covered Securities
7 TAC sec.sec.114.1-114.4
The State Securities Board proposes new Chapter 114, sec.sec.114.1-114.4, 
concerning federal covered securities. A definition of "federal covered 
securities" is being concurrently proposed in an amendment to sec.107.2 of this 
title, relating to definitions. The new Chapter 114 is necessitated by the 
passage of the National Securities Markets Improvement Act of 1996 ("NSMIA"), 
Public Law No. 104-290. There is some uncertainty as to the effect of certain 
provisions of NSMIA; the proposals, if adopted, will likely be adopted with 
changes, which take into account the resolution of some of the ambiguities and 
provide greater uniformity with responses and interpretations adopted by other 
securities regulators. 
Micheal Northcutt, Director, Securities Registration Division has determined 
that for the first five-year period the rules are in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the rules. 
Mr. Northcutt also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be to apprise issuers of federal covered securities of the filing 
requirements associated with the offer and sale of such securities in Texas. 
Although, as a result of NSMIA, certain aspects of the state requirements 
imposed on federal covered securities are currently in flux, the proposal seeks 
to obtain a greater degree of uniformity with other securities regulators, than 
presently exists. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the rules 
as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The new rules are proposed under Texas Civil Statutes, Articles 581-28-1 and 
581-5.T. Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the Texas 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. Section 5.T provides that the Board may prescribe new 
exemptions by rule. 
The new rules affect Texas Civil Statutes, Articles 581-5, 581-6, 581-7, 581-8, 
581-35, 581-35-1, and 581-35-2.

sec.114.1. Introduction.
(a) Scope. This chapter covers filings and fees required to be paid in 
connection with the issuance of an authorization to offer and sell federal 
covered securities. 
(b) Availability of a corresponding state exemption. Except as otherwise 
provided herein, the filing and fee requirements detailed in this chapter do not 
apply to federal covered securities that are exempt from registration pursuant 
to the Texas Securities Act, sec.5 or sec.6. 

sec.114.2. Definitions. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise.
Act or Securities Act or Texas Securities Act - The Texas Securities Act, Texas 
Civil Statutes, Article 581-1, et seq., as amended.
Federal covered securities - Shall have the same meaning as provided in 
sec.107.2 of this title (relating to Definitions).
Listed securities - The category of nationally traded federal covered securities 
defined in the Securities Act of 1933, sec.18(b)(1).
SEC - The United States Securities and Exchange Commission. 

sec.114.3. Consents to Service of Process. 
(a) Unless otherwise provided in subsection (b) of this section, a consent to 
service of process is required from an issuer of federal covered securities that 
is organized under the laws of any other state, territory, or government, or 
domiciled in any state other than Texas. The written consent to service of 
process must be duly executed by an authorized agent of the issuer, under proper 
resolution or authority of the appropriate governing body, and irrevocably 
appoint the Securities Commissioner as the issuer's true and lawful attorney 
upon whom all process may be served in any action or proceeding against such 
issuer arising out of any transaction subject to the Texas Securities Act with 
the same effect as if such issuer were organized or created under the laws of 
Texas and had been lawfully served with process therein. 
(b) The consent to service of process filed through the Securities Registration 
Depository System will satisfy, in all respects, the requirements governing 
consents to service of process set out in this subsection and in the Texas 
Securities Act, sec.8. 

sec.114.4. Filings and Fees. 
(a) Generally. Unless otherwise provided in subsection (b) of this section, 
prior to the initial offer of the federal covered securities in this state, the 
issuer shall provide to the Securities Commissioner: 
(1) a notice filing, consisting of page 1 of a Form U-1, Uniform Application to 
Register Securities, with items 1-6 completed, or a document providing 
substantially the same information; 
(2) a consent to service of process signed by the issuer, if required by 
sec.114.3 of this title (relating to Consents to Service of Process); and 
(3) a fee of $10, plus one-tenth of 1.0% of the aggregate amount of federal 
covered securities proposed to be sold to persons located within this state 
based on the price at which such securities are to be offered to the public, as 
provided in the Texas Securities Act, sec.sec.35.D and 35.E. 
(b) Special circumstances. 
(1) SEC Regulation D, Rule 506 offerings. In connection with an offering 
described in both sec.109.13(k)(16) of this title (relating to Limited Offering 
Exemptions) and SEC Regulation D, Rule 506, at the time the Form D is filed with 
the SEC, but no later than 15 days after the first sale of the federal covered 
securities in this state, the issuer shall provide to the Securities 
Commissioner: 
(A) a notice on Form D; 
(B) a consent to service of process signed by the issuer, if required by 
sec.114.3 of this title (relating to Consents to Service of Process); and 
(C) a fee of one-tenth of 1.0% of the aggregate amount of federal covered 
securities described as being offered for sale, but in no case more than $500, 
as provided in the Texas Securities Act, sec.35.J.
(2) Listed securities. No filing or fee shall be required of an issuer offering 
federal covered securities that are also "listed securities" as defined in 
sec.114.2 of this title (relating to Definitions).
(3) Money market status approved. In connection with an offering of securities 
of an issuer which has applied for and been granted money market status as 
provided in sec.123.3 of this title (relating to Conditional Exemption for Money 
Market Funds), the issuer shall provide to the Securities Commissioner: 
(A) a consent to service of process signed by the issuer, if required by 
sec.114.3 of this title (relating to Consents to Service of Process), if such a 
consent to service has not previously been filed with the Securities 
Commissioner; and 
(B) the fee provided for in sec.123.3 of this title (relating to Conditional 
Exemption for Money Market Funds). 
(c) Supplemental reports. Each applicant required to pay a fee in connection 
with federal covered securities offered in this state, shall submit to the 
Securities Commissioner annual reports showing the amount of federal covered 
securities authorized to be sold in Texas, the actual amount sold in Texas, the 
consideration received therefor, and the amount of unsold securities authorized 
to be sold in Texas. Upon completion of all offerings of federal covered 
securities authorized for sale in Texas, a final sales report must be filed with 
the Securities Commissioner showing the total aggregate amount of federal 
covered securities authorized and sold in Texas and the total consideration 
received therefor. 
(d) Excess sales. 
(1) Except as provided in paragraph (2) of this subsection, an offeror who sells 
securities in this state in excess of the amount of federal covered securities 
authorized may do the following. 
(A) If the authorization is still in effect an offeror may:
(i) request authorization for the excess securities by paying three times the 
difference between the initial fee paid and one-tenth of 1.0% of the aggregate 
amount of the securities sold to persons in this state, as provided in the Texas 
Securities Act, sec.35-1.A; and 
(ii) pay an amendment fee of $10, as provided in the Texas Securities Act, 
sec.35.D. 
(B) If the authorization is no longer in effect an offeror may: 
(i) request authorization of the excess securities in accordance with 
subparagraph (A)(i) of this paragraph, plus interest on the amount of fees owed 
computed at the rate of 6.0% from the date the authorization was no longer in 
effect until the date the subsequent request is made; and 
(ii) pay an amendment fee of $10, as provided in the Texas Securities Act, 
sec.35.D. 
(C) The authorization for the excess securities shall be effective retroactively 
to the effective date of the initial authorization for the offering. 
(2) An offeror in an SEC Regulation D, Rule 506 offering, who paid less than the 
maximum fee prescribed in subsection (b)(1) of this section and sells securities 
in excess of the amount of federal covered securities authorized may do the 
following: 
(A) file an amended Form D disclosing the amount of federal covered securities 
offered; and 
(B) pay three times the difference between the initial fee paid and the fee 
which should have been paid, plus interest on the fee owed computed at the rate 
of 6.0% from the date the original Form D was received by the Securities 
Commissioner until the date the amended notice is received by the Securities 
Commissioner, as provided in the Texas Securities Act, sec.35-1.B. 
(3) After compliance with paragraph (2) of this subsection, the amended Form D 
shall be effective retroactively to the date of the initial filing. 
(e) Requests for additional documents. The Securities Commissioner may, upon 
written request, require a copy of any document required to be filed with the 
SEC in connection with the offering or sale of the federal covered securities. 
(f) Period of effectiveness. 
(1) The initial authorization for federal covered securities of an open-end 
investment company, as defined in the Investment Company Act of 1940, shall be 
effective until two months after the end of the issuer's fiscal year. After the 
initial authorization, the issuer or its agent may renew the authorization by 
submitting, within two months after the end of the issuer's fiscal year: 
(A) a notice filing, consisting of page 1 of a Form U-1, Uniform Application to 
Register Securities, with items 1-6 completed, or a document providing 
substantially the same information; 
(B) payment of the appropriate fees. 
(2) The authorization for federal covered securities of a unit investment trust, 
as defined in the Investment Company Act of 1940, shall be effective until one 
year from the date of effectiveness granted by the SEC. 
(3) Any other authorization of federal covered securities shall be effective for 
one year from the date the authorization is accepted by the Securities 
Commissioner. 
(4) The renewal of an authorization for federal covered securities under this 
chapter may be renewed for additional periods of one year if the notice filing 
and renewal fees are received prior to the expiration date of the existing 
authorization. Failure to tender the renewal fee prior to the expiration date 
may subject the issuer to higher fees, pursuant to the Texas Securities Act, 
sec.sec.35-1 or 35-2. 
(g) Money market fund determinations pursuant to sec.123.3. A fund, offering 
federal covered securities, that is determined to be a money market fund 
pursuant to sec.123.3 of this title (relating to Conditional Exemption for Money 
Market Funds) shall pay the fees provided for in that section. 
(h) Preservation of fees. The fees provided in this section correspond to the 
filing or registration fees that would be collected pursuant to the Texas 
Securities Act in effect on the day before the effectiveness of the National 
Securities Markets Improvement Act of 1996, Public Law 104-290.
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 January 21, 1997.
TRD-9700903
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

CHAPTER 115.Dealers and Salesmen
7 TAC sec.sec.115.1-115.7
The State Securities Board proposes amendments to sec.sec.115.1-115.7, 
concerning dealers, investment advisers, agents, and salesmen. Throughout 
sec.sec.115.1-115.7, amendments are proposed to reflect changes necessitated by 
the passage of the National Securities Markets Improvement Act of 1996 
("NSMIA"), Public Law No. 104-290. There is some uncertainty as to the effect of 
certain provisions of NSMIA; the proposals, if adopted, will likely be adopted 
with changes, which take into account the resolution of some of the ambiguities 
and provide greater uniformity with responses and interpretations adopted by 
other securities regulators. The amendments also make a variety of changes to 
clarify existing provisions and achieve greater consistency of language 
throughout the chapter. 
A description of additional proposed amendments, unique to specific sections, 
follows. Section 115.1, concerning registration of dealers and salesmen, would 
be amended to create a new category of restricted registration, recognize a new 
examination, and change reporting requirements. The proposed amendments to 
sec.115.2, concerning applications, would change the disclosures that investment 
advisers must deliver to clients, require specific disclosures in advisory 
contracts, and address contract terminations. In addition, sec.115.3, concerning 
examinations, would be amended to recognize the Series 62 examination and 
clarify the requirements for persons registering to act as agents for investment 
advisers. Section 115.4, concerning evidences of registration, would be amended 
to clarify requirements on successor entities and authorize the issuance of 
temporary registrations. The proposed amendments to sec.115.5, concerning 
minimum records, would clarify standards applicable to investment advisers and 
allow investment advisers to maintain records in electronic format. Readers 
should be aware that the Securities and Exchange Commission ("SEC") has a 
proposal outstanding which, if adopted, would also impact the record keeping 
requirements contained in sec.115.5. The SEC proposal (Release No. 34-37850) 
appears in the October 28, 1996, issue of the Federal Register (61 Fed. Reg. 
55593). Section 115.6, concerning registration of persons with criminal 
backgrounds, would be amended to change the crimes considered as directly 
relating to the duties and responsibilities of dealers and their agents. 
Finally, amendments proposed to sec.115.7, concerning maintenance and inspection 
of records, would provide more flexibility in records inspection requests. 
Michael S. Gunst, Director, Dealer Registration Division has determined that for 
the first five-year period the rules are in effect there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering the rules. 
Mr. Gunst also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be to avoid confusion by having the rules reflect the parameters set 
by NSMIA and clarify requirements imposed on dealers and investment advisers, 
and their salesmen and agents. Although, as a result of NSMIA, this area of 
regulation is currently in flux, the proposal seeks a greater degree of 
uniformity with other securities regulators than presently exists. There will be 
no effect on small businesses. There is no anticipated economic cost to persons 
who are required to comply with the rules as proposed. 
Comments are sought regarding proposed sec.115.2(c)(2) and how best to make 
clear that investment advisers remain subject to current federal and state case 
law, rules and regulations, interpretative opinions, and administrative actions 
which impose disclosure requirements on them that are not otherwise spelled out 
in this subsection. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or submitted by facsimile to (512) 305-
8310. 
The amendments are proposed under Texas Civil Statutes, Articles 581-28-1 and 
581-12.B. Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the Texas 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. Section 12.B provides the Board with the authority to 
prescribe new dealer/agent registration exemptions by rule. 
The proposed amendments affects Texas Civil Statutes, Articles 581-13, 581-16, 
581-18, 581-23, 581-23-1, 581-25-1, 581-29, 581-32, 581-33, 581-35, and 581-41. 

sec.115.1. General <nl> Provisions<ol>.
(a) Registration. 
(1)-(2) (No change.) 
(3) <nl> Except as provided in subsection (i) of this section, <ol> [The 
Securities Act requires the registration of] investment advisers and their 
agents <nl> who solicit clients or who are <ol> [actually] involved in the 
rendering of investment advice <nl> must be registered with the Securities 
Commissioner. Officers of a corporation or partners of a partnership shall not 
be deemed salesmen or agents solely because of their status as officers or 
partners <ol>.
(4)-(5) (No change.) 
(b) Restricted registration. 
(1) Any person or company may apply for, and the <nl> Securities <ol> 
Commissioner may grant, restricted registration for the purpose of <nl> 
rendering advice regarding or <ol> effecting transactions in a particular type 
or category of securities, or securities representing interests in one or more 
types or categories of businesses. The restricted registrations are as follows: 
(A)-(F) (No change.) 
(G) registration with other restrictions which the <nl> Securities <ol> 
Commissioner may impose based upon the facts; 
(H)-(J) (No change.) 
(K) registration to accept orders unsolicited by such person from existing 
customers of the dealer <nl>; and <ol>
<nl>(L)<ol> <nl>registration to deal exclusively in corporate securities.<ol> 
(2) (No change.) 
(c) Availability of records. All applicants for dealer and/or investment adviser 
registration must execute a Form 133.16 agreement that records will be made 
available in <nl> accordance with the provisions of sec.115.7 of this title 
(relating to Maintenance and Inspection of Records) <ol> [the registrant's 
office for immediate inspection or, if required, will be made available in the 
office of the State Securities Board within 48 hours of request by the 
Commissioner or his representative].
(d) Officer or partner registration. Dealer or investment adviser applicants 
other than individuals must make an application to register an officer or 
partner in connection with the registration, and any such officer or partner 
must complete the necessary registration requirements. An applicant may 
designate as its officer or partner a <nl> control person <ol> [principal] 
registered <nl> in Texas via <ol> [on] the Central Registration Depository 
System maintained by the National Association of Securities Dealers. If the 
officer or partner resigns or is otherwise removed from his or her position, the 
firm shall make an application to register another officer or partner within 30 
days. 
(e) Multiple registration. 
(1) Any individual, partnership, corporation, or more than one business entity 
substantially controlled by the same persons seeking multiple registration 
shall: 
(A) undertake to the <nl> Securities <ol> Commissioner to disclose to each 
client or prospective client the applicant's affiliation(s) with other 
securities dealers or investment advisers, the nature of such affiliation(s), 
and the potential conflicts of interest arising out of such affiliation(s); 
(B) (No change.) 
(2) (No change.) 
(f) (No change.) 
(g) Reporting requirements. 
(1) <nl> Each person registered as a dealer or <ol> [All registered dealers and] 
investment advisers <nl> or as an agent thereof <ol> shall report to the <nl> 
Securities Commissioner <ol> [commission] within 30 days after its entry any 
action by a self-regulatory organization, any state or federal administrative 
order, criminal conviction, or court judgment, order, or decree described in 
paragraph (2) of this subsection which is entered against <nl> that person or an 
employee, officer, or agent thereof <ol> [the dealer or any salesmen or officer 
of the dealer]. Upon request by the <nl> Securities <ol> Commissioner, <nl> that 
person <ol> [the dealer] may be required to furnish to the <nl> Securities <ol> 
Commissioner copies of the order, conviction, or decree, or other documents, as 
applicable. 
(2) The following matters must be reported: 
(A) any administrative order issued by state or federal authorities, which 
order: 
(i) (No change.) 
(ii) <nl> was entered after notice and opportunity for a hearing, denying, 
suspending, or revoking the person's license as a dealer, agent, salesman, or 
investment adviser, or the substantial equivalent of those terms <ol> [has the 
effect of enjoining such person from activities subject to federal or state 
statutes designed to protect investors or consumers against unlawful or 
deceptive practices involving securities, insurance, commodities or commodity 
futures, real estate, franchises, business opportunities, consumer goods, or 
other goods and services]; 
(B) <nl> any felony criminal action or conviction, or any misdemeanor action or 
conviction based on fraud, deceit, or wrongful taking of property <ol> [any 
conviction of any felony or misdemeanor of which fraud is an essential element, 
or which is a violation of the securities laws or regulations of this state, or 
of any other state of the United States, or of the United States, or any foreign 
jurisdiction; or which is a crime involving moral turpitude; or which is a 
criminal violation of statutes designed to protect consumers against unlawful 
practices involving insurance, securities, commodities or commodity futures, 
real estate, franchises, business opportunities, consumer goods, or other goods 
and services]; 
(C)-(D) (No change.) 
<nl>(E)<ol> <nl> any change in any other information previously disclosed to the 
Securities Commissioner on any application form or filing. <ol> 
<nl>(3)<ol> [(E)] <nl> For <ol> [for] purposes of this subsection, <nl>" <ol> 
dealer <nl>"<ol> shall include any partners, directors, executive officers, or 
beneficial owner of 10% or more of any class of the equity securities of the 
registered dealer or investment adviser (beneficial ownership meaning the power 
to vote or direct the vote and/or the power to dispose or direct the disposition 
of such securities). 
(h) (No change.) 
<nl>(i)<ol> <nl>Persons not required to register as an investment adviser or an 
agent of an investment adviser on or after April 9, 1997.<ol> 
<nl>(1)<ol> <nl>Registration as an investment adviser is not required for the 
following:<ol> 
<nl>(A)<ol> <nl> an investment adviser subject to registration under the 
Investment Advisers Act of 1940, sec.203, and properly registered 
thereunder;<ol> 
<nl>(B)<ol> <nl> a person not registered under the Investment Advisers Act of 
1940, sec.203, because such person is excepted from the definition of an 
investment adviser under the Investment Advisers Act of 1940, sec.202(a)(11); or 
<ol>
<nl>(C)<ol> <nl> an investment adviser who does not have a place of business 
located within this state and, during the preceding 12-month period, has had 
fewer than six clients who are Texas residents.<ol> 
<nl>(2)<ol> <nl> Registration as an agent of an investment adviser is not 
required for an investment adviser agent who does not have a place of business 
located in Texas but who otherwise engages in the rendering of investment advice 
in this state.<ol> 
<nl>(3)<ol> <nl> Preservation of filing requirements and fees for investment 
advisers and agents exempted from registration pursuant to this subsection 
only.<ol>
<nl>(A)<ol> <nl> Initially, the provisions of paragraphs (1) and (2) of this 
subsection are available provided that the investment adviser or agent 
files:<ol> 
<nl>(i)<ol> <nl>a copy of its current Form ADV as filed with the Securities and 
Exchange Commission, if a Form ADV is required to be filed by the investment 
adviser or agent with the Securities and Exchange Commission;<ol> 
<nl>(ii)<ol> <nl> a consent to service of process; and <ol> 
<nl>(iii)<ol> <nl> an initial fee equal to the amount that would have been paid 
had the investment adviser or agent filed for registration in Texas.<ol> 
<nl>(B)<ol> <nl> Upon amendment to its Form ADV, the investment adviser or agent 
files:<ol>
<nl>(i)<ol> <nl>a copy of its amended Form ADV as filed with the Securities and 
Exchange Commission, if a Form ADV is required to be filed by the investment 
adviser or agent with the Securities and Exchange Commission; and <ol> 
<nl>(ii)<ol> <nl> an amendment fee of $25, as provided in the Texas Securities 
Act, sec.35.C. <ol> 
<nl>(C)<ol> <nl>Annually, the investment adviser or agent files:<ol> 
<nl>(i)<ol> <nl>a copy of its Form ADV as filed with the Securities and Exchange 
Commission, if a Form ADV is required to be filed by the investment adviser or 
agent with the Securities and Exchange Commission; and <ol> 
<nl>(ii)<ol> <nl> renewal fees which would have been paid had the investment 
adviser or agent been registered in Texas.<ol> 
<nl>(j)<ol> <nl>Persons not required to register as an agent or salesman. 
Registration as an agent or salesman is not required for a person, associated 
with a dealer registered in Texas, who effects a transaction pursuant to the 
Securities Exchange Act of 1934, sec.15(h)(3), provided such person is:<ol> 
<nl>(1)<ol> <nl>not ineligible to register with this state for any reason other 
than such a transaction; and <ol> 
<nl>(2)<ol> <nl> registered with a registered securities association and at 
least one other state.<ol> 
<nl>(k)<ol> <nl>Applicability of antifraud provisions. With regard to 
subsections (i) and (j) of this section, the Texas Securities Act (sec.sec.29, 
32, and 33) prohibits the use of false or misleading statements in dealing in 
any manner in any securities whether or not the person making the false or 
misleading statements is required to be registered. The Agency has jurisdiction 
to investigate and bring enforcement actions to the full extent authorized in 
the Texas Securities Act with respect to fraud or deceit, or unlawful conduct by 
a dealer, investment adviser, or agent in connection with transactions involving 
securities in Texas. Additionally, the Act, sec.23, authorizes the Securities 
Commissioner to issue a cease and desist order prohibiting an unregistered 
person from acting as a dealer in connection with a particular offering of 
securities. The Act, sec.23-1, authorizes the Securities Commissioner to issue 
an order which assesses an administrative fine against any person or company 
found to have violated any provision of the Texas Securities Act, Board rule, or 
Board order. The Act, sec.25-1, authorizes the Securities Commissioner, under 
certain circumstances, to appoint a receiver for any person or company acting as 
a dealer.<ol>

sec.115.2. Application.
(a)-(b) (No change.) 
(c) Investment <nl> advisers <ol> [advisors]--additional requirements. 
(1) In addition to the information required to be submitted by subsection (b) of 
this section, each applicant for registration as an investment adviser must 
furnish to the <nl> Securities <ol> Commissioner a copy of its standard advisory 
contract. 
(2) <nl> All registered investment advisers must deliver to all clients or 
prospective clients a written disclosure statement which may be <ol> [The 
applicant must also undertake to the Commissioner to disclose to each client or 
prospective client the following]:
(A) <nl> either Part II of Form ADV (Uniform Application for Investment Adviser 
Registration) or another disclosure statement which contains at least the 
information disclosed on Part II of Form ADV or to amend such an application 
under the Investment Advisers Act of 1940 (17 C.F.R. sec.279.1)) as made 
effective in Release Number IA-991 and corrected in Release Number IA-991A; or 
<ol> [the applicant's affiliation(s), if any, with other securities dealers or 
investment advisers, and the nature of such affiliation(s);] 
(B) <nl> a disclosure statement containing at least the information required by 
Schedule H of Form ADV, Uniform Application for Investment Adviser Registration, 
if the investment adviser is the sponsor, or the sponsor and the portfolio 
manager, of a wrap fee program which the client will enter into.<ol> [the 
applicant's fee schedule and whether fees are negotiable; and] 
[(C) whether the applicant will also act as a principal or as an agent to 
execute recommended transactions.] 
[(3) The applicant may satisfy the requirements of paragraph (2)(A)-(C) of this 
subsection by furnishing to the Commissioner a completed copy, as filed with the 
Securities and Exchange Commission, of Part II of Form ADV (Uniform Application 
for Investment Adviser or to amend such an application under the Investment 
Advisers Act of 1940 (17 Code of Federal Regulations sec.279.1)) as made 
effective in Release Number IA-991 and corrected in Release Number IA-991A.] 
<nl>(3)<ol> [(4)] The disclosure <nl> statement <ol> required by paragraph (2) 
[(A)-(C)] of this subsection shall be delivered to a client or prospective 
client either:
(A) not less than 48 hours prior to entering into any written or oral investment 
advisory contract with such client or prospective client; or 
(B) at the time of entering into any such contract, if the advisory client has 
the right to terminate the contract without penalty within five business days 
after entering into the contract. 
<nl>(4)<ol> <nl> Each advisory contract entered into within the State of Texas 
must contain the following provision: "Client acknowledges receipt of Part II of 
Form ADV, other disclosure statement containing the equivalent information, or a 
disclosure statement containing at least the information required by Schedule H 
of Form ADV if the client is entering into a wrap fee program sponsored by the 
investment adviser. If the appropriate disclosure statement was not delivered to 
the client at least 48 hours prior to the client entering into any written or 
oral advisory contract with this investment adviser, then the client has the 
right to terminate the contract without penalty within five business days after 
entering into the contract. For the purposes of this provision, a contract is 
considered entered into when all parties to the contract have signed the 
contract, or in the case of an oral contract otherwise signified their 
acceptance, any other provisions of this contract notwithstanding."<ol> 
(5) <nl> Investment advisers are free to provide a time period longer than five 
business days for penalty free termination by their clients. If the client 
chooses to terminate the contract within the five business day period, the 
adviser can only charge for fees incurred prior to the termination excluding 
administrative fees, account set-up fees, and minimum quarterly fees <ol> [The 
required disclosure to a client or prospective client may take the form of a 
brochure incorporating the information required by paragraph (2)(A)-(C) of this 
subsection]. 
(6) Nothing in this section shall relieve an investment adviser from any 
obligation pursuant to any provision of the Investment Advisors Act of 1940 or 
the rules and regulations thereunder or other federal <nl> case law, 
interpretative opinions, and administrative actions by the Securities and 
Exchange Commission (as in existence on April 8, 1997) <ol> or state law to 
disclose any information to its clients not specifically required by this 
section. 
(d) (No change.)

sec.115.3. Examination. 
(a) (No change.) 
(b) Content. Each applicant must satisfy two examination requirements.
(1) Each applicant must pass an examination on general securities principles. 
This requirement may be satisfied by passing an examination on general 
securities principles administered by the NASD. As set out in subparagraph (B) 
of this paragraph, applicants for restricted registrations may substitute an 
examination dealing with a particular type of security for an examination on 
general securities principles. 
(A) (No change.) 
(B) In lieu of an examination on general securities principles, the Securities 
Commissioner recognizes the following limited examinations, administered by the 
NASD, for the corresponding restricted registrations:
(i)-(ii) (No change.) 
(iii) for persons seeking the type of restricted registration specified in 
sec.115.1(b)(1)(I) of this title (relating to General Provisions), the Series 22 
-- Direct Participation Programs Representative Examination; [and] 
(iv) for persons seeking the type of restricted registration specified in 
sec.115.1(b)(1)(B) of this title (relating to General Provisions), the Series 52 
-- Municipal Securities Representative Examination <nl>; and <ol>[.] 
<nl>(v)<ol> <nl>for persons seeking the type of restricted registration 
specified in sec.115.1(b)(1)(L) of this title (relating to General Provisions), 
the Series 62 -- Corporate Securities Representative Examination.<ol> 
(2) (No change.) 
(c) Exemptions from examination requirements. 
(1)-(2) (No change.) 
(3) A partial waiver of the examination requirements of the <nl> Texas <ol> 
Securities Act, sec.13.D, is granted by the Board to the following classes of 
persons: 
(A)-(G) (No change.) 
(H) applicants who are certified by the Certified Financial Planner Board of 
Standards, Inc. to be certified financial planners and who are seeking 
registration as investment advisers. These applicants are not required to take 
the general securities examination, but must pass the examination on state 
securities law as required by subsection (b)(2) of this section; [and] 
(I) applicants who are designated by the American Institute of Certified Public 
Accountants as accredited personal financial specialists and who are seeking 
registration as investment advisers. Such persons are not required to take the 
general securities examination, but are required to pass an examination on state 
securities law as required by subsection (b)(2) of this section <nl>; and <ol> 
[.] 
<nl>(J)<ol> <nl> applicants seeking registration for the purpose of acting 
exclusively as an agent for an investment adviser(s) and who limit their 
activities to disclosure of the information contained in Part II of Form ADV. 
Such persons are not required to take the general securities examination, but 
are required to pass an examination on state securities law as required by 
subsection (b)(2) of this section. <ol> 
(4)-(5) (No change.) 
(d)-(f) (No change.) 

sec.115.4. Evidences of Registration. 
(a) (No change.) 
(b) Amendments and successor entities. 
(1)-(2) (No change.) 
<nl>(3)<ol> <nl> The application for the successor entity should be filed far 
enough in advance that the application can be reviewed and approved prior to the 
successor entity taking over the business of the registered dealer. If a 
successor entity has taken over the business of a registered dealer before the 
application of the successor entity has been reviewed and approved, then the 
successor entity and its agents are subject to the sanctions provided by the 
Texas Securities Act for selling securities or rendering investment advice while 
unregistered. If specifically requested in writing with a completed application 
submission, a temporary registration for a term of 60 days may be granted by the 
Securities Commissioner at his or her discretion to allow the successor entity 
to carry on the business of the registered or extinct entity until the 
application can be reviewed and approved. An additional fee of $25, as required 
in paragraph (1) of this subsection, must be submitted with this request since 
it will involve an amendment to the evidence of registration when the 
application is approved.<ol> 
(c)-(g) (No change.)

sec.115.5. Minimum Records. 
(a) Dealer records. (Compliance with the <nl> record-keeping <ol> 
[recordkeeping] requirements of the United States Securities and Exchange 
Commission (17 Code of Federal Regulations sec.240.17a-3and sec.240.17a-4) will 
satisfy the following requirements <nl>.<ol>)[.] 
(1) (No change.) 
(2) Exemptions from the requirements of paragraph (1) of this subsection: 
(A) Paragraph (1) of this subsection shall not be deemed to require a dealer to 
make or keep such records of transactions cleared for such dealer by a member of 
the National Association of Securities Dealers, Inc., the American Stock 
Exchange, the Boston Stock Exchange, the Midwest Stock Exchange, the New York 
Stock Exchange, the Pacific Stock Exchange, the Chicago Board Option Exchange, 
or any other recognized and responsible stock exchange approved by the <nl> 
Securities <ol> Commissioner pursuant to [sec.6.F of] the <nl> Texas <ol> 
Securities Act <nl>, sec.6.F,<ol> where such records are customarily made and 
kept by the clearing member. 
(B)-(D) (No change.) 
(3) (No change.) 
(4) Records to be preserved by dealers. 
(A)-(E) (No change.) 
(F) The records required to be maintained and preserved pursuant to this section 
may be immediately produced or reproduced on microfilm or other photograph and 
may be maintained and preserved for the required time in that form provided that 
such microfilms or other photographs are arranged and indexed in such a manner 
as to permit the immediate location of any particular document, and that such 
microfilms or other photographs are at all times available for examination by 
representatives of the <nl> Securities <ol> Commissioner together with 
facilities for immediate, easily readable projection of the microfilm or other 
photograph and for the production of easily readable facsimile enlargements. 
(G)-(H) (No change.) 
(b) Investment <nl> adviser <ol> [advisor] records. [Investment adviser records 
(compliance] <nl> (Compliance <ol> with the record-keeping requirements of the 
United States Securities and Exchange Commission <nl>(17 Code of Federal 
Regulations sec.275.204-2 <ol> [(CFR sec.275-204-2]) will satisfy the following 
requirements <nl>.<ol>) [shall satisfy the following requirements:] 
(1) Records to be made by investment advisers. Persons registered as investment 
advisers <nl> whose principal place of business is located in another state 
shall maintain records at least in accordance with the minimum record keeping 
requirements of that state. Persons registered as investment advisers whose 
principal place of business is located <ol> in Texas shall make and keep current 
the following minimum records or the equivalent thereof: 
(A)-(H) (No change.) 
(2) Records to be preserved by investment advisers.
(A)-(D) (No change.) 
(E) The records required to be maintained and preserved pursuant to this section 
may be immediately produced or reproduced on microfilm or other photograph and 
may be maintained and preserved for the required time in that form, provided 
that such microfilms or other photographs are arranged and indexed in such a 
manner as to permit the immediate location of any particular document, and that 
such microfilms or other photographs are at all times available for examination 
by representatives of the <nl> Securities <ol> Commissioner together with 
facilities for immediate, easily readable projection of the microfilm or other 
photograph and for the production of easily readable facsimile enlargements. 
<nl> The records required to be maintained pursuant to this section may be 
maintained by any electronic medium available so long as such records are 
available for immediate free access by representatives of the Securities 
Commissioner. In the event that a records retention system commingles records 
required to be kept under this section with records not required to be kept, 
representatives of the Securities Commissioner may review all commingled 
records.<ol> 

sec.115.6. Registration of Persons with Criminal Backgrounds. 
(a) The application for registration may be denied, suspended, or revoked if the 
<nl> Securities <ol> Commissioner finds that the person has been convicted of a 
felony or misdemeanor offense which directly relates to its duties and 
responsibilities. In determining whether a prior criminal conviction directly 
relates to such duties and responsibilities, the <nl> Securities <ol> 
Commissioner shall consider:
(1)-(2) (No change.) 
(3) the extent to which the <nl> registration <ol> [license] applied for might 
offer an opportunity to engage in further criminal activity of the same type as 
that in which the applicant previously had been involved; and 
(4) (No change.) 
(b) In addition to the factors stated in subsection (a) of this section, the 
<nl> Securities <ol> Commissioner shall consider the following evidence in 
determining the present fitness of an applicant who has been convicted of a 
crime: 
(1)-(6) (No change.) 
(7) It shall be the responsibility of the applicant to the extent possible to 
secure and provide to the <nl> Securities <ol> Commissioner the recommendation 
of the prosecution, law enforcement, and correctional authorities as required 
under this section <nl>. The <ol> [; the] applicant shall also furnish proof
to the <nl> Securities <ol> Commissioner that he or she has maintained a record 
of steady employment and has supported his or her dependents and has otherwise 
maintained a record of good conduct and has paid all outstanding court costs, 
supervision fees, fines, and restitution as may have been ordered in all 
criminal cases in which he or she has been convicted. 
(c) The State Securities Board considers that the following crimes directly 
relate to the duties and responsibilities of securities dealers, agents, and 
salesmen: 
(1) any felony or misdemeanor of which fraud is an essential element <nl> or 
which involves wrongful taking of property<ol>; 
(2) any criminal violation of the securities <nl> laws <ol> [law] or regulations 
of this state, or of any other state in the United States, or of the United 
States, or any foreign jurisdiction; <nl> and <ol> 
[(3) any crime involving moral turpitude; and] 
<nl>(3)<ol> [(4)] any criminal violation of statutes designed to protect 
consumers against unlawful practices involving insurance, securities, 
commodities or commodity futures, real estate, franchises, business 
opportunities, consumer goods, or other goods and services. 
(d) (No change.) 
(e) The following procedures shall apply in the event of a denial, suspension, 
or revocation of license under this section. 
(1) Upon the <nl> Securities <ol> Commissioner's denial of registration to an 
applicant, the applicant may exercise his or her right to a hearing in 
accordance with [sec.24 of] the <nl> Texas <ol> Securities Act <nl> , sec.24 
<ol> (Texas Civil Statutes, Article 581-24). 
(2) Upon the <nl> Securities <ol> Commissioner's suspension or revocation of a 
<nl> registration <ol> [license] on the grounds specified in subsection (d) of 
this section, the person whose license has been suspended or revoked may 
exercise his or her right to a hearing in accordance with [sec.24 of] the <nl> 
Texas <ol> Securities Act <nl>, sec.24 <ol>(Texas Civil Statutes, Article 581-
24). 
(3) Nothing in this section shall be construed as affecting the statutory bases 
or procedures for denial, suspension, or revocation of <nl> registration <ol> 
[licenses] for dealers, agents, or salesmen, as set out in the <nl> Texas <ol> 
Securities Act [of Texas] (Texas Civil Statutes, Article 581-1 et seq.), as this 
section relates only to such actions based upon the matters stated in this 
section.
(4) If the <nl> Securities <ol> Commissioner denies, suspends, or revokes a <nl> 
registration <ol> [license] under this section, the <nl> Securities <ol> 
Commissioner shall notify the person affected in writing: 
(A) (No change.) 
(B) that a person whose <nl> registration <ol> [license] has been denied, 
suspended, or revoked, after exhausting administrative appeals, may file an 
action in Travis County, Texas, for review of the evidence presented to the <nl> 
Securities <ol> Commissioner and his <nl> or her <ol> decision, in
accordance with [sec.27 of] the <nl> Texas <ol> Securities Act <nl>, sec.27 <ol> 
(Texas Civil Statutes, Article 581-27); and 
(C) that the person seeking judicial review must file a petition with the court 
within 30 days after the <nl> Securities <ol> Commissioner's decision is final 
and appealable.

sec.115.7. Maintenance and Inspection of Records.
(a) (No change.) 
(b) The Securities Commissioner or his <nl> or her <ol> authorized 
representative may conduct on-site examinations of registered dealers and 
investment advisers without notice and shall be entitled to immediate and free 
access to all records required to be maintained pursuant to Board rules and to 
all locations where such records are kept. The Securities Commissioner or his 
<nl> or her <ol> authorized representative shall be permitted to make 
photostatic <nl> or computer <ol> copies of such records. 
(c) <nl> In the alternative, the <ol> [The] Securities Commissioner or his <nl> 
or her <ol> authorized representative may require that records maintained 
pursuant to Board rules be made available in <nl> any <ol> [the] office of the 
Texas State Securities Board <nl> designated by the Securities Commissioner or 
his or her representative <ol> within 48 hours of a request <nl> or within a 
greater time period as the Securities Commissioner or the Securities 
Commissioner's authorized representative deems reasonable <ol>. 
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 January 21, 1997.
TRD-9700904
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

CHAPTER 123.Administrative Guidelines for Registration of Open-End Investment 
Companies
7 TAC sec.123.1, sec.123.2
(Editor's Note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the State 
Securities Board or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The State Securities Board proposes the repeal of sec.sec.123.1 and 123.2, 
concerning guidelines for registration of open-end investment companies. The 
repeals are necessitated by the passage of the National Securities Markets 
Improvement Act of 1996 ("NSMIA"), Public Law No. 104-290, which removed most 
securities issued by open-end investment companies from the registration 
requirements of state law. After NSMIA, most investment companies will no longer 
be subject to the provisions of sec.sec.123.1 or 123.2, so those provisions are 
no longer needed. Investment company securities that do not come within the 
parameters of the exemption created by NSMIA will proceed under the auspices of 
Chapter 113, registration of securities, and be subject to general fairness 
standards. 
Micheal Northcutt, Director, Securities Registration Division, has determined 
that for the first five-year period the repeals are in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the repeals. 
Mr. Northcutt also has determined that for each year of the first five years the 
repeals are in effect the public benefit anticipated as a result of enforcing 
the repeals will be the elimination of unnecessary rules. There will be no 
effect on small businesses. There is no anticipated economic cost to persons who 
are required to comply with the repeals as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The repeals are proposed under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
The repeal affects Texas Civil Statutes, Article 581-7. 
sec.123.1. Generally.
sec.123.2. Registration Requirements.
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 January 21, 1997.
TRD-9700905
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

7 TAC sec.123.3
The State Securities Board proposes an amendment to sec.123.3, concerning a 
conditional exemption for money market funds. The amendments reflect changes 
necessitated by the passage of the National Securities Markets Improvement Act 
of 1996 ("NSMIA"), Public Law No. 104-290, and add a reference to an additional 
Securities and Exchange Commission ("SEC") release in subsection (b)(2). The SEC 
has a proposal outstanding which, if adopted, may also be added to the release 
list in subsection (b)(2). The SEC proposal (Release No. 33-7371) appears in the 
December 18, 1996, issue of the Federal Register (61 Fed. Reg. 66621). Related 
changes are being concurrently proposed to Form 133.26, concerning request for 
determination of money market fund, and Form 133.27, year-end report of sales, 
to reflect the proposed amendments to sec.123.3. 
Micheal Northcutt, Director, Securities Registration Division, has determined 
that for the first five-year period the rule is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the rule. 
Mr. Northcutt also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be to eliminate confusion and uncertainty over the treatment of 
federal covered securities determined to be money market funds for purposes of 
sec.123.3, by explaining that issuers of federal covered securities meeting the 
requirements in the section for money market fund status will be able to qualify 
for the exemption even through registration is no longer required after NSMIA. 
There will be no effect on small businesses. There is no anticipated economic 
cost to persons who are required to comply with the rule as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The amendment is proposed under Texas Civil Statutes, Articles 581-28-1 and 581-
5.T. Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the Texas 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. Section 5.T provides that the Board may prescribe new 
exemptions by rule. 
The proposed amendment affects Texas Civil Statutes, Articles 581-7 and 581-35. 

sec.123.3. Conditional Exemption for Money Market Funds.
(a) Introduction. 
(1) Certain open-end investment companies commonly known as money market funds 
have investment characteristics and sales patterns materially different from 
other types of mutual funds and other securities. These funds, defined in 
subsection (b) of this section, are designed to attract a large volume of 
comparatively short-term investments by purchasers. As early redemptions are 
contemplated by both purchaser and seller <nl>,<ol> and because these funds 
continuously offer to repurchase their own securities and issue new securities 
to new and repeat investors, an excessive amount of fees may be paid under the 
<nl> Texas <ol> Securities Act, sec.35.E, for the securities issued. Therefore, 
pursuant to the Act, sec.5.T, the State Securities Board conditionally exempts 
from the [registration] fee provisions of the <nl> Texas <ol> Securities Act 
certain investment company securities defined herein provided all the 
requirements of this <nl> section <ol> [rule] are satisfied. 
(2) Nothing in this section shall be construed to relieve any open-end 
investment company from any condition or requirement of registration under the 
Texas Securities Act except as specifically stated herein <nl> or in Chapter 114 
of this title (relating to Federal Covered Securities)<ol>. [No securities of 
open-end investment companies may be registered with the State Securities Board 
or conditionally exempted from registration under this section unless the 
Commissioner has determined that the offering is fair, just, and equitable to 
purchasers thereof in accordance with the requirements of the Act, sec.7 and 
sec.10.] 
(b) Definition. In this section, a "money market fund" or "fund" is an open-end 
investment company which must meet all of the following conditions.
(1) (No change.) 
(2) The fund must hold itself out to be a money market fund or an equivalent to 
a money market fund and must be in compliance with the Investment Company Act of 
1940, Rule 2a-7, as made effective in Securities and Exchange Commission Release 
Number IC-13380 and as amended in Release Numbers IC-14606, IC-14983, IC-18005, 
[and] IC-18177 <nl>, and IC-21837 <ol>. 
(3)-(6) (No change.) 
(7) A currently <nl> authorized <ol> [registered] fund which has been granted 
money market status is not required to comply with this subsection until the 
fund files its Year End Report of Sales <nl> of Federal Covered Securities <ol> 
by a Money Market Fund on Form 133.27, but it is required to comply with the 
subsection as it was in effect at the time that the fund was designated a money 
market fund for purposes of this section. 
(c) Request for determination. 
(1) At the time an applicant <nl> submits documents or fees in connection with 
an authorization to sell federal covered <ol> [applies for registration of] 
securities [issued by an open-end investment company under the Act, sec.7], or 
at any time thereafter, the applicant may request the <nl> Securities <ol> 
Commissioner [to] determine that the issuer is a money market fund as defined in 
this <nl> section <ol> [rule]. The request shall be made in writing on Form 
133.26 of this title (relating to Request for Determination of Money Market Fund 
Status <nl> for Federal Covered Securities <ol>). The <nl> Securities <ol> 
Commissioner shall review the request and any other information the <nl> 
Securities <ol> Commissioner deems relevant <nl> to the determination of 
<ol>whether [and shall determine if] the issuer is a money market fund for 
purposes of this section. 
(2) If the request is made after the issuance of the fund's original <nl> 
authorization <ol> [permit], an amendment fee of $10 will be required. 
Additional sales information [also] will be required since only the <nl> federal 
covered <ol> securities <nl> authorized <ol> [registered] and sold after the 
date the <nl> Securities <ol> Commissioner determines that the issuer is a money 
market fund will be subject to the reduced [registration] fees under subsection 
(d) of this section. 
(d) Conditional exemption. Subject to the other provisions of this section, <nl> 
federal covered <ol> securities issued by money market funds are exempt from the 
[registration] fee [requirement] imposed by the <nl> Texas <ol> Securities Act, 
sec.35.E, provided all of the following requirements are satisfied at the time 
of sale of the <nl> federal covered <ol> securities. 
(1) An applicant has requested that the <nl> Securities <ol> Commissioner 
determine that the issuer is a money market fund as defined in this section. 
(2) The <nl> Securities <ol> Commissioner has determined that the issuer is a 
money market fund as defined in this section. 
(3) For each filing of an original, renewal, or amended <nl> authorization <ol> 
[application for registration] under the conditional exemption provided by this 
section, the applicant has paid the $10 filing fee required by the Act, 
sec.35.D, in addition to the reduced [registration] fee imposed by paragraph (5) 
of this subsection. 
(4) During the current calendar year, the fund has [registered] an aggregate 
<nl> authorized <ol> amount of $10 million of <nl> federal covered <ol> 
securities for sale in Texas. 
(5) The fund has paid the reduced <nl> authorization <ol> [registration] fee 
imposed by this paragraph for the aggregate amount of <nl> federal covered <ol> 
securities proposed to be sold during the current calendar year under this 
conditional exemption. The reduced <nl> authorization <ol> [registration] fee 
imposed by this paragraph for <nl> authorization <ol> [registration] of <nl> 
federal covered <ol> securities in excess of the first $10 million aggregate 
amount of securities sold is: 
(A) for the next $10 million of <nl> federal covered <ol> securities <nl> 
authorized <ol> [registered], 1/20 of 1.0% of the aggregate amount to be sold; 
(B) for the next $30 million of <nl> federal covered <ol> securities <nl> 
authorized <ol> [registered], 1/50 of 1.0% of the aggregate amount to be sold; 
(C) for the next $50 million of <nl> federal covered <ol> securities to be <nl> 
authorized <ol> [registered], 1/100 of 1.0% of the aggregate amount to be sold; 
and 
(D) 1/200 of 1.0% of the aggregate amount on the remainder of the <nl> federal 
covered <ol> securities <nl> authorized <ol> [registered] to be sold. 
(e) Oversales. The reduced <nl> authorization <ol> [registration] fee schedule 
imposed by subsection (d)(5) of this section shall not apply to [the 
registration of] any <nl> federal covered <ol> securities <nl> authorized <ol> 
[registered] under the Act, sec.35-1. All fees paid for <nl> authorization <ol> 
[registration] of <nl> federal covered <ol> securities of money market funds 
pursuant to sec.35-1 shall be computed as set forth in the Act, sec.35.D <nl>, 
sec.35.E,<ol> and [E and] sec.35-1. 
(f) Unsold balance at end of calendar year. In any calendar year, the fees 
required to be paid by a fund for sales that year will be calculated under 
subsection (d)(4) and (5) of this section without regard to the amount of fees 
paid or <nl> federal covered <ol> securities sold in any other year. If, at the 
end of any calendar year a money market fund has a remaining unsold balance of 
<nl> federal covered <ol> securities authorized to be sold, the dollar amount of 
fees paid under subsection (d) of this section for <nl> authorization <ol> 
[registration] of the unsold balance may be reapplied to fees required in the 
next calendar year, but no unsold balance of <nl> authorized <ol> [registered] 
but unsold <nl> federal covered <ol> securities will be carried forward to the 
subsequent calendar year. 
(g) Year end reports. <nl> To qualify for the reduced fees accorded to a fund 
granted money market fund status pursuant to this section, the fund <ol> [All 
funds] must file a year end report of sales on Form 133.27 of this title 
(relating to Year End Report of Sales <nl> of Federal Covered Securities <ol> by 
<nl> a <ol> Money Market Fund) in January of each year which reflects the amount 
of <nl> federal covered <ol> securities sold in the previous year, the balance 
of fees paid for <nl> authorization <ol> [registration] of any unsold balance in 
the previous year and the recalculated balance of authorized <nl> federal 
covered <ol> securities at the beginning of the current year. In calculating 
fees applied to sales during the previous year, fees will first be applied at 
the higher rates specified in the reduced [registration] fee schedule in 
subsection (d)(5) of this section, and then at more reduced rates as sales 
volume increases, and not vice versa. Funds should consult [the examples 
contained in] Form 133.27 in determining how to compute fees. 
(h) Effect of noncompliance. If at any time the business or plan of business of 
any fund has been altered so that it is no longer a money market fund within 
subsection (b) of this section, such an issuer shall not be entitled to any 
reduction of fees as provided in subsection (d)(5) of this section. Such fund 
shall not be entitled to any reduction in fees as provided in subsection (d)(5) 
of this section for any sales of its securities from the time at which it ceases 
to comply with <nl> subsection (b) of this section <ol> [sec.(6)] until the <nl> 
Securities <ol> Commissioner redetermines in a subsequent calendar year that the 
issuer is again a money market fund as defined in subsection (b) of this 
section, and instead fees shall be calculated for such issuer as provided in the 
Act, sec.35 and sec.35-1. 
(i) Appeals. If any person should take exception to an action of the <nl> 
Securities <ol> Commissioner in making, failing to make, or revoking a 
determination whether that person is a money market fund, the aggrieved person 
may appeal the decision of the <nl> Securities <ol> Commissioner as provided in 
the Act, sec.24. 
<nl>(j)<ol> <nl>Effect of a prior determination. A fund offering federal covered 
securities, that was determined to be a money market fund prior to October 11, 
1996, will continue to be considered a money market fund for purposes of this 
section without the necessity of submitting a new request for determination, so 
long as the fund continues to meet the definition of a "money market fund" in 
subsection (b) of this section.<ol> 
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 January 21, 1997.
TRD-9700906
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

CHAPTER 133.Forms
7 TAC sec.133.2
(Editor's Note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the State Securities 
Board or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The State Securities Board proposes the repeal of sec.133.2, concerning public 
records charges - billing detail. Repeal of the existing form will allow for the 
simultaneous adoption a new form which is being concurrently proposed. 
Tom Spradlin, Director of Information Resources, and Planning, and Don Raschke, 
Director of Staff Services, have determined that for the first five-year period 
the repeal is in effect there will be no fiscal implications for state or local 
government as a result of enforcing or administering the repeal. Messrs. 
Spradlin and Raschke also have determined that for each year of the first five 
years the repeal is in effect the public benefit anticipated as a result of 
enforcing the repeal will be the elimination of an outdated form. There will be 
no effect on small businesses. There is no anticipated economic cost to persons 
who are required to comply with the repeal as proposed.
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305- 8310. 
The repeal is proposed under Texas Civil Statutes, Articles 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
Statutes and codes affected: none applicable.
sec.133.2. Public Records Charges - Billing Detail. 
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 January 21, 1997.
TRD-9700907
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

The State Securities Board proposes new sec.133.2, concerning public information 
charges -- billing detail. The new section adopts by reference a form which 
reflects changes in the fees for pubic information established by the General 
Services Commission in accordance with the Public Information Act. The existing 
Form 133.2 is being concurrently proposed for repeal. 
Tom Spradlin, Director of Information Resources, and Planning, and Don Raschke, 
Director of Staff Services, have determined that for the first five-year period 
the rule is in effect there will be no fiscal implications for state or local 
government as a result of enforcing or administering the rule. Messrs. Spradlin 
and Raschke also have determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be that the rule accurately apprises persons requesting public 
information of the associated charges. There will be no effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the rule as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The new rule is proposed under Texas Civil Statutes, Articles 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
Statutes and codes affected: none applicable.

sec.133.2. Public Information Charges -- Billing Detail.
The State Securities Board proposes to adopt by reference the public information 
charges -- billing detail form. This form is available from the State Securities 
Board, P.O. Box 13167, Austin, Texas 78711-3167. 
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 January 21, 1997.
TRD-9700918
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

7 TAC sec.133.26, sec.133.27
(Editor's Note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the State 
Securities Board or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The State Securities Board proposes the repeal of sec.133.26, concerning request 
for determination of money market fund status, and sec.133.27, concerning year 
end report of sales, both concerning money market funds. Repeal of the existing 
forms will allow for the simultaneous adoption new revised forms which are being 
concurrently proposed. 
Micheal Northcutt, Director, Securities Registration Division, has determined 
that for the first five-year period the repeals are in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the repeals. 
Mr. Northcutt also has determined that for each year of the first five years the 
repeals are in effect the public benefit anticipated as a result of enforcing 
the repeals will be the elimination of outdated forms. There will be no effect 
on small businesses. There is no anticipated economic cost to persons who are 
required to comply with the repeals as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The repeals are proposed under Texas Civil Statutes, Articles 581-28-1 and 581-
5.T. Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the Texas 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. Section 5.T provides that the Board may prescribe new 
exemptions by rule. 
The repeals affect Texas Civil Statutes, Articles 581-7 and 581-35. 
sec.133.26. Request for Determination of Money Market Fund Status.
sec.133.27. Year-End Report of Sales by a Money Market Fund.
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 January 21, 1997.
TRD-9700908
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

The State Securities Board proposes new sec.133.26, concerning request for 
determination of money market fund status, and sec.133.27, concerning year-end 
report of sales, both concerning federal covered securities. The new sections 
adopts by reference forms which reflect changes being concurrently proposed to 
sec.123.3, concerning a conditional exemption for money market funds, 
necessitated by the passage of the National Securities Markets Improvement Act 
of 1996 ("NSMIA"), Public Law No. 104-290. The Securities and Exchange 
Commission has a proposal outstanding which, if adopted, may also be added to 
the releases listed on Form 133.26, Item 5(b), when Form 133.26 is considered 
for adoption. The existing Forms 133.26 and 133.27 are being concurrently 
proposed for repeal. 
Micheal Northcutt, Director, Securities Registration Division, has determined 
that for the first five-year period the rules are in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the rules. 
Mr. Northcutt also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be to have forms allowing issuers of federal covered securities 
qualify for the exemption even through registration is no longer required after 
NSMIA. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the rules as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The new rules are proposed under Texas Civil Statutes, Articles 581-28-1 and 
581-5.T. Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the Texas 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. Article 581-5.T. Section 5.T provides that the Board may 
prescribe new exemptions by rule. 
The new rules affect Texas Civil Statutes, Articles 581-7 and 581-35.

sec.133.26. Request for Determination of Money Market Fund Status for Federal 
Covered Securities (Pursuant to sec.123.3(c)). The State Securities Board 
proposes to adopt by reference the request for determination of money market 
fund status form. This form is available from the State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167.
sec.133.27. Year-End Report of Sales of Federal Covered Securities by a Money 
Market Fund (Pursuant to sec.123.3).
The State Securities Board proposes to adopt by reference the year-end report of 
sales form. This form is available from the State Securities Board, P.O. Box 
13167, Austin, Texas 78711-3167. 
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 January 21, 1997.
TRD-9700916
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

7 TAC sec.133.33
The State Securities Board proposes an amendment to sec.133.33, concerning 
uniform forms accepted, required, or recommended. The amendment would update the 
name of the U-7 Form; add a cross-reference to Chapter 114, federal covered 
securities, which is being concurrently proposed; and remove an unnecessary 
sentence. 
Micheal Northcutt, Director, Securities Registration Division, has determined 
that for the first five-year period the rule is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the rule. 
Mr. Northcutt also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be accuracy of terminology and cross-references. There will be no 
effect on small businesses. There is no anticipated economic cost to persons who 
are required to comply with the rule as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The amendment is proposed under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
The proposed amendment affects Texas Civil Statutes, Article 581-7.

sec.133.33. Uniform Forms Accepted, Required, or Recommended.
(a) Assuming the appropriate exhibits and supplements are filed, the State 
Securities Board will accept for filing the following "Uniform Forms" in lieu of 
the requisite Texas form, if any. 
(1)-(8) (No change.) 
(9) U-7. Small <nl> Company <ol> [Corporate] Offerings Registration Form may be 
used as a disclosure guide when making a small <nl> company <ol> [corporate] 
offering of securities pursuant to an exemption under the Act or when making 
small public offerings pursuant to the Act, sec.7.A. 
(b) (No change.) 
(c) Section 109.13(k)(5) of this title (relating to Limited Offering Exemptions) 
<nl> and sec.114.4(b)(1) of this title (relating to Filings and Fees) require 
<ol> [requires] the filing of a Form D, "Notice of Sale of Securities Pursuant 
to Regulation D, sec.4(6), and/or Uniform Limited Offering Exemption." [No Texas 
form may be filed in lieu of Form D.] 
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 January 21, 1997.
TRD-9700909
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

CHAPTER 137.Administrative Guidelines for Regulation of Offers 
7 TAC sec.137.1
The State Securities Board proposes an amendment to sec.137.1, concerning 
guidelines for regulation of offers. The amendment reflects a change 
necessitated by the passage of the National Securities Markets Improvement Act 
of 1996 ("NSMIA"), Public Law No. 104-290. After NSMIA, the state will not be 
able to require the filing of offering documents for federal covered securities 
in all cases. Accordingly, the section has been amended to make this 
clarification. 
Micheal Northcutt, Director, Securities Registration Division, has determined 
that for the first five-year period the rule is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the rule. 
Mr. Northcutt also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be to eliminate confusion and uncertainty over filing requirements 
connected with the offer of federal covered securities. There will be no effect 
on small businesses. There is no anticipated economic cost to persons who are 
required to comply with the rule as proposed. 
Comments on the proposal to be considered by the Board must be submitted in 
writing within 30 days after publication of the proposed sections in the Texas 
Register. Comments should be sent to David Weaver, State Securities Board, P.O. 
Box 13167, Austin, Texas 78711-3167, or sent by facsimile to (512) 305-8310. 
The amendment is proposed under Texas Civil Statutes, Article 581-28-1. Section 
28-1 provides the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Texas Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
The proposed amendment affects Texas Civil Statutes, Article 581-22. 

sec.137.1. Application.
This chapter relates to offers to sell securities which must be filed with the 
Commissioner under the <nl> Texas <ol> Securities Act, sec.22. This <nl> chapter 
<ol> [section] does not apply to advertising for sales made in reliance upon 
exemptions contained in the Act, sec.5 or sec.6, including exemptions by rule 
adopted by the State Securities Board pursuant to the <nl> Texas <ol> Securities 
Act, sec.5.T. <nl> This chapter does not require the filing of any offering 
documents, prepared by or on behalf of the issuer, in connection with the offer 
of federal covered securities, as that term is defined in sec.107.2 of this 
title (relating to Definitions). <ol> The Act, sec.sec.29, 32, and 33, <nl> 
prohibit <ol> [prohibits] the use of false or misleading statements in 
connection with the purchase or sale of any security, whether exempt or not. 
<nl> The Agency has jurisdiction to investigate and bring enforcement actions 
with respect to fraud or deceit, or unlawful conduct by a dealer or agent, in 
connection with federal covered securities or transactions involving federal 
covered securities.<ol> 
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 January 21, 1997.
TRD-9700910
Denise Voigt Crawford
Securities Commissioner
State Securities Board
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-8300

TITLE 16. ECONOMIC REGULATION
PART I. Railroad Commission of Texas
CHAPTER 3.Oil and Gas Division
Conservation Rules and Regulations
16 TAC sec.3.38
The Railroad Commission of Texas proposes an amendment to sec.3.38, regarding 
well densities. The proposed amendments are to streamline the process for 
obtaining unprotested density exceptions by providing for their administrative 
approval. 
Larry G. Borella, Oil and Gas Section Assistant Director, Office of General 
Counsel, has determined for each year of the first five years the amendment is 
in effect, the public benefit anticipated as a result of adopting this amendment 
will be the economic benefit associated with reduced time required to obtain an 
exception to the required density regulation when there is no protest. 
Rita E. Percival, planner for the Oil and Gas Division, has determined that for 
the first five-year period the proposed rule revision will be in effect, there 
will be fiscal implications as a result of enforcing or administering it. The 
revision will reduce the time a hearings examiner spends on an unprotested Rule 
38 exception application. The savings for Fiscal Year 1997 are estimated at 
$1165, with additional annual savings of $2330 for Fiscal Years 1998-2001. There 
will be no fiscal implications for local government. There will be no cost of 
compliance with the proposed rule revision for small businesses as a result of 
enforcing or administering it. 
Comments on the proposal may be submitted to Larry Borella, Assistant Director, 
Office of General Counsel, Railroad Commission of Texas, P. O. Box 12967, 
Austin, Texas 78711-2967. Comments will be accepted for 30 days after 
publication in the Texas Register. For further information, please call Larry 
Borella at (512) 463-6924. 
The amendment is proposed under the Texas Natural Resources Code, 
sec.sec.81.051, 81.052, 85.201 - 85.202, 86.041 and 86.042 which provide the 
Railroad Commission of Texas with the authority to adopt rules for the following 
purposes: to govern and regulate persons and their operations under the 
jurisdiction of the Railroad Commission; to issue permits for oil and gas wells 
and to prevent waste and prevent injury to adjoining property. Texas Natural 
Resources Code, Chapter 85 and 86 is affected by this proposed amendment.

sec.3.38.Well Densities.
(a) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) <nl>Commission designee<ol> [Director]--Director of the Oil and Gas Division 
or <nl>any Commission employee <ol> [his staff delegate] designated in writing 
by the director or the Commission. 
(2)-(6) (No change). 
(b)-(e) (No change). 
(f) Exceptions to density provisions authorized. The Commission, <nl>or 
Commission designee,<ol> in order to prevent waste or, except as provided in 
subsection (d)(2) of this section, to prevent the confiscation of property, may 
grant exceptions to the density provisions set forth in this section. Such an 
exception may be granted only after notice and an opportunity for hearing. 
(g) (No change). 
(h) Procedure for obtaining exceptions to the density provisions.
(1) Filing requirements. If a permit to drill requires an exception to the 
applicable density provision, the operator must file, in addition to the items 
required by subsection (g) of this section: 
(A) a list of the names and addresses of all affected persons. For the purpose 
of giving notice of application, the Commission presumes that affected persons 
include the operators and unleased mineral interest owners of all adjacent 
offset tracts, and the operators and unleased mineral interest owners of all 
tracts nearer to the proposed well than the prescribed minimum lease-line 
spacing distance. The <nl>Commission designee <ol> [Director] may determine that 
such a person is not affected only upon written request and a showing by the 
applicant that: 
(i)-(ii) (No change.)
(B) (No change.) 
(C) additional data requested by the <nl> Commission designee<ol> [Director]. 
(2) (No change.)
(3) Approval without hearing. If the <nl> Commission designee<ol> [Director] 
determines, based on the data submitted, that a permit requiring an exception to 
the applicable density provision is justified according to subsection (f) of 
this section, then the <nl> Commission designee may issue the exception permit 
administratively if<ol> [application will be presented to the Commission for 
consideration and action, provided that]: 
(A) signed waivers from all affected persons were submitted with the 
application; <nl>or<ol> 
(B)-(C) (No change.)
(4) Hearing on the application. 
(A) (No change.)
(B) If the application is not protested and the <nl> Commission designee<ol> 
[Director] determines that a permit requiring an exception to the applicable 
density provision is not justified according to subsection (f) of this section, 
the operator may request a hearing to consider the application. 
(i) (No change). 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 15, 1997.
TRD-9700579
Mary Ross McDonald
Deputy General Counsel, Office of General Counsel
Railroad Commission of Texas
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 463-7008

PART II. Public Utility Commission
CHAPTER 23.Substantive Rules
Certification
16 TAC sec.23.38
The Public Utility Commission of Texas proposes to add new Substantive Rule 
sec.23.38 and repeal subsections (d) and (e) of Substantive Rule sec.23.31. The 
proposed rule will establish financial and technical standards for the award of 
certificates of operating authority and service provider certificates of 
operating authority and will establish the procedure for amending certificates 
of operating authority and service provider certificates of operating authority. 
Ms. Donna L. Nelson, Assistant General Counsel, has determined that for each 
year of the first five-year period the proposed section is in effect there will 
be no fiscal implications for state or local government as a result of enforcing 
or administering the section. 
Ms. Nelson has also determined that for each year of the first five years the 
proposed section is in effect the public benefit anticipated as a result of 
enforcing the section will be to provide more certainty to applicants in the 
procedure for approval of certificates of operating authority and service 
provider certificates of operating authority and amendments to those 
certificates. There will be no effect on small businesses as result of enforcing 
this section. There is no anticipated economic cost to persons who are required 
to comply with the section as proposed. 
Ms. Nelson has also determined that for each year of the first five years the 
proposed section is in effect there will be no impact on employment in the 
geographical area affected by implementing the requirements of the section. 
Comments on the proposed rule (16 copies) may be submitted to Paula Mueller, 
Secretary of the Commission, Public Utility Commission of Texas, 1701 North 
Congress Avenue, Austin, Texas 78711-3326, within 30 days after publication. The 
commission invites specific comments regarding the costs associated with, and 
benefits that will be gained by, implementation of the amendment. The commission 
will consider the costs and benefits in deciding whether to adopt the amendment. 
Additionally, the commission invites specific comments regarding how the passage 
of the Federal Telecommunications Act of 1996 impacts this rule. All comments 
should refer to Project Number 16537. Commission staff will conduct a public 
hearing on this rulemaking under Texas Government Code, sec.2001.029 at the 
commission offices on February 7, 1997 at 9:00 a.m. The new section is proposed 
under the Public Utility Regulatory Act of 1995, Texas Revised Civil Statutes 
Annotated, Article 1446c-0 sec.1.101 (Vernon Supp. 1997) (PURA95), which 
provides the Public Utility Commission with the authority to make and enforce 
rules reasonably required in the exercise of its powers and jurisdiction, 
including rules of practice and procedure; and specifically, PURA95 sec.3.2531 
and sec.3.2532, which grant the commission the authority to determine the 
criteria for financial and technical qualifications of applicants for 
certificates of operating authority and service provider certificates of 
operating authority. 
Public Utility Regulatory Act of 1995, sec.sec.1.101, 3.2531 and 3.2532 is 
affected by this proposed new rule. 

sec.23.38.Standards for Granting of Certificates of Operating Authority and 
Service Provider Certificates of Operating Authority. 
(a) Scope. This section applies to the provision of local exchange 
telecommunications services by holders of certificates of operating authority 
and service provider certificates of operating authority, established in the 
Public Utility Regulatory Act of 1995, Texas Revised Civil Statutes Annotated, 
Article 1446c-0 (Vernon Supp. 1997) (PURA95), sec.3.2531 and sec.3.2532 (b) 
Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Assumed name - Has the meaning assigned by Texas Business and Commerce Code, 
sec.36.10. 
(2) Capitalization - Long-term debt plus total equity.
(3) COA - Certificate of operating authority. 
(4) Corporate name - Has the meaning assigned by Texas Business Corporation Act, 
Article sec.2.05. 
(5) Geographic scope - The geographic area in which the holder of a COA or an 
SPCOA is authorized to provide service. 
(6) Incumbent local exchange company (ILEC) - Has the meaning assigned by PURA95 
sec.3.002(3). 
(7) SPCOA reseller - A holder of a service provider certificate of operating 
authority that uses only ILEC owned telecommunications facilities for providing 
local exchange service. 
(8) Return on assets - After-tax net operating income divided by total assets. 
(9) SPCOA - Service provider certificate of operating authority. 
(10) Telecommunications facilities - Conduits, ducts, poles, wires, cables, end- 
office switches, telecommunications circuit equipment, telecommunications 
signaling systems, and telecommunications transmission facilities used to 
provide local exchange service. 
(11) Working capital requirements - The additional capital required to fund the 
increased levels of current assets necessary to provide the proposed 
telecommunications service. 
(c) Standards for Granting Certification to COA Applicants.
(1) The commission shall consider the factors listed in subparagraphs (A)-(F) of 
this paragraph in deciding whether to grant a COA to an applicant proposing to 
serve an exchange where an ILEC serves more than 31,000 access lines. The 
commission shall consider the factors listed in subparagraphs (A)-(J) of this 
paragraph in deciding whether to grant a COA to an applicant proposing to serve 
an exchange where an ILEC serves fewer than 31,000 access lines. However, the 
commission may not, before September 1, 1998, grant a COA for service in an 
exchange of an ILEC serving fewer than 31,000 access lines. 
(A) Whether the applicant has satisfactorily provided all of the information 
required in the Application for a Certificate of Operating Authority. 
(B) Whether the applicant is financially qualified. To prove financial 
qualification as a COA, an applicant shall provide evidence sufficient to 
establish that: 
(i) applicant possesses a minimum of $100,000 cash or cash equivalent, liquid 
and readily available to meet the applicant's startup expenses, working capital 
requirements and capital expenditures for the first year of Texas operations; or 
(ii) applicant is an established business entity and is able to demonstrate 
evidence of profitability in existing operations for two years preceding the 
date of application by submitting a balance sheet and income statement audited 
or reviewed by a certified public accountant establishing all of the following: 
(I) a long-term debt to capitalization ratio of less than 60%;
(II) a return-on-assets ratio of at least 10%; and, 
(III) a minimum of $50,000 cash or cash equivalent, liquid and readily available 
to meet the applicant's startup expenses, working capital requirements and 
capital expenditures for a minimum of the first year of Texas operations. 
(C) Whether the applicant is technically qualified. The commission shall 
determine whether an applicant possesses sufficient technical qualifications to 
be awarded a COA based upon a review of the following information. 
(i) Prior experience by the applicant or one or more of the applicant's 
principals or employees in the telecommunications industry or a related 
industry. 
(ii) Any complaint history regarding the applicant on file at the Public Utility 
Commission of Texas. 
(iii) Any complaint history regarding the applicant with Public Utility 
Commissions or Public Service Commissions in other states where applicant is 
doing business. 
(iv) Any complaint history regarding the applicant on file with the Office of 
the Texas Attorney General and the Attorney General in other states where 
applicant is doing business. 
(v) The applicant's compliance with statutes and rules enforced by the Texas 
Comptroller's Office. 
(vi) The applicant's compliance with applicable statutes and rules enforced by 
the Public Utility Commission of Texas. 
(D) Whether the applicant is able to meet the commission's quality of service 
standards. 
(E) Whether certification of the applicant is in the public interest. 
(F) Whether the applicant's build-out plan pursuant to PURA95 sec.3.2531(c) and 
(d) is adequate. 
(G) The effect of granting the certificate on any public utility already serving 
the area and on the utility's customers. 
(H) The existing utility's ability to provide adequate service at reasonable 
rates. 
(I) The impact on the existing utility's ability as the provider of last resort. 
(J) The ability of the exchange (not the company) to support more than one 
service provider. 
(2) If, after considering the factors in this subsection, the commission finds 
it to be in the public interest to do so, the commission may limit the 
geographic scope of the COA. 
(d) Standards for Granting Certification to SPCOA Applicants.
(1) The commission shall consider the following factors in deciding whether to 
grant an SPCOA. 
(A) Whether the applicant has satisfactorily provided all of the information 
required in the Application for a Service Provider Certificate of Operating 
Authority. 
(B) Whether the applicant is financially qualified as an SPCOA or whether 
applicant should be restricted to an SPCOA reseller. To prove financial 
qualifications as an SPCOA, applicant shall meet the standards set forth for a 
COA applicant in subsection (c)(1)(B) of this section. To prove financial 
qualifications as an SPCOA reseller, an applicant shall provide evidence 
sufficient to establish that: 
(i) applicant possesses a minimum of $25,000 cash or cash equivalent, liquid and 
readily available to meet the applicant's startup expenses, working capital 
requirements and capital expenditures for the first year of Texas operations; or 
(ii) applicant is an established business entity and is able to demonstrate 
evidence of profitability in existing operations for two years preceding the 
date of application by submitting a balance sheet and income statement audited 
or reviewed by a certified public accountant establishing all of the following: 
(I) a long-term debt to capitalization ratio of less than 60%;
(II) a return-on-assets ratio of at least 10%; and, 
(III) a minimum of $10,000 cash or cash equivalent, liquid and readily available 
to meet the applicant's startup expenses, working capital requirements and 
capital expenditures for a minimum of the first year of Texas operations. 
(C) Whether the applicant is technically qualified. The commission shall 
determine whether an applicant possesses sufficient technical qualifications to 
be awarded an SPCOA or whether applicant should be restricted to an SPCOA 
reseller based upon a review of the following information. 
(i) Prior experience by the applicant or one or more of the applicant's 
principals or employees in the telecommunications industry or a related 
industry. 
(ii) Any complaint history regarding the applicant on file at the Public Utility 
Commission of Texas. 
(iii) Any complaint history regarding the applicant with Public Utility 
Commissions or Public Service Commissions in other states where applicant is 
doing business. 
(iv) Any complaint history regarding the applicant on file with the Office of 
the Texas Attorney General and the Attorney General in other states where 
applicant is doing business. 
(v) The applicant's compliance with statutes and rules enforced by the Texas 
Comptroller's Office. 
(vi) The applicant's compliance with applicable statutes and rules enforced by 
the Public Utility Commission of Texas. 
(D) Whether the applicant is able to meet the commission's quality of service 
standards. 
(E) Whether certification of the applicant is in the public interest. 
(F) Whether the applicant, together with affiliates, had in excess of 6.0% of 
the total intrastate switched access minutes of use as measured by the most 
recent 12-month period preceding the filing of the application for which data is 
available. 
(2) If, after considering the factors in this subsection, the commission finds 
it to be in the public interest to do so, the commission may limit the 
geographic scope of the SPCOA. 
(e) Financial Instruments that will meet the Cash Requirements Established in 
this Rule. 
(1) Applicants for COAs or SPCOAs shall be permitted to use any of the financial 
instruments set out in subparagraphs (A)-(G) of this paragraph to satisfy the 
cash requirements established in this rule to prove financial qualification. 
(A) Cash or cash equivalent, including cashier's check or sight draft. 
(B) A certificate of deposit with a bank or other financial institution. 
(C) A letter of credit issued by a bank or other financial institution, 
irrevocable for a period of at least 12 months beyond certification of the 
applicant by the commission. 
(D) A line of credit or other loan, issued by a bank or other financial 
institution, irrevocable for a period of at least 12 months beyond certification 
of the applicant by the commission and payable on an interest-only basis for the 
same period. 
(E) A loan issued by a subsidiary or affiliate of applicant, or a corporation 
holding controlling interest in the applicant, irrevocable for a period of at 
least 12 months beyond certification of the applicant by the commission, and 
payable on an interest only basis for the same period.
(F) A guaranty issued by a corporation, partnership, or other person or 
association, irrevocable for a period of at least 12 months beyond certification 
of the applicant by the commission. 
(G) A guaranty issued by a subsidiary or affiliate of applicant, or a 
corporation holding controlling interest in the applicant, irrevocable for a 
period of at least 12 months beyond the certification of the applicant by the 
commission. 
(2) All cash and instruments listed in subparagraphs (A)-(G) of this subsection 
shall be unencumbered by pledges as collateral and shall be subject to 
verification and review by the commission prior to certification of the 
applicant and for a period of 12 months beyond the date of certification of the 
applicant by the commission. Failure to comply with this requirement will void 
an applicant's certification or result in such other action as the commission 
deems in the public interest, including, but not limited to, assessment of 
reasonable penalties and all other available remedies under PURA95. 
(f) Name on Certificates. 
(1) All basic local exchange telephone service, basic local telecommunications 
service, and switched access service provided under the COA or SPCOA shall be 
provided in the name under which certification was granted by the commission. 
(A) If the applicant is a corporation, the commission shall issue the 
certificate in the corporate name of the applicant. 
(B) If the applicant is an unincorporated business entity or an individual, the 
commission shall issue the certificate in the assumed name of the entity or the 
individual. 
(2) The holder of a COA or SPCOA may request commission approval to change the 
name on the certificate by filing an application to amend its certificate with 
the commission. 
(g) Amendment of COA or SPCOA. 
(1) A person or entity granted a COA or an SPCOA by the commission shall be 
required to file an application to amend the COA or an SPCOA on a commission 
approved form in order to:
(A) change the corporate name or assumed name of the certificate holder; 
(B) increase the geographic scope of the COA or SPCOA; 
(C) sell, transfer, or lease the COA or the SPCOA or sell, transfer, or lease 
the entity holding the COA or the SPCOA; or 
(D) remove the resale-only restriction on an SPCOA reseller certificate. 
(2) If the application to amend is for a name change of the certificate holder 
and is not a sale, transfer, or lease of the COA or the SPCOA or a sale, 
transfer, or lease of the entity holding the COA or the SPCOA, applicant will be 
required to provide a general description of the applicant, including the 
following: 
(A) Legal name and all assumed names of entity to which commission issued 
certificate. 
(B) All other assumed names, if any, under which certificate holder does 
business. 
(C) Certificate number of the COA or SPCOA. 
(D) Address and telephone number of the principal office of certificate holder. 
(E) Name, address, and office location of each partner, officer, and the five 
largest shareholders of certificate holder. 
(F) Proposed amendment to legal name or assumed name of certificate holder. 
(3) If the application to amend requests the changes set forth in this 
subsection, paragraph (1)(B),(C) or (D), the commission shall consider the 
factors set forth in subsection (c) and (d) of this section in determining 
whether to approve the amendment to the certificate. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700886
Paula Mueller
Secretary of the Commission
Public Utility Commission of Texas
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 936-7152

Telephone
16 TAC sec.23.104, sec.23.105
The Public Utility Commission of Texas proposes new sec.23.104, relating to 
Telecommunications Pricing, and sec.23.105, relating to Services Provided to 
Other Telecommunications Utilities. The proposed rule is necessary to comply 
with the Public Utility Regulatory Act of 1995 (PURA95) sec.3.457, which 
requires the commission to adopt a pricing rule by April 1, 1997. 
Candice Clark, Manager of Competitive Pricing in the Office of Regulatory 
Affairs, has determined that for each of the first five years the proposed 
sections are in effect there will be no fiscal implications for state or local 
government as a result of enforcing or administering the sections. 
Ms. Clark also has determined that for each of the first five years the proposed 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be to establish principles for the pricing of 
telecommunications services that foster economic efficiency and the public 
welfare. There will be no effect on small businesses as result of enforcing 
these sections. There is no anticipated economic cost to persons who are 
required to comply with the sections as proposed. 
Ms. Clark also has determined that for each of the first five years the proposed 
sections are in effect there will be no impact on employment in the geographic 
area affected by implementing the requirements of the sections. Comments on the 
proposed rule (16 copies) may be submitted to Paula Mueller, Secretary of the 
Commission, Public Utility Commission of Texas, 1701 North Congress Avenue, 
Austin, Texas 78711-3326, within 30 days after publication. Reply comments may 
be submitted within 45 days after publication. The commission invites specific 
comments regarding the costs associated with, and benefits that will be gained 
by, implementation of the rule. The commission will consider the costs and 
benefits in deciding whether to adopt the rule. All comments should refer to 
Project Number 12771. The commission staff will conduct a public hearing on this 
rulemaking under Texas Government Code sec.2001.029 at the commission offices on 
March 6, 1997, at 10:00 a.m. 
The new sections are proposed under the Public Utility Regulatory Act of 1995, 
Texas Civil Statute, Article 1146c-O, (Vernon Supplement 1997), sec.1.101, which 
provide the Public Utility Commission with the authority to make and enforce 
rules reasonably required in the exercise of its powers and jurisdiction, 
including rules of practice and procedure; and specifically sec.3.457, which 
requires the commission to adopt a pricing rule by April 1, 1997. 
Cross Index to Statutes: Public Utility Regulatory Act of 1995, Texas Civil 
Statute, Article 1146c-O, sec.sec.1.101, 3.457 (Vernon Supplement 1997) 
(PURA95). 

sec.23.104.Telecommunications Pricing.
(a) Purpose. The purpose of this section is to establish principles to foster 
economic efficiency and the public welfare in the pricing of telecommunications 
services. 
(b) Application. Except as otherwise provided herein, the provisions of this 
section shall apply to dominant certified telecommunications utilities (DCTUs). 
Unless the DCTU has elected to be regulated under the terms of the Public 
Utility Regulatory Act of 1995 (PURA95), Title III, Subtitle H, the provisions 
of this section may be applied to a DCTU serving 31,000 or more but fewer than 
one million access lines only on a bona fide request by a holder of a 
Certificate of Operating Authority or Service Provider Certificate of Operating 
Authority. 
(c) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Service-For purposes of this section, each tariffed or contract offering 
which a customer may purchase to the exclusion of other offerings shall be 
considered a service. For example: the various mileage bands for standard toll 
services are rate elements, not services; individual optional calling plans that 
can be purchased individually and which are offered as alternatives to each 
other are services, not rate elements. 
(2) Stand-alone costs-The stand-alone costs of an element or service are defined 
as the forward-looking costs that an efficient entrant would incur in providing 
the element or service. 
(d) General principles. 
(1) Subsidy-free pricing. 
(A) Telecommunications prices should be subsidy-free. Subsidy-free prices 
prevent one service or group of services from subsidizing or being subsidized by 
another. 
(B) Pricing all services produced by a DCTU above long-run incremental cost 
(LRIC) will ensure subsidy-free pricing. Pricing above LRIC will also ensure 
that prices are not predatory or anticompetitive. 
(C) In a subsidy-free pricing environment, support for universal basic 
telecommunications service must come from an explicit subsidy, such as a 
Universal Service Fund. 
(D) The transition to subsidy-free pricing may be undertaken in stages, in 
coordination with implementation of state and federal universal service support 
mechanisms and initiatives to reform pricing of access services.
(2) Customer-specific pricing. When set above incremental cost and not used in 
an anticompetitive manner, customer-specific pricing can benefit the general 
body of ratepayers and foster economic efficiency by encouraging utilization of 
under- utilized facilities. 
(3) The commission has no obligation to ensure that a DCTU recovers inefficient 
or uneconomic costs. 
(e) Basic network services. 
(1) The following services are initially classified as basic network services: 
(A) flat-rate residential and business local exchange telephone service, 
including primary directory listings and the receipt of a directory and any 
applicable mileage or zone charges; 
(B) tone dialing service; 
(C) lifeline and tel-assistance services; 
(D) service connection charges for basic services; 
(E) direct inward dialing service for basic services; 
(F) private pay telephone access service; 
(G) call trap and trace service; 
(H) access to 911 service, where provided by a local authority, and access to 
dual party relay service; 
(I) switched access service; 
(J) interconnection to competitive providers; 
(K) mandatory extended area service arrangements; 
(L) mandatory extended metropolitan service or other mandatory toll-free calling 
arrangements; 
(M) interconnection for commercial mobile service providers;
(N) directory assistance; and 
(O) 1+ intraLATA message toll service. 
(2) Notwithstanding the requirements of this section, a DCTU electing to be 
regulated under the terms of PURA95, Title III, Subtitle H ("electing LEC"), may 
exercise pricing flexibility as described in this paragraph for basic network 
services. The rate for a basic network service may be decreased at any time on 
the initiative of an electing LEC to the service's price floor. The price floor 
shall be LRIC for switched access service or for any basic local 
telecommunications service provided by a DCTU that is required by the commission 
to perform long run incremental cost studies or elects to perform those studies. 
For any other basic local telecommunications service, the price floor shall be 
the appropriate cost of the service. The pricing flexibility permitted by this 
subsection does not permit the packaging of basic network services with services 
from other groups (such as discretionary services or competitive services). 
(3) In setting the price of a basic network service, the commission shall pursue 
the goal of maintaining basic services at affordable rates for customers. 
(f) Discretionary services 
(1) The following services shall initially be classified as discretionary 
services. 
(A) 1+ intraLATA message toll services, where intraLATA equal access is 
available; 
(B) 0+, 0- operator services; 
(C) call waiting, call forwarding, and custom calling features not classified as 
competitive services; 
(D) call return, caller ID, and call control options not classified as 
competitive services; 
(E) central office-based PBX-type services; 
(F) billing and collection services; 
(G) integrated services digital network (ISDN) services; and
(H) new services. 
(2) The price for a discretionary service shall not be set below LRIC or the 
price floor prescribed by sec.23.102 of this chapter, whichever is higher. A 
DCTU may request the establishment of a price floor for a discretionary service 
that is above LRIC. 
(3) The price of a discretionary service shall not be set above the service's 
stand-alone cost. A DCTU may request the establishment of a ceiling for a 
discretionary service that is below stand-alone cost.
(4) The price ceiling for a discretionary service provided by an electing LEC 
may not be set below or above the rate in effect on September 1, 1995, without 
regard to proceedings pending under sec.1.301 or sec.3.210 of PURA95 or under 
Subchapter G, Chapter 2001, Government Code. The ceiling may be raised only 
after the proceedings required under PURA95, Title III, Subtitle J. Thereafter, 
on application by the DCTU or on the commission's own motion, the commission may 
change the price ceiling but may not increase the ceiling more than 10% 
annually. 
(5) Within the range of the floor and the ceiling established pursuant to this 
subsection, an electing LEC may change the price of a discretionary service but 
shall notify the commission of each change. Such price changes may include 
volume and term discounts, zone density pricing, packaging of services, customer 
specific pricing, and other promotional pricing flexibility. Packaging of 
services may include packaging of an installation service or charge with 
provision of the corresponding service. An electing LEC lowering the price of 
any component of a package of services, including an installation charge, shall 
demonstrate that the package of services affected by the price change recovers 
its LRIC within one year of the price change. The pricing flexibility permitted 
by this subsection does not permit the packaging of discretionary services with 
services from other groups (such as basic network services or competitive 
services). 
(6) Discounts and other forms of pricing flexibility for discretionary services 
may not be preferential, prejudicial, or discriminatory.
(g) Competitive services. 
(1) The following services shall initially be classified as competitive 
services: 
(A) services described in the WATS tariff as of January 1, 1995; 
(B) 800 and foreign exchange services; 
(C) private line service; 
(D) special access service; 
(E) services from public pay telephones; 
(F) paging services and mobile services (IMTS); 
(G) 911 premises equipment; 
(H) speed dialing; and 
(I) three-way calling. 
(2) The price for a competitive service shall not be set below LRIC or the price 
floor prescribed by sec.23.102 of this chapter, whichever is higher. A DCTU may 
request the establishment of a price floor for a competitive service that is 
above the floor prescribed by this paragraph.
(3) An electing LEC may set the price for a competitive service at any level 
above the floor prescribed in this subsection. Permissible pricing flexibility 
includes volume and term discounts, zone density pricing, packaging of services, 
customer specific contracts, and other promotional pricing flexibility, subject 
to the requirements of sec.3.451 of PURA95. However, an electing LEC may not 
increase the price of a service in a geographic area in which that service or a 
functionally equivalent service is not readily available from another provider. 
The pricing flexibility permitted by this subsection does not permit the 
packaging of competitive services with services from other groups (such as basic 
network services or discretionary services).
(4) Prices for competitive services may not be unreasonably preferential, 
prejudicial, or discriminatory. 
(h) Services vested in the public interest. 
(1) The commission may determine that a service is vested in the public 
interest. In making such a determination the commission may consider such 
factors as customer privacy and safety. 
(2) The commission may establish, on a service-by-service basis, special pricing 
rules for services vested in the public interest. Such pricing may include 
setting the rate for a service below LRIC. 
(3) The commission may require that the rate for a service vested in the public 
interest recover a minimum or maximum amount of contribution to joint and common 
costs. This minimum or maximum level of contribution may be expressed as a 
dollar amount per unit of the service, a proportion of LRIC, a proportion of 
revenue from the service or some other measure. 
(i) Reclassification of a service. The commission, acting on a petition from an 
interested party or on its own motion, may reclassify a service as a basic 
network service, a discretionary service, a competitive service or a service 
vested in the public interest. 
(1) A petition for reclassification of a service shall include information 
regarding 
(A) availability of the service from providers other than DCTUs; 
(B) the proportion of the market that currently receives the service; 
(C) the effect of the transfer on subscribers of the service; and 
(D) the nature of the service. 
(2) A service may be classified as a competitive service upon a determination by 
the commission that the service may be obtained from at least one source other 
than the DCTU to an extent sufficient to discipline the price charged by the 
DCTU in the state. For purposes of classifying a service as competitive pursuant 
to this subsection, there shall be a rebuttable presumption that a service is 
competitive if the service is available from a competitor, other than a pure 
reseller, to 60% of the access lines to which the service is available. 
(3) For purposes of defining pricing flexibility for an electing LEC, a service 
may not be reclassified as a basic network, discretionary or competitive service 
until full implementation of all competitive safeguards required by 
sec.sec.3.452, 3.453, 3.454, 3.455, 3.456, 3.457 and 3.458 of PURA95. 

sec.23.105.Services Provided to Other Telecommunications Utilities. 
(a) Application. The provisions of this section shall be applied in a proceeding 
to arbitrate an interconnection agreement between a telecommunications utility 
and a dominant certified telecommunications utility (DCTU). 
(b) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Element-As used in this subsection the term "element" includes unbundled 
network elements, interconnection, physical collocation and virtual collocation. 
(2) Forward-looking common costs-Economic costs efficiently incurred in 
providing a group of elements or services that cannot be attributed directly to 
individual elements or services.
(3) Forward-looking economic cost-The forward-looking economic cost of an 
element is the sum of the total element long-run incremental cost of the 
element, and a reasonable allocation of forward-looking-common costs. 
(4) Forward-looking economic cost per unit-The forward-looking economic cost of 
the element as defined in this subsection, divided by a reasonable projection of 
the sum of the total number of units of the element that the DCTU is likely to 
provide to requesting telecommunications carriers and the total number of units 
of the element the DCTU is likely to use in offering its own services, during a 
reasonable time period. 
(5) Local telecommunications traffic: 
(A) telecommunications traffic between a DCTU and a telecommunications carrier 
other than a commercial mobile radio service (CMRS) provider that originates and 
terminates within the mandatory single or multi-exchange local calling area of a 
DCTU including the mandatory extended area service (EAS) areas served by the 
DCTU; or 
(B) telecommunications traffic between a DCTU and a CMRS provider that, at the 
beginning of the call, originates and terminates within the same major trading 
area. 
(6) Reciprocal compensation-An arrangement between two carriers in which each of 
the two carriers receives compensation from the other carrier for the transport 
and termination on each carrier's network facilities of local telecommunications 
traffic that originates on the network facilities of the other carrier. 
(7) Termination-Termination is the switching of local telecommunications traffic 
at the terminating carrier's end office switch, or equivalent facility and 
delivery of such traffic to the called party's premises. 
(8) Total element long-run incremental cost (TELRIC)-The total element long-run 
incremental cost consists of the forward-looking cost over the long run of the 
total quantity of the facilities and functions that are directly attributable 
to, or reasonably identifiable as incremental to, such element, calculated 
taking as given the DCTU's provisions of other elements.
(9) Transport-The transmission and any necessary tandem switching of local 
telecommunications traffic from the interconnection point between the two 
carriers to the terminating carrier's end office switch that directly serves the 
called party, or equivalent facility provided by a carrier other than a DCTU. 
(c) Unbundled network elements and interconnection services.
(1) Pricing Standard. 
(A) The standard for pricing an element shall be TELRIC. 
(B) For elements that a DCTU offers on a flat-rated basis the number of units is 
defined as the discrete number of elements (e.g., local loops or local switch 
per switch ports) that the DCTU uses or provides. The price for such elements 
shall be based on the forward-looking economic cost per unit. 
(C) For elements that a DCTU offers on a usage-sensitive basis, the number of 
units is defined as the unit of measurement of the usage (e.g., minutes of use 
or call-related database queries) of the element. The price for such elements 
shall be based on the forward-looking economic cost per unit. 
(D) The sum of a reasonable allocation of forward-looking common costs and the 
total element long-run incremental cost of an element shall not exceed the 
stand-alone costs associated with the element. 
(E) The sum of the allocation of forward-looking common costs for all elements 
and services shall equal the total forward-looking common costs, exclusive of 
retail costs, attributable to operating the DCTU's total network, so as to 
provide all the elements and services offered. 
(F) A DCTU must prove to the commission that the rates for each element it 
offers do not exceed the forward-looking economic cost per unit of providing the 
element. 
(G) The TELRIC of an element should be measured based on the use of the most 
efficient telecommunications technology currently available and the lowest cost 
network configuration, given the existing location of the DCTU's wire centers. 
(H) The depreciation rates used in calculating forward-looking economic costs of 
elements shall be economic depreciation rates. 
(2) Rate structure for specific elements. In addition to the general principles 
set forth in paragraph (c)(1) of this section, rates for specific elements shall 
comply with the following rate structure rules. 
(A) With the exception of loop facilities offered under a tariff approved 
pursuant to the Public Utility Regulatory Act of 1995 (PURA95) sec.3.453(a), 
local loop costs shall be recovered through flat-rated charges.
(B) Local switching costs shall be recovered through a combination of a flat- 
rated charge for line ports and one or more flat-rated or per-minute usage 
charges for the switching matrix and for trunk ports. 
(C) Dedicated transmission link costs shall be recovered through a flat-rated 
charge. 
(D) The costs of shared transmission facilities between tandem switches and end 
offices may be recovered through usage-sensitive charges, or in another manner 
consistent with the manner that the DCTU incurs those costs. 
(E) Tandem switching costs may be recovered through usage-sensitive charges, or 
in another manner consistent with the manner that the DCTU incurs those costs. 
(F) Signaling and call-related database services costs shall be usage-sensitive, 
based on either the number of queries or the number of messages, with the 
exception of the dedicated circuits known as signaling links, the cost of which 
shall be recovered through flat-rated charges. 
(d) Transport and termination. 
(1) Scope. This subsection applies to reciprocal compensation for transport and 
termination of local telecommunications traffic between a DCTU and another 
telecommunications carrier. 
(2) Rates for transport and termination. 
(A) In setting rates for transport and termination a DCTU shall use the TELRIC 
pricing standard outlined in paragraph (c)(1) of this section. 
(B) The rate of a carrier providing transmission facilities dedicated to the 
transmission of traffic between two carriers' networks shall recover only the 
costs of the proportion of that trunk capacity used by an interconnecting 
carrier to send traffic that will terminate on the providing carrier's network. 
(3) Symmetrical reciprocal compensation and obligation. Symmetrical rates are 
rates that a carrier other than a DCTU assesses upon a DCTU for transport and 
termination of local telecommunications traffic equal to those that the DCTU 
assesses upon the first carrier for the same services. 
(A) Each DCTU shall establish reciprocal compensation arrangements for transport 
and termination of local telecommunications traffic with any requesting 
telecommunications carrier. 
(B) A DCTU may not assess charges on any other telecommunications carrier for 
local telecommunications traffic that originates on the DCTU's network. 
(C) A DCTU's rates for transport and termination of local telecommunications 
traffic shall be established on the basis of: 
(i) the forward-looking economic costs of such offerings supported by a cost 
study; or 
(ii) a bill-and-keep arrangement. 
(D) In cases where both carriers in a reciprocal compensation arrangement are 
DCTUs, or neither party is a DCTU, the symmetrical rate for transportation and 
termination shall be based on the larger carrier's forward-looking economic 
costs. 
(E) In cases where one carrier in a reciprocal compensation arrangement is a 
DCTU, and the other carrier is not a DCTU, the symmetrical rate for 
transportation and termination shall be based on the DCTU's forward-looking 
economic costs. 
(F) Where the switch of a carrier other than a DCTU serves a geographic area 
comparable to the area served by the DCTU's tandem switch, the appropriate rate 
for the carrier other than a DCTU is the DCTU's tandem interconnection rate. 
(G) The commission may establish asymmetrical rates between carriers for 
transport and termination of local telecommunications traffic if a carrier 
proves to the commission, on the basis of a cost study using the forward- 
looking economic cost pricing methodology outlined in paragraph (c)(1) of this 
subsection, that the forward-looking costs for a network efficiently configured 
and operated by the carrier justify a higher rate. 
(4) Bill-and-keep arrangements for reciprocal compensation. Bill-and-keep 
arrangements are those in which neither of two interconnecting carriers charges 
the other for the termination of local telecommunications traffic that 
originates on the other carrier's network. 
(A) Bill-and-keep shall be the reciprocal arrangement for the first nine months 
after the date upon which the first commercial call is terminated between 
carriers. 
(B) At the completion of the nine-month period, if the difference between the 
traffic volumes flowing between two networks exceeds 10% of the larger volume of 
traffic, the carriers shall assess each other symmetrical transport and 
termination rates established pursuant to clause (d)(3)(C)(i) of this section. 
The 10% threshold should be calculated on a per-minute basis. When traffic 
exceeds the 10% threshold, the carriers shall compensate each other for all 
calls unless the parties agree to apply the compensation rates only to the 
volume of traffic that exceeds 10%. 
(C) If interconnecting carriers are unable to agree upon a measurement and 
billing method, carriers shall report the percentage local use to each other for 
purposes of measurement and billing, unless otherwise required by the 
commission. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9700887
Paula Mueller
Secretary of the Commission
Public Utility Commission of Texas
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 936-7152

PART VIII. Texas Racing Commission
CHAPTER 303.General Provisions
SUBCHAPTER D.Texas Bred Incentive Programs
Programs for Horses
16 TAC sec.303.92
The Texas Racing Commission proposes an amendment to sec.303.92, concerning the 
rules for the Texas Bred Incentive Program for thoroughbred horses. The 
amendment was presented to the Commission as a petition for rulemaking under 16 
Texas Administration Code sec.307.303. According to the petition, the amendment 
would give detailed guidance for the functioning of the Texas Bred Incentive 
Program for thoroughbred horses and for the standards and procedures for 
determining eligibility and conferring awards. The amendment would change 
existing practice primarily by adding the features of subsection (b) relating to 
record keeping, governance of the program, and procedures for payment of awards. 
The petitioner is the Texas Thoroughbred Association, the officially designated 
breed registry for thoroughbred horses in Texas. The petitioner has determined 
that for the first five-year period the amendment is in effect there will be no 
fiscal implications for state or local government as a result of enforcing the 
proposal. 
The petitioner has also determined that for each of the first five years the 
amendment is in effect the public benefit anticipated as a result of enforcing 
the proposal will be that a clearly defined mechanism and set of standards to 
govern the exercise of duties conferred on the petitioner will be created. The 
petitioner has also determined that there will be no fiscal implications for 
small businesses and there is no anticipated economic cost to persons who are 
required to comply with the proposal. 
Comments on the proposal may be submitted on or before February 25, 1997, to 
Paula C. Flowerday, General Counsel for the Texas Racing Commission, P.O. Box 
12080, Austin, Texas 78711-2080. 
The amendment is proposed under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; and sec.6.08, which 
authorizes the commission to adopt rules relating to the accounting, audit, and 
distribution of all amounts set aside for the Texas-bred program. The proposed 
amendment implements Texas Civil Statutes, Article 179e.

sec.303.92.Thoroughbred Rules.
<nl>(a)<ol> <nl>Definitions.
The following words and terms, when used in this section, shall have the 
following meanings, unless the context indicates otherwise.<ol>
<nl>(1)<ol> <nl>Horse Owner--A person who is owner of record of an accredited 
Texas-bred horse at the time of a race. <ol>
<nl>(2<ol>) <nl> Breeder--The owner of the dam at the time of foaling as stated 
on the foal's Jockey Club certificate of registration. <ol>
<nl>(3)<ol> <nl> Stallion Owner--A person who is the owner of record, at the 
time of conception, of the stallion that sired the accredited Texas-bred horse. 
<ol>
<nl>(4)<ol> <nl> Accredited Texas-bred Thoroughbred--A horse registered with the 
Jockey Club, accredited with the breed registry and conceived and foaled in 
Texas, sired by a stallion accredited with the breed registry at the time of 
conception of said foal and out of a mare accredited with the breed registry 
that is permanently domiciled in Texas. Also, any horse foaled in Texas will be 
eligible to be accredited if the mare remains in Texas to be next bred to any 
stallion accredited with the breed registry and the mare becomes an accredited 
mare permanently domiciled in Texas. <ol>
<nl>(5)<ol> <nl> Accredited Texas-bred Thoroughbred Mare--A mare registered with 
the Jockey Club, accredited with the breed registry, and permanently domiciled 
in Texas except for racing and breeding privileges. Annual reproductive activity 
of the mare may be required to be reported to the breed registry in writing via 
photocopy of the Live Foal Report/No Foal Report submitted annually to the 
Jockey club. <ol>
<nl>(6)<ol> <nl> Accredited Texas Thoroughbred Stallion--A stallion registered 
with the Jockey Club, accredited with the breed registry, and standing the 
entire breeding season in Texas. He shall be permanently domiciled in Texas from 
January 1 to July 31 except for medical or racing privileges, but shall not 
service a mare in North America outside the State of Texas within that breeding 
season. The breed registry must be notified in writing within ten calendar days 
each time the stallion leaves or enters the State of Texas. A photocopy of the 
annual "Report of Mares Bred" may be required to be submitted to the breed 
registry office on or before the date required by the Jockey Club (August 1). 
Stallion owners are eligible to receive stallion awards only from offspring 
sired in Texas after the stallion has become accredited with the breed registry 
and paid the applicable administrative fees. <ol>
<nl>(7)<ol> <nl> Breed Registry--The Texas Thoroughbred Association, the 
official breed registry for thoroughbred horses as designated in the Act. <ol>
<nl>(8)<ol> <nl>Act--The Texas Racing Act. <ol>
<nl>(9)<ol> <nl> Commission--The Texas Racing Commission. <ol>
<nl>(b)<ol> <nl>Organizational Structure. The breed registry shall comply with 
the provisions of the Act and commission rules and shall further maintain 
substantially the following: <ol>
<nl>(1)<ol> <nl>Records of the breed registry shall be kept so as to identify 
separately the activities of the accredited Texas-bred program. <ol>
<nl>(2)<ol> <nl> Management of the accredited Texas-bred program shall be under 
the control of the board of directors of the breed registry and may be exercised 
through a committee or other governing body appointed by and accountable to the 
board of directors. The committee shall keep records or minutes of its 
proceedings and shall establish its operational procedures. The committee's 
records must be available for inspection at any time by the commission at the 
office of the breed registry. The committee is authorized to reasonably 
interpret the definitions and standards of this section, subject to approval by 
the board of directors, whose decision in such matters shall be final. <ol>
<nl>(3)<ol> <nl> The committee shall prepare and implement a budget on an annual 
basis, subject to prior approval of the board of directors. The budget may 
contain provisions for reserves for contingencies deemed appropriate. The breed 
registry may develop and implement a fair system for sharing and allocation of 
expenses and operational costs between breed registry activities and accredited 
Texas-bred program activities, taking into consideration the promotion and 
improvement of thoroughbred horses in Texas. In no event may funds that are 
dedicated by law to fund the incentive awards program be used for any other 
purpose. Any funds or services advanced or provided by the breed registry to the 
accredited Texas-bred program may be offset or otherwise recouped upon proper 
accounting. The committee is authorized to set and collect application and 
administration fees. <ol>
<nl>(4)<ol> <nl> Eligibility for awards under the accredited Texas-bred program 
may not be conditioned upon membership in an organization. <ol>
<nl>(c)<ol> <nl>Procedure for Payment of Awards. <ol>
<nl>(1)<ol> <nl>Conditions precedent for payment of awards are: <ol>
<nl>(A)<ol> <nl> If a horse is leased, there must be on file with the breed 
registry a lease agreement specifying which party shall receive award money. 
<ol>
<nl>(B)<ol> <nl> Breeder's Awards will be paid only on an accredited Texas- bred 
Thoroughbred whose dam was accredited with the breed registry prior to foaling 
the subject horse. <ol>
<nl>(C)<ol> <nl> Accreditation fees are non-refundable after a work order has 
been assigned to an eligible entry. If a horse is ineligible, the fee will be 
refunded to the applicant. <ol>
<nl>(D)<ol> <nl> Any Texas-bred horse that becomes breeding stock must be 
accredited with the breed registry as an accredited mare or stallion. <ol>
<nl>(E)<ol> <nl> All applicable fees set by the breed registry must have been 
paid. <ol>
<nl>(2)<ol> <nl> Any accredited Texas-bred Thoroughbred that finishes first, 
second, or third in any race in Texas (with the exception of a stakes race 
restricted to accredited Texas-breds) shall receive an owner's award. Commencing 
with all Thoroughbred race meets run on and after January 8, 1997, all owner's 
awards shall be noted as a purse supplement in each association's condition book 
and race program, and owner's awards shall be considered as a portion of the 
purse money earned by the accredited Texas-bred Thoroughbred. For the purpose of 
calculations of the amount of owner's award purse supplement available the 
following procedure shall be utilized: <ol>
<nl>(A)<ol> <nl> Owner's Award purse supplements shall be calculated on a track-
by-track basis, with analysis and opportunity for adjustment with each condition 
book. <ol>
<nl>(B)<ol> <nl>Based on historical data such as <ol>
<nl>(i)<ol> <nl>the relationship of the owner's award money available in 
relation to the purse money earned by accredited Texas-bred Thoroughbreds 
finishing first, second, or third, and <ol>
<nl>(ii)<ol> <nl> income projections for owner's award revenue calculated by the 
breed registry with the advice and consent of the Executive Secretary of the 
commission, the amount of the owner's award (as a percentage of the purse) shall 
be determined in advance for publication in each track's condition book and 
stakes book. For open company races, the owner's awards shall be advertised in 
each condition book, stakes book, and program so as to identify the availability 
of the accredited Texas-bred program awards. <ol>
<nl>(C)<ol> <nl> Accredited Texas-bred owner's award supplements shall only be 
paid to owners of accredited Texas-breds finishing first, second, or third in 
any race (except a stakes race restricted to accredited Texas-breds). No owner's 
award purse supplements shall be paid on fourth and fifth place finishes. <ol>
<nl>(D)<ol> <nl> It is the intent of the breed registry that (as close of an 
actual sum as possible to) (40%) of the total money generated for all categories 
of awards through the accredited Texas-bred Thoroughbred program will be 
distributed as owner's award purse supplements. The balance of the award money 
will be distributed by the breed registry with two-thirds of the balance (after 
payment of owner's awards) distributed to breeder's awards and one-third of the 
balance (after payment of owner's awards) distributed to stallion owner's 
awards. <ol>
<nl>(E)<ol> <nl> If the percentage set by the breed registry causes an amount 
greater or less than 40% of the cumulative owner's, breeder's, and stallion 
owner's awards from all sources of award revenue to be paid out in owner's 
awards during a condition book period, the breed registry (with the advice and 
consent of the Executive Secretary of the commission) shall have the ability to 
adjust the owner's award purse supplement (as a percentage of the purse) in 
future condition books during each particular race meeting. A periodic 
reconciliation shall be effected. <ol>
<nl>(F)<ol> <nl> After payment of owner's awards for the final condition book of 
a race meeting, any remaining award money allocated for owner's awards during 
that race meet (if any) will be carried over to the next live race meet at that 
track. Funds allocated to the breeder's and stallion awards shall be distributed 
by the breed registry, with two-thirds of the balance to breeder's awards and 
one-third of the balance to stallion owner's awards. <ol>
<nl>(G)<ol> <nl> All funding for the accredited Texas-bred Thoroughbred program 
from all sources (either dedicated by statute or commission rule from breakage 
and/or 1.0% of the multiple two and multiple three wagering pools and/or the 10% 
of the simulcast fee paid by out-of-state receiving locations) shall continue to 
be collected and distributed to the breed registry in the same manner as was in 
effect by commission policy on December 1, 1996. <ol>
<nl>(H)<ol> <nl> On the first business day after a week of live racing is 
concluded at a Texas track (i.e., Monday for a race week ending on a Friday, 
Saturday, or Sunday), the racetrack shall supply by electronic means (fax, e-
mail, etc.) to the breed registry a complete listing of accredited Texas-bred 
Thoroughbreds that finished first, second, or third in any race at the track 
during the previous live racing week. The listing shall include the name of the 
horse, name of horse's owner, date of race, race number, finish position of 
horse (1st, 2nd, or 3rd), amount of purse money from the horsemen's purse 
account earned by the horse, and amount of accredited Texas-bred owner's award 
earned by the horse. The breed registry shall then on the same business day as 
it receives this report, transfer via electronic means to the horsemen's 
bookkeeper at the track a sum of money necessary to cover all accredited Texas-
bred owner's awards during the previous live racing week. <ol>
<nl>(I)<ol> <nl>The breed registry shall retain the ability to set a maximum 
dollar amount for an owner's award. This procedure may be utilized in certain 
stakes races and/or high purse value allowance races. The intent of this maximum 
owner's award policy is to not provide an inordinate amount of the total money 
available for owner's awards to an individual horse during a condition book 
period. In the event the maximum owner's award policy is utilized for a race, 
the dollar amount of the maximum owner's award shall be indicated in the track's 
condition book, stakes book, and stakes nomination forms whenever possible. <ol> 
[The commission adopts by reference the rules of the Texas Thoroughbred 
Association dated June/July 1996, regarding the administration of the Texas Bred 
Incentive Program for thoroughbred horses. Copies of these rules are available 
at the Texas Racing Commission, P.O. Box 12080, Austin, Texas 78711, or at the 
commission office at 8505 Cross Park Dr., #110, Austin, Texas 78754-4594.]
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Issued in Austin, Texas, on January 15, 1997.
TRD-9700651
Paula C. Flowerday
General Counsel
Texas Racing Commission
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 833-6699

CHAPTER 311.Conduct and Duties of Individuals
SUBCHAPTER C.Alcohol and Drug Testing
Drugs
16 TAC sec.311.208
The Texas Racing Commission proposes an amendment to sec.311.208, concerning the 
penalties that may be imposed against an occupational licensee who tests 
positive for drugs while performing his or her duties on the grounds of a 
licensed racetrack. The amendment permits the stewards or judges to condition 
the reinstatement of a license after a suspension for a drug positive on the 
completion of any rehabilitation program ordered by the medical review officer. 
Paula C. Flowerday, General Counsel for the Texas Racing Commission, has 
determined that for the first five-year period the amendment is in effect there 
will be no fiscal implications for state or local government as a result of 
enforcing the proposal. 
Ms. Flowerday has also determined that for each of the first five years the 
amendment is in effect the public benefit anticipated as a result of enforcing 
the proposal will be that pari-mutuel racing will be safer and the participants 
in racing will be encouraged to complete appropriate and necessary 
rehabilitation programs. There will be no fiscal implications for small 
businesses. There may be an economic cost to a person who is required to 
complete a drug rehabilitation program as a condition of the reinstatement of 
his or her license. An individual licensee who is ordered by the medical review 
officer to complete a drug rehabilitation program will incur the cost of the 
program. The exact cost cannot be determined at this time, however, because it 
will vary with the individual program selected and the type of program ordered. 
Comments on the proposal may be submitted on or before February 25, 1997, to 
Paula C. Flowerday, General Counsel for the Texas Racing Commission, P.O. Box 
12080, Austin, Texas 78711-2080.
The amendment is proposed under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; and sec.14.03, which 
authorizes the commission to adopt rules relating to drug testing for 
occupational licensees. 
The proposed amendment implements Texas Civil Statutes, Article 179e. 

sec.311.208.Penalties.
(a)-(b) (No change.) 
(c) For a first violation, the stewards or racing judges shall:
(1) suspend the licensee for at least 30 days; and 
(2) prohibit the licensee from participating in racing until: 
(A) the licensee's condition has been evaluated by the medical review officer or 
a person designated by the medical review officer undersec.311.206 of this title 
(relating to Medical Review Officer); [and]
<nl>(B)<ol> <nl> the licensee has satisfactorily complied with any 
rehabilitation requirements ordered by the medical review officer; and <ol>
<nl>(C)<ol> [(B)] the licensee has produced a negative test result. 
(d)-(e) (No change.) 
(f) After a suspended licensee has satisfactorily <nl> complied with any 
rehabilitation requirements ordered by the medical review officer or 
<ol>completed a certified substance abuse rehabilitation program approved by the 
commission, the licensee may apply to have the license reinstated. The 
commission may reinstate the license if the commission determines the licensee 
poses no danger to other licensees or race animals and that reinstatement is in 
the best interest of racing. On reinstatement, the stewards or racing judges 
shall require the licensee to submit to further drug testing to verify continued 
unimpairment <nl>and complete any additional rehabilitation or after-care drug 
treatment recommended by the medical review officer<ol>. 
(g) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 15, 1997.
TRD-9700650
Paula C. Flowerday
General Counsel
Texas Racing Commission
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 833-6699

CHAPTER 319. Veterinary Practices and Drug Testing.
SUBCHAPTER A. General Provisions
16 TAC sec.319.7 
The Texas Racing Commission proposes an amendment to sec.319.7, concerning the 
requirements for labeling medication possessed on the grounds of licensed 
racetracks. 
Paula C. Flowerday, General Counsel for the Texas Racing Commission, has 
determined that for the first five-year period the amendment is in effect there 
will be no fiscal implications for state or local government as a result of 
enforcing the proposal. 
Ms. Flowerday has also determined that for each of the first five years the 
amendment is in effect the public benefit anticipated as a result of enforcing 
the proposal will be that the commission's enforcement programs relating to 
drugging of race animals will be enhanced. There will be no fiscal implications 
for small businesses. There is no anticipated economic cost to a person who is 
required to comply with the proposal. 
Comments on the proposal may be submitted on or before February 25, 1997, to 
Paula C. Flowerday, General Counsel for the Texas Racing Commission, P.O. Box 
12080, Austin, Texas 78711-2080. 
The amendment is proposed under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; and sec.14.03, which 
authorizes the commission to adopt rules relating to illegal influencing of the 
outcome of a race. 
The proposed amendment implements Texas Civil Statutes, Article 179e. 

sec.319.7.<nl>Labeling Requirements. <ol> [Medication Labelling.]
(a) <nl>A person may not possess on association grounds a drug, medication, 
chemical, foreign substance or other substance that is prohibited in a race 
animal on a race day unless the product is labeled in accordance with this 
section.<ol> [A person may not possess, dispense, or sell on an association's 
grounds a drug, chemical, or other substance or a substance containing a drug, 
chemical, or other substance that is prohibited in a race animal on a race day 
unless the product is labelled in accordance with this section.] 
(b) <nl>A drug or medication which is used or kept on association grounds by a 
licensee other than a veterinarian and which, by federal or state law, requires 
a prescription must have been validly prescribed by a licensed veterinarian and 
in compliance with the applicable federal or state law. All such drugs or 
medications must have a prescription label which is securely attached and 
clearly ascribed to show the following: <ol>
<nl>(1)<ol> <nl>the name of the product; <ol>
<nl>(2)<ol> <nl> the name, address, and telephone number of the veterinarian 
prescribing or dispensing the product; <ol>
<nl>(3)<ol> <nl> the name of each patient (race animal) for whom the product is 
intended/prescribed; <ol>
<nl>(4)<ol> <nl> the dose, dosage, duration of treatment and expiration date of 
the prescribed/dispensed product; and <ol>
<nl>(5)<ol> <nl> the name of the person (trainer) to whom the product was 
dispensed.<ol>[The label on a product required to be labelled must contain: 
[(1) the name of the person prescribing or dispensing the product; 
[(2) the name of the race animal for whom the product is intended; 
[(3) the purpose for which the product is prescribed or dispensed; 
[(4) the dosage of the product; 
[(5) the name of the person to whom the product is dispensed; and 
[(6) the manufacturer of the product, the active ingredients in the product, and 
the expiration date of the product.] 
(c) <nl>A veterinarian may not possess, dispense, or sell on association grounds 
a product that is intended for compounding, dispensation, or sale unless the 
product is labeled in accordance with all applicable labeling requirements in 
federal or state law.<ol>[The executive secretary may, from time to time, 
designate certain medications or classes of medications that may be prescribed 
for an entire kennel. A list of all medications and classes of medications 
designated under this subsection must be made available in the commission office 
at each greyhound racetrack.]
<nl>(d)<ol> <nl>The commission or its agents may seize a product possessed on 
association grounds to determine whether the product is labeled in accordance 
with this section. It is considered a violation of this section if subsequent 
analysis of or investigation regarding a product reveals that any of the 
information on the product's label is inaccurate or untruthful. <ol>
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 15, 1997.
TRD-9700649
Paula C. Flowerday
General Counsel
Texas Racing Commission
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 833-6699

TITLE 22. EXAMINING BOARDS
PART IX. Texas State Board of Medical Examiners
CHAPTER 174. Telemedicine
22 TAC sec.174.3
The Texas State Board of Medical Examiners proposes an amendment to sec.174.3, 
relating to the practice of telemedicine in Texas. The amendment will require 
passage of the Texas Medical Jurisprudence Examination for physicians applying 
for a special license to practice telemedicine and will incorporate additional 
qualifications for issuance of the license. 
Tony Cobos, general counsel, has determined that for the first five-year period 
the section is in effect there will be fiscal implications as a result of 
enforcing or administering the section as proposed which the agency anticipates 
will be offset by the revenue generated through the cost of the examination. Mr. 
Cobos also has determined that for each year of the first five years the section 
as proposed is in effect the public benefit anticipated as a result of enforcing 
the section will be to require passage of the medical jurisprudence examination 
as a prerequisite for obtaining a special license to practice telemedicine. This 
will ensure that physicians practicing telemedicine will be knowledgeable 
regarding Texas laws governing the practice of medicine. There is currently no 
anticipated significant effect on small businesses.
There is an anticipated cost of the examination already calculated in the 
licensure processing fee, as well as individual expenses for travel to Austin, 
Texas, to take the examination, to persons who are required to comply with the 
section as proposed. 
Comments on the proposal may be submitted to Pat Wood, P.O. Box 2018, MC-901, 
Austin, Texas 78768-2018. A public hearing will be held at a later date. The 
amendment is proposed under the Medical Practice Act, Texas Civil Statutes, 
Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical 
Examiners with the authority to make rules, regulations and bylaws not 
inconsistent with this Act as may be necessary for the governing of its own 
proceedings, the performance of its duties, the regulation of the practice of 
medicine in this state, and the enforcement of this Act. 
Article 4495b, Texas Civil Statutes, sec.3.06, is affected by this amendment. 

sec.174.3. Qualifications for Special Purpose License for Practice of Medicine 
Across State Lines. 
For a person to engage in the practice of medicine in Texas as defined under the 
Medical Practice Act, sec.3.06(i), and sec.174.2 of this chapter (relating to 
Definitions), the person must: 
(1)-(2) (No change.) 
(3) be certified in a medical specialty pursuant to the standards of and 
approved by the American Board of Medical Specialties or the Bureau of 
Osteopathic Specialists and Boards of Certification; [and]
<nl>(4)<ol> <nl> have passed the Texas Medical Jurisprudence Examination;<ol>
<nl>(5)<ol> [(4)] be in possession of a special purpose license issued pursuant 
to the terms of this chapter after submission of a completed board-approved 
application for a special purpose license for the practice of medicine across 
state lines and any requisite initial fee and subsequent annual renewal 
fees<nl>; and, <ol> [.]
<nl>(6)<ol> <nl> meet the requirements of sec.174.5 of this chapter (relating to 
Denial of Application for Special Purpose License to Practice Medicine Across 
State Lines).<ol>
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Issued in Austin, Texas, on January 22, 1997.
TRD-9700985
Bruce A. Levy, M.D., J.D.
Executive Director
Texas State Board of Medical Examiners
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-7016

CHAPTER 193. Standing Delegation Orders
22 TAC sec.193.7
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas State 
Board of Medical Examiners or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The Texas State Board of Medical Examiners proposes the repeal of sec.193.7, 
relating to registration requirements for radiological technologists. In order 
to implement provisions of the Medical Radiologic Technologist Certification 
Act, Texas Civil Statutes, Article 4512m, extensive rewrite of the section was 
felt necessary. In addition, the new sections are proposed as a new chapter, 
sec.194.1-194.12. 
Tony Cobos, general counsel, has determined that for the first five-year period 
the repeal is in effect there will be no fiscal implications as a result of 
enforcing or administering the section as proposed. 
Mr. Cobos also has determined that for each year of the first five years the 
repeal as proposed is in effect the public benefit anticipated as a result of 
enforcing the section will be clarification by omission of outdated information. 
There will be no effect on small businesses. There is no anticipated economic 
cost to persons who are required to comply with the section as proposed. 
Comments on the proposal may be submitted to Pat Wood, P.O. Box 2018, MC-901, 
Austin, Texas 78768-2018. A public hearing will be held at a later date. The 
repeal is proposed under the Medical Practice Act, Texas Civil Statutes, Article 
4495b, sec.2.09(a), which provide the Texas State Board of Medical Examiners 
with the authority to make rules, regulations and bylaws not inconsistent with 
this Act as may be necessary for the governing of its own proceedings, the 
performance of its duties, the regulation of the practice of medicine in this 
state, and the enforcement of this Act. 
Medical Radiologic Technologist Certification Act, Texas Civil Statutes, Article 
4512m, is affected by this proposal.
sec.193.7. Radiologic Technologists. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Issued in Austin, Texas, on January 22, 1997.
TRD-9700986
Bruce A. Levy, M.D., J.D.
Executive Director
Texas State Board of Medical Examiners
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-7016

CHAPTER 194. Non-Certified Radiologic Technicians
22 TAC sec.sec.194.1-194.12
The Texas State Board of Medical Examiners proposes new sec.sec.194.1-194.12 
regarding non-certified radiologic technicians. The new sections will outline 
the requirements for registration and disciplinary action relating to persons 
who perform radiologic procedures under the supervision of licensed physicians. 
The new sections are proposed to implement the provisions of the Medical 
Radiologic Technologist Certification Act, Texas Civil Statutes, Article 4512m. 
The proposal is submitted with simultaneous repeal of board rules, sec.193.7, 
Radiologic Technologists. 
Tony Cobos, general counsel, has determined that for the first five-year period 
the sections are in effect there will be fiscal implications as a result of 
enforcing or administering the sections as proposed which will be offset by the 
registration fees collected. 
Mr. Cobos also has determined that for each year of the first five years the 
sections as proposed are in effect the public benefit anticipated as a result of 
enforcing the sections will be to register properly trained individuals to 
perform radiologic procedures under the supervision of licensed physicians and 
to have guidelines for taking disciplinary action should the need arise. There 
may be some effect on small businesses which offer training programs. There is 
anticipated economic cost to persons who are required to comply with the 
sections as proposed, but the exact amount cannot be determined at the present 
time. 
Comments on the proposal may be submitted to Pat Wood, P.O. Box 2018, MC-901, 
Austin, Texas 78768-2018. A public hearing will be held at a later date. The new 
sections are proposed under the Medical Practice Act, Texas Civil Statutes, 
Article 4495b, sec.2.09(a), which provide the Texas State Board of Medical 
Examiners with the authority to make rules, regulations and bylaws not 
inconsistent with this Act as may be necessary for the governing of its own 
proceedings, the performance of its duties, the regulation of the practice of 
medicine in this state, and the enforcement of this Act. 
Medical Radiologic Technologist Certification Act, Texas Civil Statutes, Article 
4512m, is affected by this proposal.

sec.194.1. Purpose. 
The purpose of these rules is to implement the provisions of the Medical 
Radiologic Technologist Certification Act, Texas Civil Statutes, Article 4512m, 
applicable to non-certified radiologic technicians or non-certified technicians. 

sec.194.2. Definitions. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise.
Board-The Texas State Board of Medical Examiners.
Non-certified technician (NCT) or registrant-A person who:
(A) has completed a training program approved by the Texas Department of Health 
by January 1, 1998; however, if the person is employed after January 1, 1998, 
the training program approved by the Texas Department of Health shall be 
completed prior to the person performing radiologic procedures for any medical 
purpose; 
(B) after January 1, 1998, is listed on the registry with the Texas Department 
of Health; and 
(C) is registered with the Board.
Supervision-Responsibility for and control of quality, radiation safety and 
protection, and technical aspects of the application of ionizing radiation to 
human beings for diagnostic purposes.
TRCR-Texas Regulations for the Control of Radiation, 25 Texas Administrative 
Code, Chapter 289. The regulations are available from the Standards Branch, 
Bureau of Radiation Control, Texas Department of Health.

sec.194.3. Registration. 
(a) Any person performing radiologic procedures, as defined in sec. 194.5 of 
this chapter (relating to Non-Certified Technician's Scope of Practice), under 
the supervision of a licensed Texas physician must be registered with the Texas 
State Board of Medical Examiners. 
(b) This section does not apply to registered nurses, physician assistants, or 
to persons certified by the Department of Health under the Medical Radiologic 
Technologist Certification Act. 
(c) An applicant shall make application for registration with the board on a 
form provided by the board, which includes a list of the applicant's supervising 
physician(s), and shall pay the appropriate fee established by the board. 
Multiple physicians, each of whom will have an equal right and responsibility to 
supervise a particular non-certified technician at different times at the same 
geographic location, may be listed on a single application form. 
(d) Applicants shall: 
(1) receive training and instruction as set out in 25 Texas Administrative Code, 
sec.143.17 (relating to Mandatory Training Programs for Non-Certified 
Technicians). The completion of mandatory training shall be demonstrated by 
proof of an applicant's registry with the Texas Department of Health; and 
(2) be 18 years of age or older.

sec.194.4. Annual Renewal. 
(a) Registrants shall renew the registration annually by submitting a 
registration application, paying a fee, as specified by the board, to the Texas 
State Board of Medical Examiners by cashiers check or money order, and providing 
proof of the registrant's renewal of status on the Texas Department of Health 
registry. 
(b) If the annual registration fee and if proof of the registrant's renewal 
status on the Texas Department of Health registry is not received on or before 
the expiration date of the registration, the following penalty will be imposed: 
(1) one to 90 days late - $25.00 plus the required annual registration fee; 
(2) over 90 days late - registration will be submitted to the board for 
cancellation. 
(c) The board by rule may adopt a system under which registrations expire on 
various dates during the year. For the year in which the expiration date is 
changed, registration fees payable on or before January 1 shall be prorated on a 
monthly basis so that each registrant shall pay only that portion of the 
registration fee which is allocable to the number of months during which the 
registration is valid. On renewal of the registration on the new expiration 
date, the total registration is payable. 
(d) Registrants shall inform the board of address changes within two weeks.

sec.194.5. Non-Certified Technician's Scope of Practice.
(a) A registrant may only perform the following radiologic procedures: 
(1) chest, spine, extremities, abdomen, and skull studies utilizing standard 
film or film screen combinations and an x-ray tube that is stationary at the 
time of exposure; or 
(2) bone densitometry utilizing a dual energy x-ray densitometer.
(b) A registrant may not perform studies which require use of contrast agents 
unless the registrant's supervising physician is physically present on the 
premises. 
(c) A registrant may not perform a radiologic procedure which has been 
identified as dangerous or hazardous by the Texas Department of Health in 25 
Texas Administrative Code &#21;143.16 (relating to Dangerous or Hazardous 
Procedures). 
(d) A registrant shall perform radiologic procedures under the supervision, 
instruction, or direction of a physician physically present on the premises. 
(e) All registrants must comply with the safety rules of the Texas Department of 
Health relating to the control of radiation as set forth in that department's 
document titled, "Texas Regulations for Control of Radiation." 

sec.194.6. Suspension, Revocation or Nonrenewal of Registration. 
(a) The board may refuse to issue a registration to an applicant and may, 
following notice of hearing and a hearing as provided for in the Administrative 
Procedure Act, take disciplinary action against any non-certified technician 
who: 
(1) violates the Medical Practice Act, the rules of the Texas State Board of 
Medical Examiners, an order of the board previously entered in a disciplinary 
proceeding, or an order to comply with a subpoena issued by the board; 
(2) violates the Medical Radiologic Technologist Certification Act or the rules 
promulgated by the Texas Department of Health; 
(3) violates the rules of the Texas Department of Health for control of 
radiation; 
(4) obtains, attempts to obtain, or uses a registration by bribery or fraud; 
(5) engages in unprofessional conduct, including, but not limited to, conviction 
of a crime, commission of any act that is in violation of the laws of the State 
of Texas if the act is connected with provision of health care, and commission 
of an act of moral turpitude; 
(6) develops or has an incapacity that prevents the practice of radiologic 
technology with reasonable skill, competence, and safety to the public as a 
result of: 
(A) an illness; 
(B) drug or alcohol dependency; or habitual use of drugs or intoxicating 
liquors; or 
(C) another physical or mental condition; 
(7) fails to practice as a non-certified technician in an acceptable manner 
consistent with public health and welfare; 
(8) has disciplinary action taken against a certification, permit, or 
registration as a non-certified technician in another state, territory, or 
country or by another regulatory agency; 
(9) engages in acts requiring registration under these rules without a current 
registration from the board. 
(10) is removed, suspended, or has had disciplinary action taken against the 
registrant. 
(b) The board may suspend, revoke, or refuse to renew the registration of a non-
certified technician, upon a finding that a non-certified technician has 
committed any offense listed in this section.

sec.194.7. Disciplinary Entity. 
Hearings on alleged statutory or rules violations by a non-certified technician 
and discipline of a non-certified technician shall be conducted by the board in 
accordance with the rules for such hearings following review of the allegations 
against the non-certified technician by representatives of the board and 
recommendation of such representatives that a hearing be conducted with regard 
to such allegations.

sec.194.8. Procedure - General. 
(a) Applicability. These rules shall govern the procedures for the institution, 
conduct, and determination of all causes and proceedings before the board. The 
purpose of these sections is to provide for a simple and efficient system of 
procedure before the board; to ensure uniform standards of practice and 
procedure, public participation, and notice of board actions; and a fair and 
expeditious determination of causes. 
(b) Construction. These rules shall not be construed so as to enlarge, diminish, 
modify or alter the jurisdiction, powers, or authority of the board or the 
substantive rights of any party. They shall be liberally construed with a view 
towards the purpose for which they were adopted. 
(c) Computation of Time. 
(1) Computing time. In computing any period of time prescribed or allowed by 
these sections, Order of the board, or any applicable statute, the period shall 
begin on the day after the act, event, or default in controversy and end on the 
last day of such computed period, unless it is a Saturday, Sunday, or legal 
holiday, in which event the period runs until the end of the next day which is 
not a Saturday, Sunday, nor a legal holiday. 
(2) Extensions. Unless otherwise provided by statute, the time for filing any 
document may be extended by agreement of the parties or order of the secretary 
or administrative law judge upon written verified motion duly filed prior to the 
expiration of the applicable time period, showing good cause for an extension of 
time and stating that the need therefor is not caused by the neglect, 
indifference, or lack of diligence of the movant. A copy of any such motion 
shall be served upon all other parties of record to the proceeding 
contemporaneously with the filing thereof. 
(d) Agreement to be in Writing. No stipulation or agreement between the parties, 
their attorneys, or representatives with regard to any matter involved in any 
proceeding before the board shall be enforced unless it shall have been reduced 
to writing and signed by the parties or their authorized representatives, or 
unless it shall have been dictated into the record by them during the course of 
a hearing, or incorporated in an Order bearing their written approval. This 
section does not limit a party's ability to waive, modify, or stipulate any 
right or privilege afforded by these sections, unless precluded by law. 
(e) Notice of Adjudicative Hearing Proceedings. 
(1) Notice. Before revoking or suspending any registration or denying an 
application for a registration, the board shall afford all parties an 
opportunity for an adjudicative hearing after reasonable notice of not less than 
ten days. 
(2) Content. Such notice of adjudicative hearing shall include: 
(A) a statement of time, place, and nature of the hearing;
(B) a statement of the legal authority and jurisdiction under which the hearing 
is to be held; 
(C) a reference to the particular sections of the statutes and rules involved; 
and 
(D) a short and plain statement of the matters asserted.
(3) More definite statement. If the board is unable to state the matters in 
detail at the time the notice is served, the initial notice may be limited to a 
statement of the issues involved. Thereafter, on a timely written application, a 
more definite and detailed statement must be furnished not less than three days 
prior to the date set for the hearing; however, the board shall not be required 
to plead its evidence in its complaint.
(f) Conduct and Decorum. Each person, party, witness, attorney, or other 
representative shall comport himself or herself in all proceedings with proper 
dignity, courtesy, and respect for the board, the secretary, the executive 
director, the examiner, and all other parties. Disorderly or disruptive conduct 
will not be tolerated. Attorneys and other representatives of parties shall 
observe and practice the standards of ethical behavior prescribed for attorneys 
at law by the Texas State Bar. 
(g) Classification of Parties. Regardless of errors as to designation of a 
party, parties shall be accorded their true status in the proceeding.
(h) Parties in Interest. Any party in interest may appear in any proceeding 
before the board. All appearances shall be subject to a motion to strike upon a 
showing that the party has no justifiable or administratively cognizable 
interest in the proceeding. 
(i) Service in Adjudicative Hearing Proceedings. 
(1) Personal service. Where personal service of notice by the board is required, 
the board shall serve in person or by mailing the notice of adjudicative 
hearing, certified or registered mail, return receipt requested, to the last 
address filed with the board by the person entitled to receive such notice. 
(2) Service by publication. Where personal service cannot be made as 
contemplated in paragraph (1) of this subsection, then service of notice shall 
be by publication of the notice of adjudicative hearing in a newspaper of 
general circulation once each week for two consecutive weeks in the county which 
the registrant listed as his or her mailing address; the last publication to be 
at least ten days prior to the date of the hearing. If the person is not 
currently practicing in Texas as evidenced by information in the board files, or 
if the last county of practice is unknown, publication shall be in a newspaper 
in Travis County. When publication of notice is used, the date of hearing may 
not be less than ten days after the date of the last required publication of 
notice. Proof of publication may be accomplished by publisher's affidavit 
together with a copy of the published notice which shall be introduced into the 
record at the hearing, or by introduction and admission into evidence of 
reasonably reliable copies of the required notices published for purposes of 
service. 
(3) Service of pleadings. A copy of any document filed by any party in any 
proceeding subsequent to the institution thereof shall be mailed or otherwise 
delivered to all other parties of record by the filing party. If any party has 
appeared in the proceeding by attorney or other representative authorized under 
these sections to make appearances, service shall be made upon such attorney or 
other representative. The willful failure of any party to make such service 
shall be sufficient grounds for the entry of an order by the presiding officer 
or administrative law judge striking the document from the record. 
(j) Appearances Personally or by Representative. Any party may appear and be 
represented by an attorney at law authorized to practice law before the highest 
court of this state. This right may be waived. Any person may appear on his or 
her own behalf or by a bona fide full-time employee. A corporation, partnership, 
or association may appear and be represented by any bona fide officer, partner, 
or full-time employee. 
(k) Ex Parte Consultations. Unless required for the disposition of ex parte 
matters authorized by law, members or employees of the board assigned to render 
a decision or to make findings of fact and conclusions of law in a contested 
case may not communicate, directly or indirectly, in connection with any issue 
of fact or law, with any party or his representative except on notice and 
opportunity for all parties to participate.

sec.194.9. Procedure - Prehearing. 
(a) Discovery. After the initiation and filing of a formal complaint, or upon 
the filing of the board's initial pleading in any other contested matter, the 
following discovery rules shall apply: 
(1) Preliminary Discovery. Not later than 30 days after receiving a written 
request from an opposing party, the responding party shall provide to the 
requesting party the following: 
(A) a preliminary list of the names and last known addresses of potential 
witnesses which the responding party reasonably anticipates may testify in its 
case-in-chief; 
(B) a list or copy of all documents, records, photographs, moving pictures, 
films, videotapes, audio recordings, and other such material in the possession 
of the responding party which the responding party intends to offer in its case-
in-chief, and a reasonable opportunity to inspect and copy such items; 
(C) a list identifying all tangible items in the possession of the responding 
party which the responding party intends to offer in its case-in-chief, and a 
reasonable opportunity to inspect such items; and 
(D) a list of the names and last known addresses of any experts the responding 
party anticipates calling to testify in its case-in-chief.
(2) Experts. Upon written request, a list identifying all of the following 
documents and tangible items pertaining to the responding party's experts, or 
copies of such documents and tangible items, shall be provided to the requesting 
party before the initial deposition of such an expert, or no later than five 
days prior to the hearing on the case if no deposition of the expert has been 
taken: 
(A) documents and tangible items which have been provided to any expert who is 
expected to testify in the case; 
(B) documents and tangible items which have been made or prepared by any expert 
used for consultation if such documents and tangible items form the basis, 
either in whole or in part, of the opinion of an expert who is expected to 
testify in the case; and 
(C) a report from each expert who is anticipated to testify in the case which 
generally synopsizes the expected testimony of the expert.
(3) Inspection and Copying. Documents and tangible items which are identified in 
a discovery response, but not provided, shall be made available for inspection 
and copying at a reasonable time and place upon the written request of an 
opposing party. 
(4) Depositions. The taking and use of depositions shall be governed by the 
Administrative Procedure Act or by an agreement between the parties either on 
the record or in a writing signed by the parties or their representatives. 
Except by an agreement between the parties either on the record or in a writing 
signed by the parties or their representatives, or upon an order by the 
administrative law judge, depositions shall be conducted and completed no later 
than five days prior to the scheduled hearing date. Failure of a properly 
noticed witness who is a party to the case to attend a deposition for the 
purpose of taking the testimony of that party witness, or the failure of such a 
witness to attend such a deposition as agreed to by the parties on the record or 
in a writing signed by the parties or their representatives, may result in the 
imposition of the sanctions and remedies set forth in paragraph (5) of this 
subsection. 
(5) Remedies and Sanctions. A failure to comply with a discovery request to the 
extent required by board rule, the Medical Practice Act, or as agreed between 
the parties in a discovery agreement, may be remedied and sanctioned by ordering 
any or all of the following: 
(A) granting of a continuance; 
(B) limitations or restrictions on the admissibility and use of the evidence, to 
include exclusion of the evidence; 
(C) payment by a party of the actual travel, lodging, and court reporter costs, 
but not attorney fees, incurred by an opposing party as a result of the failure 
to comply with the discovery requirements under board rule; 
(D) imposition of a scheduling order providing for discovery deadlines necessary 
to remedy the failure to comply with discovery requirements under board rules; 
and 
(E) remedies and sanctions agreed to by the parties in writing or on the record. 
(6) Good Cause. Good cause for failure to comply with a discovery request to the 
extent required by law, board rule, or as agreed between the parties in a 
discovery agreement, may justify the imposition of less severe remedies or 
sanctions which might otherwise be imposed. Good cause shall include but is not 
limited to the following: 
(A) lack of knowledge of the existence of the information or material; 
(B) lack of access to or control of the information or material; and 
(C) an act of God or providence. 
(7) Calculation of Deadlines and Time Limits. 
(A) For purposes of discovery under board rules, deadlines and time limits shall 
be based on calendar days; however, when a deadline falls on a Saturday, Sunday, 
or legal holiday, the deadline shall be extended to the next calendar day which 
is not a Saturday, Sunday, or legal holiday.
(B) Discovery requests promulgated less than seven days prior to the scheduled 
hearing date shall not require a response unless agreed to by the parties on the 
record or in a writing signed by the parties or their representatives; however, 
other discovery requests promulgated at a time prior to the scheduled hearing 
date which by their timing allow less than the applicable deadline period for a 
response, shall not require a response until submitted for approval by motion of 
the requesting party to the administrative law judge and approved in whole or in 
part by order of the administrative law judge. Any such approval shall provide 
for one or more of the following: 
(i) modified response deadlines; 
(ii) a continuance of the hearing date charged to the party requesting 
discovery; or 
(iii) such reasonable requirements which are necessary to minimize any 
anticipated burden or inconvenience to the responding party as a result of the 
lateness of the discovery request. 
(8) Discovery Agreements. Discovery requirements governing board proceedings may 
be modified by agreement of the parties either on the record or in a writing 
signed by the parties or their representatives.
(9) Ordered Modification of Discovery. Modification of discovery requirements 
under board rules may be ordered by an administrative law judge pursuant to an 
agreement of the parties or the discovery provisions under board rules 
pertaining to remedies and sanctions. 
(10) Official Notice. No later than three days prior to the date of the hearing, 
the parties shall exchange lists specifying all matters which each party will 
seek to have officially noticed at the hearing. 
(11) Final Witness List. No later than five days prior to the date of the 
hearing, the parties shall exchange final lists identifying the names and last 
known addresses of the witnesses each party intends to call to testify in its 
case-in-chief. 
(12) Waiver of Privilege/Confidentiality. The provision of any information or 
material in response to a discovery request which may be the subject of a 
privilege or confidentiality requirement under the Medical Practice Act or other 
applicable law shall not constitute a waiver of any such privilege or 
confidentiality requirement with respect to other such information or material 
not provided. 
(13) Supplementation. Upon receiving new information or material, or upon 
otherwise determining that an inaccuracy exists in a previous discovery 
response, each party shall supplement such responses as soon as practicable. 
(b) Subpoenas. 
(1) Authority. Pursuant to the Medical Practice Act, sec. 2.09(i), on behalf of 
the board, the executive director or the secretary-treasurer of the board may 
issue subpoenas and subpoenas duces tecum. 
(2) Request. A party may request at any time after during the pendency of a 
proceeding, including a contested case, that the board issue a subpoena or 
subpoena duces tecum upon a showing of good cause; the relevancy, and necessity 
of the testimony or documents; lack of undue inconvenience, imposition, or 
harassment of the party required to produce the testimony or documents; and the 
deposit of sums sufficient to ensure payment of expenses incident to the 
subpoenas. 
(A) The party requesting the subpoena shall be responsible for the payment of 
any expense incurred in serving the subpoena, as well as reasonable and 
necessary expenses incurred by the witness who appears in response to the 
subpoena. 
(B) The party requesting a subpoena duces tecum shall describe and recite with 
great clarity, specificity, and particularity the books, records, or documents 
to be produced. 
(C) Failure to timely comply with a subpoena issued pursuant to the Act shall be 
grounds for disciplinary action by the board. 
(3) Ministerial Act. When requested by a party to issue a subpoena or subpoena 
duces tecum, the board is performing a ministerial act and shall do so in 
accordance with the law; however, the board shall not be responsible for 
inadequacies, insufficiencies, or lack of pleading by the requesting parties or 
the consequences thereof. 
(4) Service and Expenses. A subpoena issued at the request of the staff may be 
served either by a board investigator or by certified mail, return receipt 
requested. The board shall pay reasonable charges for photocopies produced in 
response to a subpoena requested by the staff, but such charges may not exceed 
those billed by the board for producing copies of its own records. 
(5) Fees and Travel. A witness called at the request of the board shall be paid 
a fee per day and reimbursed for travel in like manner as board staff. An expert 
witness called at the request of the board shall be paid a fee per day and shall 
be reimbursed for travel in like manner as board members. 
(c) Show Compliance Proceeding. Pursuant to the Administrative Procedure Act, 
sec. 2001.054, the following rules shall apply to show compliance proceedings: 
(1) Prior to institution of board proceedings to take disciplinary action 
relating to a registration, the non-certified technician shall be given an 
opportunity to show compliance with all requirements of law for the retention of 
a registration either in writing, or through a personal appearance at an 
informal meeting with one or more representatives of the board, at the option of 
the registrant. 
(2) The opportunity to show compliance under this section shall be extended to a 
registrant in writing by certified mail, return receipt requested, overnight or 
express mail, or registered mail, to the last mailing address of the registrant 
or the registrant's attorney on file with the board.
(3) Prior to a show compliance proceeding under this section, the registrant 
shall be provided with a brief written statement of the nature of the 
allegations to be addressed at the show compliance proceeding along with a brief 
written statement of the grounds for disciplinary action. These statements shall 
be provided to the registrant by certified mail, return receipt requested, 
overnight or express mail, or registered mail to the last mailing address of the 
registrant or the registrant's attorney on file with the board. The registrant 
shall also be provided with written notice of the time, date, and location of 
the show compliance proceeding and the rules governing the proceeding by 
certified mail, return receipt requested, overnight or express mail, or 
registered mail, to the last mailing address of the registrant or the 
registrant's attorney on file with the board. 
(4) A registrant shall be afforded an opportunity to show compliance with the 
law as provided for under this section; however, a registrant's refusal or 
failure to take such an opportunity when offered, or when scheduled with proper 
notice to the registrant, shall not require that an additional show compliance 
opportunity be made available. In the discretion of the board's representatives 
an additional show compliance opportunity may be afforded to a registrant who 
refused a previous opportunity or failed to attend a scheduled show compliance 
proceeding. 
(5) One or more members of the board shall conduct the show compliance 
proceeding as the board's representatives. The representative who has seniority 
on the board shall chair the proceeding. 
(6) The show compliance proceeding shall allow: 
(A) the board staff to present a synopsis of the allegations and the facts which 
the staff reasonably believes could be proven by competent evidence at a 
hearing; 
(B) the registrant to reply to the staff's presentation and present facts the 
registrant reasonably believes could be proven by competent evidence at a 
hearing; 
(C) presentation of evidence by the staff and the registrant which may include 
medical and office records, x-rays, pictures, film recordings of all kinds, 
audio and video recordings, diagrams, charts, drawings, and any other 
illustrative or explanatory materials which in the discretion of the board's 
representatives are relevant to the proceeding; 
(D) representation of the registrant by counsel; 
(E) presentation of oral or written statements by the registrant or the 
registrant's counsel; 
(F) presentation of oral or written statements or testimony by witnesses; and, 
(G) questioning of witnesses. 
(7) The board's representatives shall exclude from the show compliance 
proceeding all persons except witnesses during their testimony or presentation 
of statements, the registrant, the registrant's attorney or representative, 
board members, and board staff. 
(8) During the show compliance proceeding, the board's legal counsel or a 
representative of the Office of the Attorney General shall be present to advise 
the board's representatives and the board's staff. 
(9) Except with the agreement of the registrant, during the deliberations of the 
board's representatives at a show compliance proceeding, the board 
representatives shall exclude the board staff who presented the allegations 
against the registrant, the registrant's attorney or representative, any 
witnesses, and the general public. The board's legal counsel or a representative 
of the Office of the Attorney General shall be available to assist the 
representatives in deliberations. 
(10) After a show compliance proceeding has been held, the board staff and the 
board's representatives shall be subject to the ex parte provisions of the 
Administrative Procedure Act with regard to contacts with board members and 
administrative law judges concerning the case. 
(11) To the extent possible, board members are required to serve as 
representatives at show compliance proceedings an equal number of times during a 
calendar year. In the event a board member has a complaint regarding the 
frequency or infrequency of service as a representative, the complaint may be 
routed in writing to the Director of Hearings for the board who shall then bring 
the complaint to the attention of the presiding officer of the board for 
submission to the board for a resolution by a majority vote.
(12) The show compliance proceeding may be held in conjunction with, and 
simultaneously with, an informal settlement conference held pursuant to 
subsection (h) of this section. 
(13) The board's representatives may call upon board staff at any time for 
assistance in conducting the show compliance proceeding.
(14) The board's representatives shall prohibit or limit access to the board's 
investigative file by the registrant, the registrant's attorney or 
representative, the complainant, witnesses, and the public consistent with the 
Medical Practice Act, sec. 4.05(c). 
(15) At the conclusion of the show compliance proceeding, the board's 
representatives shall make recommendations for disposition of the allegations 
which may include recommendations of dismissal and closure of the related 
investigation. In the event a dismissal and closure of the investigation is not 
recommended, the representatives shall attempt to mediate the disputed matters 
and make a recommendation regarding the disposition of the case in the absence 
of a hearing under the provisions of applicable law concerning contested cases. 
(16) The registrant may have the show compliance proceeding recorded and reduced 
to writing at the registrant's expense after providing written notice to the 
Director of Hearings for the board at least one day in advance of the show 
compliance proceeding. Recording and transcribing equipment shall be provided by 
the registrant. Efforts to mediate the disputed matters or discussions 
concerning possible settlement options shall not be recorded. 
(d) Prehearing Conferences. 
(1) Appearance. In any contested case the administrative law judge on his or her 
own motion or on the motion of a party, may direct the parties, their attorneys, 
or representatives to appear before him or her at a specified time and place for 
a conference prior to the hearing for the purpose of: 
(A) formulating issues; 
(B) simplifying issues; 
(C) discussing matters to be officially noticed; 
(D) discussing the possibility of making admissions of certain averments of fact 
or stipulations concerning the use by either or both parties of matters of 
public record, such as official records of the board, to the end of avoiding the 
unnecessary introduction of proof; 
(E) ruling on any previously filed motions; 
(F) discussing the procedure at a hearing; 
(G) discussing the limitation, where possible, of the number of witnesses; and 
(H) discussing such other matters as may aid in the simplification of the 
proceedings. 
(2) Order. Action taken at the conference shall be recorded in an appropriate 
Order by the administrative law judge. 
(e) Motions. 
(1) Any motion filed in a pending proceeding shall, unless made during a 
hearing: 
(A) be in writing; 
(B) set forth the specific grounds and reasons therefore, and the relief sought; 
(C) be distributed to all parties of record over a certificate of service as 
outlined in sec.194.8(e) and (i) of this title (relating to Procedure - 
General); 
(D) be filed with the administrative law judge not less than five days prior to 
the hearing date; 
(E) if based on facts or matters which are not of record, be supported by an 
affidavit; and 
(F) be ruled on by the administrative law judge at the prehearing conference or 
at the hearing. 
(2) Motions for continuance or for dismissal of a complaint shall: 
(A) comply with subsection (a)(1)-(6) of this section; 
(B) make reference to all prior motions of the same nature filed in the same 
proceeding. 
(3) When a complaint has proceeded to its hearing date, pursuant to the notice 
issued therein, no continuance or dismissal shall be granted by the 
administrative law judge without the consent of all parties involved. 
(f) Consolidated Hearings. A motion for consolidation of two or more complaints, 
applications, petitions, or other proceedings shall comply with subsection (e) 
of this section. Proceedings shall not be consolidated unless the board shall 
find that: 
(1) the proceedings involve common questions of law and fact; and, 
(2) separate hearings would result in unwarranted expense, delay, or substantial 
injustice. 
(g) Place and Nature of Hearings. All hearings conducted in any proceedings 
shall be open to the public. All hearings shall be conducted by the State Office 
of Administrative Hearings in Austin, Texas. 
(h) Informal Disposition. Pursuant to the Administrative Procedure Act, sec. 
2001.056, the following rules shall apply to informal dispositions of any matter 
relating to the non-certified technician's registration or of any contested 
case. 
(1) The board may make an informal disposition of any matter relating to the Act 
or of any contested case by stipulation, agreed order, agreed settlement, 
consent order, or default. 
(2) In the event the board makes such a disposition of a contested case or other 
matter, the disposition shall be in writing and, if appropriate, the writing 
shall be signed by the registrant. 
(3) To facilitate the expeditious disposition of contested cases, the board may 
provide a registrant with an opportunity to attend an informal settlement 
conference. The informal settlement conference may be held in conjunction with, 
and simultaneously with, a show compliance proceeding held pursuant to 
subsection (c) of this section. 
(4) If the opportunity for an informal settlement conference is provided to a 
registrant, the registrant shall be provided with a brief statement of the 
nature of the allegations to be addressed at the conference along with a brief 
statement of the provisions of the Act which may be grounds for disciplinary 
action. These statements shall be provided to the registrant by certified mail, 
return receipt requested, overnight or express mail, or registered mail, to the 
last mailing address of the registrant or the registrant's attorney on file with 
the board. The registrant shall also be provided with written notice of the 
time, date, and location of the conference and the rules governing the 
proceeding by certified mail, return receipt requested, overnight or express 
mail, or registered mail, to the last mailing address of the registrant or the 
registrant's attorney on file with the board. 
(5) One or more members of the board shall conduct the informal settlement 
conference as the board's representatives. The representative who has seniority 
on the board shall chair the conference. 
(6) The informal settlement conference shall allow: 
(A) board staff to present a synopsis of the allegations and the facts which 
staff reasonably believes could be proven by competent evidence at a hearing; 
(B) the registrant to reply to the board staff's presentation and present facts 
the registrant reasonably believes could be proven by competent evidence at a 
hearing; 
(C) presentation of evidence by the staff and the registrant which may include 
medical and office records, x-rays, pictures, film recordings of all kinds, 
audio and video recordings, diagrams, charts, drawings, and any other 
illustrative or explanatory materials which in the discretion of the board's 
representatives are relevant to the proceeding; 
(D) representation of the registrant by counsel; 
(E) presentation of oral or written statements by the registrant or the 
registrant's counsel; 
(F) presentation of oral or written statements or testimony by witnesses; and, 
(G) questioning of witnesses. 
(7) The board's representatives shall exclude from the informal settlement 
conference all persons except witnesses during their testimony or presentation 
of statements, the registrant, the registrant's attorney or representative, 
board members, and board staff. 
(8) During the informal settlement conference, the board's legal counsel or a 
representative of the Office of the Attorney General shall be present to advise 
the board's representatives or the board's staff. 
(9) Except with the agreement of the registrant, during the deliberations of an 
appropriate settlement, the board's representatives at an informal settlement 
conference shall exclude the board staff which presented the allegations against 
the registrant, the registrant's attorney or representative, witnesses, and the 
general public. Legal counsel for the board or a representative of the Office of 
the Attorney General shall be available to assist the representatives in their 
deliberations. 
(10) After an informal settlement conference has been held, the staff of the 
board and the board's representatives shall be subject to the ex parte 
provisions of the Administrative Procedure Act with regard to contacts with 
board members and administrative law judges concerning the case. 
(11) To the extent possible, board members are required to serve as 
representatives at informal settlement conferences an equal number of times 
during a calendar year. In the event a board member has a complaint regarding 
the frequency or infrequency of service as a representative, the complaint may 
be routed in writing to the Director of Hearings for the board who shall then 
bring the complaint to the attention of the presiding officer of the board for 
submission to the board for a resolution by a majority vote.
(12) At the informal settlement conference, the board's representatives will 
attempt to mediate disputed matters, and the board's representatives may call 
upon the staff at any time for assistance in conducting the informal settlement 
conference. 
(13) The board's representatives shall prohibit or limit access to the board's 
investigative file by the registrant, the registrant's attorney or 
representative, the complainant, witnesses, and the public consistent with the 
Medical Practice Act, sec. 4.05(c). 
(14) Although notes may be made by the participants, mechanical or electronic 
recordings shall not be made of settlement discussions, mediation efforts, or 
the informal settlement conference. 
(15) The settlement conference shall be informal and shall not follow the 
procedures established under this title for contested cases.
(16) At the conclusion of the informal settlement conference, the board's 
representatives shall make recommendations for disposition of the allegations 
which may include recommendations of dismissal and closure of the related 
investigation. In the event a dismissal and closure of the investigation is not 
recommended, the representatives shall make a recommendation regarding the 
disposition of the case in the absence of a hearing under the provisions of 
applicable law concerning contested cases. The board's representatives may make 
recommendations to the registrant for resolution of the issues, including 
suspension, revocation, or nonrenewal. These recommendations may be subsequently 
modified by the board's representatives or staff based on new information, a 
change of circumstance, or to expedite a resolution in the interest of 
protecting the public. The board's representatives may also conclude that the 
board lacks jurisdiction or that a violation of the board's rules has not been 
established, and may recommend that the investigation be closed or referred for 
further investigation. These recommendations may be adopted, modified, or 
rejected by the duly convened board or through the duly authorized actions of 
the board's Disciplinary Process Review Committee. 
(17) The registrant may either accept or reject the settlement recommendations 
proposed by the board's representatives. If the registrant accepts the 
recommendations, the registrant shall execute the settlement agreement in the 
form of an Agreed Order or affidavit as soon thereafter as is practicable. If 
the registrant rejects the proposed agreement, the matter shall be referred to 
the board's staff for appropriate disposition as directed by the board's 
representatives or the Disciplinary Process Review Committee. The board through 
staff may also schedule the matter for a hearing as described in sec. 194.10 of 
this title (relating to Procedure - Hearing). 
(18) Following acceptance and execution by the registrant of the settlement 
agreement, the agreement shall be submitted to the board for approval. 
(19) The following relate to consideration of an agreed disposition by the 
board: 
(A) Upon an affirmative majority vote, the board shall enter an Order approving 
the proposed settlement agreement. The Order shall bear the signature of the 
presiding officer of the board at such meeting and shall be referenced in the 
minutes of the board. 
(B) If the board does not approve a proposed settlement agreement, the 
registrant shall be so informed and the matter shall be referred to the staff 
for appropriate action to include dismissal, closure, further negotiation, 
further investigation, an additional informal settlement conference, or a 
hearing. 
(C) To promote the expeditious resolution of any matter relating to the non-
certified technician or of any contested case, with the approval of the 
executive director of the board, or the Disciplinary Process Review Committee of 
the board, board staff may present a proposed settlement agreement to the board 
for consideration and acceptance without conducting an informal settlement 
conference. If the board does not approve such a proposed settlement agreement, 
the registrant shall be so informed and the matter shall be referred to board 
staff for appropriate action to include dismissal, closure, further negotiation, 
further investigation, an informal settlement conference, or a hearing.

sec.194.10. Procedure - Hearing. 
(a) Presiding Officer. When the board en banc, or a committee or panel of the 
board, conducts a hearing pursuant to the Medical Practice Act, the following 
apply: 
(1) The hearing will be presided over by the presiding officer of the board. 
(2) The presiding officer shall have the authority to:
(A) administer oaths; 
(B) examine witnesses; 
(C) rule on the admissibility of evidence; 
(D) rule on motions; 
(E) rule on amendments to pleadings; 
(F) recess the hearing from day to day; and 
(G) refer the hearing to an administrative law judge at the State Office of 
Administrative Hearings. 
(b) Administrative Law Judges. 
(1) Authority. When the board utilizes an administrative law judge, such 
hearings shall be conducted In accordance with the Administrative Procedure Act, 
the Medical Practice Act, the rules of the board, and all other applicable law. 
(2) Duties. Except for accepting or rejecting proposed findings of fact or 
conclusions of law, issuing final orders on the merits, dismissing complaints, 
and making recommendations as to a registrant's discipline, the administrative 
law judge shall have all the authority which the board has regarding the conduct 
of hearings including, without limitation, the following: 
(A) to hold hearings and issue notices; 
(B) to administer oaths and affirmations; 
(C) to direct all parties to enter their appearance on the record; 
(D) to subpoena and examine witnesses; 
(E) to subpoena documents and other physical evidence; 
(F) to hold conferences before, during, or after the hearing, to consider the 
matters specified in sec. 194.9(d) of this title (relating to Procedure - 
Prehearing); 
(G) to regulate the course and conduct of the hearing including, without 
limitation, setting the time and place of the hearing and/or continued hearings; 
fixing the time for filing of briefs and other documents; receiving relevant 
evidence; excluding evidence which is irrelevant, immaterial, repetitious, or 
cumulative; ruling upon offers of proof; regulating the manner of examination to 
prevent needless and unreasonable harassment, intimidation, expense, 
inconvenience, or embarrassment of any witness or party at a hearing; removing 
disruptive individuals; and ruling on motions; 
(H) to submit in writing to the parties, a proposal for decision containing the 
elements specified in sec.194.11(a) of this title (relating to Procedure - 
Posthearing); 
(I) to present and explain in person his or her proposal for decision to the 
board for its consideration and final action; and 
(J) to dispose of any other matter that arises in the course of a hearing and to 
take any action authorized by the rules of the board, the Medical Practice Act, 
the Administrative Procedure Act, and all other applicable law. 
(c) Order of Proceeding. 
(1) Hearings. In all proceedings, the petitioner, applicant, or complainant, 
respectively, shall be entitled to open and close. Where several proceedings are 
heard on a consolidated record, the administrative law judge shall designate who 
shall open and close. The administrative law judge in all cases shall determine 
whether and at what stage intervenors shall be permitted to offer evidence. 
After all parties have completed the presentation of their evidence, the 
administrative law judge may call upon any party or the board staff for further 
material or relevant evidence upon any issue, to be presented at further public 
hearing after notice to all parties of record. 
(2) Before the board. During proceedings before the board, en banc, the order of 
proceeding shall be the following: 
(A) The administrative law judge shall present his or her proposal for decision 
and recommended order, explaining the items as specified in subsection (b) of 
this section. 
(B) The party adversely affected shall briefly state their reasons for being so 
affected, supported by the evidence of record. 
(C) The other party or parties shall be given the opportunity to respond. 
(D) The board as complainant shall have the right to close.
(E) The presiding officer or a member of the board may question any party as to 
any matter relevant to the proceeding. 
(F) At the end of any argument by the parties, the board may deliberate the 
matter in executive session, but shall vote and announce its final decision in 
open meeting. 
(3) Limitation. A party shall not inquire into the mental processes used by the 
board in arriving at its decision, nor be disruptive of the orderly procedure of 
the board's routine. 
(d) Reporter and Transcripts. 
(1) Option. A party has the option of furnishing his or her own stenographic 
reporter at his or her own expense or using the reporter by the board. If a 
party elects to provide his or her own reporter, the party shall notify the 
board prior to the commencement of the hearing. 
(2) Original. The original transcript shall be delivered to the board as soon as 
practicable. A stenographic reporter may sell copies of a transcript. If the 
respondent in the proceedings requests the original record (statement of fact) 
of the testimony and evidence of a disciplinary hearing, the costs for the 
original record (transcript) shall be borne by the respondent (applicant) non-
certified technician. Any subsequent copies of the record (transcript) shall be 
borne by any person requesting same.
(3) Corrections. Suggested corrections to the transcript of the record may be 
offered within ten days after the transcript is filed in the proceeding, unless 
the board shall permit suggested corrections to be offered thereafter. Suggested 
corrections shall be served in writing upon each party of record, the official 
reporter, and the board. If suggested corrections are not objected to, the board 
will direct the corrections to be made and the manner of making them. In case 
the parties disagree on suggested corrections, they may be heard by the board 
which shall then determine the manner in which the record shall be changed, if 
at all. 
(e) Dismissal Without Hearing. 
(1) The board may entertain motions for dismissal for the following reasons: 
(A) failure to prosecute; 
(B) unnecessary duplication of proceedings or res judicata;
(C) withdrawal; 
(D) moot questions or stale petitions; or 
(E) lack of jurisdiction. 
(2) Such motions must meet the criteria of sec.194.9(e) of this title (relating 
to Procedure - Prehearing). 
(3) These motions may be argued prior to the board ruling thereon. 
(f) Evidence. 
(1) Rules. The rules of evidence as applied in nonjury civil cases in the 
district courts of this state shall be followed. In all cases, irrelevant, 
immaterial, or unduly repetitious evidence shall be excluded. When necessary to 
ascertain facts not reasonably susceptible of proof under those rules, evidence 
not admissible thereunder may be admitted, except where precluded by statute, if 
it is of a type commonly relied upon by reasonably prudent men in the conduct of 
their affairs. The board shall give effect to the rules of privilege recognized 
by law. Opportunity must be afforded all parties to respond and present evidence 
and argument of all issues involved.
(2) Objections. Objections to evidentiary offers shall be made and shall be 
noted in the record. Formal exceptions to rulings of the administrative law 
judge during a hearing shall be unnecessary. It shall be sufficient that the 
party at the time any ruling is made or sought shall have made known to the 
administrative law judge the action which he or she desires. 
(3) Offer of proof. If evidence is excluded from the record by an exclusionary 
ruling of the administrative law judge, the evidence may be included in the 
record by an offer of proof by the sponsoring party by dictating into the record 
or submitting in writing the substance of the evidence. An offer of proof shall 
be sufficient to preserve the evidence for review.
(4) Office records. When subpoenaed by the board, the office records of each 
patient shall have stapled thereto an affidavit in the form approved and 
furnished by the board which contains the requisite elements to comply with the 
Texas Rules of Civil Evidence, sec. 902(10)(b), relating to the form of 
affidavits. 
(5) Documents. Subject to these requirements, if a hearing will be expedited and 
the interests of the parties will not be substantially prejudiced, any part of 
the evidence may be received in written form. 
(A) Copies. Documentary evidence may be received in the form of copies or 
excerpts if the original is not readily available. On request, parties shall be 
given an opportunity to compare the copy with the original. When numerous 
documents are offered, the administrative law judge may limit those admitted to 
a number which are typical and representative and may, in his or her discretion, 
require the abstracting of the relevant data from the documents and the 
presentation of the abstracts in the form of an exhibit; provided, however, that 
before making such requirement the administrative law judge shall require that 
all parties of record or their representatives be given the right to examine the 
documents from which such abstracts were made. 
(B) Prepared testimony. In all contested proceedings and after service of copies 
upon all parties of record at such time as may be designated by the 
administrative law judge, the prepared testimony of any witness upon direct 
examination, either in narrative or question and answer form, may be 
incorporated in the record as if read or received as an exhibit, upon the 
witness' being sworn and identifying the same. Such witness shall be subject to 
cross-examination and the prepared testimony shall be subject to a motion to 
strike in whole or in part. 
(6) Official notice. Official notice may be taken of all facts judicially 
cognizable and of records of the board. In addition, notice may be taken of 
generally recognized facts within the area of the agency's specialized 
knowledge. Parties shall be notified either before or during the hearing or by 
reference in preliminary reports or otherwise, of the material officially 
noticed, including any staff memoranda or data, and the parties shall be 
afforded an opportunity to contest the material so noticed. The special skills 
or knowledge of the board and its staff may be utilized in evaluating the 
evidence. 
(7) Limitations on number of witnesses. The administrative law judge shall have 
the right in any proceeding to limit the number of witnesses whose testimony is 
merely cumulative. 
(8) Exhibits. 
(A) Form: Documentary exhibits shall be 8 inches by 11 inches in length, so as 
to not unduly encumber the files and records of the board. There shall be a 
brief statement on the first sheet of the exhibit of what the exhibit purports 
to show. Exhibits shall be limited to fact material and relevant to the issues 
involved in a particular proceeding. 
(B) Marking and service: The original of each exhibit offered shall be marked 
sequentially for identification and tendered for inclusion in the evidentiary 
record. One copy shall be furnished to the administrative law judge and one copy 
to each party of record or his or her attorney or representative. 
(9) After hearing. No exhibit will be permitted to be filed in any proceeding 
after the conclusion of the hearing unless specifically directed by the 
administrative law judge, presiding officer, or by the board with copies of the 
late-filed exhibit served on all parties of record. 
(g) Default. If the respondent (applicant) fails to appear in person or by legal 
representation on the day and at the time set for hearing in a contested case, 
regardless of whether an appearance has been entered, the administrative law 
judge, upon motion by board staff, shall enter a default judgment in the matter 
adverse to the respondent (applicant) who failed to attend the hearing, provided 
that accompanying the motion will be an affidavit of board staff averring that 
in the opinion of board staff, there is legally admissible credible evidence 
reasonably available to support the factual allegations against the respondent 
(applicant).

sec.194.11. Procedure - Posthearing. 
(a) Proposals for Decision. 
(1) Elements. In addition to any other requirement of the Administrative 
Procedure Act, the administrative law judge shall serve on the parties a 
proposal for decision which shall contain: 
(A) a summary of the evidence adduced by each party; 
(B) a statement of the administrative law judge's reasons for the proposed 
decision; 
(C) findings of fact expressed in clear, concise factual terms, neither 
summarizing nor reciting the evidence. Findings of fact must be based explicitly 
on the evidence and on matters officially noticed; 
(D) conclusions of law necessary to the proposed decision;
(E) a listing and explanation of all mitigating and aggravating circumstances 
necessary to a complete understanding of the case by the board; and 
(F) recommended disposition or discipline. 
(2) Service. When a proposal for decision is prepared, a copy of the proposal 
shall be served forthwith by the administrative law judge on each party, his or 
her attorney of record or representative, and the board. Service of the proposal 
for decision shall be in accordance with sec.194.8(i) of this title (relating to 
Procedure - General). 
(3) Statutory statement. If findings of fact are stated in statutory language, 
each finding must be accompanied by a concise and explicit statement of the 
facts supporting the finding. 
(4) Proposed findings. Only when the administrative law judge requests a party 
or parties to submit findings of fact will it be necessary for the 
administrative law judge to rule on each proposed finding in the recommended 
order. 
(b) Exceptions and Replies. 
(1) Entitlement. Any party of record who is aggrieved by the administrative law 
judge's proposal for decision shall have the opportunity to file exceptions to 
the proposal for decision within 20 days from the date of service of the 
proposal for decision. Replies to the exceptions may be filed by other parties 
within ten days of the filing of the exceptions. Exceptions and replies shall be 
filed with the administrative law judge. Any extensions of time shall be as 
provided by sec.194.8(c) of this title (relating to Procedure - General). 
(2) Content. Each exception or reply to a finding of fact shall be stated 
concisely and shall summarize the evidence in support thereof. Arguments shall 
be logical and citations to authorities shall be complete.
(3) Briefs. Briefs shall be filed only when requested or permitted by the board, 
presiding officer, administrative law judge. 
(4) Service. Exceptions and replies shall be served upon every party of record 
by the filing party pursuant to sec. 194.8(i) of this title (relating to 
Procedure - General). 
(c) Oral Argument. Any party may request oral argument prior to the final 
determination of any proceeding, but oral argument shall be allowed only in the 
sound discretion of the board. A request for oral argument may be incorporated 
in exceptions, briefs, replies to exceptions, motions for rehearing, or in 
separate pleadings. 
(d) Final Decisions and Orders. 
(1) Board action. The proposal for decision may be acted on by the board upon 
the expiration of ten days after the filing of replies to exceptions to the 
proposal for decision. Parties shall be notified either personally or by mail of 
any decision or order. On written request, a copy of the decision or order shall 
be delivered or mailed to any party and to his or her attorney of record. 
(2) Recorded. All final decisions and orders of the board shall be in writing or 
stated in the record and shall be signed by the presiding officer of the board. 
A final order shall include findings of fact and conclusions of law, separately 
stated. 
(3) Imminent peril. If the board finds that an imminent peril to the public 
health, safety, or welfare requires immediate effect of a final decision or 
order in a contested case, it shall recite that finding in the decision or order 
as well as the fact that the decision or order is final and effective on the 
date rendered, in which event the decision or order is final and appealable on 
the date rendered and no motion for rehearing is required as a prerequisite for 
appeal. 
(4) Changes to Recommendation. To protect the public interest and ensure that 
sound principles govern the decisions of the board, it shall hereafter be the 
policy of the board to change a finding of fact or conclusion of law or to 
vacate or modify the proposed order of an administrative law judge when the 
proposed order is: 
(A) erroneous; 
(B) against the weight of the evidence; 
(C) based on unsound medical principles; 
(D) based on an insufficient review of the evidence; 
(E) not sufficient to protect the public interest; or 
(F) not sufficient to adequately allow rehabilitation of the non-certified 
technician. 
(5) Amended order. If the board modifies, amends, or changes the hearing 
examiner's or the administrative law judge's recommended order, an order shall 
be prepared reflecting the board's changes as stated in the record. 
(6) Administrative finality. A final order or board decision is administratively 
final: 
(A) upon a finding of imminent peril to the public health, safety, or welfare as 
outlined in paragraph 
(3) of this subsection; 
(B) when absent the filing of a timely motion for rehearing upon the expiration 
of 20 days from the date the final order or board decision is entered; or 
(C) when a timely motion for rehearing is filed and the motion for rehearing is 
overruled by board order or operation of law as outlined in subsection (e) of 
this section. 
(7) Rendering of final decision or order. The final decision or order must be 
rendered within 60 days after the date the hearing is finally closed. In a 
contested case heard by an administrative law judge, an extension of time for 
the issuing of a proposal for decision may be announced at the conclusion of the 
hearing. 
(e) Motions for Rehearing. 
(1) Filing Times. A motion for rehearing must be filed within 20 days after a 
party has been notified, either in person or by mail, of the final decision or 
order of the board. 
(2) Board Action. Action by the board on the motion must be taken within 45 days 
after the date of rendition of the final decision or order. If board action is 
not taken within the 45-day period, the motion for rehearing is overruled by 
operation of law 45 days after the date of rendition of the final decision or 
order. The board may, by written order, extend the period of time for filing the 
motions and replies and taking board action, except that an extension may not 
extend the period for board action beyond 90 days after the date of rendition of 
the final decision or order. In the event of an extension, the motion for 
rehearing is overruled by operation of law on the date fixed by the order, or in 
the absence of a fixed date, 90 days after the date of the final decision or 
order. The parties may, by agreement, with the approval of the board, provide 
for a modification of the times provided in this section. 
(f) The Record. The record in a contested case shall include:
(1) all pleadings, motions, and intermediate rulings; 
(2) evidence received or considered; 
(3) a statement of matters officially noticed; 
(4) questions and offers of proof, objections, and rulings on them; 
(5) proposed findings of fact, conclusions of law, exceptions, and replies; 
(6) any decision, opinion, or report by the officer presiding at the hearing; 
and 
(7) all staff memoranda, correspondence from parties, or other data submitted to 
or considered by the administrative law judge or members of the agency who are 
involved in making the decision. 
(g) Costs of Appeal. A party appealing a final decision of the board in a 
contested case may be ordered by the board to pay all or a part of the cost of 
preparation of the original or a certified copy of the record of the proceeding 
that is required to be transmitted to the reviewing court.

sec.194.12. Construction. 
The provisions of this chapter shall be construed and interpreted so as to be 
consistent with the statutory provisions of the Medical Practice Act. In the 
event of a conflict between this chapter and the provisions of the Medical 
Practice Act, the provisions of the Medical Practice Act shall control; however, 
this chapter shall be construed so that all other provisions of this chapter 
which are not in conflict with the Act shall remain in effect. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 22, 1997.
TRD-9700987
Bruce A. Levy, M.D., J.D.
Executive Director
Texas State Board of Medical Examiners
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 305-7016

TITLE 25. HEALTH SERVICES
PART I. Texas Department of Health
CHAPTER 133. Hospital Licensing
SUBCHAPTER D. Special Service Requirements
25 TAC sec.133.52
(Editor's note: The Texas Department of Health proposes for permanent adoption 
the amended section it adopts on an emergency basis in this issue. The text of 
the amended section is in the Emergency Rules section of this issue.)
The Texas Department of Health (TDH) proposes an amendment to sec.133.52 
concerning standards for the provision of mental health services in an 
identifiable part of a hospital. The amendment requires hospitals providing 
mental health services to comply with specific rules adopted by the Texas Board 
of Mental Health and Mental Retardation board (TXMHMR) which are set out in 
subsection (b)(1)-(5). 
The Texas Hospital Licensing Law, Health and Safety Code, sec.241.0265 states 
that the care and treatment of a patient receiving mental health services in a 
hospital is governed by the standards adopted by TXMHMR to the same extent as if 
the TXMHMR standards were rules adopted by the Board of Health. TDH is required 
to enforce the TXMHMR standards. 
TXMHMR contemporaneously repealed and adopted new rules as follows: Chapter 401, 
Subchapter J (relating to Standards of Care and Treatment in Psychiatric 
Hospitals), as referenced in sec.133.52(b)(1), was adopted effective September 
13, 1996; Chapter 405, Subchapter FF (relating to Consent to Treatment with 
Psychoactive Medication), as referenced in sec.133.52(b)(4), was adopted 
effective October 1, 1996; and Chapter 405, Subchapter F (relating to Voluntary 
and Involuntary Behavioral Interventions in Mental Health Programs (formerly 
titled Restraint and Seclusion in Mental Health Facilities), as referenced in 
sec.133.52(b)(5), was amended effective October 1, 1996. TXMHMR amended Chapter 
404, Subchapter E (relating to Rights of Persons Receiving Mental Health 
Services), as referenced in sec.133.52(b)(2), effective October 1, 1996. TXMHMR 
made no changes to Chapter 405, Subchapter E (relating to Electroconvulsive 
Therapy) as referenced in sec.133.52(b)(3). 
The amendments to subsection (b)(1)-(5) delete the effective dates of the TXMHMR 
rules so that the TXMHMR rules are accurately described and so that TDH will not 
have to amend its rules next time TXMHMR revises its rules; correct an 
incomplete sentence in subsection (b)(2); delete a provision in subsection 
(b)(4) which no longer applies due to TXMHMR's deletion of the funding provision 
from the TXMHMR rule; and reflect the new title of the TXMHMR rule referenced in 
subsection (b)(5). The amendment is necessary in order to meet the requirements 
of the Texas Hospital Licensing Law to enforce the revisions made by TXMHMR 
effective September 13, 1996 and October 1, 1996, and to prevent confusion among 
hospitals as to which rules are in effect. Contemporaneous with this proposal, 
TDH is adopting this amendment on an emergency basis. 
Bernie Underwood, Chief of Staff Services, Health Care Quality and Standards, 
has determined that for each of the first five years the section is in effect, 
there will be no additional fiscal costs to state or local governments as a 
result of enforcing or administering the sections as proposed. TXMHMR stated in 
the preamble to the new section relating to consent to treatment with 
psychoactive medication there may be some additional cost to local government or 
small businesses as a result of administering the new section as proposed; 
however, TXMHMR indicated the impact could not be calculated at the time the 
rule was proposed. When contacted by TDH, a TXMHMR official stated there had 
been no comment on the fiscal note during or following the public comment 
period. TDH has not identified any additional fiscal impact. 
Ms. Underwood also has determined that for each year of the first five years the 
section as proposed will be in effect, the public benefits for those persons who 
utilize the mental health services provided by hospitals are assurances that 
rules for compliance with State of Texas rules are clearly and consistently 
stated. There will be no costs to small businesses. There is no anticipated cost 
to individuals required to comply with the sections as proposed. There will be 
no significant local employment impact. 
Comments on the proposed rules may be submitted to John M. Evans, Jr., Hospital 
Licensing Director, Health Facility Licensing Division, Texas Department of 
Health, 1100 West 49th Street, Austin, Texas 78756-3199. Comments will be 
accepted for a period of 30 days after publication of the proposed amendments in 
the Texas Register. 
The amendment is proposed under the Health and Safety Code, Chapter 241, which 
provides the Texas Board of Health (board) with authority to adopt rules to 
establish and enforce minimum standards for the licensing of hospitals; Chapter 
321 which provides the board with the authority to adopt a patient bill of 
rights; and sec.12.001 which provides the board with the authority to adopt 
rules for the performance of every duty imposed by law upon the board, TDH and 
the commissioner of health.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 21, 1997.
TRD-9700875
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 458-7236

CHAPTER 134. Private Psychiatric Hospitals and Crisis Stabilization Units
SUBCHAPTER C. Operational Requirements
25 TAC sec.134.22
(Editor's note: The Texas Department of Health proposes for permanent adoption 
the amended section it adopts on an emergency basis in this issue. The text of 
the amended section is in the Emergency Rules section of this issue.)
The Texas Department of Health (TDH) proposes an amendment to sec.134.22 
concerning standards for the provision of mental health services in hospitals 
and crisis stabilization units. The amendment requires private psychiatric 
hospitals and crisis stabilization units to comply with specific rules adopted 
by the Texas Board of Mental Health and Mental Retardation (TXMHMR) which are 
set out in subsection (b)(1)(A)-(E). The Texas Hospital Licensing Law, Health 
and Safety Code, sec.241.0265 states that the care and treatment of a patient 
receiving mental health services in a hospital is governed by the standards 
adopted by TXMHMR to the same extent as if the TXMHMR standards were rules 
adopted by the Board of Health. TDH is required to enforce the TXMHMR standards.
TXMHMR contemporaneously repealed and adopted new rules as follows: Chapter 401, 
Subchapter J (relating to Standards of Care and Treatment in Psychiatric 
Hospitals), as referenced in sec.134.22(b)(1)(A), was adopted effective 
September 13, 1996; Chapter 405, Subchapter FF (relating to Consent to Treatment 
with Psychoactive Medication), as referenced in sec.134.22(b)(1)(D), was adopted 
effective October 1, 1996; and Chapter 405, Subchapter F (relating to Voluntary 
and Involuntary Behavioral Interventions in Mental Health Programs (formerly 
titled Restraint and Seclusion in Mental Health Facilities)), as referenced in 
sec.134.22(b)(1)(E), was amended effective October 1, 1996. TXMHMR amended 
Chapter 404, Subchapter E (relating to Rights of Persons Receiving Mental Health 
Services), as referenced in sec.134.22(b)(1)(B), effective October 1, 1996. 
TXMHMR made no change to Chapter 405, Subchapter E (relating to 
Electroconvulsive Therapy) as referenced in sec.134.22(b)(1)(C), or to Chapter 
401, Subchapter K (relating to Rules Governing Licensure of Crisis Stabilization 
Units) as referenced in sec.134.22(b)(2).
The amendments to subsection (b)(1)(A)-(E) delete the effective dates to allow 
for future revisions of the TXMHMR rules so that the TXMHMR rules are accurately 
described and so that TDH will not have to amend its rules next time TXMHMR 
revises its rules; correct an incomplete sentence in subsection (b)(1)(B); 
delete a provision in subsection (b)(1)(D) which no longer applies due to 
TXMHMR's deletion of the funding provision from the TXMHMR rule; and reflect the 
new title of the TXMHMR rule referenced in subsection (b)(1)(E).
The amendment is necessary in order to meet the requirements of the Texas 
Hospital Licensing Law to enforce the revisions made by TXMHMR effective 
September 13, 1996, and October 1, 1996, and to prevent confusion among private 
psychiatric hospitals as to which rules are in effect. 
Contemporaneous with this proposal, TDH is adopting this amendment on an 
emergency basis. 
Bernie Underwood, Chief of Staff Services, Health Care Quality and Standards, 
has determined that for each of the first five years the sections as proposed is 
in effect, there will be no additional fiscal costs to state or local government 
as a result of enforcing or administering the proposed amendments.
TXMHMR stated in the preamble to the new section relating to consent to 
treatment with psychoactive medication there may be some additional cost to 
local government or small businesses as a result of administering the new 
section as proposed; however, TXMHMR indicated the impact could not be 
calculated at the time the rule was proposed. When contacted by TDH, a TXMHMR 
official stated there had been no comment on the fiscal note during or following 
the public comment period. TDH has not identified any additional fiscal impact. 
Ms. Underwood also has determined that for each year of the first five years the 
section as proposed will be in effect, the public benefits for those persons who 
utilize the services of private psychiatric hospitals and crisis stabilization 
units are assurances that rules for compliance with State of Texas rules are 
clearly and consistently stated by the state agencies who regulate the private 
psychiatric hospitals and crisis stabilization units. There will be no 
additional costs to small businesses. There is no anticipated cost to 
individuals required to comply with the sections as proposed. There will be no 
significant local employment impact. 
Comments on the proposed rules may be submitted to John M. Evans, Jr., Hospital 
Licensing Director, Health Facility Licensing Division, Texas Department of 
Health, 1100 West 49th Street, Austin, Texas 78756-3199. Comments will be 
accepted for a period of 30 days after publication of the proposed amendments in 
the Texas Register. 
The amendment is proposed under the Health and Safety Code, Chapter 577, which 
provides the Texas Board of Health (board) with authority to adopt rules to 
establish and enforce minimum standards for the licensing of private mental 
hospitals and mental health facilities; Health and Safety Code, sec.241.0265 
which provides the board with authority to enforce TXMHMR standards and 
sec.12.001 which provides the board with the authority to adopt rules for the 
performance of every duty imposed by law upon the board, TDH and the 
commissioner of health. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 21, 1997.
TRD-9700873
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 458-7236

TITLE 30. ENVIRONMENTAL QUALITY
PART I. Texas Natural Resource Conservation Commission
CHAPTER 32. Transfers of Permits, Licenses, and Other Authorizations
The commission proposes new sec.sec.32.1, 32.3, 32.5, 32.7, 32.9, 32.11, 32.13, 
32.15, 32.51, 32.53, 32.55, 32.57, 32.59, 32.75, 32.77, 32.101, 32.103, 32.125, 
32.127, 32.151, 32.153, 32.155, 32.157, 32.175, 32.177, 32.201, 32.203, and 
32.205, concerning Transfers of Permits, Licenses, and Other Authorizations. The 
primary purpose of the proposed new sections is to consolidate and streamline 
all transfer requirements. 
EXPLANATION OF PROPOSED RULES. Existing transfer requirements in 
sec.sec.116.110, 291.109, 291.112, 291.115, 293.13, 303.41, 297.811, 297.82, 
297.83, 304.43, 305.64, 305.97, 312.10, 312.11, 321.34, 330.63, 330.812, 
330.835, 330.843, 330.852, and 330.855 will be cut and placed into this new 
chapter. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years these sections as proposed are in 
effect there will be no significant fiscal implications for state government as 
a result of administration and enforcement of the sections. The effect on local 
governments subject to the provisions of the sections as proposed will be 
similar to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years 
these sections as proposed are in effect the public benefit anticipated as a 
result of enforcement of and compliance with the sections will be increased 
accessibility to and comprehension of agency requirements for transfers of 
permits, licenses, and other authorizations due to the consolidation and 
streamlining of existing transfer requirements. There are no economic costs 
anticipated for any person required to comply with these sections as proposed.
The effects of these sections as proposed will generally benefit any permit 
holder or recipient, including small businesses, involved in a transfer, 
although the effect is not anticipated to represent a significant savings in 
terms of the costs of transferring permits or other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission 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 purpose of the rules is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rules will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of these rules will 
not burden private real property which is the subject of the rules because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission (TNRCC) complex, located at 12100 North IH-35, Park Technology 
Center, Austin. Individuals may present oral statements when called upon in 
order of registration. Open discussion within the audience will not occur during 
the hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 

SUBCHAPTER A.General Provisions
30 TAC sec.sec.32.1, 32.3, 32.5, 32.7, 32.9, 32.11, 32.13, 32.15 
STATUTORY AUTHORITY. The new sections are proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed new sections implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412.

sec.32.1. Applicability.
This chapter applies to applications for transfer of all permits, licenses, and 
other written and unwritten authorizations issued by the commission and to 
applications seeking orders that have the effect of transferring permits, 
except: 
(1) interwatershed transfers under Texas Water Code, sec.11.085 (transfers 
between watersheds); 
(2) sewage sludge and similar waste transporter registrations; and 
(3) federal operating permits under Chapter 122 of this title (relating to 
Federal Operating Permits). 

sec.32.3. Definitions.
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
Change of ownership -Includes, but is not limited to: 
(A) a merger; 
(B) a stock transfer that results in a controlling interest in a permittee; 
(C) an asset purchase that results in a change in the operational control of a 
permittee; or 
(D) a change in the federal tax identification number. Transfer -Includes the 
assignment of a permit from one entity to another, a change of ownership or 
control, or a stock transfer by a person which holds a permit with the 
commission. 

sec.32.5. Limits of Permits.
(a) For other than water rights, a permit is issued to a person and may be 
transferred only upon approval of the executive director or the commission. No 
transfer is required for a corporate name change, as long as the secretary of 
state can verify that a change in name alone has occurred.
(b) For water rights, a permit is issued in rem and may be transferred within 
the records of the agency only upon notification of the executive director or 
the commission. No transfer fee payment is required for a corporate name change, 
as long as the secretary of state can verify that a change in name alone has 
occurred, but the executive director of the agency must be notified of the name 
change. 
(c) A permit is attached to the realty to which it pertains and may not be 
transferred from one site to another except as otherwise noted.

sec.32.7. Application Submittal.
Except as otherwise provided in this chapter, a submittal of an application for 
transfer of a permit must be conducted pursuant to the submittal requirements in 
sec.305.43 of this title (relating to Who Applies).

sec.32.9. Application.
An application for transfer must include: 
(1) the name and address of the transferee and/or future operator if applicable; 
(2) the permit number and any other applicable authorization numbers; 
(3) the date of the proposed transfer; 
(4) if the permit requires financial responsibility, the method by which the 
proposed transferee intends to assume or provide financial responsibility which 
must be identified and be in accordance with any applicable state and federal 
financial responsibility requirements; 
(5) the signatures of the transferor and transferee, in addition to provisions 
in sec.305.44 of this title (relating to Signatories to Applications); and 
(6) any other information that the executive director may reasonably require. 

sec.32.11. Post-Transfer Notice to the Executive Director.
This section applies to permits, licenses, and other authorizations issued under 
Chapter 116, Subchapters B and C of this title (relating to New Source Review 
Permits and Permit Exemptions) and Chapter 297 of this title (relating to Water 
Rights, Substantive). 
(1) Change in ownership. 
(A) For other than water rights, the new owner of a facility to which this 
section applies and who previously has received a permit from the commission is 
not required to apply for a new permit. The new owner is not required to post 
public notice of the change in ownership, provided that within 30 days after the 
change of ownership, the new owner notifies the executive director of the 
change. The notification must include a certification of each of the following: 
(i) the ownership change has occurred and the new owner agrees to be bound by 
all conditions of the permit and all representations made in the application for 
permit and any amendments to the permit; 
(ii) there is no change in the type of pollutants emitted; and 
(iii) there is no increase in the quantity of pollutants emitted.
(B) For water rights, the new owner is not required to post public notice of the 
change of ownership, but is required to notify the executive director of the 
changes. 
(C) The new owner of the facility is required to comply with all conditions of 
the permit and all representations made in the application for permit and any 
amendments to the permit. 
(2) A copy of the written agreement between the parties reflecting the specific 
date of transfer must be submitted to the executive director. 
(3) The executive director may refuse to approve a transfer where conditions of 
a judicial decree, compliance agreement, or other enforcement order have not 
been entirely met. The executive director must also consider the prior 
compliance record of the transferee, if any. 

sec.32.13. Pre-Transfer Notice to the Executive Director. 
This section applies to all transfers except for those transfers in sec.32.11 of 
this title (relating to Post-Transfer Notice to the Executive Director) and 
Subchapter E of this chapter (relating to Radioactive Material Licenses). 
(1) Except as provided otherwise in Subchapter D of this chapter (relating to 
Hazardous Waste), the transferee, the permittee, or the current or future 
operator of a facility, if applicable, must submit to the executive director an 
application for transfer at least 30 days before the proposed transfer date. The 
executive director may waive the 30-day requirement for good cause. In addition 
to the requirements in sec.32.9 of this title (relating to Application), the 
application must contain the following: 
(A) a fee of $100 to be applied toward the processing of the application, as 
provided in sec.305.53(a) of this title (relating to Application Fee), unless 
otherwise specified; and 
(B) a sworn statement that the application is made with the full knowledge and 
consent of the permittee if the transferee is filing the application. 
(2) If no agreement regarding transfer of permit responsibility and liability is 
provided, responsibility for compliance with the terms and conditions of the 
permit and liability for any violation associated therewith is assumed by the 
transferee, effective on the date of the approved transfer. This section is not 
intended to relieve a transferor of any liability.
(3) The executive director must be satisfied that proof of any required 
financial responsibility is sufficient. Except as provided otherwise in 
Subchapter D of this chapter, no permit may be transferred until any required 
financial responsibility is approved. 
(4) If a person attempting to acquire a permit causes or allows operation of the 
facility before approval is given, this person is considered to be operating 
without a permit or other authorization. 
(5) The executive director may refuse to approve a transfer where conditions of 
a judicial decree, compliance agreement, or other enforcement order have not 
been entirely met. The executive director must also consider the prior 
compliance record of the transferee, if any. 

sec.32.15. Involuntary Transfer of Permits.
This section applies to involuntary transfers of all permits other than those 
covered under Subchapters B and E of this chapter (relating to Water Rights and 
Radioactive Material Licenses). 
(1) The executive director may transfer a permit involuntarily if: 
(A) the permittee no longer owns or controls the permitted facilities; or the 
facilities have not been built and the permittee no longer has sufficient 
property rights in the site of the proposed facilities; and
(B) except for hazardous or industrial solid waste permits:
(i) the executive director received proof of ownership of the facilities and/or 
site of the proposed facilities; 
(ii) the executive director has provided notice by certified mail to the 
permittee, using the last address of record, giving an opportunity for hearing; 
(iii) the executive director did not receive a request for hearing from the 
permittee within 30 days from the date the notice was mailed; and 
(iv) the executive director has received an application for transfer from the 
transferee as required by this chapter. 
(2) The commission may transfer permits to an interim permittee pending an 
ultimate decision on a permit transfer if it finds that there exists a need for 
the continued operation of the facility and the proposed interim permittee is 
capable of assuming responsibility for compliance with the permit. 
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 December 18, 1996.
TRD-9700735
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER B.Water Rights
30 TAC sec.sec.32.51, 32.53, 32.55, 32.57, 32.59 
The new sections are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed new sections implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.32.51. Applicability.
This subchapter applies to licenses issued under Texas Water Code, Chapter 11, 
and Chapter 295 of this title (relating to Water Rights, Procedural). 

sec.32.53. General Rules of Conveyance Applicability. 
(a) Except as provided in subsection (b) of this section, the right to use water 
for the purpose of irrigation is appurtenant to the land authorized to be 
irrigated and a conveyance of land with an appurtenant water right also conveys 
the water right unless expressly reserved or excepted, provided that the water 
right has been granted for the irrigation of land not owned by the water right 
holder. This water right is personal to the permittee and does not pass with a 
conveyance of the land. 
(b) A water right does not attach to the irrigated land when held by a water 
corporation, water district, river authority, or governmental entity authorized 
to supply water to others. Only by express written conveyance can this water 
right be transferred. The foregoing is subject to all laws relating to lawful 
rights of owners along ditches and canals. 
(c) If a landowner reserves a water right in a conveyance of land authorized to 
be irrigated and desires to change the place of use, the point of diversion, or 
the purpose of use, an application to amend the water right must be filed with 
the executive director as provided by sec.295.71 of this title (relating to 
Applications to Amend a Permit). 
(d) A water right may be conveyed separately from the land, provided that the 
water right must be utilized in accordance with its terms and conditions until 
amended by the commission. 

sec.32.55. Duty to Inform the Executive Director. 
An owner of a water right or his or her agent must promptly inform the executive 
director of any transfer of water right or change of the owner's address in 
accordance with sec.32.11 of this title (relating to Post-Transfer Notice to the 
Executive Director). 

sec.32.57. Recording Conveyances of Water Rights. 
The written instrument evidencing a water right ownership transfer must be 
recorded in the office of the county clerk. Certified copies or photocopies of 
the recorded instruments establishing the complete chain of title between owners 
of record and the new owner must be filed with the executive director along with 
a completed "Change of Ownership" form and an ownership recording fee as 
required by sec.295.139(d) of this title (relating to Miscellaneous Fees).

sec.32.59. Sale of Water Rights.
(a) This subsection applies to the Rio Grande Basin. 
(1) The owner of a water right may convey his water right as provided by this 
subchapter. The purpose and place of use may not be changed without 
authorization from the commission. Owners of water rights must promptly inform 
both the executive director and the watermaster of any transfers of water 
rights. The new owner must file with the executive director all required 
documents as identified in this subchapter. No authorization to divert may be 
granted by the watermaster until the watermaster is notified of any transfer of 
water rights. 
(2) If a tract of land to which a smaller water right acreage is appurtenant is 
owned by more than one person in divided interests, a water right partition 
agreement is required among all the owners of said tract of land before any one 
of the owners can be authorized by the watermaster to divert water. However, if 
the owners fail to submit a water right partition agreement within one month 
after being notified by the executive director that this agreement is needed, 
the executive director must administratively divide the water rights among the 
owners on a prorata basis by acreage. The owners involved may request that the 
executive director grant an extension of the one month deadline not to exceed 
six months if extenuating circumstances exist. If the executive director does 
not grant the extension, the division will be made on a prorata basis. The 
executive director will recognize the prorata shares until changes are made by 
valid partition agreement. 
(b) This subsection applies to all water rights transfers in watermaster areas 
except those in the Rio Grande Basin. 
(1) When a water right is sold or otherwise transferred, the new owner must 
promptly inform the executive director, and the watermaster if one has been 
established for the authorized basin of use, of the change of ownership and must 
provide the appropriate ownership documents. No authorization to divert or 
impound waters will be granted by the watermaster until the transfer of 
ownership is recorded with the executive director. If a tract of land to which a 
smaller water right acreage is appurtenant is owned by more than one person in 
divided interest, the executive director may administratively divide the water 
right among the owners on a pro rata basis by acreage. If the new ownership 
record is not complete, the executive director must inform the alleged owner by 
letter that ownership documents must be filed within 30 days and approved by the 
executive director. During a 60-day period following the date of the executive 
director's letter, the watermaster will honor declarations of intent, as defined 
under sec.304.3 of this title (relating to Definitions), by the alleged owner in 
accordance with the water right. After the 60-day period, no declaration of 
intent will be honored until the executive director notifies the watermaster of 
the approved change in ownership. 
(2) Requests for extension for the initial 60-day period referenced in paragraph 
(1) of this subsection must be submitted in writing to the executive director at 
least five business days before the end of the 60-day period. If the extension 
is granted, the watermaster may honor declarations of intent for the alleged 
owner; otherwise, no declaration of intent from the unverified owner will be 
honored. 
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 December 18, 1996.
TRD-9700734
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER C.Waste Tires
30 TAC sec.32.75, sec.32.77 
The new sections are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed new sections implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.32.75. Applicability.
This subchapter applies to permits issued under Chapter 330 of this title 
(relating to Municipal Solid Waste). 

sec.32.77. Transfers Pertaining to Tire Registrations. 
(a) A new waste tire transporter registration application must be submitted to 
the executive director within ten days of a determination by the executive 
director that operations or management methods are no longer adequately 
described by the existing registration or ownership of the registered 
transporter is changed. Following the executive director's determination, the 
old transporter registration number may be canceled or transferred to the new 
registrant. 
(b) A Type VIII-R registration is transferrable contingent upon executive 
director approval. A change in the federal tax identification number will 
constitute a change of ownership. A new Type VIII-R storage facility 
registration application and a non-refundable $500 application review fee must 
be submitted to the executive director within ten days of a determination by the 
executive director that operations or management methods are no longer 
adequately described by the existing registration. If ownership of the 
registered Type VIII-R storage facility will change or if the operator of a Type 
VIII-R storage facility will change, notification of the pending change must 
occur at least 60 days before the actual transfer of ownership or operations. 
Until the change of ownership and/or operations of the facility is approved in 
writing by the executive director, no Waste Tire Reimbursement Fund 
reimbursements will occur. 
(c) A new registration application must be submitted to the executive director 
within ten days of a determination by the executive director that operation or 
management methods are no longer adequately described by the existing 
registration. If ownership of the registered waste tire facility will change or 
the location of the equipment or facility will change, notification of the 
pending change must occur at least 30 days before the actual transfer of 
ownership or operations. Until the change of ownership and/or operations of the 
facility is approved in writing by the executive director, no reimbursements 
will occur. A change in the federal tax identification number will constitute a 
change of ownership. 
(d) A waste tire recycling registration is transferrable contingent upon prior 
executive director approval. A change in the federal tax identification number 
will constitute a change of ownership. 
(e) A waste tire energy recovery facility registration is transferrable 
contingent upon prior approval from the executive director. 
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 December 18, 1996.
TRD-9700733
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER D. Hazardous Waste 
30 TAC sec.32.101, sec.32.103 
The new sections are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed new sections implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.32.101. Applicability.
This subchapter applies to the transfer of permits to carry out the 
responsibilities for management of hazardous waste storage, processing, and/or 
disposal activities under Chapter 305 of this title (relating to Consolidated 
Permits), with the exception of permits issued under Chapter 331 of this title 
(relating to Underground Injection Control).

sec.32.103. Requirements.
For permits involving hazardous waste under the Texas Solid Waste Disposal Act, 
Texas Health and Safety Code, Chapter 361, changes in the ownership or 
operational control of a facility must be made as Class 1 modifications with 
prior written approval of the executive director in accordance with sec.305.69 
of this title (relating to Solid Waste Permit Modification at the Request of the 
Permittee). 
(1) The new owner or operator must submit a revised permit application no later 
than 90 days before the scheduled change. The executive director may waive the 
90-day requirement with good cause. 
(2) The application must include, in part, documentation to satisfy the 
requirements of sec.305.50(4)(B) of this title (relating to Additional 
Requirements for an Application for a Hazardous or Industrial Solid Waste 
Permit). 
(3) A written agreement containing a specific date for transfer of permit 
responsibility between the current and new permittees must also be submitted to 
the executive director. 
(4) When a transfer of ownership or operational control occurs, the old owner or 
operator must comply with the requirements of 40 Code of Federal Regulations 
Part 264, Subpart H, as adopted by reference in sec.335.152(a)(6) of this title 
(relating to Standards), until the new owner or operator has demonstrated to the 
executive director that he is complying with the requirements of 40 Code of 
Federal Regulations Part 264, Subpart H. 
(5) The new owner or operator must demonstrate compliance with 40 Code Federal 
Regulations Part 264, Subpart H requirements within six months of the date of 
the change of ownership or operational control of the facility. Upon 
demonstration to the executive director by the new owner or operator of 
compliance with 40 Code of Federal Regulations Part 264, Subpart H, the 
executive director must notify the old owner or operator that he no longer needs 
to comply with 40 Code of Federal Regulations Part 264, Subpart H as of the date 
of demonstration. 
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 December 18, 1996.
TRD-9700732
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER E. Radioactive Material Licenses 
30 TAC sec.32.125, sec.32.127 
The new sections are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed new sections implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.32.125. Applicability.
This subchapter applies to radioactive material licenses issued under Chapter 
336 of this title (relating to Radiation Rules). 

sec.32.127. Radioactive Material Licenses.
(a) It is the duty of the licensee to submit an application to transfer a 
license under this section. 
(b) A license, or any right thereunder, may not be transferred, assigned, or in 
any manner disposed, either voluntarily or involuntarily, directly or 
indirectly, through transfer of control of the license to any person, unless the 
commission finds that the transfer is in accordance with the provisions of the 
Texas Radiation Control Act and applicable rules and orders of the commission 
and gives its consent in writing in the form of a major amendment to the 
license. 
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 December 18, 1996.
TRD-9700731
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER F. Utilities 
30 TAC sec.sec.32.151, 32.153, 32.155, 32.157 
The new sections are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed new sections implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.32.151. Applicability.
This subchapter applies to the transfer of water utilities governed by Chapter 
291 of this title (relating to Water Rates). 

sec.32.153. Report of Sale, Merger, or Consolidation. 
(a) The utility or water supply or sewer service corporation must notify the 
commission and give public notice of the proposed transaction. The notification 
must be on the form required by the commission. Public notice may be waived by 
the executive director for good cause shown: 
(1) at least 120 days before the proposed effective date of any sale, 
acquisition, lease, rental, merger, or consolidation of any water or sewer 
system required by law to possess a certificate of public convenience and 
necessity; or 
(2) at least 60 days before a utility purchases voting stock in or person 
acquires a controlling interest in a utility doing business in the state. 
(b) The commission must, with or without a public hearing, investigate the sale, 
acquisition, lease, rental, merger, or consolidation to determine whether the 
transaction will serve the public interest. 
(1) The commission or executive director may request a contested case hearing 
for those transactions. 
(2) A copy of the written agreement between parties reflecting the specific date 
of transfer must be submitted to the executive director.
(c) Before the expiration of the applicable notification period, the executive 
director must notify all known parties to the transaction of the decision to 
either approve the sale administratively or to request that the commission hold 
a public hearing to determine if the transaction will serve the public interest. 
The executive director may request a hearing if:
(1) the notification to the commission or the public notice was improper; 
(2) the person purchasing or acquiring the water or sewer system is 
inexperienced as a utility service provider; 
(3) the person or an affiliated interest of the person purchasing or acquiring 
the water or sewer system has a history of noncompliance with the requirements 
of the commission or the Texas Department of Health or of continuing 
mismanagement or misuse of revenues as a utility service provider; 
(4) the person purchasing or acquiring the water or sewer system cannot 
demonstrate the financial ability to provide the necessary capital investment to 
ensure the provision of continuous and adequate service to the customers of the 
water or sewer system; or 
(5) it is in the public interest to investigate the following factors: 
(A) whether the seller has failed to comply with a commission order; 
(B) the adequacy of service currently provided to the area;
(C) the need for additional service in the requested area;
(D) the effect of approving the transaction on the utility or water supply or 
sewer service corporation, the person purchasing or acquiring the water or sewer 
system, and on any retail public utility of the same kind already serving the 
proximate area; 
(E) the ability of the person purchasing or acquiring the water or sewer system 
to provide adequate service; 
(F) the feasibility of obtaining service from an adjacent retail public utility; 
(G) the financial stability of the person purchasing or acquiring the water or 
sewer system, including, if applicable, the adequacy of the debt-equity ratio of 
the person purchasing or acquiring the water or sewer system if the transaction 
is approved; 
(H) the environmental integrity; and 
(I) the probable improvement of service or lowering of cost to consumers in that 
area resulting from approving the transaction. 
(d) Unless the executive director requests that a public hearing be held, the 
transaction may be completed as proposed at the end of the appropriate 
notification or may be completed at any time after the utility or water supply 
or sewer service corporation receives notice that a hearing will not be 
requested.
(e) Within 30 days after the actual effective date of the transaction, the 
utility or water supply or sewer service corporation must file a signed 
contract, bill of sale, or other appropriate documents as evidence that the 
transaction has been made final and, for transactions other than purchases or 
acquisitions of voting stock, documentation that customer deposits have been 
transferred or refunded to the customer with interest as required by these 
rules. 
(f) If a hearing is requested or if the utility or water supply or sewer service 
corporation fails to provide the required notification or public notice, the 
transaction may not be completed unless the commission determines that the 
proposed transaction serves the public interest. 
(g) The conveyance of any water or sewer system required by law to possess a 
certificate of public convenience and necessity that is not completed in 
accordance with the provisions of Texas Water Code, sec.13.301 is void. 
(h) The requirements of Texas Water Code sec.13.301, do not apply to the 
purchase of replacement property, to a transaction under Texas Water Code, 
sec.13.255, or to foreclosure on the physical assets of a utility.
(i) If a utility facility or system is sold and the facility or system was 
partially or wholly constructed with customer contributions in aid of 
construction derived from specific surcharges approved by the regulatory 
authority over and above revenues required for normal operating expenses and 
return, the utility may not sell or transfer any of its assets, its certificate 
of convenience and necessity, or controlling interest in an incorporated 
utility, unless the utility provides to the purchaser or transferee before the 
date of the sale or transfer a written disclosure relating to the contributions. 
The disclosure must contain, at a minimum, the total dollar amount of the 
contributions and a statement that the contributed property or capital may not 
be included in invested capital or allowed depreciation expense by the 
regulatory authority in rate-making proceedings. 
(j) A utility or a water supply or sewer service corporation that proposes to 
sell, assign, lease, or rent its facilities must notify the other party to the 
transaction of the requirements of this section before signing an agreement to 
sell, assign, lease, or rent its facilities. 

sec.32.155. Transfer of Certificate of Convenience and Necessity.
(a) A certificate is issued in person, continues in force until further order of 
the commission, and may be transferred only by the approval of the commission. 
Any attempted transfer is not effective for any purpose until actually approved 
by the commission. 
(b) Except as provided by Texas Water Code, sec.13.255, a utility or a water 
supply or sewer service corporation may not sell, assign, or lease a certificate 
of public convenience and necessity or any right obtained under a certificate 
unless the commission has determined that the purchaser, assignee, or lessee is 
capable of rendering adequate and continuous service to every consumer within 
the certificated area, after considering the factors under Texas Water Code, 
sec.13.246(c). The sale, assignment, or lease must be on the conditions 
prescribed by the commission. 
(c) If the executive director does not request a hearing, the commission may 
approve the transfer by order at a regular meeting of the commission. 
(d) If a hearing is requested, the application will be processed in accordance 
with Chapter 263 of this title (relating to Final Approval By Executive 
Director, Evaluation of Request for Contested Case Hearing).
(e) The commission may approve a sale, acquisition, lease or rental, or merger 
or consolidation and/or transfer of a certificate of convenience and necessity 
if it determines that the transaction is in the public interest after 
considering: 
(1) if notice has been properly given; 
(2) if the retail public utility which will acquire the facilities or 
certificate is capable of rendering adequate and continuous service to every 
consumer within the certificated area, after considering the factors set forth 
in Texas Water Code, sec.13.246(c). The commission may refuse to approve a sale, 
acquisition, lease, rental, merger, or consolidation and/or transfer where 
conditions of a judicial decree, compliance agreement, or other enforcement 
order have not been substantially met; 
(3) the experience of the person purchasing or acquiring the water or sewer 
system as a utility service provider; 
(4) the history of the person or an affiliated interest of the person in 
complying with the requirements of the commission or the Texas Department of 
Health or of properly managing or using revenues as a utility service provider; 
or 
(5) the ability of the person purchasing or acquiring the water or sewer system 
to provide the necessary capital investment to ensure the provision of 
continuous and adequate service to the customers of the water or sewer system. 
(f) Within 30 days after the sale or transfer of any utility or operating units 
thereof, the seller must file with the commission, under oath, in addition to 
other information, a list showing the names and addresses of all customers 
served by this utility or unit who have to their credit a deposit, the date this 
deposit was made, the amount thereof, and the unpaid interest thereon. All such 
deposits must be refunded to the customers or transferred to the new owner, with 
all accrued interest. sec.32.157. Cessation of Operations by a Retail Public 
Utility. If a utility abandons operation of its facilities without commission 
authorization, the commission may appoint a temporary manager to take over 
operations of the facilities to ensure continuous and adequate service. 
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 December 18, 1996.
TRD-9700730
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER G. Water Districts 
30 TAC sec.32.175, sec.32.177 
The new sections are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed new sections implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.32.175. Applicability.
This subchapter applies to the transfer of water districts governed by Chapter 
293 of this title (relating to Water Districts). 

sec.32.177. Special Considerations for Water District Creation.
With respect to special utility districts, a water supply corporation may not be 
converted to a special utility district unless the water supply corporation is 
to be dissolved after the conversion. A certified copy of the dissolution order 
must be filed with the executive director. The certificate of convenience and 
necessity for the water supply corporation will automatically be transferred to 
the district. 
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 December 18, 1996.
TRD-9700729
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER H. Water Quality 
30 TAC sec.sec.32.201, 32.203, 32.205 
The new sections are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed new sections implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.32.201. Applicability.
This subchapter applies to permits for storage, processing, incineration, or 
disposal of sewage sludge issued under Chapter 312 of this title (relating to 
Sludge Use, Disposal, and Transportation), wastewater discharge issued under 
Chapter 305 of this title (relating to Consolidated Permits), and concentrated 
animal feeding operation and commercial livestock and poultry production 
operation issued under Chapter 321 of this title (relating to Control of Certain 
Activities by Rule). 

sec.32.203. Application Submittal.
A person who seeks a transfer of the following permits, licenses, or other 
authorizations must submit an application under sec.32.9 and sec.32.13 of this 
title (relating to Application and Pre-Transfer Notice to the Executive 
Director): 
(1) registration for the beneficial use of domestic sewage sludge under 
sec.312.12(a) of this title (relating to Registration of Land Application 
Activities); 
(2) permit to process, dispose of, or incinerate domestic sewage sludge under 
sec.312.11(b) of this title (relating to Permits);
(3) wastewater discharge permit under sec.305.43(a) of this title (relating to 
Who Applies); 
(4) concentrated animal feeding operation permit under sec.321.184(b) of this 
title (relating to Application Requirements); and
(5) commercial livestock and poultry production operation permit under 
sec.321.34(a) of this title (relating to Procedures for Making Application for a 
Permit). sec.32.205. Sewage Sludge Beneficial Use Registration Applications 
Processing. In addition to the signature requirements in sec.32.9(4) of this 
title (relating to Application), both the registered site operator and the 
landowner must sign the transfer application. In order to transfer a sewage 
sludge beneficial use registration, an application for transfer that is not 
signed by both the registered site operator and the landowner will be considered 
a request for cancellation. 
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 December 18, 1996.
TRD-9700728
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 39.Public Notice
SUBCHAPTER A.Applicability and General Provisions
30 TAC sec.sec.39.1, 39.5, 39.11, 39.13, 39.17 
The Texas Natural Resource Conservation Commission (commission) proposes 
amendments to sec.sec.39.1, 39.5, 39.11, 39.13, and 39.17, concerning 
applicability and general provisions; and proposes new sec.sec.39.301, 39.303, 
39.305, 39.307, 39.309, and 39.311, concerning public notice of radioactive 
material license applications. 
EXPLANATION OF PROPOSED RULE. These rules are proposed as a companion to the 
commission's proposed radioactive substance rules. The purpose of these proposed 
rules is to incorporate certain procedural revisions into the commission's rules 
to adapt the radioactive substance rules to the existing procedural requirements 
of the commission. 
The radioactive substance rules are being proposed as a result of Senate Bill 
(SB) 2, First Called Session, 72nd Legislature, and SB 1043, 73rd Legislature, 
and to incorporate, with modifications, rules previously adopted by reference 
from the Texas Department of Health (TDH). The new rules are needed to adapt the 
previous TDH rules to commission requirements. Further, they incorporate 
revisions and additions which are needed to maintain compatibility with the 
rules of the United States Nuclear Regulatory Commission (NRC). Compatibility of 
the commission's rules with the federal program is necessary to preserve the 
status of Texas as an Agreement State under Title 10 Code of Federal Regulations 
Part 150 and the "Articles of Agreement between the United States Atomic Energy 
Commission and the State of Texas for Discontinuance of Certain Commission 
Regulatory Authority and Responsibility Within the State Pursuant to Section 274 
of the Atomic Energy Act of 1954, as Amended." 
A brief description of the changes to each of the proposed subchapters follows. 
Commission staff has also prepared an issues paper that describes in more detail 
the proposed radioactive substance rules and the accompanying procedural 
revisions. The paper also gives a detailed description of proposed provisions to 
be incorporated based on NRC requirements. Copies of this issues paper may be 
obtained by contacting Jace A. Houston at (512) 239-4641, or by mail at TNRCC 
Office of Policy and Regulatory Development, MC 203, P.O. Box 13087, Austin, 
Texas 78711-3087. 
The proposed amendments to Subchapter A revise parts of the commission's general 
public notice provisions to make them compatible with the radioactive substance 
rules. The proposed amendments make the commission's public notice requirements 
generally applicable to license applications under Chapter 336, while certain 
sections are specifically amended so that they are not applicable to Chapter 336 
license applications. The proposed amendments also make conforming changes with 
regard to environmental analyses and applications for minor amendments. 
Proposed new Subchapter F sets forth the public notice requirements for 
radioactive material license applications. The proposed new sections establish 
requirements for when notice must be mailed and/or published and list the 
required recipients of notice for each type of license. The rules also provide 
for proof and certification of notice. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five-year period the sections as proposed are in 
effect there will be fiscal implications anticipated as a result of enforcement 
and administration of the sections. The effect on state government will be an 
increase in revenues of at least $312,000 in annual license fees. In addition, 
revenues will increase as a result of the adoption of increased application 
fees. The actual increased revenue to be produced will depend on the number of 
applications made and has not been determined. There are no significant fiscal 
implications anticipated for local governments. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
sections as proposed are in effect the public benefit anticipated as a result of 
enforcement of and compliance with the sections will be clarification of 
existing regulations relating to regulation of radioactive substances, improved 
consistency between state and federal regulations and more effective recovery of 
costs of regulation of radioactive substances. Compliance with the proposed 
state regulations will result in no significant costs to affected persons that 
would not otherwise result from compliance with the existing federal regulations 
proposed for incorporation, except for increases in fees under Chapter 336, 
Subchapter B (relating to Radioactive Substance Fees) that are required to fully 
recover the costs of the state program. Under the proposed rules, fees for 
applications for most types of facilities are unchanged. For certain types of 
facilities, however, application fees will increase by as much as $19,000. For 
commercial disposal facilities, a new application fee of $64,415 is proposed. 
Annual license fees for existing facilities will be amended under these rules, 
varying from a decrease of $25,139 per year to an increase of $48,406 per year. 
The average increase in annual license fees is $18,370. There are no direct 
fiscal implications anticipated for small businesses. 
TAKINGS IMPACT ASSESSMENT. 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 rules is to incorporate rules previously adopted by reference 
from the TDH following the transfer of jurisdiction over source material 
recovery and processing and disposal of radioactive substances to the 
commission. The proposed rules would also maintain compatibility of commission 
rules with the NRC, which is necessary to preserve the status of Texas as an 
Agreement State. The rules will substantially advance this specific purpose by 
setting standards for protection against radiation, by adopting regulations for 
the disposal of radioactive materials, by clearly outlining the regulated 
community's responsibilities, and by more clearly establishing compatibility 
with NRC requirements. Promulgation and enforcement of these rules could burden 
private real property that is the subject of the rules. 
However, the following exceptions to the application of Texas Government Code 
Chapter 2007 listed in Texas Government Code, sec.2007.003(b) apply to these 
rules: Sections 2007.003(b)(4)--an action that is reasonably taken to fulfill an 
obligation mandated by federal law; and sec.2007.003(b)(13)--an action that is 
taken in response to a real and substantial threat to public health and safety, 
that is designed to significantly advance the health and safety purpose, and 
that does not impose a greater burden than is necessary to achieve the health 
and safety purpose. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Bettie Bell, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087, or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 95031-336-WS. Comments must be received by 5:00 p.m., 30 days from 
the date of publication of this proposal. For further information, please 
contact Devane Clarke at (512) 239-5604 or Kathy Vail at (512) 239-6637.
STATUTORY AUTHORITY. These amendments are proposed under the Texas Radiation 
Control Act (TRCA), Texas Health and Safety Code, sec.sec.401.011, 401.051, and 
401.412, and Texas Water Code, sec.5.103, which give the commission the 
authority to adopt rules necessary to carry out its responsibilities to regulate 
the disposal of radioactive substances and the recovery and processing of source 
material. 
These amendments implement Texas Health and Safety Code, Chapter 401.

sec.39.1.Applicability.
This chapter applies to: 
(1) - (4) (No change.) 
(5) hearings under Chapter 80 of this title (relating to Contested Case 
Hearings) concerning applications for air quality permits under Chapter 116 of 
this title (relating to Control of Air Pollution by Permits for New Construction 
or Modification); [and] 
(6) hearings on contested enforcement cases under Chapter 80 of this title<nl>; 
and<ol> [.] 
<nl>(7)<ol> <nl> applications for radioactive material licenses under Chapter 
336 of this title (relating to Radioactive Substance Rules). <ol>

sec.39.5.General Provisions.
(a) - (b) (No change.) 
(c) When this chapter requires notice by mail, notice by hand delivery may be 
substituted. Mailing is complete upon deposit of the document, enclosed in a 
prepaid, properly addressed wrapper, in a post office or official depository 
under the care and custody of the United States Postal Service. If hand delivery 
is by courier-receipted delivery, the delivery is complete upon the courier 
taking possession. <nl>This subsection does not apply to applications for 
radioactive material licenses under Chapter 336 of this title (relating to 
Radioactive Substance Rules).<ol> 
(d) - (e) (No change.) 
(f) When this chapter requires an applicant to publish notice, the applicant 
must file an affidavit with the chief clerk certifying facts that constitute 
compliance with the requirement. The deadline to file the affividavit is the day 
of the public meeting for notice of public meeting, two days before a public 
hearing for notice of a public hearing, and 30 days after the last publication 
for other published notices. For notice of a public meeting, the applicant must 
also submit the affidavit to the executive director no later than the day of the 
public meeting. Filing an affidavit certifying facts that constitute compliance 
with notice requirements creates a rebuttable presumption of compliance with the 
requirement to publish notice. <nl> This subsection does not apply to 
applications for radioactive material licenses under Chapter 336 of this 
title.<ol> 
(g) When this chapter requires notice to be published according to this 
subsection, the applicant shall publish notice in a newspaper of the largest 
general circulation that is published in the county in which the facility is 
located or proposed to be located. If a newspaper is not published in the 
county, the notice must be published in a newspaper of general circulation in 
the county in which the facility is located or proposed to be located. If a 
newspaper is not published in the county, and the application concerns an 
application for a new or amended municipal solid waste permit, and publication 
of notice of intent, notice of draft permit, or notice of hearing, then the 
applicant shall publish notice in a newspaper of the largest general circulation 
that is published in the county in which the facility is located or proposed to 
be located and in a newspaper of circulation in the immediate vicinity in which 
the facility is located or proposed to be located, and such notice may be 
satisfied by one publication if the publishing newspaper meets both circulation 
requirements. <nl> This subsection does not apply to applications for 
radioactive material licenses under Chapter 336 of this title.<ol> 
(h) When this chapter requires notice be broadcast according to this subsection, 
the applicant shall broadcast notice of the application on one or more local 
radio stations that broadcast to an area that includes all of the county in 
which the facility is located. The executive director may require that the 
broadcasts be made to an area that also includes contiguous counties. <nl>This 
subsection does not apply to applications for radioactive material licenses 
under Chapter 336 of this title.<ol>

sec.39.11.Text of Public Notice.
When notice by publication or by mail is required by this chapter, the text of 
the notice must include: 
(1) - (10) (No change.) 
(11) a statement of whether the executive director has prepared a draft permit; 
[and] 
(12) if applicable, a statement that the application or requested action is 
subject to the Coastal Management Program and must be consistent with the 
Coastal Management Program goals and policies<nl>; and<ol>[.] 
<nl>(13)<ol> <nl> for radioactive material licenses under Chapter 336 of this 
title (relating to Radioactive Substance Rules), if applicable, a statement that 
a written environmental analysis on the application has been prepared by the 
executive director, is available to the public for review, and that written 
comments may be submitted. <ol>

sec.39.13.Mailed Notice.
<nl>(a)<ol> When this chapter requires mailed notice under this section, the 
chief clerk shall mail notice to: 
(1) the landowners named on the application map or supplemental map, or the 
sheet attached to the application map or supplemental map; 
(2) the mayor and health authorities of the city or town in which the facility 
is or will be located or in which waste is or will be disposed of; 
(3) the county judge and health authorities of the county in which the facility 
is or will be located or in which waste is or will be disposed of; 
(4) the Texas Department of Health; 
(5) the Texas Parks and Wildlife Department; 
(6) the Texas Railroad Commission; 
(7) if applicable, state and federal agencies for which notice is required in 40 
Code of Federal Regulations, sec.124.10(c); 
(8) if applicable, persons on a mailing list developed and maintained in 
accordance with 40 Code of Federal Regulations, sec.124.10(c)(1)(ix);
(9) the applicant; 
(10) if the application concerns an injection well, the Water Well Drillers 
Advisory Council; 
(11) persons on a relevant mailing list kept under sec.39.7 of this title 
(relating to Mailing Lists); 
(12) any other person the executive director or chief clerk may elect to 
include; 
(13) if applicable, the secretary of the Coastal Coordination Council; and 
(14) persons who filed public comment or hearing requests on or before the 
deadline for filing public comment or hearing requests.
<nl>(b)<ol> <nl>This section does not apply to applications for radioactive 
material licenses under Chapter 336 of this title (relating to Radioactive 
Substance Rules). <ol>

sec.39.17.Notice of Minor Amendment.
(a) (No change.) 
(b) Subsection (a) of this section does not apply to<nl>:<ol> 
<nl>(1)<ol> applications seeking a minor amendment of a wastewater discharge 
permit. For such applications, the notice requirements are in sec.39.151(c) of 
this title (relating to Application for Wastewater Discharge Permit, including 
Application for the Disposal of Sewage Sludge or Water Treatment Sludge). 
<nl>(2)<ol> <nl> applications for a minor amendment to radioactive material 
licenses. For such applications, the notice requirements are specified in 
Subchapter F of this chapter (relating to Public Notice of Radioactive Material 
License Applications). <ol>
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Issued in Austin, Texas, on January 21, 1997.
TRD-9701000
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 239-6087

SUBCHAPTER F. Public Notice of Radioactive Material License Applications 
30 TAC sec.sec.39.301, 39.303, 39.305, 39.307, 39.309, 39.311
These new sections are proposed under the Texas Radiation Control Act (TRCA), 
Texas Health and Safety Code sec.sec.401.011, 401.051, and 401.412, and Texas 
Water Code, sec.5.103, which give the commission the authority to adopt rules 
necessary to carry out its responsibilities to regulate the disposal of 
radioactive substances and the recovery and processing of source material. 
These new sections implement Texas Health and Safety Code Chapter 401.

sec.39.301.Notice of Declaration of Administrative Completeness.
When an application under Chapter 336 of this title (relating to Radioactive 
Substance Rules) has been declared administratively complete, the chief clerk 
shall mail notice in accordance with the requirements of this subchapter. 

sec.39.303.Notice of License Applications Upon Completion of Technical Review.
(a) When the executive director has completed the technical review of an 
application for a license, major amendment, or renewal of a license issued under 
Chapter 336 of this title (relating to Radioactive Substance Rules) or for minor 
amendments issued under Chapter 336, Subchapter H of this title (relating to 
Licensing Requirements for Near-Surface Land Disposal of Radioactive Waste), 
notice shall be mailed and published in accordance with the requirements of this 
subchapter. The deadline to file public comment, protests, or hearing requests 
is 30 days after publication. 
(b) For an application for minor amendment to a license issued under Chapter 
336, Subchapter F of this title (relating to Alternative Methods of Disposal of 
Radioactive Material) or Subchapter G of this title (relating to Licensing 
Requirements for Source Material (Uranium or Thorium) Recovery and Processing 
Facilities), notice shall be mailed in accordance with the requirements of this 
subchapter. The deadline to file public comment, protests, or hearing requests 
is ten days after mailing.

sec.39.305.Mailed Notice for Radioactive Material Licenses.
When notice by mail is required under this subchapter, the chief clerk shall 
mail notice to: 
(1) the mayor and health authorities of the city in which the facility is or 
will be located, or, for licenses issued under Chapter 336, Subchapter G of this 
title (relating to Licensing Requirements for Source Material (Uranium or 
Thorium) Recovery and Processing Facilities), the mayor and health authorities 
of each incorporated city whose city limits are within five highway miles of the 
site of the facility; 
(2) the county judge and health authorities of the county in which the facility 
is or will be located; 
(3) any person who submitted a written request in advance to be notified of any 
licensing action on this type of license; 
(4) the applicant; 
(5) for applications under Chapter 336, Subchapter F of this title (relating to 
Licensing of Alternative Methods of Disposal) or Subchapter H of this title 
(relating to Licensing Requirements for Near-Surface Land Disposal of 
Radioactive Waste), each owner of property adjacent to the proposed site; or, 
for licenses under Chapter 336, Subchapter G of this title, owners of property 
within 1,000 feet of the perimeter of the proposed license area. For the 
purposes of determining property ownership under this subsection, the applicant 
shall provide the chief clerk the names of the relevant landowners from the 
county tax rolls that are available no more than 30 days before the date of 
newspaper publication of the notice; 
(6) for applications under Chapter 336, Subchapter G of this title, the chief 
executive of each political subdivision and special district levying taxes upon 
all or any part of the site of the facility and each member of the Texas 
Legislature in whose district the facility is or will be located; and 
(7) any other person the chief clerk or executive director may elect to include. 

sec.39.307.Published Notice.
(a) For applications under Chapter 336, Subchapter F of this title (relating to 
Alternative Methods of Disposal of Radioactive Material) or Subchapter G of this 
title (relating to Licensing Requirements for Source Material (Uranium or 
Thorium) Recovery and Processing Facilities), when notice is required to be 
published under this subchapter, the applicant shall publish notice at least 
once in a newspaper of general circulation in the county in which the facility 
is or will be located, or, if no newspaper is published in the county or 
counties in which the facility is or will be located, in a newspaper of general 
circulation in each county adjacent to the county in which the facility is 
located. In addition, in the same edition that the notice is published, the 
applicant shall publish an advertisement outside the notice section of the 
newspaper that directs the reader to the notice section for the details of the 
proposed licensing action. 
(b) For applications for a new license, renewal license or major amendment to a 
license issued under Chapter 336, Subchapter H of this title (relating to 
Licensing Requirements for Near-Surface Land Disposal of Radioactive Waste), 
when notice is required to be published under this subchapter, the applicant 
shall publish notice in a newspaper published in the county or counties in which 
the facility is or will be located. If no newspaper is published in the county 
or counties in which the facility is or will be located, a written copy of the 
notice shall be posted at the courthouse door and five other public places in 
the immediate locality to be affected. The notice shall be posted for at least 
31 days. 
(c) In addition to published notice requirements in subsection (b) of this 
section, for an amendment of a license under Chapter 336, Subchapter H of this 
title, the chief clerk shall publish notice once in the Texas Register. 

sec.39.309.Notice of Contested Case Hearing on Application.
(a) The requirements of this section apply when an application is referred to 
the State Office of Administrative Hearings (SOAH) for a contested case hearing 
under Chapter 80 of this title (relating to Contested Case Hearings).
(b) For applications under Chapter 336, Subchapter F of this title (relating to 
Licensing of Alternative Methods of Disposal) or Subchapter G of this title 
(relating to Licensing Requirements for Source Material (Uranium or Thorium) 
Recovery and Processing Facilities), notice shall be mailed no later than 30 
days before the hearing. For applications under Chapter 336, Subchapter H of 
this title (relating to Licensing Requirements for Near-Surface Land Disposal of 
Radioactive Waste), notice shall be mailed no later than 31 days before the 
hearing. 
(c) For applications under Chapter 336, Subchapter G of this title, if a hearing 
has been set at the time the notice of application is provided, the notice of 
hearing may be combined with the notice of application.
(d) A written environmental analysis, if required, shall be made available to 
the public no later than 31 days before the date of hearing.

sec.39.311.Proof and Certification of Notice.
(a) Notice shall be mailed by certified mail, return receipt requested. Proof of 
mailing to the proper address on the return receipt shall be accepted as 
conclusive evidence of the fact of the mailing. 
(b) The applicant shall file proof of publication with the chief clerk within 30 
days after publication. Acceptance of an affidavit executed by the publisher 
accompanied by a printed copy of the notice as published creates a rebuttable 
presumption of compliance with the requirement to publish notice. 
(c) The applicant shall file proof of posting with the chief clerk within 30 
days of posting. Proof of posting may be made by the return affidavit of the 
sheriff or constable, or, by the affidavit of a credible person made on a copy 
of the posted notice showing the fact of the posting.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 21, 1997.
TRD-9701001
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Earliest possible date of adoption: March 3, 1997
For further information, please call: (512) 239-6087

CHAPTER 70. Enforcement 
SUBCHAPTER D. Other Provisions 
30 TAC sec.70.121
The commission proposes new sec.70.121, concerning Enforcement. The primary 
purpose of the proposed new section is to place those existing involuntary 
transfer requirements for permits, licenses, and other authorizations, which are 
enforcement in nature, with other enforcement requirements. 
EXPLANATION OF PROPOSED RULE. Existing requirements in 30 TAC sec.305.64 will be 
moved into this new section. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the section as proposed is in effect 
there will be no significant fiscal implications for state government as a 
result of administration and enforcement of the section. The effect on local 
governments subject to the provisions of the section as proposed will be similar 
to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
section as proposed is in effect the public benefit anticipated as a result of 
enforcement of and compliance with the section will be increased accessibility 
to and comprehension of agency enforcement regulations. There are no economic 
costs anticipated for any person required to comply with the section as 
proposed. The effects of the section as proposed will generally benefit any 
permit holder or recipient, including small businesses, involved in a transfer, 
although the effect is not anticipated to represent a significant savings in 
terms of the costs of transferring permits or other authorizations.
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for this rule pursuant to Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the rule is 
to make it easier for the public to use agency rules. The rule will 
substantially advance this specific purpose by cutting portions of the existing 
involuntary transfer requirements from their current location within the rules 
and placing them under a new subchapter within the enforcement chapter (Chapter 
70, Subchapter D). Promulgation and enforcement of this rule will not burden 
private real property which is the subject of the rule because there is no 
substantive change in existing requirements, only a change in the organization 
of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearings should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The new section is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The new section implements Texas Water Code, sec.sec.5.103, 5.105, 13.041, 
26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety Code, 
sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 
401.051, and 401.412.

sec.70.121. Involuntary Transfer of Permits.
This section applies to involuntary transfers of all permits other than those 
covered under Chapter 32, Subchapters B and E of this title (relating to Water 
Rights and Radioactive Material Licenses). 
(1) The commission may transfer a permit involuntarily after notice to the 
permit holder and an opportunity for hearing if: 
(A) the permittee has failed or is failing to comply with commission rules, 
orders, permits, or other authorizations; 
(B) the permitted facilities have been or are about to be abandoned; 
(C) the permittee has been or is operating the permitted facilities in a manner 
which creates an imminent and substantial endangerment to the public health or 
the environment; 
(D) foreclosure, insolvency, bankruptcy, or similar proceedings have rendered 
the permittee unable to construct the permitted facilities or adequately perform 
its responsibilities in operating the facilities; or
(E) transfer of the permit would maintain the quality of water in the state 
consistent with the public health and enjoyment, the propagation and protection 
of terrestrial and aquatic life, the operation of existing industries, and the 
economic development of the state and/or would minimize the damage to the 
environment; and 
(F) the transferee has demonstrated the willingness and ability to comply with 
the permit and all other applicable requirements. 
(2) The commission may transfer permits to an interim permittee pending an 
ultimate decision on a permit transfer if it finds that the permittee is about 
to abandon or cease operation of the facilities; or the permittee has abandoned 
or ceased operating the facilities. 
(3) The executive director, the Office of Public Interest Counsel, and the 
permittee are parties to any hearing regarding involuntary transfers under 
paragraph (1) of this section. 
(4) The commission may initiate proceedings in accordance with Texas Water Code, 
Chapter 13 for the appointment of a receiver consistent with commission rules. 
(5) The commission may approve a transfer by order at a commission meeting. 
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 January 9, 1997.
TRD-9700727
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 101.General Rules
30 TAC sec.sec.101.1, 101.6, 101.7, 101.11
The commission proposes amendments to sec.101.1, concerning Definitions and 
sec.101.11, concerning Exemptions from Rules and Regulations and new sec.101.6, 
concerning Upset Reporting and Recordkeeping Requirements and sec.101.7, 
concerning Maintenance, Start-up and Shutdown Reporting, Recordkeeping, and 
Operational Requirements. In concurrent rulemaking, the commission is proposing 
the repeal of sec.101.6, concerning Notification Requirement for Major Upset and 
sec.101.7, concerning Notification Requirements for Maintenance and revisions to 
the State Implementation Plan (SIP) regarding these proposals. 
EXPLANATION OF PROPOSED RULES. The proposal is intended to clarify when and how 
unauthorized air emissions during upsets, maintenance, start-ups, and shutdowns 
must be recorded and reported, considering reporting requirements found in other 
state and federal regulations, enhancement of compliance, and utilization of 
agency resources. Specifically, the revisions are intended to use the same 
reporting tools as the commission's spill prevention and control rules found in 
30 TAC Chapter 327 which coordinate the reporting requirements found in the 
Comprehensive Environmental Response, Compensation, and Liability Act of 1980 
(CERCLA) (42 United States Code Annotated (USCA), sec.sec.9601-9675) and the 
Emergency Planning and Community Right-To-Know Act of 1986 (EPCRA) (42 USCA, 
sec.sec.11001-11050), and the related regulations implementing these Acts. The 
reporting requirements under CERCLA, EPCRA, and the spill rules are based on 
reportable quantities (RQs). CERCLA, EPCRA, and the spill rules all require the 
reporting of any release which equals or exceeds an RQ. The proposed rule would 
facilitate consistent reporting for state and federal programs. 
The proposed revisions incorporate the concept of using RQs as the mechanism 
that defines what should be reported immediately. The proposed definition of RQ 
also establishes quantities for several air contaminants significant to Texas 
industries, and defines a default RQ of 100 pounds for air contaminants not 
listed in the federal rules or this definition, which is similar to the CERCLA 
default RQ of 100 pounds for unlisted hazardous substances. The concept of 
opacity is included in the definition of RQ, and opacity reporting and 
recordkeeping are adjusted due to the difficulty in estimating the emission 
quantity. The RQs are not intended to represent a judgment as to the specific 
degree of hazard associated with certain releases, but rather function as a 
mechanism by which the regulated community will know when to notify the 
commission of an unauthorized emission. The recordkeeping requirements replace 
the need for reporting of all events, allowing the agency to focus on the more 
significant events in the short term while enhancing the information more 
appropriately handled in the long term. 
In addition to comments on the specific language and impacts of the proposed 
rules, the commission solicits suggestions on alternative language or approaches 
on how unauthorized air emissions during upsets, maintenance, start-ups, and 
shutdowns should be recorded, reported, limited, or exempted. The commission 
specifically wants comments on how to eliminate any duplicate or unnecessary 
reporting or information. The commission also specifically would like comments 
on how continuous emission monitors (CEMs) provide the same or similar 
information and how the requirements of the proposed rules should be modified or 
made inapplicable to avoid unnecessary duplication. 
If adopted, these revisions will be submitted to the United States Environmental 
Protection Agency (EPA) as a revision to the SIP. The commission also solicits 
comments on delaying the effect of these rules until EPA approval. 
The proposed amendments to sec.101.1 would delete the definition of "major 
upset" and add definitions for "non-reportable upset," "reportable quantity," 
"reportable upset," "upset," and "unauthorized emission." The definition of 
unauthorized emissions specifically includes compounds and elements the agency 
does not want to consider in records and reports. The definitions would 
establish the distinction between reportable and non-reportable upsets through 
the use of numerical values for reportable quantities. The air contaminants 
listed within the reportable quantity definition are not listed in CERCLA and 
EPCRA, but are air contaminants significant to Texas industries. Additional 
compounds may be added through rulemaking. The agency considered use of 
additional generic categories such as particulate matter, volatile organic 
compounds, alkanes, and alkenes. These categories were not proposed to ensure 
the agency would receive appropriate information on the chemical characteristics 
of the release. Particulate matter, volatile organic compounds, and alkene 
groups can include significantly hazardous constituents listed in CERCLA, EPCRA, 
and agency permits. Alkanes were not added as a group because the most common 
gaseous alkanes are individually listed at the maximum RQ that the commission 
considered appropriate. 
The proposed new sec.101.6 would establish the reporting and recordkeeping 
requirements for upsets, including establishment of a time frame for making 
certain decisions related to reporting and recordkeeping. Any requirement for 
additional information would be at the discretion of the executive director. The 
owners or operators will continue to be required to provide timely notification 
of reportable upsets, but the language "as soon as practicable" is intended to 
provide the flexibility to make a cursory determination of whether the upset has 
or will exceed a reportable quantity, and allow sufficient time to gather enough 
information to make a reasonably informative report. Where obvious health and 
human safety impacts are occurring or have occurred, more immediate reporting is 
expected. The outside limit for reporting is 24 hours from discovery of the 
upset. The concept of a compound descriptive air contaminant is introduced to 
clarify that compound specific information is not required when it cannot be 
determined, but to ensure that the owner or operator provides as much insight as 
possible regarding the nature of the material released. The proposal also 
clarifies that an estimate of the quantity is acceptable, rather than an exact 
quantity. For upsets involving opacity exceedences only, the owner/operator 
would not have to estimate the excess weight of air contaminants. The location, 
magnitude, and the chemical characteristics of the release are the important 
factors that will aid the agency in its short term response. The amendments 
require that a record of any upset be created within two weeks of the occurrence 
and that the record be retained for two years. 
An unauthorized air release of regular unleaded gasoline provides a good example 
of the commission's expectations of the new reporting requirements. Obviously, 
it would be impractical to provide an exact speciation of all the compounds in a 
gasoline release, and the major constituents of gasoline, branched-chain 
paraffins, cycloparaffins, and aromatics are well known. Regular unleaded 
gasoline is relatively descriptive as compared to a description like volatile 
organic compounds. If the release is from evaporation of a spill from an 
overfilled gasoline tank, or is a mist coming off the top of a distillation 
column, the compound description should include that type of information. The 
reportable quantity for regular unleaded gasoline would normally be the 100-
pound default RQ. Knowledge of the basic makeup of the gasoline at the facility 
should be used to ensure that the known CERCLA and EPCRA constituents of the 
gasoline are not controlling the reportable quantity or forcing the 
owner/operator to use the RQ of the most hazardous constituent as the mixture 
default RQ. For example, benzene is a known hazardous constituent of gasoline 
and has a listed RQ of ten pounds. Owners or operators who know the benzene in 
their gasoline is never greater than about 5.0% by weight (or five pounds 
benzene per 100 pounds gasoline) would know the benzene RQ is not the 
controlling RQ. This same analysis is generally true of the other CERCLA and 
EPCRA constituents of gasoline. Additives with an RQ of one pound would have to 
be greater than 1.0% by weight to be the controlling RQ in a gasoline, or any 
mixture. It would be important for an owner or operator to be aware of and 
report unusually high concentrations of hazardous additives, such as lead 
compounds, which would effect the toxic nature of the mixture. 
The proposed new sec.101.7 establishes the reporting, recordkeeping, and 
operational requirements for maintenance, start-ups, and shutdowns. The new 
section utilizes the concept of reportable quantities for the purpose of 
limiting the number of required reports. The section retains the specific 
authority of the executive director to establish the amount, time, and duration 
of emissions allowed during the maintenance, start-up, or shutdown, which is 
currently codified in sec.101.11(b). The executive director also retains the 
specific authority to require a detailed plan on how these emissions can be 
limited. The proposed new section would require that maintenance, start-up, and 
shutdown events which were not expected to equal or exceed an RQ but which 
resulted in reportable emissions, be considered upsets. As such, they would be 
subject to the requirements for upset reporting and recordkeeping, and the 
additional standard of "unavoidability" to be eligible for an upset exemption 
under sec.101.11. 
The language prohibiting the creation of nuisances during upsets, maintenance, 
start-ups, and shutdowns in existing sections sec.101.6 and sec.101.7 would not 
be carried into the proposed new sections. This prohibition is retained in 
sec.101.11(f). 
The proposed amendments to sec.101.11 establish conditions for an exemption of 
unauthorized emissions from limits in permits, rules, and orders of the 
commission during upsets, maintenance, start-ups, and shutdowns. The amendments 
to sec.101.11 would eliminate the requirement for the executive director to take 
definitive action to exempt unauthorized emissions during upsets. This action 
cannot be practically provided in all cases. Eliminating the requirement will 
provide the regulated community with more certainty of the availability of 
exemptions. The amendments would retain separate exemptions for upsets and for 
maintenance, start-up, and shutdown. 
The proposed exemption for upsets would establish the requirement that the owner 
or operator must comply with sec.101.6 for an upset to be exempt. This retains 
the concept in the current rule that upsets must be correctly reported, which 
provides an appropriate incentive for the regulated community to communicate 
reportable upsets to the agency. The proposal retains the commission's practice 
that requires upsets to be reasonably unavoidable in order to be exempt. In 
general, the agency considers such factors as the use of good engineering 
practice, the presence of negligence, or the repetition of similar upsets in 
evaluating the unavoidability of an upset. The amendments modify language in the 
current rule that has been interpreted to require a shutdown even in 
circumstances where a shutdown would result in higher emissions than continuing 
to operate in an upset condition. The proposal retains the requirement that an 
owner or operator must take appropriate corrective action, which could include 
shutdown. Specifically, the commission intends that appropriate action should 
include minimization of emissions in concert with correction of the upset. 
The proposed exemption for maintenance, start-up, and shutdown would establish 
the requirement that the owner or operator must comply with sec.101.7 to receive 
the exemption for unauthorized emissions during those activities. This retains 
the concept in the current rule that maintenance, start-ups, and shutdowns must 
be correctly reported, which provides an appropriate incentive for the regulated 
community to communicate these activities to the agency. The amended exemption 
would further establish the requirement for emissions to be minimized to the 
extent practicable. The executive director's specific authority to establish the 
amount, time, and duration of emissions allowed would be moved to sec.101.7. It 
is not common practice for the executive director to set limits where 
maintenance, start-up, and shutdown are expected to cause unauthorized 
emissions, so the exemption criteria of minimizing emissions to the extent 
practicable is important in ensuring that the owner or operator takes reasonable 
precautions in their internal plans for these activities. 
FISCAL NOTE. Steve Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the sections as proposed are in effect, 
there will be no fiscal implications for state or local government as a result 
of enforcement and administration of the sections. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
sections as proposed are in effect, the public benefit anticipated as a result 
of the sections will be the ability of the commission to concentrate short term 
resources on the larger releases of air pollutants and more effectively evaluate 
unauthorized releases in the long term. There are no additional regulatory 
burdens on small businesses. There is no anticipated economic cost for persons 
who are required to comply with the sections as proposed. 
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for the sections under Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of these 
sections is to clarify when and how unauthorized emissions must be reported and 
recorded and when those unauthorized emissions can be exempt from limits 
established in permits, rules, and orders of the commission. Promulgation and 
enforcement of the sections will not affect private real property. 
PUBLIC HEARING. A public hearing on the proposal will be held March 6, 1997, at 
2:00 p.m. in Room 2210 of TNRCC Building F, located at 12100 Park 35 Circle, 
Austin. The hearing is structured for the receipt of oral or written comments by 
interested persons regarding this proposal and request for alternatives. 
Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, a TNRCC staff member will be available to discuss the proposal 
30 minutes prior to the hearing and will answer questions before and after the 
hearing.
SUBMITTAL OF COMMENTS. Written comments regarding this proposal and request for 
alternatives may be mailed to Lisa Martin, Office of Policy and Regulatory 
Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 
239-4808. All comments should reference Rule Log Number 96154-101-AI. Comments 
must be received by 5:00 p.m., March 13, 1997. For further information, please 
contact Jeff Greif, Office of Compliance and Enforcement, (512) 239-1534, or 
Beecher Cameron, Office of Policy and Regulatory Development, (512) 239-1495.
STATUTORY AUTHORITY. The amendments and new sections are proposed under the 
Texas Health and Safety Code, the Texas Clean Air Act (TCAA), sec.382.017, which 
provides the TNRCC with the authority to adopt rules consistent with the policy 
and purposes of the TCAA. 
The proposed amendments and new sections implement Health and Safety Code, 
sec.382.017.

sec.101.1.Definitions.
Unless specifically defined in the Texas Clean Air Act (TCAA) or in the rules of 
the <nl>commission<ol> [Texas Natural Resource Conservation Commission 
(Commission)], the terms used by the <nl> commission<ol> [Commission] have the 
meanings commonly ascribed to them in the field of air pollution control. In 
addition to the terms which are defined by the TCAA, the following terms, when 
used in this chapter, shall have the following meanings, unless the context 
clearly indicates otherwise. 
[Major upset-An unscheduled occurrence or excursion of a process or operation 
that results in an emission of air contaminants that contravenes the Texas Clean 
Air Act and is beyond immediate control, or a release that is initiated to 
protect life in the immediate or adjacent areas.] 
<nl>Non-reportable upset<ol><nl>-Any upset that is not a reportable upset as 
defined in this section. <ol>
<nl>Reportable quantity (RQ)<ol><nl>--Is as follows:<ol>
<nl>(A)<ol> <nl> for substances, either: <ol>
<nl>(i)<ol> <nl>the lowest of the quantities: <ol>
<nl>(I)<ol> <nl>listed in 40 Code of Federal Regulations (CFR), sec.302, Table 
302.4, the column "final RQ"; <ol>
<nl>(II)<ol> <nl> listed in 40 CFR, sec.355, Appendix A, the column "Reportable 
Quantity"; or <ol>
<nl>(III)<ol> <nl> listed as follows: <ol>
<nl>(-a-)<ol> <nl> butane-5,000 pounds; <ol>
<nl>(-b-)<ol> <nl> butenes (except 1,3-butadiene)-5,000 pounds; <ol>
<nl>(-c-)<ol> <nl> ethylene-5,000 pounds; <ol>
<nl>(-d-)<ol> <nl> carbon monoxide-5,000 pounds; <ol>
<nl>(-e-)<ol> <nl> isobutylene-5,000 pounds; <ol>
<nl>(-f-)<ol> <nl> pentane-5,000 pounds; <ol>
<nl>(-g-)<ol> <nl> propane-5,000 pounds; <ol>
<nl>(-h-)<ol> <nl> propylene-5,000 pounds; or <ol>
<nl>(ii)<ol> <nl> if not listed in clause (i) of this subparagraph, 100 pounds; 
<ol>
<nl>(B)<ol> <nl> for mixtures: <ol>
<nl>(i)<ol> <nl>where the relative amount of constituents is known, any amount 
of a constituent which equals or exceeds the amount specified in subparagraph 
(A) of this definition; <ol>
<nl>(ii)<ol> <nl> where the relative amount of constituents is not known, an 
amount of mixture which equals or exceeds the amount of any single constituent 
specified in subparagraph (A) of this definition; <ol>
<nl>(C)<ol> <nl> for opacity, an opacity which is 15% above the applicable 
limit, averaged over a six-minute period. <ol>
<nl>Reportable upset<ol><nl>-Any upset which, in any 24-hour period, results in 
an unauthorized emission of air contaminants equal to or in excess of the 
reportable quantity as defined in this section. <ol>
<nl>Upset<ol><nl>-An unscheduled occurrence or excursion of a process or 
operation that results in an unauthorized emission of air contaminants. <ol>
<nl>Unauthorized emission<ol><nl>-An emission of any air contaminant except 
carbon dioxide, water, nitrogen, methane, ethane, noble gases, hydrogen, and 
oxygen which exceeds any limit in a permit, rule or order of the commission.<ol>

sec.101.6.Upset Reporting and Recordkeeping Requirements. 
(a) The following requirements for reportable upsets shall apply. 
(1) As soon as practicable, but not later than 24 hours after the discovery of 
an upset, the owner or operator shall: 
(A) determine if the upset is a reportable upset; and 
(B) notify the commission's regional office for the region in which the facility 
is located and all appropriate local air pollution control agencies if the upset 
is reportable. 
(2) The notification for reportable upsets shall identify: 
(A) the processes and equipment involved; 
(B) the date and time of the upset; 
(C) the duration or expected duration of the upset; 
(D) the compound descriptive type of air contaminant(s) released or expected to 
be released during the upset; and 
(E) the estimated quantities of the air contaminant(s) released or expected to 
be released during the upset, except in the case of upsets determined on opacity 
only, where the volumetric flow rate and opacity shall be estimated. 
(3) The owner or operator of a facility must report additional or more detailed 
information on the upset when requested by the executive director. 
(b) The owner or operator of a facility shall create records of reportable and 
non-reportable upsets as soon as practicable but no later than two weeks after 
an upset. The records shall be maintained on site for a minimum of two years and 
be made readily available upon request to commission staff or personnel of any 
local air pollution program having jurisdiction. If a site is not normally 
staffed, then records of upsets may be maintained at the staffed location within 
Texas that is responsible for day-to-day operations of the site. Such records 
shall identify: 
(1) the cause of the upset; 
(2) the processes and equipment involved; 
(3) the date and time of the upset; 
(4) the duration of the upset; 
(5) the compound descriptive type of the air contaminant(s) released during the 
upset; 
(6) the estimated quantities of the air contaminant(s) released during the 
upset, except in the case of upsets determined on opacity only, where the 
volumetric flow rate and opacity shall be estimated; and
(7) the corrective actions taken to eliminate the upset and/or minimize the 
emissions. 
(c) The owner or operator of any facility subject to the provisions of this 
section shall perform, upon request by the executive director, a technical 
evaluation of the upset event. The evaluation shall include at least an analysis 
of the probable causes of the upset and any necessary actions to prevent or 
minimize recurrence. The evaluation shall be submitted in writing to the 
executive director within 60 days from the date of request. The 60-day period 
may be extended by the executive director.

sec.101.7.Maintenance, Start-up and Shutdown Reporting, Recordkeeping, and 
Operational Requirements.
(a) All pollution emission capture equipment and abatement equipment shall be 
maintained in good working order and operated properly during normal facility 
operations. Emission capture and abatement equipment shall be considered in good 
working order and operated properly when operated in a manner such that the 
facility is capable of operating within limitations established by permit, rule, 
or order of the commission. 
(b) The owner or operator shall notify the commission's regional office for the 
region in which the facility is located and all appropriate local air pollution 
control agencies at least ten days prior to any maintenance, start-up, or 
shutdown which is expected to cause an unauthorized emission which equals or 
exceeds the reportable quantity in any 24-hour period. If notice cannot be given 
ten days prior to any start-up, shutdown, or maintenance which is expected to 
cause an unauthorized emission that will equal or exceed a reportable quantity 
in any 24-hour period, notification shall be given as soon as practicable prior 
to the maintenance, start-up, or shutdown. Any maintenance, start-up, or 
shutdown which results in an unexpected unauthorized emission that equals or 
exceeds the reportable quantity shall be considered a reportable upset and 
subject to sec.101.6 of this title (relating to Upset Reporting and 
Recordkeeping Requirements). The notification shall include: 
(1) the expected date and time of the maintenance, start-up, or shutdown; 
(2) the processes and equipment involved; 
(3) the expected duration of the maintenance, start-up, or shutdown; 
(4) the compound descriptive type of the air contaminant(s) expected to be 
released during the maintenance, start-up, or shutdown; and
(5) the estimated quantities of the air contaminant(s) expected to be released 
during the maintenance, start-up, or shutdown, except in the case of 
unauthorized emissions based on opacity only, where the volumetric flow rate and 
opacity shall be estimated. 
(c) The owner or operator of a facility shall create records of all maintenance, 
start-ups, and shutdowns with unauthorized emissions as soon as practicable but 
no later than two weeks after the maintenance, start-up, or shutdown. The 
records shall be maintained on-site for a minimum of two years and be made 
readily available upon request to commission staff or personnel of any local air 
pollution program having jurisdiction. If a site is not normally staffed, then 
records of upsets may be maintained at the staffed location within Texas that is 
responsible for day to day operations of the site. Such records shall identify: 
(1) the type of activity and the reason for the maintenance, start-up, or 
shutdown; 
(2) the processes and equipment involved; 
(3) the date and time of the maintenance, start-up, or shutdown; 
(4) the duration of the maintenance, start-up, or shutdown;
(5) the compound descriptive type of the air contaminant(s) released during the 
maintenance, start-up, or shutdown; 
(6) the estimated quantities of the air contaminant(s) released during the 
maintenance, start-up, or shutdown, except in the case of unauthorized emissions 
based on opacity only, where the volumetric flow rate and opacity shall be 
estimated; and 
(7) the actions taken to minimize the emissions from the maintenance, start-up, 
or shutdown. 
(d) The executive director may specify the amount, time, and duration of 
emissions that will be allowed during the maintenance, start-up, or shutdown. 
The owner or operator of any source subject to the provisions of this section 
shall submit a technical plan for any start-up, shutdown, or maintenance when 
requested by the executive director. The plan shall contain a detailed 
explanation of the means by which emissions will be minimized during the 
maintenance, start-up, or shutdown. For those emissions which must be released 
into the atmosphere, the plan shall include the reasons such emissions cannot be 
reduced further.

sec.101.11.Exemptions from Rules and Regulations. 
<nl>(a)<ol> <nl>Upset emissions are exempt from compliance with emissions limits 
established in permits, rules, and orders of the commission if: <ol>
<nl>(1)<ol> <nl>the owner or operator properly complies with the requirements of 
sec.101.6 of this title (relating to Upset Reporting and Recordkeeping 
Requirements); <ol>
<nl>(2)<ol> <nl> the upset was not reasonably avoidable; and <ol>
<nl>(3)<ol> <nl> appropriate corrective actions were taken as soon as 
practicable after initiation of the upset. <ol>
[(a) Emissions occurring during major upsets may not be required to meet the 
allowable emission levels set by the rules and regulations upon proper 
notification as set forth in sec.101.6 of this title (relating to Notification 
Requirements for Major Upset), if a determination is made by the executive 
director after consultation with appropriate local agencies and with appropriate 
officials of the subject source that the upset conditions were unavoidable and 
that a shutdown or other corrective actions were taken as soon as practicable.] 
<nl>(b)<ol> <nl>Emissions from any maintenance, start-up, or shutdown are exempt 
from compliance with emission limits established in permits, rules, and orders 
of the commission if the owner or operator complies with the requirements of 
sec.101.7 of this title (relating to Maintenance, Start-up and Shutdown 
Reporting, Recordkeeping, and Operational Requirements), and the emissions are 
minimized to the extent practicable. <ol>
[(b) Emissions occurring during start-up or shutdown of processes or during 
periods of maintenance may not be required to meet the allowable emission levels 
set by the rules and regulations if so determined by the executive director upon 
proper notification as set forth in sec.101.7 of this title (relating to 
Notification Requirements for Maintenance). The executive director may specify 
the amount, time, and duration of emissions that will be allowed during start-up 
and shutdown and during periods of maintenance]. 
(c)-(f) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas, on January 8, 1997.
TRD-9700973
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 30, 1997
For further information, please call: (512) 239-1966

30 TAC sec.101.6, sec.101.7 
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
The commission proposes the repeal of sec.101.6, concerning Notification 
Requirement for Major Upset and sec.101.7, concerning Notification Requirements 
for Maintenance. 
EXPLANATION OF PROPOSED REPEALS. The purpose of the repeals is to allow the 
adoption of new sec.101.6, concerning Upset Reporting and Recordkeeping 
Requirements and sec.101.7, concerning Maintenance, Start-up and Shutdown 
Reporting, Recordkeeping, and Operational Requirements in concurrent rulemaking.
FISCAL NOTE. Steve Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the repeals as proposed are in effect, 
there will be no fiscal implications for state or local government as a result 
of enforcement and administration of the repeals. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
repeals as proposed are in effect, the public benefit anticipated as a result of 
the repeals will be the ability of the commission to concentrate attention on 
the larger releases of air pollutants. There are no anticipated effects on small 
businesses. There is no anticipated economic cost for persons who are required 
to comply with the repeals as proposal. 
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for this proposal under Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the repeals 
is to clarify when and how unauthorized emissions must be reported and to 
achieve consistency with other state and federal law. Promulgation and 
enforcement of the repeals will not affect private real property. 
PUBLIC HEARING. A public hearing on the proposal will be held March 6, 1997, at 
2:00 p.m. in Room 2210 of TNRCC Building F, located at 12118 North IH-35, Park 
35 Technology Center, Austin. The hearing is structured for the receipt of oral 
or written comments by interested persons. Individuals may present oral 
statements when called upon in order of registration. Open discussion within the 
audience will not occur during the hearing; however, an agency staff member will 
be available to discuss the proposal 30 minutes prior to the hearing and will 
answer questions before and after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC, 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96154-101-AI. Comments must be received by 5:00 p.m., March 13, 1997. 
For further information, please contact Jeff Greif, Engineering Services 
Section, (512) 239-1534, or Beecher Cameron, Office of Policy and Regulatory 
Development, (512) 239-1495. 
STATUTORY AUTHORITY. The repeals are proposed under the Texas Health and Safety 
Code, the Texas Clean Air Act (TCAA), sec.382.017, which provides the TNRCC with 
the authority to adopt rules consistent with the policy and purposes of the 
TCAA. 
The proposed repeals implement Health and Safety Code, sec.382.017.
sec.101.6.Notification Requirements for Major Upset. 
sec.101.7.Notification Requirements for Maintenance. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Issued in Austin, Texas, on January 8, 1997.
TRD-9700972
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 30, 1997
For further information, please call: (512) 239-1966

CHAPTER 116. Control of Air Pollution by Permits for New
Construction or Modification 
SUBCHAPTER B. New Source Review Permits 
Permit Application 
30 TAC sec.116.110 
The commission proposes an amendment to sec.116.110, concerning Applicability. 
The primary purpose of the proposed amendment is to consolidate requirements for 
transfers of permits, licenses, and other authorizations into a new 30 TAC 
Chapter 32. The amendment also will eliminate duplicative, confusing, and overly 
bureaucratic language. 
EXPLANATION OF PROPOSED RULE. The proposed amendment will cut existing transfer 
requirements from sec.116.110(c) and place them into the new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the section as proposed is in effect 
there will be no significant fiscal implications for state government as a 
result of administration and enforcement of the section. The effect on local 
governments subject to the provisions of the section as proposed will be similar 
to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
section as proposed is in effect the public benefit anticipated as a result of 
enforcement of and compliance with the section will be increased accessibility 
to and comprehension of agency requirements for transfers of permits, licenses, 
and other authorizations due to the consolidation and streamlining of existing 
transfer requirements. There are no economic costs anticipated for any person 
required to comply with the section as proposed. The effects of the section as 
proposed will generally benefit any permit holder or recipient, including small 
businesses, involved in a transfer, although the effect is not anticipated to 
represent a significant savings in terms of the costs of transferring permits or 
other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for this rule pursuant to Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the rule is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rule will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of this rule will 
not burden private real property which is the subject of the rule because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The amendment is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed amendment implements Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412.

sec.116.110. Applicability.
(a)-(b) (No change.) 
[(c) Change in ownership. 
[(1) The new owner of a facility which previously has received a permit or 
special permit from the TNRCC shall not be required to apply for a new permit or 
special permit, and the change of ownership shall not be subject to the public 
notification requirements of this chapter, provided that within 30 days after 
the change of ownership the new owner notifies the TNRCC of the change. The 
notification shall include a certification of each of the following: 
[(A) the ownership change has occurred and the new owner agrees to be bound by 
all conditions of the permit or special permit and all representations made in 
the application for permit or special permit and any amendments to the permit; 
[(B) there will be no change in the type of pollutants emitted;
[(C) there will be no increase in the quantity of pollutants emitted. 
[(2) The new owner of the facility is required to comply with all conditions of 
the permit or special permit and all representations made in the application for 
permit or special permit and any amendments to the permit.]
<nl>(c)<ol> [(d)] Submittal under seal of registered professional engineer. All 
applications for permit or permit amendment with an estimated capital cost of 
the project above $2 million, and not subject to any exemption contained in the 
Texas Engineering Practice Act (TEPA), shall be submitted under seal of a 
registered professional engineer. However, nothing in this subsection shall 
limit or affect any requirement which may apply to the practice of engineering 
under the TEPA or the actions of the Texas State Board of Registration for 
Professional Engineers. For purposes of this subsection, the estimated capital 
cost is defined in sec.116.141 of this title (relating to Determination of 
Fees). 
<nl>(d)<ol> [(e)] Responsibility for permit application. The owner of the 
facility or the operator of the facility authorized to act for the owner is 
responsible for complying with this section.
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 December 18, 1996.
TRD-9700726
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 291. Water Rates 
SUBCHAPTER G. Certificates of Convenience and Necessity 
30 TAC sec.291.109
(Editor's Note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
The commission proposes the repeal of sec.291.109, concerning Water Rates. The 
primary purpose of the proposed repeal is to consolidate requirements for 
transfers of permits, licenses, and other authorizations into a new 30 TAC 
Chapter 32. The repeal also will eliminate duplicative, confusing, and overly 
bureaucratic language. 
EXPLANATION OF PROPOSED RULE. The proposed repeal will correct references within 
the sections and cut existing transfer requirements from sec.sec.291.109, 
291.110(d), 291.112(a), (b), (c)(4)-(6), and (d), and 291.115 and place them 
into the new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the repeal as proposed is in effect 
there will be no significant fiscal implications for state government as a 
result of administration and enforcement of the repeal. The effect on local 
governments subject to the provisions of the repeal as proposed will be similar 
to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
repeal as proposed is in effect the public benefit anticipated as a result of 
enforcement of and compliance with the repeal will be increased accessibility to 
and comprehension of agency requirements for transfers of permits, licenses, and 
other authorizations due to the consolidation and streamlining of existing 
transfer requirements. There are no economic costs anticipated for any person 
required to comply with the repeal as proposed. The effects of the repeal as 
proposed will generally benefit any permit holder or recipient, including small 
businesses, involved in a transfer, although the effect is not anticipated to 
represent a significant savings in terms of the costs of transferring permits or 
other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for the rule pursuant to Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the rule is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rule will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rule and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of the rule will not 
burden private real property which is the subject of the rule because there is 
no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The repeal is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed repeal implements Texas Water Code, sec.sec.5.103, 5.105, 13.041, 
26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety Code, 
sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 
401.051, and 401.412.
sec.291.109. Report of Sale, Merger, or Consolidation. 
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 December 18, 1996.
TRD-9700725
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

30 TAC sec.sec.291.110, 291.112, 291.115 
The commission proposes amendments to sec.sec.291.110, 291.112, and 291.115, 
concerning Water Rates. The primary purpose of the proposed amendments is to 
consolidate requirements for transfers of permits, licenses, and other 
authorizations into a new 30 TAC Chapter 32. The amendments also will eliminate 
duplicative, confusing, and overly bureaucratic language.
EXPLANATION OF PROPOSED RULES. The proposed amendments will correct references 
within the sections and cut existing transfer requirements from sec.sec.291.109, 
291.110(d), 291.112(a), (b), (c)(4)-(6), and (d), and 291.115 and place them 
into the new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years these sections as proposed are in 
effect there will be no significant fiscal implications for state government as 
a result of administration and enforcement of the sections. The effect on local 
governments subject to the provisions of the sections as proposed will be 
similar to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years 
these sections as proposed are in effect the public benefit anticipated as a 
result of enforcement of and compliance with the sections will be increased 
accessibility to and comprehension of agency requirements for transfers of 
permits, licenses, and other authorizations due to the consolidation and 
streamlining of existing transfer requirements. There are no economic costs 
anticipated for any person required to comply with these sections as proposed. 
The effects of these sections as proposed will generally benefit any permit 
holder or recipient, including small businesses, involved in a transfer, 
although the effect is not anticipated to represent a significant savings in 
terms of the costs of transferring permits or other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission 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 purpose of the rules is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rules will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of these rules will 
not burden private real property which is the subject of the rules because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The amendments are proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed amendments implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412.

sec.291.110. Foreclosure and Bankruptcy.
(a)-(c) (No change.) 
(d) The financial institution may operate the utility for an interim period not 
to exceed 12 months before transferring <nl> according to Chapter 32 of this 
title (relating to Transfers of Permits, Licenses, and Other Authorizations)<ol> 
or otherwise obtaining a certificate of convenience and necessity unless the 
executive director in writing extends the time period. A financial institution 
that operates a utility during an interim period under this subsection is 
subject to each commission rule to which the utility was subject and in the same 
manner.

sec.291.112. Transfer of Certificate of Convenience and Necessity.
[(a) Effective date of transfer. A certificate is issued in person and, 
continues in force until further order of the commission, and may be transferred 
only by the approval of the commission. Any attempted transfer is not effective 
for any purpose until actually approved by the commission. 
[(b) Sell, assignment, or lease of certificate of convenience and necessity. 
Except as provided by the Texas Water Code, sec.13.255 a utility or a water 
supply or sewer service corporation may not sell, assign, or lease a certificate 
of public convenience and necessity or any right obtained under a certificate 
unless the commission has determined that the purchaser, assignee, or lessee is 
capable of rendering adequate and continuous service to every consumer within 
the certificated area, after considering the factors under the Texas Water Code, 
sec.13.246(c). The sale, assignment, or lease shall be on the conditions 
prescribed by the commission.] 
[(c)] Notice of proposed sale, acquisition, lease, rental, merger, or 
consolidation and transfer of a certificate of convenience and necessity. 
(1) Unless notice is waived by the executive director for good cause shown, 
mailed notice shall be given to customers of the water or sewer system to be 
sold, acquired, leased or rented or merged or consolidated and other affected 
parties as determined by the executive director on the form prescribed by the 
executive director and shall include the following: 
(A) the name and business address of the currently certificated retail public 
utility and the retail public utility which will acquire the facilities or 
certificate; 
(B) a description of the service area of the retail public utility being 
transferred; 
(C) the anticipated effect of the acquisition or transfer on the operation or 
the rates and services provided to customers being transferred; and 
(D) a statement that persons who wish to comment upon the action sought should 
contact the designated representative of the executive director at the 
commission's mailing address within 30 days of mailing or publication of notice, 
whichever occurs later. 
(2) The commission may require the applicant to publish notice once each week 
for two consecutive weeks in a newspaper of general circulation in the area in 
which the retail public utility being transferred is located and publication may 
be allowed in lieu of individual notice as required in this subsection. 
(3) The applicant shall mail the notice to cities and neighboring retail public 
utilities providing the same utility service within two miles of the requested 
service area, and any city with an extraterritorial jurisdiction which overlaps 
the proposed service area. 
[(4) If the executive director does not request a hearing, the commission may 
approve the transfer by order at a regular meeting of the commission. 
[(5) If a hearing is requested, the application will be processed in accordance 
with Chapter 263 of this title (relating to Final Approval By Executive 
Director, Evaluation of Request for Contested Case Hearing). 
[(6) The commission may approve a sale, acquisition, lease or rental, or merger 
or consolidation and/or transfer of a certificate of convenience and necessity 
if it determines that the transaction is in the public interest after 
considering: 
[(A) if notice has been properly given; 
[(B) if the retail public utility which will acquire the facilities or 
certificate is capable of rendering adequate and continuous service to every 
consumer within the certificated area, after considering the factors set forth 
in the Texas Water Code, sec.13.246(c). The commission may refuse to approve a 
sale, acquisition, lease, rental, merger, or consolidation and/or transfer where 
conditions of a judicial decree, compliance agreement or other enforcement order 
have not been substantially met; 
[(C) the experience of the person purchasing or acquiring the water or sewer 
system as a utility service provider; 
[(D) the history of the person or an affiliated interest of the person in 
complying with the requirements of the commission or the Texas Department of 
Health or of properly managing or using revenues as a utility service provider; 
or 
[(E) the ability of the person purchasing or acquiring the water or sewer system 
to provide the necessary capital investment to ensure the provision of 
continuous and adequate service to the customers of the water or sewer system. 
[(d) Reporting of customer deposits. Within 30 days after the sale or transfer 
of any utility or operating units thereof, the seller shall file with the 
commission, under oath, in addition to other information, a list showing the 
names and addresses of all customers served by such utility or unit who have to 
their credit a deposit, the date such deposit was made, the amount thereof, and 
the unpaid interest thereon. All such deposits shall be refunded to the 
customers or transferred to the new owner, with all accrued interest.]

sec.291.115. Cessation of Operations by a Retail Public Utility.
(a)-(i) (No change.) 
[(j) If a utility does abandon operation of its facilities without commission 
authorization, the commission may appoint a temporary manager to take over 
operations of the facilities to ensure continuous and adequate service.] 
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 December 18, 1996.
TRD-9700724
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 293. Water Districts 
Creation of Water Districts 
30 TAC sec.293.13
The commission proposes an amendment to sec.293.13, concerning Special 
Considerations for Water District Creation. The primary purpose of the proposed 
amendment is to consolidate requirements for transfers of permits, licenses, and 
other authorizations into a new 30 TAC Chapter 32. The amendment also will 
eliminate duplicative, confusing, and overly bureaucratic language.
EXPLANATION OF PROPOSED RULE. The proposed amendment will cut existing transfer 
requirements from sec.293.13(b)(2) and place them into the new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the section as proposed is in effect 
there will be no significant fiscal implications for state government as a 
result of administration and enforcement of the section. The effect on local 
governments subject to the provisions of the section as proposed will be similar 
to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
section as proposed is in effect the public benefit anticipated as a result of 
enforcement of and compliance with the section will be increased accessibility 
to and comprehension of agency requirements for transfers of permits, licenses, 
and other authorizations due to the consolidation and streamlining of existing 
transfer requirements. There are no economic costs anticipated for any person 
required to comply with the section as proposed. The effects of the section as 
proposed will generally benefit any permit holder or recipient, including small 
businesses, involved in a transfer, although the effect is not anticipated to 
represent a significant savings in terms of the costs of transferring permits or 
other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for the rule pursuant to Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the rule is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rule will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of this rule will 
not burden private real property which is the subject of the rule because there 
is no substantive change in existing requirements, only a change in organization 
of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108 at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The amendment is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed amendment implements Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412.

sec.293.13. Special Considerations for Water District Creation.
(a) (No change.) 
(b) The following considerations shall apply only with respect to special 
utility districts. 
(1) The legal description accompanying the resolution requesting conversion of a 
water supply corporation, as defined in [the] Texas Water Code, sec.65.001(10), 
to a special utility district shall conform to the legal description of the 
service area of the water supply corporation as such service area appears in the 
certificate of public convenience and necessity issued by the commission or by 
the Public Utility Commission of Texas to the water supply corporation except 
that any area of the water supply corporation that overlaps another entity's 
certificate of convenience and necessity must be excluded unless the other 
entity consents in writing to the inclusion of its dually certified area in the 
district. 
[(2) A water supply corporation shall not be converted to a special utility 
district unless the water supply corporation is to be dissolved after the 
conversion. A certified copy of the dissolution order shall be filed with the 
executive director. The certificate of convenience and necessity for the water 
supply corporation will automatically be transferred to the district.] 
<nl>(2)<ol> [(3)] Notice of the public creation hearing and transfer of the 
certificate of convenience and necessity shall be provided as follows: 
(A) published in a newspaper with general circulation in the county or counties 
in which the district is located once a week for two consecutive weeks. The 
first publication shall be at least 30 days before the date of the hearing; 
(B) sent to each city which has extraterritorial jurisdiction in the county or 
counties in which the proposed district is located and which has formally 
requested notice of the creation of all districts in the county or counties in 
which the city's extraterritorial jurisdiction is located;
(C) mailed to customers of the water supply corporation and other affected 
parties at least 60 days prior to the date of the hearing including the 
following: 
(i) name and business address of the district; 
(ii) a description of the service area involved; 
(iii) the anticipated effect of the conversion on the operation or the rates and 
services provided to customers; and 
(iv) a statement that persons may attend the hearing and participate in the 
process. 
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 December 18, 1996.
TRD-9700750
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 297. Water Rights, Substantive 
SUBCHAPTER H. Conveyance of Land and Water Rights 
30 TAC sec.sec.297.81-297.83
(Editor's Note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The commission proposes the repeal of sec.sec.297.81-297.83, concerning 
Conveyances of Land and Water Rights. The primary purpose of the proposed 
repeals is to consolidate requirements for transfers of permits, licenses, and 
other authorizations into a new 30 TAC Chapter 32. The repeals also will 
eliminate duplicative, confusing, and overly bureaucratic language.
EXPLANATION OF PROPOSED RULE. The proposed repeals will remove sec.sec.297.81-
297.83 and place them into the new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the repeals as proposed are in effect 
there will be no significant fiscal implications for state government as a 
result of administration and enforcement of the repeals. The effect on local 
governments subject to the provisions of the repeals as proposed will be similar 
to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
repeals as proposed are in effect the public benefit anticipated as a result of 
enforcement of and compliance with the repeals will be increased accessibility 
to and comprehension of agency requirements for transfers of permits, licenses, 
and other authorizations due to the consolidation and streamlining of existing 
transfer requirements. There are no economic costs anticipated for any person 
required to comply with the repeals as proposed.
The effects of the repeals as proposed will generally benefit any permit holder 
or recipient, including small businesses, involved in a transfer, although the 
effect is not anticipated to represent a significant savings in terms of the 
costs of transferring permits or other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for the rule pursuant to Texas Government, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the rules is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rules will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of the rules will 
not burden private real property which is the subject of the rules because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The repeals are proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed repeals implement Texas Water Code, sec.sec.5.103, 5.105, 13.041, 
26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety Code, 
sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 
401.051, and 401.412.
sec.297.81. General Rules of Conveyance.
sec.297.82. Duty To Inform Executive Director.
sec.297.83. Recording Conveyances of Water Rights. 
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 December 18, 1996.
TRD-9700749
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 303. Operation of the Rio Grande 
Amendments to and Sales of Water Rights 
30 TAC sec.303.41
(Editor's Note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
The commission proposes the repeal of sec.303.41, concerning Sale of Water 
Rights. The primary purpose of the proposed repeal is to consolidate 
requirements for transfers of permits, licenses, and other authorizations into a 
new 30 TAC Chapter 32. This repeal also will eliminate duplicative, confusing, 
and overly bureaucratic language. 
EXPLANATION OF PROPOSED RULE. The proposed repeal will remove sec.303.41 and 
place the section into the new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the repeal as proposed is in effect 
there will be no significant fiscal implications for state government as a 
result of administration and enforcement of the repeal. The effect on local 
governments subject to the provisions of the repeal as proposed will be similar 
to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
repeal as proposed is in effect the public benefit anticipated as a result of 
enforcement of and compliance with the repeal will be increased accessibility to 
and comprehension of agency requirements for transfers of permits, licenses, and 
other authorizations due to the consolidation and streamlining of existing 
transfer requirements. There are no economic costs anticipated for any person 
required to comply with the repeal as proposed. The effects of the repeal as 
proposed will generally benefit any permit holder or recipient, including small 
businesses, involved in a transfer, although the effect is not anticipated to 
represent a significant savings in terms of the costs of transferring permits or 
other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for the rule pursuant to Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the rule is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rule will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of this rule will 
not burden private real property which is the subject of the rule because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The repeal is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed repeal implements Texas Water Code, sec.sec.5.103, 5.105, 13.041, 
26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety Code, 
sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 
401.051, and 401.412.
sec.303.41. Sale of Water Rights.
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 December 18, 1996.
TRD-9700748
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 304. Watermaster Operations 
Administration 
30 TAC sec.304.43 
(Editor's Note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
The commission proposes the repeal of sec.304.43, concerning Watermaster 
Operations. The primary purpose of the proposed repeal is to consolidate 
requirements for transfers of permits, licenses, and other authorizations into a 
new 30 TAC Chapter 32. This repeal also will eliminate duplicative, confusing, 
and overly bureaucratic language. 
EXPLANATION OF PROPOSED RULE. The proposed repeal will move sec.304.43 into the 
new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years the repeal as proposed is in effect 
there will be no significant fiscal implications for state government as a 
result of administration and enforcement of the repeal. The effect on local 
governments subject to the provisions of the repeal as proposed will be similar 
to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years the 
repeal as proposed is in effect the public benefit anticipated as a result of 
enforcement of and compliance with the repeal will be increased accessibility to 
and comprehension of agency requirements for transfers of permits, licenses, and 
other authorizations due to the consolidation and streamlining of existing 
transfer requirements. There are no economic costs anticipated for any person 
required to comply with the repeal as proposed. The effects of the repeal as 
proposed will generally benefit any permit holder or recipient, including small 
businesses, involved in a transfer, although the effect is not anticipated to 
represent a significant savings in terms of the costs of transferring permits or 
other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission has prepared a Takings Impact 
Assessment for the rule pursuant to Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the rule is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rule will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of this rule will 
not burden private real property which is the subject of the rule because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The repeal is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed repeal implements Texas Water Code, sec.sec.5.103, 5.105, 13.041, 
26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety Code, 
sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 
401.051, and 401.412. 
sec.304.43. Ownership.
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 December 18, 1996.
TRD-9700747
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 305. Consolidated Permits 
SUBCHAPTER D. Amendments, Modifications, Renewals, Transfers,
Corrections, Revocation, and Suspension of Permits 
30 TAC sec.305.61, sec.305.69 
The commission proposes amendments to sec.305.61 and sec.305.69, concerning 
Consolidated Permits. The primary purpose of the proposed amendments is to 
consolidate requirements for transfers of permits, licenses, and other 
authorizations into a new 30 TAC Chapter 32. These amendments also will 
eliminate duplicative, confusing, and overly bureaucratic language. 
EXPLANATION OF PROPOSED RULES. The proposed amendments will cut existing 
transfer requirements from sec.305.61 and sec.305.69 and place them into the new 
Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years these sections as proposed are in 
effect there will be no significant fiscal implications for state government as 
a result of administration and enforcement of the sections. The effect on local 
governments subject to the provisions of the sections as proposed will be 
similar to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years 
these sections as proposed are in effect the public benefit anticipated as a 
result of enforcement of and compliance with the sections will be increased 
accessibility to and comprehension of agency requirements for transfers of 
permits, licenses, and other authorizations due to the consolidation and 
streamlining of existing transfer requirements. There are no economic costs 
anticipated for any person required to comply with these sections as proposed. 
The effects of these sections as proposed will generally benefit any permit 
holder or recipient, including small businesses, involved in a transfer, 
although the effect is not anticipated to represent a significant savings in 
terms of the costs of transferring permits or other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission 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 purpose of the rules is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rules will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of these rules will 
not burden private real property which is the subject of the rules because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The amendments are proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed amendments implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.305.61. Applicability.
The provisions of this subchapter set forth the standards and requirements for 
applications and actions concerning amendments, modifications, renewals, 
[transfers,] corrections, revocations, and suspensions of permits. 

sec.305.69. Solid Waste Permit Modification at the Request of the Permittee.
(a)-(h) (No change.) 
(i) Appendix I. The following appendix will be used for the purposes of <nl>this 
subchapter<ol> [Subchapter D] which relate to solid waste permit modification at 
the request of the permittee.
Figure: 30 TAC sec.305.69(i)
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 December 18, 1996.
TRD-9700746
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

30 TAC sec.305.64
(Editor's Note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
The commission proposes the repeal of sec.305.64 and sec.305.97, concerning 
Consolidated Permits. The primary purpose of the proposed repeals is to 
consolidate requirements for transfers of permits, licenses, and other 
authorizations into a new 30 TAC Chapter 32. These repeals also will eliminate 
duplicative, confusing, and overly bureaucratic language.
EXPLANATION OF PROPOSED RULES. The proposed repeals will cut existing transfer 
requirements from sec.305.64 and sec.305.97 and place them into the new Chapter 
32 and into the new 30 TAC Chapter 70. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years these repeals as proposed are in effect 
there will be no significant fiscal implications for state government as a 
result of administration and enforcement of the repeals. The effect on local 
governments subject to the provisions of the repeals as proposed will be similar 
to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years 
these repeals as proposed are in effect the public benefit anticipated as a 
result of enforcement of and compliance with the repeals will be increased 
accessibility to and comprehension of agency requirements for transfers of 
permits, licenses, and other authorizations due to the consolidation and 
streamlining of existing transfer requirements. There are no economic costs 
anticipated for any person required to comply with these repeals as proposed. 
The effects of these repeals as proposed will generally benefit any permit 
holder or recipient, including small businesses, involved in a transfer, 
although the effect is not anticipated to represent a significant savings in 
terms of the costs of transferring permits or other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission 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 purpose of the rules is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rules will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of these rules will 
not burden private real property which is the subject of the rules because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The repeal is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed repeal implements Texas Water Code, sec.sec.5.103, 5.105, 13.041, 
26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety Code, 
sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 
401.051, and 401.412. 
sec.305.64. Transfer of Permits.
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 December 18, 1996.
TRD-9700745
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER E. Actions, Notice, and Hearing 
30 TAC sec.305.97
(Editor's Note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
The repeal is proposed under Texas Water Code, sec.sec.5.103, 5.105, 13.041, 
26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety Code, 
sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 
401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed repeal implements Texas Water Code, sec.sec.5.103, 5.105, 13.041, 
26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety Code, 
sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 
401.051, and 401.412. 
sec.305.97. Action on Application for Transfer.
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 December 18, 1996.
TRD-9700744
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 312. Sludge Use, Disposal, and Transportation 
SUBCHAPTER A. General Provisions 
30 TAC sec.312.10, sec.312.11
The commission proposes amendments to sec.312.10 and sec.312.11, concerning 
Sludge Use, Disposal, and Transportation. The primary purpose of the proposed 
amendments is to consolidate requirements for transfers of permits, licenses, 
and other authorizations into a new 30 TAC Chapter 32. These amendments also 
will eliminate duplicative, confusing, and overly bureaucratic language. 
EXPLANATION OF PROPOSED RULES. The proposed amendments will delete sec.312.10(j) 
and sec.312.11(d) and place them into the new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years these sections as proposed are in 
effect there will be no significant fiscal implications for state government as 
a result of administration and enforcement of the sections. The effect on local 
governments subject to the provisions of the sections as proposed will be 
similar to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years 
these sections as proposed are in effect the public benefit anticipated as a 
result of enforcement of and compliance with the sections will be increased 
accessibility to and comprehension of agency requirements for transfers of 
permits, licenses, and other authorizations due to the consolidation and 
streamlining of existing transfer requirements. There are no economic costs 
anticipated for any person required to comply with these sections as proposed. 
The effects of these sections as proposed will generally benefit any permit 
holder or recipient, including small businesses, involved in a transfer, 
although the effect is not anticipated to represent a significant savings in 
terms of the costs of transferring permits or other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission 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 purpose of the rules is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rules will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of these rules will 
not burden private real property which is the subject of the rules because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY. The amendments are proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed amendments implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.312.10. Permit and Registration Applications Processing.
(a)-(i) (No change.) 
[(j) In order to transfer a registration, both the registered site operator and 
the landowner must sign the transfer application. An application for transfer 
that is not signed by both the registered site operator and the landowner will 
be considered a request for cancellation.]
<nl>(j)<ol> [(k)] If a registration for a site is cancelled, a complete 
application for registration must be submitted in order to re-register the site. 
If the application is approved, the site will be re-registered under the same 
site registration number.
<nl>(k)<ol> [(l)] [Major Amendment.] For purposes of this chapter and except as 
provided in subsection <nl> (l)<ol> [(m)] of this section, a major amendment is 
an amendment that changes a substantive term, provision, requirement, or a 
limiting parameter of a permit or registration or a substantive change in the 
information provided in an application for registration, regarding sewage 
sludge. Changes which are not considered major include typographical errors, 
changes which result in more stringent monitoring requirements, changes in site 
ownership, changes in site operator, or similar administrative information. 
<nl>(l)<ol> [(m)] Upon the effective date of this chapter, the commission will 
process as a minor amendment a request by an existing wastewater disposal 
permittee, a sewage sludge registrant, or by a sewage sludge permittee to change 
any substantive term, provision, requirement, or a limiting parameter in a 
permit or registration which was due to prior regulations of the commission, 
when it is no longer a requirement of this chapter. Notice requirements of 
sec.312.13 <nl> of this title<ol> (relating to Actions and Notice) are not 
applicable to minor amendments.

sec.312.11. Permits.
(a)-(c) (No change.) 
(d) Any person who is required to obtain a permit, or who requests an amendment, 
modification<nl>,<ol> or renewal of a permit to dispose of or incinerate sewage 
sludge is subject to the standards and requirements for applications and actions 
concerning amendments, modifications, renewals, transfers, corrections, 
revocations, and suspensions of permits, as set forth in sec.305.62 of this 
title (relating to Amendment), sec.305.63 of this title (relating to Renewal), 
<nl>Chapter 32 of this title (relating to Transfer of Permits, Licenses, and 
Other Authorizations) <ol> [sec.305.64 of this title (related to Transfer of 
Permits)], sec.305.65 of this title (relating to Corrections of Permits), 
sec.305.66 of this title (relating to Permit Denial, Suspension, and 
Revocation), sec.305.67 of this title (relating to Revocation and Suspension 
upon Request or Consent), and sec.305.68 of this title (relating to Action and 
Notice on Petition for Revocation or Suspension). 
(e) (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 December 18, 1996.
TRD-9700743
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 321. Control of Certain Activities by Rule 
The commission proposes amendments to sec.sec.321.34, 321.183, and 321.184, 
concerning Control of Certain Activities by Rule. The primary purpose of the 
proposed amendments is to consolidate requirements for transfers of permits, 
licenses, and other authorizations into a new 30 TAC Chapter 32. The amendments 
also will eliminate duplicative, confusing, and overly bureaucratic language. 
EXPLANATION OF PROPOSED RULES. The proposed amendments will change references in 
sec.sec.321.34(a), 321.183(i), and 321.184(e) to reflect the new Chapter 32, 
which consolidates requirements for transfers of permits, licenses, and other 
authorizations. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years these sections as proposed are in 
effect there will be no significant fiscal implications for state government as 
a result of administration and enforcement of the sections. The effect on local 
governments subject to the provisions of the sections as proposed will be 
similar to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years 
these sections as proposed are in effect the public benefit anticipated as a 
result of enforcement of and compliance with the sections will be increased 
accessibility to and comprehension of agency requirements for transfers of 
permits, licenses, and other authorizations due to the consolidation and 
streamlining of existing transfer requirements. There are no economic costs 
anticipated for any person required to comply with these sections as proposed. 
The effects of these sections as proposed will generally benefit any permit 
holder or recipient, including small businesses, involved in a transfer, 
although the effect is not anticipated to represent a significant savings in 
terms of the costs of transferring permits or other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission 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 purpose of the rules is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rules will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of these rules will 
not burden private real property which is the subject of the rules because there 
is no substantive change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 

SUBCHAPTER B. Commercial Livestock and Poultry Production Operations
30 TAC sec.321.34
STATUTORY AUTHORITY. The amendment is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed amendment implements Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.321.34. Procedures for Making Application for a Permit.
(a) Any person whose feedlot operation does not conform to the criteria for 
regulation by rule set forth under sec.321.33 of this title (relating to 
Applicability) shall apply for a permit. Application for a permit shall be made 
on forms provided by the executive director. The applicant shall provide such 
additional information in support of the application as may be necessary for an 
adequate technical review of the application. At a minimum, the application 
shall demonstrate compliance with the technical requirements set forth in 
sec.321.35 of this title (relating to Surface Water Protection), sec.321.36 of 
this title (relating to Ground Water Protection), sec.321.37 of this title 
(relating to Feedlot Waste Utilization or Disposal by Land Spreading), 
sec.321.38 of this title (relating to Other Waste Disposal Methods) and 
sec.321.39 of this title (relating to Pesticide Use), or other equivalent 
technical requirements. Applicants shall comply with sec.sec.305.41-305.45 of 
this title (relating to Applicability; Application Required; Who Applies; 
Signatories to Applications; <nl>and<ol> Contents of Application for Permit). 
Each applicant shall pay an application fee as required by sec.305.503 of this 
title (relating to Application Fees). An annual waste treatment inspection fee 
is also required of each permittee as required by sec.305.503 of this title 
(relating to Fee Assessments). Except as provided in subsections (b)-(e) of this 
section, each permittee shall comply with <nl>Chapter 32 of this title (relating 
to Transfer of Permits, Licenses, and Other Authorizations) and sec.sec.305.61-
305.64 and 305.66-305.68 <ol> [sec.sec.305.61-305.68] of this title (relating to 
Applicability, Amendment, Renewal, [Transfer of Permits,] Corrections of 
Permits; Permit Denial, Suspension, and Revocation; Revocation and Suspension 
Upon Request or Consent; and Action and Notice on Petition for Revocation or 
Suspension). Each permittee shall comply with sec.305.125 of this title 
(relating to Standard Permit Conditions). Permits authorized under this 
subchapter may be effective for the life of the project as determined by 
sec.305.127(1)(C) of this title (relating to Conditions to be Determined for 
Individuals Permits).
(b)-(f) (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 December 18, 1996.
TRD-9700742
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER K. Concentrated Animal Feeding Operations 
30 TAC sec.321.183, sec.321.184
The amendments are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed amendments implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.321.183. Applicability.
(a)-(h) (No change.) 
(i) Any CAFO which has existing authority under the <nl> TCAA<ol> [Texas Clean 
Air Act (TCAA)] does not have to meet the air quality criteria of this 
subchapter. Pursuant to the TCAA, sec.382.051, any new CAFO which meets all of 
the requirements of this subchapter is hereby entitled to an air quality 
standard permit authorization under this subchapter in lieu of the requirement 
to obtain an air quality permit under Chapter 116 of this title (relating to 
Control of Air Pollution by Permits for New Construction or Modification). Those 
CAFOs which would otherwise be required to obtain an air quality permit under 
Chapter 116 of this title, which cannot satisfy all of the requirements of this 
subchapter shall apply for and obtain an air quality permit pursuant to Chapter 
116 of this title in addition to any authorization required under this 
subchapter. Those animal feeding operations which are not required to obtain 
authorization under this subchapter may be subject to requirements under Chapter 
116 of this title. Any change in conditions such that a person is no longer 
eligible for authorization under this section requires authorization under 
Chapter 116 of this title. No person may concurrently hold an air quality permit 
issued under Chapter 116 of this title and an authorization with air quality 
provisions under this subchapter for the same site. Any application for a permit 
renewal, amendment, or transfer for any permit issued under the TCAA shall be 
reviewed and/or issued under the provisions of Chapter 116 of this title <nl>and 
Chapter 32 of this title (relating to Transfer of Permits, Licenses, and Other 
Authorizations) <ol>. 
(j)-(l) (No change.)

sec.321.184. Application Requirements.
(a)-(d) (No change.) 
(e) Each permittee shall comply with <nl> Chapter 32 of this title (relating to 
Transfer of Permits, Licenses, and Other Authorizations), sec.sec.305.61, 
305.64, and 305.66-305.68<ol> [sec.sec.305.61 and 305.64-305.68] of this title 
(relating to Applicability, [Transfer of Permits,] Corrections of Permits, 
Revocation and Suspension, Revocation and Suspension Upon Request or Consent, 
Action and Notice on Petition for Revocation or Suspension). 
(f)-(g) (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 December 18, 1996.
TRD-9700741
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

CHAPTER 330. Municipal Solid Waste 
The commission proposes amendments to sec.sec.330.63, 330.812, 330.835, 330.843, 
330.852, and 330.855, concerning Municipal Solid Waste. The primary purpose of 
the proposed amendments is to consolidate requirements for transfers of permits, 
licenses, and other authorizations into a new 30 TAC Chapter 32. These 
amendments also will eliminate duplicative, confusing, and overly bureaucratic 
language. 
EXPLANATION OF PROPOSED RULE. The proposed amendments will cut existing transfer 
requirements from sec.sec.330.63, 330.812, 330.835, 330.843, 330.852, and 
330.855 and place them into the new Chapter 32. 
FISCAL NOTE. Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five years these sections as proposed are in 
effect there will be no significant fiscal implications for state government as 
a result of administration and enforcement of the sections. The effect on local 
governments subject to the provisions of the sections as proposed will be 
similar to those for any other permit holder or recipient. 
PUBLIC BENEFIT. Mr. Minick has also determined that for the first five years 
these sections as proposed are in effect the public benefit anticipated as a 
result of enforcement of and compliance with the sections will be increased 
accessibility to and comprehension of agency requirements for transfers of 
permits, licenses, and other authorizations due to the consolidation and 
streamlining of existing transfer requirements. There are no economic costs 
anticipated for any person required to comply with these sections as proposed. 
The effects of these sections as proposed will generally benefit any permit 
holder or recipient, including small businesses, involved in a transfer, 
although the effect is not anticipated to represent a significant savings in 
terms of the costs of transferring permits or other authorizations. 
TAKINGS IMPACT ASSESSMENT. The commission 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 purpose of the rules is 
to make it easier for the public to use agency rules, specifically the 
requirements for transfers of permits, licenses, and other authorizations. The 
rules will substantially advance this specific purpose by cutting the existing 
requirements from their current location within the rules and placing them under 
a single chapter (Chapter 32). Promulgation and enforcement of these rules will 
not burden private real property which is the subject of the rules because there 
is no substantial change in existing requirements, only a change in the 
organization of the rules. 
PUBLIC HEARING. A public hearing on this proposal will be held March 3, 1997, at 
2:00 p.m. in Building F, Room 5108, at the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park Technology Center, 
Austin. Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. 
SUBMITTAL OF COMMENTS. Written comments may be mailed to Lisa Martin, TNRCC 
Office of Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, 
Texas 78711-3087 or faxed to (512) 239-4808. All comments should reference Rule 
Log Number 96147-032-AD. Comments must be received by 5:00 p.m., March 3, 1997. 
For further information, please contact Catherine Collins, Policy Research 
Division, (512) 239-0389. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 

SUBCHAPTER E. Permit Procedures 
30 TAC sec.330.63
STATUTORY AUTHORITY. The amendment is proposed under Texas Water Code, 
sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and 
Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 
361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which authorize the 
commission to adopt any rules necessary to carry out its powers and duties under 
the Water Code and other laws of Texas and to establish and approve all general 
policy of the commission. 
The proposed amendment implements Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.330.63. Duration and Limits of Permits.
(a)-(b) (No change.) 
[(c) A permit is issued to a specific person (see definition for person 
contained in sec.330.2 of this title (relating to Definitions)) and may not be 
transferred from one person to another without complying with the transfer 
approval requirements of the commission. 
[(d) A permit is attached to the realty to which it pertains and may not be 
transferred from one site to another.] 
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 December 18, 1996.
TRD-9700740
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

SUBCHAPTER R. Management of Whole Used or Scrap Tires 
30 TAC sec.sec.330.812, 330.835, 330.843, 330.852, 330.855
The amendments are proposed under Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412, which authorize the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. 
The proposed amendments implement Texas Water Code, sec.sec.5.103, 5.105, 
13.041, 26.011, 27.019, 32.009, 33.007, and 34.006, and Texas Health and Safety 
Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 
401.011, 401.051, and 401.412. 

sec.330.812. Transporter Registration.
(a)-(d) (No change.) 
[(e) A new registration application shall be submitted, to the executive 
director within ten days of a determination by the executive director that 
operations or management methods are no longer adequately described by the 
existing registration or ownership of the registered transporter is changed. 
Following the executive director's determination, the old transporter 
registration number may be canceled or transferred to the new registrant.]
<nl>(e)<ol> [(f)] Suspension, revocation or denial of registration procedures 
are as follows: 
(1) The commission may suspend or revoke a registration or deny an initial or 
renewal registration for: 
(A) failure to maintain a complete and accurate record of shipments of tires; 
(B) failure to maintain vehicles in safe working order as evidenced by at least 
two citations per vehicle from the Texas Department of Public Safety or local 
traffic law enforcement agencies; 
(C) altering waste shipping documents or shipment records;
(D) delivery of whole used or scrap tires to a facility not registered to handle 
the tires; 
(E) failure to comply with any rule or order issued by the commission pursuant 
to the requirements of this chapter; 
(F) failure to submit the annual report required in sec.330.815(c)(3) of this 
title (relating to Transporter Record Keeping); 
(G) failure to pay registration fees pursuant to sec.330.817 of this title 
(relating to Transporter Fees); 
(H) illegal dumping of whole used or scrap tires; 
(I) collection or transportation of whole used or scrap tires without 
registration as required in this section; 
(J) failure to notify the TNRCC of any change in transporter registration 
information required in subsection (d) of this section; 
(K) illegally charging a transportation fee to a wholesale or retail dealer of 
tires; or 
(L) illegally transporting out-of-state scrap tires using a commission-approved 
manifest or transporter number. 
(2) A transporter registration shall be suspended for a period of one year; 
however, depending upon the seriousness of the offense(s), the time of 
suspension may be increased or decreased. A transporter registration is revoked 
automatically upon a second suspension. If the registration is suspended or 
revoked, a transporter shall not transport whole used or scrap tires or shredded 
tire pieces regulated under this subchapter. 
(3) The holder of a transporter registration that has been revoked by the 
commission may reapply for registration pursuant to this subchapter as if 
applying for the first time, after a period of at least one year from the date 
of revocation. If a transporter registration is revoked by the commission a 
second time, the revocation shall be permanent. 
(4) Appeal of suspension, revocation or denial of initial or renewal 
registration procedures are as follows: 
(A) An opportunity for a formal hearing on the suspension or revocation of 
registration may be requested in writing by the registrant by certified mail, 
return receipt requested, provided the request is postmarked within 20 days 
after a notice of proposed revocation or denial of registration has been sent 
from the executive director to the last known address of the registrant. 
(B) An opportunity for a formal hearing on the denial of registration or renewal 
of registration may be requested in writing by the applicant by certified mail, 
return receipt requested, provided the request is postmarked within 20 days 
after a notice of denial has been sent from the executive director to the 
address listed on the application. If the registration is denied, a person shall 
not collect or transport whole used or scrap tires or shredded tire pieces. 
(C) The formal hearing under this paragraph shall be a contested case in 
accordance with the requirements of the Administrative <nl> Procedure<ol> 
[Procedures] Act, Texas Government Code Annotated, sec.2001 et seq. (Vernon 
1993) and the Texas Solid Waste Disposal Act, Texas Health and Safety Code 
Annotated, Chapter 361 (Vernon 1993) and the rules of the commission. 
<nl>(f)<ol> [(g)] Transport vehicles owned and operated by municipalities, 
counties, or other governmental entities or agencies which are used to transport 
whole used or scrap tires to a waste tire facility, a waste tire storage 
facility, a waste tire recycling facility, or a waste tire energy recovery 
facility shall be exempt from registration under this section; however, the load 
of whole used or scrap tires shall be manifested. To properly manifest these 
tires, the generator portion of the manifest form should be completed showing 
the governmental entity's generator number, the number of tires hauled 
(separated by passenger and truck tires), the date of transportation, and 
physical location where the tires were removed from and to. The transporter 
portion of the manifest form should be completed as described in sec.330.815(a) 
of this title (relating to Transporter Record Keeping), using the governmental 
entity's generator number as the registration number.

sec.330.835. Requirements for a Type VIII-R Waste Tire Storage Facility.
(a) Registration requirements. 
(1)-(2) (No change.) 
(3) A Type VIII-R registration shall expire 60 months from the date of issuance 
unless the storage site changes ownership prior to that time. [A Type VIII-R 
registration is transferable contingent upon executive director approval. A 
change in the federal tax identification number will constitute a change of 
ownership.] Registrations shall be renewed prior to the expiration date. 
Applications for renewal shall be submitted at least 60 days prior to the 
expiration date of the Type VIII-R storage facility registration.  
(4) (No change.) 
[(5) A new Type VIII-R storage facility registration application and a non-
refundable $500 application review fee shall be submitted to the executive 
director within ten days of a determination by the executive director that 
operations or management methods are no longer adequately described by the 
existing registration. If ownership of the registered Type VIII-R storage 
facility will change or the operator of a Type VIII-R storage facility will 
change notification of the pending change shall occur at least 60 days prior to 
the actual transfer of ownership or operations. Until the change of ownership 
and/or operations of the facility is approved in writing by the executive 
director no WTRF reimbursements will occur.] 
<nl>(5)<ol> [(6)] Suspension, revocation or denial of initial or renewal 
registration procedures are as follows: 
(A) The commission may suspend or revoke a registration or refuse to issue an 
initial or renewal registration for: 
(i) failure to maintain complete and accurate records required under this 
subchapter; 
(ii) failure to maintain on-road vehicles in safe working order as evidenced by 
at least two citations per vehicle excluding parking citations from the Texas 
Department of Transportation or local traffic law enforcement agencies; 
(iii) altering any record maintained or received by the registrant;
(iv) failure to comply with any rule or order issued by the commission pursuant 
to the requirements of this subchapter; 
(v) failure to submit the annual report required in subsection (d)(5) of this 
section; 
(vi) failure to maintain financial assurance as required in sec.sec.330.885-
330.888 of this title (relating to Cost Estimate for Closure; Financial 
Assurance for Closure; Incapacity of Owners or Operators or Financial 
Institutions; and Wording of the Instruments); 
(vii) collection and/or storage of shredded tire pieces or whole used or scrap 
tires or scrap tire pieces without the registration; and  
(viii) altering any documentation used to substantiate a request for 
reimbursement from the WTRF; 
(ix) failure to deliver scrap tires, tire pieces or shredded tire pieces to 
another registered waste tire storage site, registered waste tire energy 
recovery facility or registered waste tire recycling facility or other in-state 
or out-of-state facility approved by the executive director within the time 
frame specified in sec.330.832(b)(2) of this title (relating to Waste Tire 
Storage Facility Classification). 
(B) A Type VIII-R storage facility registration shall be suspended for a period 
of one year; however, depending upon the seriousness of the offense(s), the time 
of suspension may be increased or decreased. A Type VIII-R storage facility 
registration is revoked automatically upon a second suspension. If the 
registration is suspended or revoked, a Type VIII-R storage facility shall not 
store waste tire shreds or whole used or scrap tires or scrap tire pieces 
regulated under this subchapter. 
(C) The holder of a Type VIII-R storage facility registration that has been 
revoked by the commission may reapply for registration pursuant to this 
subchapter as if applying for the first time, after a period of at least one 
year from the date of revocation. If a Type VIII-R storage facility registration 
is revoked by the commission a second time, the revocation shall be permanent. 
(D) Appeal of suspension, revocation or denial of initial or renewal 
registration procedures are as follows: 
(i) an opportunity for a formal hearing on the suspension or revocation of 
registration must be requested in writing by the registrant by certified mail, 
return receipt requested, provided the request is postmarked within 20 days 
after a notice of proposed revocation or denial of registration has been sent 
from the executive director to the last known address of the registrant; 
(ii) an opportunity for a formal hearing on the denial of registration or 
renewal of registration must be requested in writing by the applicant by 
certified mail, return receipt requested, provided the request is postmarked 
within 20 days after a notice of denial has been sent from the executive 
director to the last known address listed on the application. If the 
registration is denied, the individual or company shall not store shredded tire 
pieces or whole used or scrap tires or scrap tire pieces regulated under this 
subchapter; and 
(iii) the formal hearing under this paragraph shall be in accordance with the 
requirements of the Administrative <nl>Procedure <ol> [Procedures] Act, Texas 
Government Code Annotated, sec.2001 (Vernon 1993) and the Texas Solid Waste 
Disposal Act, Texas Health and Safety Code Annotated Chapter 361 (Vernon 1993) 
and the rules of the commission. 
(E) If the registration is suspended or revoked, and a formal hearing has been 
timely requested by the registrant the Type VIII-R storage facility shall not 
accept for storage additional shredded tire pieces, whole used or scrap tires or 
scrap tire pieces regulated under this subchapter until a final decision has 
been made by the commission as result of the hearing.
(F) If the revocation of the Type VIII-R storage facility registration is 
approved by the commission, the owner or operator of the facility shall remove 
all shredded tire pieces and whole used or scrap tires and scrap tire pieces 
stored at the facility within 60 days from the date of suspension or revocation 
in accordance with the requirements contained in this subchapter.  
<nl>(6)<ol> [(7)] Preparation and submission of an application for a Type VIII-R 
storage facility shall be in accordance with the following procedures: 
(A) The application for registration shall be prepared and signed by the 
applicant on a form to be provided by the executive director. The application 
shall include information necessary for the executive director to make an 
evaluation of the proposed operation to ensure that the facility is located, 
designed, and operated so that the health, welfare, and physical property of the 
public as well as the environment and endangered species are protected. Failure 
to submit complete information as required by these sections shall result in the 
return of the application to the applicant without further action by the 
executive director. The submission of false information shall constitute grounds 
for denial of the initial or renewal application or suspension or revocation of 
the current Type VIII-R storage facility registration.
(B) The application for a registration of a Type VIII-R storage facility shall 
be submitted in duplicate to the executive director with all supporting data 
also submitted in duplicate unless otherwise directed by the executive director. 
Within 30 days of receipt of the application, the executive director will 
forward to the applicant a letter acknowledging receipt of the application. 
(C) Data presented in support of an initial or renewal application for a Type 
VIII-R storage facility shall consist of: 
(i) the legal name, address and federal tax identification number of the 
individual, partnership, corporation, city, county or other governmental entity 
that is applying for the registration and will be responsible for operations at 
the Type VIII-R storage facility; 
(ii) the legal name and address of landowner where the Type VIII-R storage 
facility will be or is currently located; 
(iii) the current status of the Type VIII-R storage facility; (i.e., proposed or 
existing); 
(iv) the specific location of the Type VIII-R storage facility by street 
address, if within the city limits, or distance and direction from a city 
corporate limits or road intersection. The Type VIII-R storage facility location 
shall be further described by giving the direction (using compass headings as N, 
NE, E, etc.) and distance measured perpendicularly (in feet or miles), unless 
otherwise noted, from each Type VIII-R storage facility boundary to a known 
physical feature (such as a road, highway, canal, creek, etc.); 
(v) the location of the Type VIII-R storage facility by county, or 
extraterritorial jurisdiction of a city; 
(vi) the estimated number of whole used or scrap tires or shredded tire pieces 
to be received daily; 
(vii) the size of the Type VIII-R storage facility in acres;
(viii) the maximum number of whole used or scrap tires or shredded tire pieces 
to be stored at the Type VIII-R storage facility; 
(ix) the intended purpose of the whole used or scrap tires or shredded tires 
pieces stored at the Type VIII-R storage facility; 
(x) the time period that the whole used or scrap tires or shredded tire pieces 
will be stored at the Type VIII-R storage facility (not to be in excess of 12 
months unless written authorization for a longer storage period has been granted 
by the executive director); 
(xi) the storage method (tire pile on the ground, inside a building or 
enclosure, totally enclosed and lockable containers); 
(xii) a topographic map which shall be a United States Geological Survey 7-1/2 
minute quadrangle sheet or equivalent, encompassing the area of the site and 
showing the location of area streams (particularly those entering and leaving 
the site), and marked to show the Type VIII-R storage facility boundaries, and 
roadway access. These maps may be obtained at a nominal cost from: Branch of 
Distribution, United States Geological Survey Federal Center, Denver, Colorado 
80225; 
(xiii) a general location map, which shall be all or a portion of a half-scale 
county map, prepared by the Texas Department of Transportation, annotated as 
necessary to show the location of the Type VIII-R storage facility; prevailing 
wind direction; residences, cemeteries, and recreational areas within a one mile 
radius of the Type VIII-R storage facility and location and type of surface of 
all roads within a one mile radius which will be used for entering or leaving 
the Type VIII-R storage facility. If only a portion of the map sheet is used, 
the portion shall include scale, date, north arrow, and two or more latitudes 
and longitudes. These maps may be obtained at a nominal cost from the nearest 
District Highway Engineer Office or by writing to: Texas Department of 
Transportation, Attention: Transportation Planning Division (D-10), P. O. Box 
5051, West Austin Station, Austin, Texas 78763-5051;
(xiv) a statement from the property owner shall be submitted on a form prepared 
by the executive director when the applicant is not a city, county, state 
agency, federal agency, or other governmental entity and is not the owner of 
record of the land described in the application, or does not have an option to 
buy the land. The statement shall be witnessed and notarized;  
(xv) a Type VIII-R storage facility layout plan showing location of the storage 
areas, oversize tires that qualify for WTRF reimbursement, and oversize tires 
that do not qualify for reimbursement, fire lanes, access roads (internal and 
external), fire control facilities, facility security and fencing, maintenance 
and control buildings, sanitation facilities, location and description of the 
type of tire processing equipment to be used, other operational buildings to be 
located on the Type VIII-R storage facility, and current dated signature of the 
fire marshal within whose jurisdiction the waste tire storage facility is 
located; 
(xvi) a drainage plan showing drainage flow throughout the Type VIII-R storage 
facility area, specifically the potential for contaminated storm water run-off 
from storage piles, or wastewater run-off from areas of the waste tire storage 
facility where equipment is operated or stored; locations of streams; and any 
other important drainage feature of the facility. Any additional surface 
drainage controls that are necessary to ensure facility containment and 
treatment of potentially contaminated storm water or wastewater shall be 
designed by a registered professional engineer. If, during review of the 
application or after issuance of the registration, a detailed drainage plan is 
determined to be required, then it shall be prepared, signed, and sealed by a 
registered professional engineer within the time period requested by the 
executive director; 
(xvii) a legal description of the Type VIII-R storage facility consisting of the 
official metes and bounds description including the volume and page number of 
the deed record, or if platted property, the book and page number of the plat 
record of only that acreage encompassed in the application;
(xviii) a Type VIII-R storage facility operating plan containing information 
outlined in subsection (c) of this section; 
(xix) an applicant's statement and signature provided by the applicant, or the 
authorized representative empowered to make commitments for the applicant, that 
he/she is familiar with the application and all supporting data and is aware of 
all commitments represented in the application and that he/she is also familiar 
with all pertinent requirements in these regulations and he/she agrees to 
develop and operate the Type VIII-R storage facility in accordance with the 
application, the sections in this subchapter, and any special provisions that 
may be imposed by the executive director; and
(xx) a Type VIII-R storage facility fire plan containing information outlined in 
subsection (c)(3) of this section. 
(b)-(e) (No change.)

sec.330.843. Waste Tire Facility Registration.
(a)-(e) (No change.) 
[(f) A new registration application shall be submitted to the executive director 
within ten days of a determination by the executive director that operation or 
management methods are no longer adequately described by the existing 
registration. If ownership of the registered waste tire facility will change or 
the location of the equipment or facility will change, notification of the 
pending change shall occur at least 30 days prior to the actual transfer of 
ownership or operations. Until the change of ownership and/or operations of the 
facility is approved in writing by the executive director no reimbursements will 
occur. A change in the federal tax identification number will constitute a 
change of ownership.]
<nl>(f)<ol> [(g)] Suspension, revocation or denial of initial or renewal 
registration procedures are as follows: 
(1) The commission may suspend or revoke a registration, or deny the issuance of 
an initial or renewal registration for: 
(A) failure to maintain complete and accurate records pursuant to sec.330.845 of 
this title (relating to Waste Tire Facility Record Keeping);
(B) failure to maintain equipment in safe working order; 
(C) altering any record maintained or received by the registrant;
(D) delivery of shredded tire pieces to a facility not registered or permitted 
by the commission to handle the material; 
(E) failure to comply with any rule or order issued by the commission pursuant 
to the requirements of this chapter; 
(F) failure to submit annual reports as required by sec.330.845(d) of this title 
(relating to Waste Tire Facility Record Keeping); 
(G) failure to maintain financial assurance as required in sec.sec.330.885-
330.888 of this title (relating to Cost Estimate for Closure; Financial 
Assurance for Closure; Incapacity of Owners or Operators or Financial 
Institutions; and Wording of the Instruments); 
(H) failure to operate a registered waste tire processing facility within 180 
days of receipt of registration from the executive director, or cessation of the 
processing operation for longer than 180 days after commencing processing of 
scrap tires at the facility; 
(I) collection and/or shredding of whole used or scrap tires without 
registration as required in this section; 
(J) failure to deliver shredded tire pieces to a registered waste tire facility 
or a recycling, reuse, or energy recovery facility as required in sec.330.841(c) 
of this title (relating to Waste Tire Facility Processors of Scrap Tires); 
(K) altering any request for reimbursement from the WTRF;
(L) failure to complete the work required to clean up a PEL site as stated in 
the executive director approved Site Clean-Up Plan; 
(M) failure to account to the executive director for recycling, reuse, or energy 
recovery activities in the required five year period; 
(N) knowingly accepted out-of-state scrap tires on a manifest using a commission 
approved transporter or generator number; 
(O) failure of a new or expanded waste tire facility, approved after September 
1, 1995, to provide certification that the waste tire facility is capable of 
collecting and transporting waste tires from registered generators in rural 
counties of the state at the request of the commission during emergency periods 
as defined by the commission; 
(P) failure of a new or expanded waste tire facility, approved after September 
1, 1995, to collect waste tires from generators located in rural counties during 
commission declared emergency periods; or 
(Q) failure to have a binding agreement with authorized legitimate end users. 
(2) A waste tire facility registration shall be suspended for a period of one 
year; however, depending upon the seriousness of the offense(s), the time of 
suspension may be increased or decreased. A waste tire facility registration is 
revoked automatically upon a second suspension. If the registration is suspended 
or revoked, a waste tire facility shall not shred any whole used or scrap tires 
regulated under this subchapter.
(3) The holder of a waste tire facility registration that has been revoked by 
the commission may reapply for registration pursuant to this subchapter as if 
applying for the first time, after a period of at least one year from the date 
of revocation. If a waste tire facility registration is revoked by the 
commission a second time, the revocation shall be permanent.
(4) Appeal of suspension, revocation or denial of initial or renewal 
registration procedures are as follows: 
(A) An opportunity for a formal hearing on the suspension or revocation of 
registration may be requested in writing by the applicant by certified mail, 
return receipt requested, provided the request is postmarked within 20 days 
after a notice of proposed suspension or revocation or denial of the initial or 
renewal registration has been sent from the executive director to the last known 
address of the applicant. 
(B) An opportunity for a formal hearing on the denial of initial registration or 
renewal of registration may be requested in writing by the applicant by 
certified mail, return receipt requested, provided the request is postmarked 
within 20 days after a notice of denial of initial or renewal registration has 
been sent from the executive director to the last known address listed on the 
application. If the registration is denied, a person shall not process whole 
used or scrap tires regulated under this subchapter.
(C) The formal hearing under this paragraph shall be in accordance with the 
requirements of the Administrative Procedure Act, Texas Government Code 
Annotated, sec.2001 (Vernon 1993), the Texas Solid Waste Disposal Act, Texas 
Health and Safety Code Annotated, Chapter 361 (Vernon 1993), and the rules of 
the commission. 
<nl>(g)<ol> [(h)] A waste tire facility shall be inspected to insure compliance 
with the application by the executive director prior to receiving final approval 
for storage.
<nl>(h)<ol> [(i)] Effective January 1, 1996, all existing, new, amended, and 
renewal waste tire facility registration applications shall contain requirements 
for the applicant to identify the entity registered pursuant to sec.330.852 of 
this title (relating to Requirements for Registration for a Waste Tire Recycling 
Facility) or sec.330.855 of this title (relating to Requirements for 
Registration for a Waste Tire Energy Recovery Facility) that intends to accept 
for recycling or energy recovery, the waste tire facility's shredded tire 
pieces. The executive director shall only reimburse a waste tire facility for 
those shredded tire pieces that have been delivered to, or have been contracted 
for delivery to a registered waste tire recycling facility or waste tire energy 
recovery facility or other entity that has been approved as a legitimate end 
user by the executive director.
<nl>(i)<ol> [(j)] Beginning January 1, 1996, the commission may reimburse a 
waste tire facility for scrap tires shredded only if in accordance with one of 
the following options: 
(1) The waste tire facility has a binding agreement to deliver, within 180 days 
of reimbursement, 100% of the shredded scrap tires (including process wire, wire 
bead and fluff) to a registered waste tire recycling facility, waste tire energy 
recovery facility, or other entity that has been approved as a legitimate end 
user by the executive director. The waste tire facility shall submit an 
affidavit to the executive director which confirms that the contract it has 
submitted to the executive director with the registered waste tire recycling 
facility, waste tire energy recovery facility, or entity that has been approved 
as a legitimate end user by the executive director, is a binding agreement as 
required by and described in Texas Health and Safety Code sec.361.477(g) and 
applicable Texas law. This affidavit shall also affirm that the contract 
consists of terms that are certain as to quantity, duration, and parties. 
Further, the affidavit shall affirm that the parties agree to the terms of the 
agreement and that it is a valid and enforceable agreement. The affidavit should 
be notarized and signed by someone who has authority to sign contracts for the 
waste tire facility. The commission shall suspend reimbursements to a waste tire 
facility that fails to deliver the tire shreds (including process wire, wire 
bead and fluff) to a legitimate end user before the 181st day after the date of 
reimbursement unless the executive director determines that the failure to 
deliver was caused by an act of God or by unforeseen business events. The 
commission may not resume suspended reimbursements until the processor makes all 
delinquent deliveries.
(2) The waste tire facility provides to the executive director proof of delivery 
of the shreds to an authorized end user. 
<nl>(j)<ol> [(k)] For all shreds reimbursed after January 1, 1996, the waste 
tire facility shall report monthly to the executive director the date of 
reimbursement for each shredded tire and whether, as of the date of the monthly 
report, the shredded tire was delivered to a registered waste tire recycling 
facility, waste tire energy recovery facility, or other entity that has been 
approved as a legitimate end user by the executive director. The end use 
delivery information shall be submitted on a form provided by the executive 
director and shall be applied to the end use credit system pursuant to 
sec.330.884 of the title (relating to WTRF End Use Credit System).
<nl>(k)<ol> [(l)] Registration fees. (1) Individuals or companies that prepare a 
new, renewed or amended application on forms obtained from the executive 
director for registration as a waste tire facility shall pay a non-refundable 
registration fee of $500.
(2) Registration fees collected under paragraph (l) of this subsection shall be 
allocated to the commission for its reasonable and necessary costs associated 
with reviewing for approval, applications for the registration of waste tire 
facilities.

sec.330.852. Requirements for Registration for a Waste Tire Recycling Facility.
(a) Registration requirements. 
(1)-(2) (No change.) 
(3) A waste tire recycling registration shall expire 60 months from the date of 
issuance unless the waste tire recycling facility changes ownership prior to 
that time. [A waste tire recycling registration is transferable contingent upon 
prior executive director approval. A change in the federal tax identification 
number will constitute a change of ownership.]
(4)-(7) (No change.) 
(b)-(f) (No change.)

sec.330.855. Requirements for Registration for a Waste Tire Energy Recovery 
Facility.
(a) Registration requirements for a waste tire energy recovery facility. 
(1)-(2) (No change.) 
(3) A waste tire energy recovery registration shall expire 60 months from the 
date of issuance unless the facility changes ownership prior to that time. [A 
waste tire energy recovery facility registration is transferrable contingent 
upon prior approval from the executive director.]
(4)-(5) (No change.) 
(b)-(f) (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 December 18, 1996.
TRD-9700739
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: April 2, 1997
For further information, please call: (512) 239-1966

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART XX. Texas Workforce Commission
CHAPTER 801.Local Workforce Development Boards
40 TAC sec.801.2
The Texas Workforce Commission proposes an amendment to sec.801.2, Waiver 
Requirements, concerning waivers that may be granted regarding service delivery, 
board staffing and developmental services. The section clarifies terms and 
circumstances in which waivers will be allowed. The section is amended to 
streamline the process of obtaining a waiver and clearly defines what a board 
must do to obtain a waiver. 
The Texas Labor Code, as amended by Chapter 655, Acts of the 74th Legislature, 
1995, requires the Commission to establish objective criteria for granting 
waivers to local workforce development boards. The amendment deletes statutory 
definitions from the rule as such information is repetitive and unnecessary, and 
the amendment clarifies that operational functions, such as intake, eligibility 
determination, assessment and referral, are included within the meaning of 
"workforce training and services." The amendment also clarifies that the 
Commission will issue a recommendation on submitted waiver requests to the Texas 
Council on Workforce and Economic Competitiveness. Finally, the proposed 
amendment replaces the requirement that certain documentation be submitted with 
the request with a provision granting the Commission discretion in identifying 
what documents may be needed to support a request for a waiver. This would allow 
greater flexibility in submitting and reviewing requests for waivers. Emily 
Zimmet, Deputy Director of Operational Services, has determined that for the 
first five-year period the section is in effect, there will be minimal fiscal 
implications for state or local government as a result of enforcing or 
administering the section. There will be no additional costs to state government 
as a result of enforcing or administering the rule. Reductions in costs to the 
state will depend on program consolidation and local involvement and cannot be 
estimated. Any costs to local governments choosing to operate under a plan 
including waivers are entirely within the control of the local government and 
cannot be estimated. 
Ms. Zimmet, 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 improved coordination of and access to workforce training 
and services programs at the local level. There will be no effect on small 
businesses. There may be minimal economic impact as a result of this amendment, 
but it is impossible to estimate at this time. 
Written comments on the proposal may be submitted to Emily Zimmet, Operational 
Services, Texas Workforce Commission Building, 101 East 15th Street, Room 144T, 
Austin, Texas 78778 (512) 463-6045. E-mail address: emily.zimmet@twc.state.tx.us
The amendment is proposed under Texas Labor Code, Title 4, sec.302.063, as 
amended by Chapter 655, Acts of the 74th Legislature, 1995, which provides the 
Texas Workforce Commission with the authority to develop objective criteria for 
the granting of waivers under Texas Civil Statutes, Government Code, 
sec.sec.2308.264, 2308.267, and 2308.312. 
No other statute, article or code will be affected by this proposal. 

sec.801.2.<nl>Waivers <ol> [Waiver Requirements].
(a) Purpose of Rule. The Workforce and Economic Competitiveness Act, 
sec.sec.2308.264, 2308.267, and 2308.312, Government Code, Vernon's Texas Codes 
Annotated, sets forth prohibitions regarding service delivery, board staffing, 
and developmental services. Only under exceptional circumstances will waivers 
from such prohibitions be allowed. [The Commission's decision on a waiver 
request shall be final.] 
[(b) Definitions. The following words and terms, when used in this section, 
shall have the following meanings unless the context clearly requires otherwise. 
[(1) Board--A local workforce development board as created under the Workforce 
and Economic Competitiveness Act. 
[(2) Developmental services--Program services designed to increase a 
participant's basic education and skill level, including adult basic education 
courses, GED preparatory courses, adult literacy programs, and occupational 
skills training. 
[(3) One-Stop services--Services provided at a Career Development Center 
established by a board, including, but not limited to:
[(A) access to labor market information in the workforce a